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Lou Dobbs Moneyline
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Aired December 04, 2001 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, December 4. Here now, Lou Dobbs.
LOU DOBBS, HOST: Good evening, everyone. The global crackdown against terrorism is intensifying. U.S. warplanes bombing targets where Osama Bin Laden may be hiding, possibly wounding or killing a top al Qaeda leader at the same time. We'll have a live report for you on that.
America freezes the assets of the Holy Land Foundation. That's a charity accused of funneling money to the terrorist organization Hamas. We'll have more for you on the efforts to choke off terrorist funding worldwide.
And Israel fires missiles into Palestinian targets today, killing three, injuring dozens of others, and hitting a building near Yasser Arafat's office. We'll be going live to Jerusalem for that report.
On Wall Street today, stock prices rallied on expectations that the economy will improve next year.
Tonight, in the war against the Taliban and al Qaeda terrorists, anti-Taliban fighters are engaged in a fight with al Qaeda fighters. That fight near the Tora Bora region where Osama Bin Laden may be hiding. In recent days, anti-Taliban mujahedeen fighters have been threatening to attack al Qaeda and Taliban terrorists, despite apparent calls from Bin Laden himself not to do so.
A mujahedeen commander says U.S. bombs that fell on a cave complex in Tora Bora may have injured Osama Bin Laden's right-hand man, Ayman al Zawahiri. The Pentagon says it cannot confirm the report.
Defense Secretary Donald Rumsfeld also says he does not know whether Bin Laden has a so-called dirty bomb in his possession, as some reports have suggested.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: There is intelligence information floating around the world in various countries of various types that reflect the fact that the al Qaeda organization has an interest in weapons of mass destruction. (END VIDEO CLIP)
DOBBS: Rumsfeld says the 20-year-old Taliban fighter identified as John Walker, who claims to be an American, is now in custody undergoing medical treatment. The defense secretary says he's heard of other prisoners who also claim to be Americans, but says he does not know who, or where, they are.
Our Nic Robertson is in Chaman, on the border between Afghanistan and Pakistan. Nic, what tonight can you tell us about the U.S. offensive there?
NIC ROBERTSON, CNN CORRESPONDENT: Well, Lou, the offensive around the Kandahar city airport enters its fifth day. Yesterday, sources inside Kandahar were telling us that there was intensive bombing on the city again, and much of it focused around the airport. The say that anti-Taliban tribal forces are trying to gain control of the airport.
Now the airport, tribal leaders here tell us, is absolutely key. It is the strategic gateway to Kandahar city. Whoever controls the airport will then likely be able to move on Kandahar city.
Also part of that bombing campaign, we are told, has been taking out key bridges around Kandahar, effectively isolating Taliban forces there.
Now, the Taliban are fighting back, we are told. The Taliban still say that they control Kandahar city. In fact, the Taliban even yesterday claimed to have captured some of these anti-Taliban forces.
But the information reaching us from other tribal leaders just to the north of Kandahar is that they are -- the tribal forces are closing in. They're closing in from the airport side on the southeast. They're also closing in from the north and effectively squeezing down on Kandahar city.
Closer to the border here, tribal leaders are telling us that they have been contacted by the Taliban leader, Mullah Mohamed Omar. Mullah Mohamed Omar asking those tribal leaders not to fight against the Taliban, in fact, to throw their lot in with the Taliban and come and help the Taliban defend Kandahar airport.
Difficult to read if that really is a last cry for help from the Taliban. But those tribal leaders telling us they are keeping their fighters at home. They're not putting them in the mix on the side of the Taliban at this time. Lou?
DOBBS: Nic, also reports that Osama Bin Laden has asked those tribal leaders also not to attack his reported positions, the cave complex. What do we know about that tonight?
ROBERTSON: Well, the tribal forces have always been key to whoever rules and controls any section of Afghanistan. The tribes here are fiercely independent, and as we have seen in the past will always tend to throw their lot in with whoever is on the winning side. And it appears to be an act of desperation, if these calls prove to be true, not only from Osama Bin Laden but also from Mullah Omar. It appears to be an act of desperation that these leaders see their usual base of support in the tribes now moving away from them. And it -- it really hints at the sense of isolation that Osama Bin Laden and Mullah Omar must be feeling at this time, that they cannot count on these former trusted allies. Lou?
DOBBS: All right. Nic Robertson. Thank you very much.
For his analysis now on these military actions in Afghanistan, we are joined by CNN Military Analyst General David Grange. General, good to have you with us.
