AT&T CEO says hiring Trump lawyer Michael Cohen was a 'big mistake'

AT&T told employees Friday that hiring President Donald Trump's lawyer Michael Cohen as a consultant was a "big mistake."

The telecommunications giant also announced the retirement of the executive whose unit retained Cohen.

AT&T's explanation about the $600,000 contract with Cohen came a day after drugmaker Novartis said, "we made a mistake" in hiring Cohen under a whopping $1.2 million contract for health-care policy consulting work. Novartis said Cohen soon proved unable to do that work, but it kept paying him because the contract "could only be terminated for cause."

AT&T and Novartis were contacted last fall by special counsel Robert Mueller, who is investigating Trump campaign officials, and asked about their payments to Cohen. Those payments were revealed Tuesday night by a lawyer for porn star Stormy Daniels, who is fighting a nondisclosure agreement about her alleged dalliance with Trump.

In a separate "fact sheet" released Friday, AT&T confirmed reports that Cohen was hired to help the company understand how the Trump administration might handle its proposed $85 billion merger with Time Warner.

Lucas Jackson | Reuters
President Donald Trump's personal lawyer Michael Cohen leaves federal court in the Manhattan borough of New York City, New York, U.S., April 16, 2018.

"Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged," said CEO Randall Stephenson in the message to employees.

"There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.

"To be clear, everything we did was done according to the law and entirely legitimate," Stephenson added.

"But the fact is, our past association with Cohen was a serious misjudgment. In this instance, our Washington D.C. team's vetting process clearly failed, and I take responsibility for that."

In that same mea culpa, Stephenson also said AT&T's senior vice president for external and legal affairs, Bob Quinn, "will be retiring."

Quinn had started with the old Bell system as a telephone operator in 1980, later went on to become a trial attorney after law school and rejoined AT&T in 1993 as a regional attorney. He had been in charge of the external and legislative affairs group since October 2016, several months before Cohen was hired by that unit.

Stephenson said from now on the external and legal affairs group would be reporting to company general counsel David McAtee.

Adam Jeffery | CNBC
Randall Stephenson, CEO of AT&T speaking at the New York Economic Club on Nov. 29th, 2017.

AT&T, its fact sheet released with the apology, said Cohen had approached the external and legal affairs unit soon after Trump's election and "said he was going to leave the Trump Organization and do consulting work for a few select companies that wanted his opinion on the new President and his administration — the key players, their priorities, and how they think."

The company said its team in Washington hired Cohen under a one-year contract, at $50,000 per month, from January through December 2017. The contract was only for consulting and advisory services, AT&T said.

"We didn't ask him to set up any meetings for us with anyone in the Administration and he didn't offer to do so," the company said.

On Tuesday night, Daniels' lawyer Michael Avenatti ignited a media furor by releasing a report that a shell company created by Cohen had received hundreds of thousands of dollars from businesses on the heels of Trump's election, at the same time Cohen was acting at the president's personal's attorney.

Essential Consultants was the same corporate shell that Cohen, soon after creating it in October 2016, had used to give Daniels a $130,000 hush-money payment in exchange for her keeping quiet about the alleged affair with Trump a decade earlier.

The White House has denied Trump had sex with her.

The companies revealed to have paid Cohen in addition to Novartis and AT&T included South Korean defense contractor Korea Aerospace Industries and Columbus Nova, an American financial management firm closely tied to Russian oligarch Viktor Vekselberg.

Columbus Nova, according to Avenatti's report, had paid Cohen about $500,000, while KAI had paid him $150,000.

Cohen is under criminal investigation by federal prosecutors in New York for his business dealings, as well as for the payment to Daniels, which came on the eve of the 2016 presidential election.

The probe was sparked by a referral from Mueller to the U.S. Attorney's Office for the Southern District of New York. Mueller is investigating Russian interference in the election, as well as possible collusion with that meddling by people in and associated with the Trump campaign.

Here is the full memo from Stephenson released Friday.

All AT&T employees worldwide Team, Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged. There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake.

To be clear, everything we did was done according to the law and entirely legitimate. But the fact is, our past association with Cohen was a serious misjudgment. In this instance, our Washington D.C. team's vetting process clearly failed, and I take responsibility for that.

Here is more information on this issue, if you're interested. For the foreseeable future, the External & Legislative Affairs (E&LA) group will report to our General Counsel David McAtee. Bob Quinn, Senior Executive Vice President - E&LA, will be retiring. David's number one priority is to ensure every one of the individuals and firms we use in the political arena are people who share our high standards and who we would be proud to have associated with AT&T.

To all of you who work tirelessly every day to serve customers and represent the brand proudly, thank you. My personal commitment to you is – we will do better.

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