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Novartis GC to step down after admitting $1.2m contract with Trump lawyer was an error

Novartis group general counsel Felix Ehrat is standing down from the company after taking personal responsibility for a $1.2m (£890,000) contract with US President Donald Trump’s personal lawyer Michael Cohen, an agreement he admits was an "error". Ehrat, who has has been group GC of the pharmaceutical giant since 2011, will retire in June, the company said Wednesday (16 May). He will be replaced by chief ethics, risk and compliance officer Shannon Thyme Klinger. The Swiss company revealed last week (9 May) that it had paid Cohen's company Essential Consultants $1.2m for healthcare policy consulting work that he had proved "unable" to do. Novartis said that Ehrat – who is also a member of the company's executive committee – was retiring "in the context of discussions" over the agreement. In a statement, Ehrat said: "Although the contract was legally in order, it was an error. As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end." The one-year contract with Essential Consultants – signed in February 2017, shortly after Trump became president – saw Novartis agree to pay Cohen (pictured above) $100,000 (£74,000) per month. The company said it had expected that Cohen could advise it on the administration’s approach to healthcare policies such as the Affordable Care Act, better known as Obamacare. However, following its initial meeting with Cohen in March 2017, the company realised that he would be “unable to provide the services that Novartis had anticipated", but was unable to break the contract. Both Ehrat and former chief executive Joe Jimenez signed the contract last year. Jimenez left the company last September. Cohen has faced intense scrutiny in recent months following the FBI raid on his offices in New York amid the Mueller probe into Russian interference in the 2016 election. He shared office space with Squire Patton Boggs, with which he had formed a strategic alliance in April 2017, a deal that came to an end last month. Ehrat – the former senior partner and executive chairman of Slaughter and May’s Swiss best friend Baer & Karrer – joined Novartis in October 2011. He had been at the Swiss firm since 1987, making partner in 1992 – the same year as he opened the firm’s Lugano branch, its first outside Zurich. He was appointed managing partner in 2000 and senior partner in 2003. He has led the company's legal team on a number of landmark deals, including the $13bn (£9bn) sale of a 36.5% stake in its consumer health joint venture with pharma giant GlaxoSmithKline last year. Freshfields Bruckhaus Deringer acted for Novartis on that deal, while Slaughter and May represented GSK. Less than a year after Ehrat joined Novartis in 2011, a line-up of firms including Allen & Overy, Freshfields, Linklaters, Morrison & Foerster, Cravath Swaine & Moore, White & Case, Hogan Lovells and Simpson Thacher & Bartlett were appointed to the company's legal panel, known as the Novartis Legal Preferred Firm Program. Click here for a 2012 interview with Ehrat.