GENERAL DAVID GRANGE, (RET.), CNN MILITARY ANALYST: Good evening, Lou.
DOBBS: This -- this offensive against Kandahar, in which the Taliban first in considerable negotiation and intensive negotiation, apparently, with the -- the tribal forces, the opposition forces, the Northern Alliance -- it now looks like there's a fight to the death. Is that the way you read it?
GRANGE: I -- I believe they'll have a last stand, at least in this part of the country around Kandahar. And there'll be some other pockets that'll be some hard-core fights as well, some mountain locations.
But it'll be, I think, a tough fight here, some of the hard-core elements, the mercenaries. I don't believe -- I think they'll still try a lot of negotiations, though, between the anti-Taliban forces and the -- and the Pashtun Taliban -- the nonforeigner-type Taliban -- to cross the line to the -- the coalition side. And I think that's what's taking a little bit of time, as well as positioning forces for -- for a coordinated attack on -- on the city and the -- and the surrounding key terrain of the city.
DOBBS: The airport has proved to be very difficult to take, the resistance in Kandahar around the airport in particular has -- does that surprise you at this point?
GRANGE: Well, if you don't have airplanes it does a little bit, of why the airport would be so critical. Probably it's astride a key avenue of approach on -- on terrain as -- that provides dominating fires on whoever moves through the area. So that may be the case.
And it may just be the -- symbolic of the airfield, of Kandahar itself. Great fields of fire on an airfield. As you know, very flat. Hard to obtain cover. And so any kinds of assaults around that -- that type of flat terrain is difficult.
DOBBS: At the same time, General, it would also appear to be something of an advantage for U.S. air power in trying to inflict damage against the Taliban.
GRANGE: Absolutely, unless you're -- you're trying, of course, to keep from damaging the airport too badly. Because every time we go into an area like this with the international coalition, we rebuild airfields from the damage. But they're obviously very exposed unless there's some significant mountainous terrain around the airfield, which I doubt there's much.
DOBBS: The president today, General, said that some of the forces are ready to round Afghanistan and the war against the Taliban and the al Qaeda could well be used for conflicts of outside Afghanistan.
Would it be your judgment that there are sufficient forces there to -- to carry out broader campaigns, or would implicit in the president's remarks be a suggestion that we will see a further buildup?
GRANGE: Well, I think we are postured with all of the international forces in the Persian Gulf, the Arabian Sea and bases within the Middle East, to strike just about anywhere we need to, whether it be against Hezbollah, Hamas, pieces of the al Qaeda that's not in Afghanistan itself. So with the exception of the regional war, small-scale conflicts, we probably have enough strike capability in the area to do that.
DOBBS: General David Grange. Thank you.
GRANGE: Thank you, Lou.
DOBBS: Turning now to the conflict in the Middle East. Israeli helicopters and war planes today fired missiles at Palestinian targets in both Gaza and the West Bank for the second straight day.
A building next to Palestinian president Yasser Arafat was hit in those attacks, but Arafat was not injured in the attacks and the Israel defense forces say the Palestinian president was not their target.
In an exclusive interview with CNN, Arafat said before those attacks began, Palestinian security forces had arrested many suspected Islamic extremists.
(BEGIN VIDEO CLIP)
YASSER ARAFAT, CHAIRMAN, PALESTINIAN AUTHORITY: Did President Bush succeed to stop the attack of Bin Laden? You have the biggest power over the area. I am doing one hundred percent of my effort.
(END VIDEO CLIP)
DOBBS: Meanwhile, hospitals in Gaza say three people were killed in those attacks and at least 120 injured in the strikes.
For more on the Israeli strikes and Yasser Arafat's reaction today, we are joined by our Mike Hanna in Jerusalem. Mike?
MIKE HANNA, CNN CORRESPONDENT: Hello, Lou. There has been a relative calm for about ten hours now, since those strikes occurred basically midday those strikes happened.
The one strike was in Gaza city. The target there was the offices of the Palestinian security organization. That was destroyed by missiles fired from an Israeli fighter aircraft.
Also under attack today, a police station in the West Bank city of Ramallah, once again hit by a missile. This right next door to a building in which Arafat was at the time. The Palestinians leader reportedly taken to an underground bunker.
Israel making clear these attacks have been in response to a series of suicide bombings that killed a number of Israelis over the weekend and in the course of last week, but also making clear that they are sending a message to Yasser Arafat and the Palestinian Authority that if he does not clamp down on militant organizations, then they will do whatever is necessary to take action against militants and those associated with those militants themselves.
