In the winter of 2017, the pharmaceutical giant Novartis made a strategic investment. It paid Donald Trump’s longtime employee Michael Cohen a rate of $100,000-a-month over the course of a year to, in its words, “advise the company as to how the Trump administration might approach certain U.S. healthcare policy matters, including the Affordable Care Act.”
But for Novartis and other companies that enlisted Cohen’s services, Cohen’s LLC, Essential Consultants, also provided another benefit: total opacity and anonymity.
Through the LLC, the pharmaceutical company could try to shape, or at least predict, federal policy without ever having to disclose the work or the sums paid to carry it out.
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“Fortune 500 companies are risk averse,” said a top GOP lobbyist. “This structure helped them hide the risk.”
Novartis now claims that the arrangement was a bust as it quickly became apparent that Essential Consultants, in the company’s words, “would be unable to provide the services that Novartis had anticipated related to US healthcare policy matters.”
Nevertheless, the arrangement, now that it’s been made public, is yet another quagmire for Cohen, who already finds himself dealing with probes into the Trump campaign’s potential collusion with Russia and the payoffs made from the same LLC to a porn star alleging an affair with the president.
The opacity of the arrangement is the heart of the issue. Ethicists say that the advocacy practiced by President Trump’s longtime right-hand man and fixer speaks to a phenomenon that good government groups call “shadow lobbying.” It’s the practice of influencing policy and policymakers through activity informal enough to fall short of the legal definition of “lobbying.” An army of consultants, government relations executives, and “political intelligence” professionals earn tens, perhaps hundreds, of millions of dollars each year through such soft advocacy, and none of its activities are disclosed to the public.
“If it is accurate that Cohen touted his sway over Trump and offered to influence the Trump administration on matters that affect the business interests of Novartis, and these companies in turn made payments to Cohen for such services, that crosses the line into lobbying,” said Craig Holman, government affairs lobbyist for the group Public Citizen. “Since Cohen is not a registered lobbyist and has not disclosed the payment-for-services, he would likely be in violation of LDA if the payments came from domestic sources, or in violation of FARA if the payments came from foreign sources.”
For months into the Trump era, Cohen had talked with friends and associates about his plans and opportunities to “cash in,” as one Trumpworld associate described, on his intimate connections to, and knowledge of, the now most powerful person in the world—his former Trump Organization boss. It was long an open secret in pro-Trump political circles that Cohen was one of many Trump-aligned figures who was knee-deep in courting wealthy people based on his reputation and his purported access to the president.
He never registered as a federal lobbyist. He made more than they did.
During all of 2017, Novartis’ formal payments to outside lobbying firms averaged under $12,000 a month—less than an eighth of what it paid Cohen for the better part of a year in which, the company says, he did exactly zero work.
Another Cohen client, AT&T, reportedly paid Essential Consulting LLC up to $600,000 for “actual work done” according to CNBC. That arrangement, too, was hidden from public view. AT&T did pick up one lobbying firm in early 2017 with some Trump administration pull—Sextons Creek, a firm run by Vice President Mike Pence’s former chief of staff—but reported paying that firm just a fifth of what it paid Cohen.
Cohen did not return a request for comment. But how he managed to score big, despite lacking any tangible D.C. experience or notable policy acumen, is perhaps the clearest illustration of the koan that chaos is a ladder.
In the weeks after Trump’s surprise victory in the 2016 campaign, there was a corporate rush to get in the good graces of a president who few had expected to prevail.
“Everybody was scrambling,” said the GOP lobbyist. “It was, ‘we need some sort of insider who knows the operation.’ It was a black box.”
Cohen was one of the main insiders, having worked for Trump for years prior to his presidential bid. But he was far from the only one benefiting from his connections to the president.
Numerous Trump associates and former campaign hands remarked on how their respective stock significantly rose after the 2016 election. “It was a gold rush,” said one former senior Trump campaign official. Some said that if you were on cable news routinely during the 2016 race speaking on behalf of the (then future) president, various entities would aggressively reach out after Trump’s election to solicit insight into his thinking and agenda.
A few firms with actual ties to the administration stood to benefit tremendously. Sextons Creek was one of them. Others included Avenue Strategies, Ballard Partners, American Continental Group, Jamestown Associates, and Nahigian Strategies, all of which had senior executives with ties to the Trump campaign or to Trump transition veterans.
But while business has, indeed, been good for those firms, none of them scored lobbying contracts with the corporations that turned to Cohen.
“We have never talked to either one of those companies,” said Keith Nahigian, whose brother Ken was the lead on the presidential transition team.
And Jamestown, which doesn’t lobby, also said that it had “never been contacted by any of these companies,” according to Barney Keller, a partner with the company.
Indeed, when Novartis went looking for formal lobbying help, it chose more traditional shops. During the first quarter of 2017, when it began paying Cohen’s LLC, it hired three new lobbying firms, including powerhouses Capitol Counsel and Brownstein Hyatt Farber Schreck. During that same period, it also spent about $4.15 million on in-house and contracted federal lobbyists to work on issues similar to those for which it ostensibly brought on Cohen: general health policy concerns, and in particular Trump administration efforts to roll back the Affordable Care Act.
As for AT&T, which has eyed a controversial merger with Time Warner, Sextons Creek has been retained but has never actually done any lobbying.
Cohen, likewise, appears not to have been retained for actual advocacy but for access. According to CNN, his pitch to investors boiled down to: “I don’t know who’s been representing you, but you should fire them all. I’m the guy you should hire. I’m closest to the president. I’m his personal lawyer.”
It may be the type of setup that gets Trump’s longtime aide off the hook, legally, in so far as Cohen can plausibly claim that he never functioned as a lobbyist per se. But it’s not a good look either way.
As Brendan Fischer, the director of federal reform programs at the Campaign Legal Center, quipped, “It’s almost as if our political system is structured so that economic power can be quietly converted into political influence.”
Correction: An earlier version of this piece referred to AT&T's merger with T-Mobile. It has been updated to reflect that the merger opportunity is with Time Warner.
