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AT&T Chief Says It Made a 'Big Mistake' Hiring Michael Cohen


AT&T Chief Says It Made a ‘Big Mistake’ Hiring Michael Cohen

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Randall L. Stephenson, the chief executive of AT&T, said “hiring Michael Cohen as a political consultant was a big mistake.”CreditCarlos Barria/Reuters

May 11, 2018

WASHINGTON — Randall L. Stephenson, AT&T’s chief executive, said on Friday that the company had made a “big mistake” by hiring President Trump’s personal lawyer, Michael D. Cohen, to provide advice on federal policy, including how the government might approach the telecommunications giant’s deal to buy Time Warner.

Mr. Stephenson also said that the company’s head of lobbying and external affairs, Bob Quinn, would be leaving the company.

“Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged,” Mr. Stephenson wrote in a memo to employees. “There is no other way to say it — AT&T hiring Michael Cohen as a political consultant was a big mistake.”

Mr. Stephenson’s note followed the revelation this week that the company had paid Mr. Cohen $600,000 to advise on the $85.4 billion merger with Time Warner and other regulatory matters.

Federal prosecutors are investigating Mr. Cohen’s business dealings, including a $130,000 payment he made to the adult film actress Stephanie Clifford, known professionally as Stormy Daniels, to buy her silence about an affair she says she had with Mr. Trump. The president has denied Ms. Clifford’s claims.

The payment to Ms. Clifford was the first known activity involving Essential Consultants, a company started by Mr. Cohen. It was through Essential Consultants that AT&T retained Mr. Cohen. Several other businesses, including the Swiss drugmaker Novartis and an American company linked to a Russian oligarch, also sent payments to Mr. Cohen’s company.

The Russian, Viktor Vekselberg, was stopped and questioned at an airport this year by investigators for Robert S. Mueller III, the special counsel examining Russian interference in the 2016 presidential election.

Although AT&T’s statements were meant to distance itself from Mr. Cohen and the arrangement on Friday, they also provided insight into how companies like AT&T operate in Washington during the Trump era.

Mr. Trump pledged during his campaign to shake up the Washington establishment — to “drain the swamp” — while railing against “the special interests, the lobbyists and the corrupt corporate media that have rigged the system against everyday Americans.” He also announced policies intended to clamp down on the revolving door between government and K Street, which is home to many of the capital’s lobbying firms.

But the anti-lobbying rhetoric and policies did not discourage some former Trump aides from seeking big paydays from the influence industry, where few of the established players had close connections to Mr. Trump or his inner circle.

Some Trump insiders, including Mr. Cohen and Corey Lewandowski, a former Trump campaign manager, positioned themselves as strategic advisers. Because they were offering insight — or political intelligence — on Mr. Trump and his team, and not overtly lobbying, they did not need to disclose their role with Congress and possibly the Justice Department.

AT&T fanned out to try to keep pace in this changing climate. Although the company has long retained a platoon of lobbyists with deep connections on both sides of the aisle, none of the firms they worked with were as close to Mr. Trump as Mr. Cohen.

The company said Mr. Cohen had approached it about being a consultant, and that he was among “several consultants” the company hired as Mr. Trump was assuming the presidency.

AT&T officials would not disclose the names of the other people and firms hired. But according to a person with ties to Mr. Trump’s campaign, AT&T approached other Trump associates about possibly retaining them as government affairs consultants or lobbyists. The person would speak only under the condition of anonymity because the talks were private.

Among Trump associates pitching AT&T was Mr. Lewandowski. AT&T said it was approached early in January 2017 by Avenue Strategies, a lobbying firm that Mr. Lewandowski helped found. AT&T said it did not pursue a contract with the firm, which Mr. Lewandowski left in the middle of 2017.

AT&T paid a total of $4.1 million in lobbying fees to nearly 30 firms through the first three months of this year, according to congressional lobbying filings. But none of those businesses, including top-tier law firms like Mayer Brown and Akin Gump Strauss Hauer & Feld, have lobbyists who were as close to Mr. Trump as Mr. Cohen.

The filings show that the largest fees paid to those firms were around $35,000 a month — significantly less than the $50,000 a month that the company paid Mr. Cohen. It is possible that the firms were paid other fees by AT&T that were not expressly for lobbying and therefore were not disclosed.