One government source says the fact that the missile was so close to where Yasser Arafat was, was a reminder that those close to Yasser Arafat are involved in acts of terror against Israeli civilians.
The Palestinian says it's doing all it can, as we heard there from Yasser Arafat, and that these ongoing Israeli operations are making their task on the ground even more difficult, particularly as it's those very security officers who are supposed to arrest militants who are the target of Israeli attacks.
So the violence does continue on the ground, although, as I said, it has been relatively calm for a period of time now. But no signs whatsoever that there's any form of cease-fire in the offing, any form of settlement, some kind of negotiation or approximation of negotiation that will end these continually repeated incidents of violence from both sides, Lou.
DOBBS: Mike, as we've reported, three people killed, 120 injured in the Israeli attacks. Within terms of -- at least, of the deaths in those attacks, would you characterize these as a relatively constrained response, given previous Israeli responses to terrorist acts on their soil?
HANNA: Yes, Lou. It does seem to be a bit strange to say that the deployment of F-16 fighter aircraft is reserved. But in terms of the figures that you have just mentioned, in terms of the amount of destruction that was caused by these Israeli aircraft and helicopter gunships, then yes, there is a relatively low casualty list involved here in terms of previous attacks being carried out by Israel in these areas. So there is an element of restraint.
Israel itself says that it is carefully selecting these targets. It says that it, for example, flies over buildings before it actually attacks to get the people who are in the buildings out.
However, despite all of this, you have among the three dead there a 15-year-old boy, a schoolboy, who according to eyewitnesses was in school. The teachers told the children to leave the classroom. He was walking past the building that was struck by an Israeli missile when he was hit by shrapnel and killed.
Now, the Israeli air force denies that it was responsible for the death of the schoolboy. But this just an example that although the casualty figures may be relatively low compared to the fire power that is being deployed, there are still people are dying on the ground and there are still schoolboys dying on the ground, Lou.
DOBBS: And lots of other innocents as well, on both sides of this conflict. Mike Hanna, as always, thanks. Mike Hanna from Jerusalem
Well, coming up next here, we're going to take a look at Wall Street, where prices moved higher. It was an outright rally.
We will of course have more for you on the fallout from the collapse of Enron. How did Enron's outside directors miss warning signs? We'll have a special report for you.
We'll also be live in Florida, where President Bush today held a town hall meeting, fielding questions on everything from the economy to the war against terrorism. We'll have that live report.
And the government freezes the assets of a charity. We'll hear from former Justice Department prosecutor Michael Zeldon about the progress in cutting off terrorist funding. All of that and a lot more still ahead here. Stay with us.
(COMMERCIAL BREAK)
DOBBS: A busy day for President Bush. Freezing a charity's assets in the morning. That charity accused of being a terrorist -- supporting a terrorist organization. The president also holding a town hall meeting in Florida late this afternoon. White House Correspondent Kelly Wallace joins us now from the White House, appropriately. Kelly?
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Hello there, Lou. Well, at this hour president Bush making his way back to the White House from Florida. This trip to Orlando really designed for Mr. Bush to show his concern about those workers out of a job since the September 11 attacks.
Orlando hit especially hard. Nearly 2,000 jobs lost, mostly in the tourism industry. So as you noted, Mr. Bush headed to Orlando, hosting a town hall meeting, taking a range of questions on a variety of subjects.
No surprise. Orlando residents asking about the economy. Mr. Bush using this opportunity to once again press lawmakers in the U.S. Congress to pass a measure to give a boost to economy. The president saying a series of tax cuts the best way to stimulate the economy and help those out of a job.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: (UNINTELLIGIBLE) policy in such a shape that interest rates are low, energy prices are reasonable, and so we've got the framework for growth. And by the way, the same entrepreneurial spirit that existed in America prior to September 11 still exists today. They can't take that away from us.
(END VIDEO CLIP)
WALLACE: And Mr. Bush also asked about what he was doing in the Middle East. The president speaking out publicly for the first time since the weekend suicide bombings in Israel and Israel's retaliatory attacks. The president talking about his meeting Sunday with the Israeli Prime Minister Ariel Sharon, but then Mr. Bush definitely singling out Palestinian leader Yasser Arafat, saying Mr. Arafat must do much more to crack down on terrorism in order for there to be peace in the Middle East.
(BEGIN VIDEO CLIP)
BUSH: It is incumbent upon Mr. Arafat now to respond forcefully, to rout out those who kill. It is incumbent upon other friends and allies of ours around the world to help bring those terrorists the justice if we want peace in the Middle East. Which I do. Which I do. We've got to bring the terrorists to justice.
