By John Miller
ZURICH (Reuters) - Novartis (S:NOVN) has recruited a new chief ethics officer from Siemens (DE:SIEGn) after costly bribery scandals and a disputed $1.2 million contract with President Donald Trump's former lawyer that the Swiss drugmaker now calls a mistake.
Novartis said on Tuesday it had hired Klaus Moosmayer, 49, from Siemens, where he spent more than a decade helping oversee the German engineering company's efforts to build its compliance system after several of its own bribery scandals.
Novartis Chief Executive Vas Narasimhan, promoted on Feb. 1 to lead the Basel-based company, has promised to boost its reputation following settlements or fines in corruption cases in China, South Korea and the United States.
He has also faced U.S. lawmakers' criticism over the contract with former Trump lawyer Michael Cohen, something Narasimhan called a "mistake" that exposed Novartis to accusations it paid to gain influence within the administration.
Moosmayer, a German, replaces Shannon Thyme Klinger, who was appointed as Novartis's general counsel when Felix Ehrat resigned in May to take responsibility for the Cohen agreement.
"We must hold ourselves to (the) highest ethical standards and always aim to win and maintain the trust of society and our many stakeholders," Narasimhan said in a statement, while lauding Moosmayer's extensive experience in compliance matters.
Novartis has said neither Narasimhan nor Klinger knew of the contract with Cohen when it was signed in early 2017, shortly after Trump's inauguration.
In recent years, Novartis has paid hundreds of millions of dollars to resolve cases where employees were accused of flouting the law to accelerate sales. Units remain under scrutiny in Greece, Asia and Russia, and a trial is scheduled next year in another U.S. federal lawsuit.
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Novartis has acknowledged shortcomings amid what ex-CEO Joe Jimenez called a "results-oriented" culture, while insisting the Greek probe includes "many sensational and unfounded claims".
Moosmayer, a Siemens lawyer since 2000, played a central role in building up the company's policies governing internal investigations, disciplinary sanctions, remediation and compliance risk assessment.
In 2008, Siemens paid about $1.6 billion to resolve U.S. and European allegations it bribed officials around the world in exchange for business.
At Siemens, one of Moosmayer's main duties was to handle the remainder of what the company dubbed a “compliance crisis" that had once put the group's future in doubt.
His brief also included helping manage Siemens's response to the diversion of four turbines to Crimea, in breach of EU sanctions imposed after Russia annexed the region from Ukraine in 2014. Siemens's efforts to seize the turbines have been rejected by a Russian court.
Moosmayer, who joins the Novartis executive committee, said he hopes to build on Novartis's personal accountability focus.
"Society has high expectations of the pharmaceutical industry and rightfully so," Moosmayer said.