Contradicted: US President Donald Trump on Wednesday. Credit:Bloomberg Asked if Trump knew about the arrangement, Giuliani said: "[Trump] didn't know about the specifics of it, as far as I know. But he did know about the general arrangement, that Michael would take care of things like this, like I take care of things like this for my clients. I don't burden them with every single thing that comes along. These are busy people." Stormy Daniels claims she had sex with Donald Trump in 2006. Credit:AP He also said the payment was "going to turn out to be perfectly legal" because "that money was not campaign money". Daniels claims she had sex with Trump in 2006, months after his third wife Melania gave birth to his youngest child.

She was paid $US130,000 by Cohen before the 2016 election to keep quiet about the allegations. Trump has denied having sex with Daniels. Trump told reporters several weeks ago that he didn't know about the payment to Daniels as part of a non-disclosure agreement she signed days before the 2016 presidential election. Asked by a reporter aboard Air Force One whether he knew about the payment, Trump said flatly: "No." The reporter then asked: "Then why did Michael Cohen make [the payment], if there was no truth to her allegations?"

Loading Replay Replay video Play video Play video "You'll have to ask Michael Cohen," Trump said. "Michael's my attorney, and you'll have to ask Michael." Loading Another reporter asked Trump: "Do you know where he got the money to make that payment?" "No," Trump said. "I don't know."

Cohen has said he arranged the financing of the settlement with Daniels, whose real name is Stephanie Clifford, through his home-equity line of credit. In a statement earlier this year, he did not to mention any role by Trump. "Neither the Trump Organisation nor the Trump campaign was a party to the transaction with Ms Clifford, and neither reimbursed me for the payment, either directly or indirectly," Cohen said then. Federal prosecutors in New York are investigating Cohen's business practices, including whether any crimes were committed as part of a possible pattern or strategy of buying the silence of people who could offer accounts in 2016 that could have damaged Trump's candidacy, according to people familiar with the probe. Michael Avenatti, an attorney for Daniels, called Giuliani's comment "a stunning revelation". Former US attorney-general and mayor of New York Rudy Giuliani is now on Trump's legal team. Credit:AP

He said they suggested campaign finance violations and possibly, bank fraud and money laundering. "According to Mr Giuliani, Mr Trump and Mr Cohen were co-conspirators in a felony," he said. "Now it is time for justice to be served, and we intend to serve it." Giuliani, who joined Trump's legal team last month, told he show's presenter Sean Hannity that the President had repaid Cohen over several months, indicating the payments continued through at least the presidential transition, if not into his presidency. Illustration: Matt Golding Later, Giuliani said in an interview that when Cohen paid the settlement to Daniels, he knew he would eventually get paid back by Trump, as he was for other expenses.

Daniels is now seeking to invalidate the non-disclosure agreement. That suit also named Essential Consultants, a company that Cohen set up as a vehicle for the payment. She has also filed a defamation suit against Trump. "Mr Trump evidently has participated in a felony and there must be serious consequences for his conduct and his lies and deception to the American people," Avenatti said. Cohen's payment to the accuser in the weeks leading up to the presidential election could be cast as an illegal contribution but not if he were acting on Trump's behest and with his money. Trump hires Clinton lawyer Illustration: Matt Golding

Meanwhile, sources say Trump is hiring the lawyer who represented former president Bill Clinton in his impeachment proceedings to replace outgoing White House lawyer Ty Cobb. Cobb, who served as the administration's point person in dealing with Special Counsel Robert Mueller, is stepping down and is expected to be replaced by Emmet Flood, according to senior administration officials. Flood, who also served as special counsel in George W. Bush's administration and is currently a partner at Williams & Connolly, was quietly interviewed by Trump in March. At the time the President denied reports he was considering adding a lawyer to his team.

He tweeted it was a "false story," adding, "I am VERY happy with my lawyers, John Dowd, Ty Cobb and Jay Sekulow. They are doing a great job". In a statement, White House Press Secretary Sarah Huckabee Sanders said Cobb was retiring without offering a reason. "For several weeks Ty Cobb has been discussing his retirement and last week he let Chief of Staff Kelly know he would retire at the end of this month," she said. Cobb's departure is the latest shake-up of Trump's legal team and comes as his attorneys face increasing pressure to determine whether the President should agree to sit down for an interview with Mueller. The Washington Post reported on Tuesday that Mueller raised the possibility of subpoenaing Trump if he declined to sit down for a voluntary interview.

AP, Washington Post