(END VIDEO TAPE)
WALLACE: Now, Mr. Bush used this town hall meeting to once again vigorously defend his call to possibly use military tribunals as opposed to civilian courts to try suspected terrorists, saying this would be one of the best ways to protect the American people from future terrorist attack.
And then a young boy asked a very insightful question, asking the president what went through his mind the day of the terrorist attacks. For the first time, we learned that the president, when he saw the first plane hit one of the towers on television he thought it had been a horrible accident. But after the second plane hit, he said that his chief of staff, Andrew Card, had whispered in his ear that America had been under attack. Lou?
DOBBS: Kelly, thank you very much. Kelly Wallace from the White House.
Just five minutes before the space shuttle Endeavor was scheduled to launch this evening, that mission was scrubbed because of bad weather. NASA has rescheduled that launch for tomorrow evening. The shuttle -- and these are of course live pictures that you're looking at as the -- as the ground crew gets the shuttle ready for takeoff -- the shuttle will deliver a new crew and supplies to the international space station.
As a high-flying salute to the victims killed in the September 11th attacks, the shuttle will carry 6,000 postcard-sized American flags, which will later be given to relatives of the victims.
Security is obviously especially tight now at the Kennedy Space Center. For the first time in 20 years, journalists have been kept away when the crew departed for the launch pad, and a helicopter that wandered into restricted airspace was escorted out by a F-16 jet.
Well, since September 11, the Federal Aviation Administration has received 100,000 applications for the air marshal program. The training process has intensified in recent weeks, but beyond that, there is very little we know. The FAA says secrecy is an important part of this new program. Kitty Pilgrim reports.
(BEGIN VIDEO TAPE)
KITTY PILGRIM, CNN CORRESPONDENT: Federal air marshals blend in to the airport crowd, sit with other passengers, and spring into action if there is an attack, as in this training video.
UNIDENTIFIED MALE: Police. Put your hands on top of your head.
PILGRIM: The FAA doesn't talk about training techniques, criteria for hiring or even how many federal air marshals they will put on flights. They do say that basic law enforcement skills are helpful, because the primary part of this job is shooting a hijacker -- without injuring passengers. According to the FAA, air marshals have the highest fire range qualifications in the federal government.
LARRY JOHNSON, COUNTERTERRORISM EXPERT: Shooting on board an airplane requires a different what are called rules of engagement, close quarter battle. And that -- that's something that you don't wake up and learn in just two or three days.
PILGRIM: The FAA won't even talk about what kind of budget they have for the program. It's clear that federal marshals will not be able to be on every flight, because tens of thousands of planes fly every day. But the mere possibility a marshal would be on a flight, they hope, is a deterrent to a hijacker, and a comfort to passengers.
BEAU DIETL, BEAU DIETL AND ASSOCIATES: When people know that possibly -- maybe not on every flight -- but possibly there's an air marshal on that flight, they feel a lot more comfortable.
PILGRIM: There is still some debate if marshals alone can do the job, and many advocate arming pilots and putting them through similar training.
BILLIE VINCENT, FORMER DIRECTOR OF AVIATION SECURITY, FEDERAL AVIATION ADMINISTRATION: The federal air marshal program certainly is an effective program. It's a professional group. And it would be -- it will be effective only if we arm the pilots and make them pilot-air marshals as well.
(END VIDEO TAPE)
PILGRIM: The FAA says they have stepped up these training programs all over the country, saying many people are willing and able to do these jobs. The flying public, however, will not be able the thank them in person. Kitty Pilgrim, CNN Financial News, New York.
DOBBS: Well, still ahead here, Israel steps up its bombing campaign against the Palestinians. We'll have the latest developments for you.
Then, the assets of a charity accused of having links to terrorists and specifically the terrorist organization Hamas have been frozen by the United States. We'll hear from a former federal prosecutor on efforts being made to choke off terrorist funding. All of that and a lot more, including a big rally on Wall Street, coming up next.
ANNOUNCER: Next, Lou talks to Michael Zeldon, former federal prosecutor for the Department of Justice.
(COMMERCIAL BREAK)
DOBBS: These are the latest developments in the war against terrorism. The Pentagon says it believes Osama Bin Laden remains in Afghanistan, and the Pentagon says Afghan forces are trying to find him.
