Cohen Episode Humbles AT&T's Vaunted Washington Lobbying Corps

(Bloomberg) -- AT&T Inc. has few peers when it comes to corporate influence in Washington. But like the rest of the nation’s capital, it was caught on the outside looking in by Donald Trump’s election triumph.

The Dallas-based telecom giant spent more than $350 million on advocacy in the past 20 years -- including nearly $17 million last year alone. That ranks it among the top spenders inside the Beltway, according to the Center for Responsive Politics.

But it was a clumsy effort in 2017 to find a foothold in Trump’s new Washington that inadvertently pulled it into a sordid scandal involving hush money paid by the president’s lawyer to a porn star.

Cohen Episode Humbles AT&T's Vaunted Washington Lobbying Corps

Revelations that AT&T paid $600,000 to the Trump lawyer who arranged for the hush money payments to Stephanie Clifford resulted in a shakeup Friday of the company’s Washington operation. Robert Quinn, a veteran lobbyist and attorney who’d led the office, was forced out and AT&T’s Chief Executive Officer Randall Stephenson issued a stinging rebuke.

“Our Washington D.C. team’s vetting process clearly failed, and I take responsibility for that,” Stephenson said in a memo to employees. He called the hiring of Cohen a “big mistake.”

Time Warner

Quinn’s abrupt departure leaves nearly 100 lobbyists working to complete an embattled merger with Time Warner Inc., as well as to preserve gains the company made elsewhere, including in weakening federal oversight of its internet business.

“It’s an unceremonious departure for someone who exercised terrible judgment,” Lee Drutman, senior fellow in the political reform program at the New America think-tank, said in an email, "but the company has a reputation to protect."

Quinn’s predecessor, Jim Cicconi, was among a handful of Republicans backing Democrat Hillary Clinton for president. Cicconi worked in Ronald Reagan’s White House and had supported every Republican candidate for president since 1976. In a June 2016 statement he said “it’s vital to put our country’s well-being ahead of party,” called Clinton qualified, and said “the alternative, I fear, would set our nation on a very dark path.”

Cicconi retired and Quinn became senior executive vice president of AT&T’s external & legislative affairs in October 2016, just before the presidential election.

Trump’s Objective

The challenge before Quinn became clear during the campaign when Trump began raising objections to AT&T’s proposed $85.4 billion purchase of Time Warner Inc. -- a deal his Justice Department would go on to oppose in a lawsuit that’s set to be decided in June.

By January 2017, Quinn and Stephenson were at Trump Tower in New York for a meeting with the president-elect. The company also donated more than $2 million to the committee organizing Trump’s inauguration.

It was about that time that the company heard from Cohen, 51, described alternately as Trump’s “personal lawyer” or his “fixer.”

Cohen “approached our external affairs organization during the post-election transition period and said he was going to leave the Trump Organization and do consulting for a select few companies that wanted his opinion on the new president and his administration -- the key players, their priorities, and how they think,” according to an AT&T fact sheet.

Special Counsel

The resulting contract -- at $50,000 per month, from January through December 2017 -- “was expressly limited to providing consulting and advisory services,” according to the fact sheet.

In late 2017 AT&T provided information about Cohen to Robert Mueller, the special counsel investigating Russian interference in the 2016 presidential election, the company said in the fact sheet. “We have received no additional questions from the Special Counsel’s office and have considered the matter closed,” it said.

“Companies often hire consultants for these purposes, especially at the beginning of a new presidential administration, and we have done so in previous administrations, as well,” the company said in the email.

AT&T’s relationship with Cohen was revealed this week by an attorney for Clifford, the porn actress whose stage name is Stormy Daniels and who alleges she had a sexual affair with Trump years ago, and was paid $130,000 just before the election to keep it quiet. The money came from a company set up by Cohen -- the same company AT&T paid for consulting services.

‘Big Mistake’

“Our company has been in the headlines for all the wrong reasons these last few days and our reputation has been damaged,” Stephenson said 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.”

Shares in AT&T briefly fell on Wednesday to their lowest point since August 2015.

At the time that AT&T engaged Cohen, it wasn’t aware of “the current controversy surrounding Cohen,” AT&T said.

Harold Feld, vice president of the digital consumer-advocacy organization Public Knowledge, sometimes worked with AT&T on issues, including subsidies to defray the cost of telephone service to low income Americans, and sometimes against it. He doesn’t think the company will lose a step.

“One of the things that has made AT&T so effective in their lobbying is that they’re not dependent on one person. They have a very deep bench,” Feld said in an interview. He said that the suddenness of Quinn’s departure might require a short period of adjustment, but that wouldn’t have a lasting impact. “Quinn stepping down is not going to cripple AT&T,” said Feld.

©2018 Bloomberg L.P.