The fallout from the Michael Cohen/Essential Consulting affair continues with the news that the general counsel of Novartis, one of the companies that retained Cohen’s services, is retiring from the company for his role in the scandal. Felix Ehrat said in a press release that he was retiring “in the context of discussions surrounding Novartis’s former agreement with Essential Consultants, owned by Michael Cohen.” Ehrat defended the contract as “legally in order; it was an error.”
This final statement by the now-disgraced executive illustrates two key themes. First, it highlights the difference between a corporate legal function and a compliance function. The only question in front of legal is whether the action the company is about to take is actually legal. While it is not clear if the company performed any legal analysis to ascertain if hiring the personal lawyer of a sitting U.S. president broke any Swiss law regarding the bribery and corruption of foreign (that is, foreign to Switzerland) officials, it is clear that Ehrat thought and continues to believe the contract was legal.