The Pentagon also says in the event Bin Laden does leave Afghanistan, he will be followed. A mujahedeen commander says American bombs that fell on a cave complex in Tora Bora injured Bin Laden's right-hand man, Ayman al Zawahiri. The Pentagon says it cannot confirm that report.
Israeli helicopters and war planes fired missiles at Palestinian targets, including a building next to one where Palestinian president Yasser Arafat was sitting. Arafat was not injured in the attaches and the Israeli defense force says he was not a target of those attacks. Hospitals in Gaza say three people were killed, at least 120 others injured in the Israeli airstrikes.
U.S. Congressional aides tell CNN that members of the House plan to offer a strongly-worded resolution -- a resolution that calls for president busy to suspend relations with Palestinians if they fail to take specific steps to round up the terrorists.
As I reported earlier, the Bush administration froze the assets of a Texas-based Islamic charity. The Holy Land Foundation raises millions of dollars. The administration says that money is then funneled to Hamas, the terrorist group behind Sunday's bloody suicide bombings in Israel. Tim O'Brien has the story from Washington.
(BEGIN VIDEO TAPE)
TIM O'BRIEN, CNN CORRESPONDENT: Shortly after sunup in Richardson, Texas, federal agents were closing up shop at the Holy Land Foundation for Relief and Development. The government has frozen the foundation's assets after concluding that much of the $13 million that Holy Land raised last year was funneled to Hamas, the Palestinian terrorist group.
BUSH: The message is this: those who do business with terror will do no business with the United States.
O'BRIEN: It was last weekend's suicide bombing in Israel that triggered the government's action. Hamas has assumed responsibility. JOHN ASHCROFT, ATTORNEY GENERAL OF THE UNITED STATES: The suicide bombings in Israel over the weekend and previous attacks claimed by Hamas and the Palestinian Islamic Jihad over the last few years leave no doubt about the urgency of stopping terrorism in all its forms.
O'BRIEN: But the foundation, which claims to be the largest Muslim charity in the United States, denies funding Hamas or terrorism, and attributes the government's dramatic action to pressure from Israel.
SHUKRI ABU BAKER, HOLY LAND FOUNDATION: This is a black day, a terrible tragedy for the American Muslims and for American civil liberties. This is evidence how foreign governments can shape and form domestic policies in this country.
O'BRIEN: Holy Land is registered as a tax-exempt charity. It has hired a high-profile national law firm to challenge the government's action in court. The State Department is on board, rejecting concerns it might offend Arab partners in the war against the Taliban.
JOHN HULSMAN, HERITAGE FOUNDATION: This mission is what's paramount, not the coalition. It's getting the policy right. Keeping your eye on the ball is what matters, and not worrying about on any given matter who comes along with us.
(END VIDEO TAPE)
O'BRIEN: Holy Land's assets total some $2 million, which treasury officials acknowledge is insignificant in the war on terrorism. But if the foundation has been funneling cash to terrorists, as the government claims, shutting it down would not only be disruptive, over time could it prevent tens of millions of dollars from falling into terrorist hands. And Lou, that could have a significant impact deterring terrorism and saving lives as well.
DOBBS: We certainly do hope so. Tim O'Brien, thank you very much. Joining us, now Michael Zeldon. Michael is the former federal prosecutor for the Justice Department's money laundering department. Michael, good to have you back with us.
MICHAEL ZELDON, FORMER FEDERAL PROSECUTOR: Thank you, Lou.
DOBBS: This action today, the timing -- what do you -- what do you think of that?
ZELDON: Well, the Justice Department and the administration has both said that the timing was stepped up a little bit in response to the suicide bombings. This was an action that was intended to be taken in about seven days to two weeks from now. And I think what you will see is over the next seven to ten days some additional actions to be taken.
But they wanted send a clear message, which they did. It's not the amount of money that's been seized, it's the fact that they are seizing Hamas money in the United States that is significant today.
DOBBS: Well, the Holy Land Foundation is -- as Tim O'Brien just reported, just about $2 million in assets, but raising over $10 million over the course of the past year. That money, obviously, allegedly going to Hamas. So it's still a significant sum of money. How many more organizations would you guess are you -- there are that the Justice Department, that the U.S. Treasury Department will move against?
ZELDON: Well, I think there are scores of them that probably relate to Hamas. Then you've got the Islamic Jihad and Hezbollah and lots of other Middle East terrorist groups then are raising funds in the United States. And then you shift forward to the drug organizations that are funding many of these terrorist organizations abroad, and we'll have to move after them too. So this is just...
DOBBS: Drug organizations.
ZELDON: So this is just -- this is just one small step in what should be a very long process.
