Novartis' ill-fated contract with President Donald Trump's personal attorney has not only bedeviled the global drug giant, it's also tripped up post-Novartis ambitions for former CEO Joe Jimenez, who authorized the Cohen deal.
Jimenez was set to join the board of leading hedge fund Bridgewater Associates, but the plans are on hold due to the scandal and fallout, according to the Wall Street Journal.
Bridgewater manages about $150 billion in assets for about 350 clients, according to its website, and believes in "radical truth and radical transparency" to achieve results. The company encourages employees to air disagreements and resolve differences to arrive at the best solution to problems.
The hedge fund had been in the process of bringing Jimenez on for a board spot, according to WSJ, but those plans have been tabled. The publication cited "people familiar with the matter" and reported that Jimenez could ultimately end up joining the fund.
News of the Novartis deal with Trump's attorney Michael Cohen broke early this month when Stormy Daniels' lawyer Michael Avenatti tweeted an "executive summary" about payments from the company and others to Cohen. Soon after, Novartis released a statement confirming it entered a healthcare consulting deal with Cohen in February 2017. After one meeting, the company determined Cohen was unable to provide services it desired.
Instead of canceling the contract, Novartis let it lapse and paid $100,000 per month through February 2018 for a total value of $1.2 million. Jimenez and outgoing general counsel Felix Ehrat signed the agreement.
In an interview with Forbes, Jimenez said Novartis hired Cohen because the attorney knew people inside the Trump Administration, and Novartis' regular consultants did not. The former helmsman cited uncertainty about healthcare reform after Trump's election as a driving force for the deal.
Novartis' legal team executed the deal without anyone who could have questioned the process, Jimenez told the publication. He said it was a mistake to move so fast and to let the deal lapse without terminating it for cause. It would have cost "substantially" more to terminate the contract rather than just make the monthly payments, he said.
In response to the Cohen scandal, Novartis' new CEO, Vas Narasimhan, wrote a memo to the company's employees calling the deal a "mistake" and said he's determined to persevere. He's also called thousands of company managers for a discussion about compliance and regaining public trust, according to Bloomberg. In the wake of the developments, lawmakers have called on the company to answer tough questions about the arrangement. Sen. Ron Wyden, D-Ore., told CNN it “raises the specter of corruption in the White House.”
Aside from the Cohen episode, Novartis has been beset by scandal around the world in recent years. The drugmaker has paid fines for violations in China, South Korea and Japan, and a bribery investigation is underway in Greece. In the U.S., prosecutors are advancing with a case alleging a massive kickback scheme through tens of thousands of "sham" medical events.