WASHINGTON -- Randall L. Stephenson, AT&T's chief executive, said Friday that the company had made a "big mistake" by hiring President Donald Trump's personal lawyer, Michael D. Cohen, to advise on the telecommunications giant's deal to buy Time Warner.
"Our company has been in the headlines for all the wrong reasons these last few days, and our reputation has been damaged," 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."
Stephenson's note followed the revelation that the company had paid Cohen $600,000 to advise on the $85.4 billion merger with Time Warner and other regulatory matters.
Stephenson also said in the memo that the company's head of lobbying and external affairs, Bob Quinn, 57, would be retiring. Quinn declined to comment.
Federal prosecutors are investigating Cohen's business dealings, including a $130,000 payment he made to pornographic film actress Stephanie Clifford, known professionally as Stormy Daniels, as part of a deal to buy her silence about an affair she says she had with Trump. The president has denied Clifford's claims.
The payment to Clifford was the first known activity involving Essential Consultants, a shell company incorporated in Delaware by Cohen. It was through Essential Consultants that AT&T retained Cohen.
Rudy Giuliani, one of Trump's attorneys, says he is "quite certain" the president did not know Cohen was trying to sell his insight into the president.
Giuliani said Friday that Trump was "surprised" to learn that Cohen brokered deals with companies looking to gain his knowledge about the president.
Asked if the president was aware that Cohen was trying to sell influence and knowledge of the president, Giuliani said, "The answer is that I am quite certain he didn't."
AT&T was one of multiple companies Cohen approached after the election. The Swiss drugmaker Novartis 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. Norvartis' current chief executive, Vasant Narasimhan, also distanced himself from Cohen, saying this week that he had no role in the decision to hire Cohen.
Novartis said it discovered soon after signing the contract that Cohen could not provide the services he had promised and allowed the contract to expire.
For AT&T, the disclosure of its ties to 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.
Stephenson insisted in his memo that "everything we did was done according to the law and entirely legitimate" and that Cohen did not do any lobbying on behalf of AT&T. Nonetheless, Stephenson added, retaining Cohen "was a serious misjudgment."
"In this instance," he continued, "our Washington, D.C., team's vetting process clearly failed, and I take responsibility for that."
Time Warner was not aware of AT&T's contract with 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.
AT&T has said Cohen approached employees in the company's Washington office shortly after the election. The company signed a contract with him three days after Trump took the oath of office. He promised to provide advice on who the "key players" would be in Trump's administration and "their priorities, and how they think," AT&T said in a fact sheet released Friday.
AT&T noted in the fact sheet that Cohen was among "several consultants" the company hired as Trump was assuming the presidency. AT&T said it would not disclose the names of the other people and firms hired.
Quinn was promoted to replace AT&T's longtime head of lobbying, James Cicconi, just before the company announced its merger with Time Warner. Quinn, who began working at AT&T in the 1980s, 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 Trump's circles.
AT&T's vast lobbying team, which includes more than 100 people, and public policy staff will now report to the company's general counsel, David McAtee.
Earlier this week, the company said it had been contacted late last year about Cohen by the office of Robert S. Mueller III, the special counsel investigating Russian meddling in the 2016 election and other matters. AT&T said it had "cooperated fully" with the inquiries.
Novartis said this week it had also spoken with Mueller's team about the payments to Cohen. Novartis said it had cooperated fully and considers its role in the matter closed.
Analysts said they did not expect the revelations about AT&T's ties to 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. Trump has been vocal in his disdain for CNN's coverage of his administration. CNN is owned by Time Warner.
But Judge Richard J. Leon of U.S. 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.
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 nonprofit Public Knowledge.
Information for this article was contributed by The Associated Press.
Business on 05/12/2018