DOBBS: Michael, you said drug organizations. Such as?
ZELDON: Well, the Colley (ph) Cartel, the old Medallin Cartel, the cartels out of Matamorris (ph), Mexico. There's cartels in Laos and in Cambodia and Thailand. All of this money that is generated from narcotic sales is being used to support insurrections around the world and terrorism in the United States.
DOBBS: Michael, two questions occur to me, as we talk about this move by the United States government against these terrorist organizations, and as you suggest these drug organizations. One is the Israelis have already moved against the Holy Land Foundation four years ago.
ZELDON: That's right.
DOBBS: One, why did it take the United States so long to respond?
ZELDON: It's a good question and I don't know the answer to it. I know that over this period of time, since -- and actually a few days before September 11, there was in Internet company who was raided. And that Internet company had links to this Holy Land Foundation, which...
DOBBS: Six days.
ZELDON: ...I think was the trail.
DOBBS: Right. Six days, in fact, before the attacks of September.
ZELDON: Yes, and so this could be a matter of just the proof you needed in court. DOBBS: The second question that occurs, and you raise it implicitly, when you talk about the drug organizations. We've had a war on drugs in this country and ostensibly around the world now for years and years. Why were not the same efforts applied in the war on drugs that we're seeing now against the terrorist acts?
ZELDON: Well, they were. We -- when I was prosecutor in Miami in the early '80s, when I was chief money laundering section in the Justice Department, we went after the money trail. We knew that it was the lifeblood of organizations around the world that were inflicting havoc on the world.
However, we weren't able to get the cooperation of many governments around the world to freeze assets on our behalf. The events of September 11 being horrific as they were has catapulted these countries that have been historically reticent to now move forward with us as partners. And that's the key difference between today and just a few years ago in the Clinton administration, when they tried to do the exact same thing with al Qaeda assets with much less success.
DOBBS: And would you say the success is, to this point, terrific? Is it what would you have expected?
ZELDON: I think they're off to a terrific start, the Bush administration. I think they are following the money methodically, as one must. We'll see over the next couple of weeks where they strike next. And if they keep moving, as they're doing I think, yes, you can say terrific is where they are in this war on terrorism on the financial side so far. Lou, we'll have to come back in a few weeks and see.
DOBBS: Well, let's do that.
ZELDON: OK.
DOBBS: Please come back as we continue to report and to analyze, as we appreciate your help in that regard. Michael Zeldon.
ZELDON: Thank you.
DOBBS: Thank you.
Well, much of our coverage of the September 11 charities has focused on the biggest charity of all, the American Red Cross. Tonight, a follow-up on the second largest charity, the September 11 Fund. It has awarded grants and loans to a variety of non-profit organizations nowhere near ground zero.
Peter Viles has the story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: Every dollar you give will go directly to the victims and their families. PETER VILES, CNN CORRESPONDENT (voice-over): When you saw the ads and gave money to the September 11 Fund, did you know the fund would eventually use some of the money it raised as a loan to a philharmonic symphony miles from ground zero? As a loan to a modern dance company? Another to an AIDS prevention group? Yet another to an arts organization that features this illustration of a dominatrix on its web site?
The September 11 Fund has raised $337 million and does not give the money away directly. Instead, it gives to other charities, which distribute the money, in keeping with this blanket commitment.
JOSHUA GOTTBAUM, SEPTEMBER 11 FUND: 100 percent of the funds that have been donated to the September 11 Fund will go to the victims of that disaster, their families, and their communities. 100 percent, point zero.
VILES: It turns out the fund has a broad definition of those communities, and says in the case of the nonprofits, it is doing exactly what some large donors asked it to do.
GOTTBAUM: Institutions like the Ford Foundation, which gave us $5 million, the Mott Foundation, which gave us more than a million dollars, etcetera, they say we want you to pay attention to nonprofit institutions, those institutions that are essential in the fabric of the community.
VILES: So money from the fund has gone to the Brooklyn Philharmonic, which received a loan of $200,000, after government aid to the philharmonic was delayed. A $100,000 loan to Mother's Voices, an AIDS prevention group that canceled a fund raiser after the attacks. A loan of $33,000 to the Institute for the Development of Earth Awareness. A $25,000 loan to a modern dance group, Jennifer Muller. And a $6,000 grant for the arts group Three Legged Dog, which produced the dominatrix you saw earlier.