Mr. Cohen had a similar arrangement with the giant drugmaker Novartis. The multinational company paid Essential Consultants $1.2 million for a yearlong contract to provide insights on the new administration’s approach to health care policy.

Novartis said its former chief executive, Joe Jimenez, hired Essential Consultants. Like Mr. Stephenson, Novartis’s current chief executive, Vasant Narasimhan, has distanced himself from Mr. Cohen, saying this week that he had no role in the decision to hire Mr. Cohen. The company has also said that hiring Mr. Cohen was a mistake.

Novartis said it discovered soon after signing the contract that Mr. Cohen could not provide the services he had promised and allowed the contract to expire.

Columbus Nova, the investment firm in New York whose biggest client is a company controlled by Mr. Vekselberg, the Russian oligarch questioned by Mr. Mueller, paid about $500,000 to Essential Consultants last year. A lawyer for Columbus Nova has described the money as a consulting fee that had nothing to do with Mr. Vekselberg.

Earlier this week, AT&T said that it had been contacted late last year about Mr. Cohen by Mr. Mueller’s team. AT&T said it had “cooperated fully” with the inquiries.

Novartis said this week that it had also spoken with special counsel’s team about the payments to Mr. Cohen. Novartis said that it had cooperated fully and considered its role in the matter closed.

For AT&T, the disclosure of its ties to Mr. Cohen comes at a critical moment. The company is defending its merger with Time Warner in federal court against the Justice Department’s efforts to block the deal.

It is unclear what services Mr. Cohen provided. Mr. Stephenson insisted in his memo that “everything we did was done according to the law and entirely legitimate” and that Mr. Cohen did not do any lobbying on behalf of AT&T. Nonetheless, Mr. Stephenson added, retaining Mr. Cohen “was a serious misjudgment.”

Time Warner was not aware of AT&T’s contract with Mr. Cohen, according to a person familiar with the company’s thinking. Within Time Warner this week, officials were surprised to learn about the contract with Essential Consultants.

Mr. Cohen did not respond to an interview request.

Many large corporations consider such strategic advice to be part of their government affairs program, complementing their overt lobbying efforts. AT&T’s contract with Mr. Cohen, for instance, called for him to advise the company on “corporate tax reform and the acquisition,” according to documents first obtained by The Washington Post.

But Mr. Stephenson said that with Mr. Cohen, “our Washington, D.C., team’s vetting process clearly failed, and I take responsibility for that.”

Mr. Stephenson said that Mr. Quinn, 57, who had led the Washington team, had decided to retire. But according to a person familiar with AT&T’s thinking, who was not authorized to speak publicly about the decision, he was pressured to leave because of the revelations of AT&T’s contract with Mr. Cohen.

Mr. Quinn began working at AT&T in the 1980s and is well connected in the political circles of both parties. But he, and the rest of the company, was surprised by the election results and had few connections to Mr. Trump’s circles.

AT&T’s vast lobbying team, which includes more than 100 people, and public policy staff members will now report to the company’s general counsel, David McAtee.

Mr. Quinn declined to comment.

Analysts said they did not expect the revelations about AT&T’s ties to Mr. Cohen to affect the government’s lawsuit to block the company’s merger with Time Warner.

AT&T and Time Warner had suggested before the trial that the Justice Department’s decision to block a merger of two companies that do not compete was influenced by presidential politics. Mr. Trump has been vocal in his disdain for coverage of his administration by CNN, which is owned by Time Warner.

But Judge Richard J. Leon of United States District Court in Washington has been strict about keeping politics out of the case, which focuses on antitrust law and whether the deal would violate competition policy and harm consumers.

Judge Leon is expected to deliver an opinion on the case by June 12.

”These revelations come at a critical point in the trial, but they are very unlikely to have any meaningful impact on the judge’s ruling,” said Gene Kimmelman, a former senior official for the antitrust division of the Justice Department and the president of the nonprofit Public Knowledge.

Sarah Huckabee Sanders, the White House press secretary, said on Friday that the government’s suit against AT&T proved that Mr. Trump could not be influenced by special interests.

“This is actually the definition of draining the swamp,” she said.

Correction: 

An earlier version of this article misstated the name of a company created by Michael D. Cohen incorporated in Delaware. It is Essential Consultants, not Essentials Consulting.
A version of this article appears in print on of the New York edition with the headline: AT&T Regrets Hiring Lawyer Tied to Trump. Order Reprints | Today’s Paper | Subscribe

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