Charity watcher Daniel Borochoff says the grants are stretching the definition of victim. DANIEL BOROCHOFF: We've got nonprofits all over this country that have had to cancel fundraising events. So if you're going to give money -- a loan to the Brooklyn Philharmonic, you might as well give one to the Los Angeles Philharmonic also. And so, they really need to stay in there closer to lower Manhattan and also look at some of the indirect victims of these crises.
VILES: Another criticism of the fund: it appears to be in no rush to give away the $337 million it has raised. To date, it has given away $51 million or 15 percent of what it raised.
(END VIDEOTAPE)
The group says it has no timetable for giving away the rest, that it will continue to evaluate requests that come to the fund and disburse the money based on what it sees as the needs of victims and their communities -- Lou.
DOBBS: $51 million?
VILES: $51 out of $337 so far.
DOBBS: And it will continue to evaluate?
VILES: They are sifting through requests for money. They're not going out there and looking for ways to give the money away.
DOBBS: It's really quite striking. As you saw, the call for funds on their television advertising, 100 percent to the victims. The statement by Joshua Gottbaum, the head of the organization, and to see what's happening there. I mean that's -- square that up for me if you can.
VILES: Well, to be fair, yes, I don't know if I can. To be fair, it's a small percentage of the total amount raised. And they did have some donors, the Ford Foundation and others, that did explicitly say, and we've confirmed this, we want you to look out for the nonprofits in your community, Use this for that. I'm not sure it was ever conveyed to the people who gave money.
Other people, you know, this fund is not just about the victims.
DOBBS: Do we have an idea of percentage of this money are individual donations versus corporate donations, for example, and foundation donations? It seems a little peculiar to be talking about a foundation donation to a charity, but...
VILES: I don't have a good breakdown on this, but I do know a lot of big, corporate donations did go to this fund. It was a magnet for big corporations, as was the Red Cross. So a good amount of the money raised was not just the Ford Foundations, but other private companies that gave million and multimillion dollar gifts.
DOBBS: Well, it's not quite, here we go again, but it is definitely one that bears some scrutiny.
VILES: It sure does.
DOBBS: That's your job and you do it very well.
VILES: Thanks, Lou.
DOBBS: Thank you, Peter Viles.
Coming up next here, we'll have the latest on the price fixing case against Sotheby's former chairman. And we'll tell you what prosecutors say was a conspiracy that lasted a decade. We'll also take a look at the downfall of Enron, of course. Where was the company's board of directors in all of this? We take a look at how a company could fall so far, so fast without any knowledge on the part of its shareholders.
And we'll tell you about a rally a Wall Street. That's right, I said a rally on Wall Street, following yesterday's sharp declines. We'll take a look at why the markets rallied, tell you what to expect. Stay with us.
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DOBBS: Well, stocks today powered higher on Wall Street. We can declare it a rally. And the indexes closed at session highs. The chip sector leading technology issues higher. The Dow gaining 129 points. The Nasdaq surging 58 points on the day. The S&P 500 rose almost 15 points.
For complete market coverage, Christine Romans at the New York Stock Exchange, Greg Clarkin at the Nasdaq marketsite.
Greg, why don't you start because you have the biggest percentage move?
GREG CLARKIN, CNN CORRESPONDENT: I was hoping for that, Lou. I tell you the composite with a real sharp gain today, up about 3 percent or so on the day. Now it was one of those days where you had some real bullish calls out of Wall Street. UBS Warburg coming out, upgrading the chip equipment sector. That really kind of ignited things this morning.
And Cisco Systems during their analyst meetings, cautiously optimistic was the tone there. And the composite never trading in negative territory today, up about 3 percent to 1963.
Now here's the call out of UBS Warburg on the chip equipment group. They say a bottom is here. The semi cycle has turned. And they now called the chip equipment stocks a rational investment.
Here's a look at how some of the big name technology shares did today. Let's start with Intel. It rode the wave in the chip equipment group. It was up 82 cents. Applied Materials, the big chip equipment company, gave better than $3.00. Cisco Systems on that analyst meeting was up 66 cents. The entire networking group there, performing very nicely. Ciena, up $1.67.
So we had the Nasdaq up. Right now, the best closing levels since August 14. It's up almost 38 percent since those September 21 lows -- Lou.
DOBBS: What percent?
CLARKIN: Almost 38 percent, 37.9 percent to be exact.
DOBBS: Takes a while for that too soak in.
CLARKIN: It sure does.
DOBBS: Greg, thank you very much. Greg Clarkin.
And now turning to Christine Romans, who also participated in this rally today. Christine?
CHRISTINE ROMANS, CNN CORRESPONDENT: It was a rally here, too, Lou. And it was on decent volume, as well. Here, all eyes are on 2002 and the hopes for some sort of recovery. You could see it in a lot of different stocks here today. The betting on that recovery.
American Express and the financials rallied. Home Depot, Merrill put it on it on its focus list and said that the mortgage refinancing cycle will help its growth next year. Merrill also said Home Depot is being intelligently managed for long terms earnings growth.
GE was very active here. IBM rallied, as tech stocks, especially the household names, found some buyers. And United Technologies, investors keen on this one, on hopes that next week's investor meeting is going to have a bullish outcome for 2002.
Meanwhile, it's not just that the Nasdaq where chips trade. We have them here as well. Analog Devices, Micron National Semi, Teradyne, all doing nicely. And Lou, late in the session, word from the SEC, a caution to companies about how they report pro-forma earnings and an investor alert about how they read them. We'll watch this as it develops, heading into the next announcing season -- Lou.
DOBBS: So a warning on pro forma earnings?
ROMANS: Saying be careful that investors should read pro forma earnings with skepticism, healthy skepticism they say.
DOBBS: I know that we do.
ROMANS: We sure do.
DOBBS: And I think most investors are waking up, certainly wising up to those pro forma reports.
ROMANS: Nice to hear it again from the SEC though.
DOBBS: Oh, absolutely. Authority. Christine Romans thanks a lot.
The collapse of Enron, of course, is destined to become one of the most spectacular tales of corporate failure in American history. If it were to become a book, one chapter would surely be devoted to Enron's board of directors, which like all boards, should have been looking out for shareholder interests.
Casey Wian has our report.
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CASEY WIAN, CNN CORRESPONDENT (voice-over): Enron's board of directors is like many in corporate America, a mix of people closely tied to the company's management, and outsiders with lots of business experience and political connections. It's a board experts say should have seen Enron's collapse coming.
JAMES KRISTIE, EDITOR, DIRECTORS AND BOARDS: The board has to ask the hard questions. And I think that, in this case, they probably didn't completely understand the financial and business situation there at the company and didn't ask the hard questions of the CEO. WIAN: While critics describe a few Enron board members as cronies of CEO Ken Lay, most have strong credentials. Wendy Gramm is the former head of the commodities futures trading commission and a proponent of the deregulated energy market that once helped Enron thrive. She's also on the faculty of George Mason University and is the wife of Texas Senator Phil Gramm.
Robert Jedickee is the former dean of Stanford University's Graduate School of Business. He heads Enron's audit committee. The board is global with business leaders Ronnie Chan of Hong Kong and Paulo Perreira of Brazil. And there's former British Energy Secretary John Wakeham.
EDWARD LAWLER, USC MARSHALL SCHOOL OF BUSINESS: Why they didn't see it is a mystery. There's certainly the possibility that they were in love with the returns that they were getting on their own stock, and certainly valuing very much the positive results that were coming out of the company, and perhaps not wanting to raise a red flag that would push the stock price down, and jeopardize not only their own stock, but that of everybody else in the company.
WIAN: Enron board members have already been hit with lawsuits. While they're covered by $350 million in insurance, law firms such as Fleming and Associates, with 750 shareholder clients, say they plan to go after board members' personal assets where state law allows.
(on camera): We tried to contact each of Enron's board members either directly or through intermediaries. All either declined to comment on Enron or did not return phone calls. Enron, itself, also declined comment.
Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE)
DOBBS: Well joining me now is Susan Byrne. She is an example of those who have not invested, even though she has invested heavily in the energy sector in Enron stock. And she joins us now.
Susan, good to is have you here.
SUSAN BYRNE, CHMN., CIO, WESTWOOD FUNDS: Thank you, Lou.
DOBBS: You heavily invested in the energy area. Why not invest in Enron?
BYRNE: Well, you know...
DOBBS: Let me rephrase it. Why didn't you invest in Enron?
BYRNE: We didn't understand it. And that would not -- I wouldn't want to take credit, that's not like that's the only thing we don't understand. But we did not understand it.
And in listening to some of the reports now, I'm struck by the fact that, first of all, it's difficult to say I don't understand if somebody's paying you a lot of money, if you're an outside director. And I'm not sure that when the whole picture is done, whether the cumulative effect of all of these little outside things was known by anyone.
DOBBS: You're talking about the structured financing?
BYRNE: The structured financings, the limited partnerships. And the problems here seems to be that the -- they have a material clause. And the auditors could say well, we won't talk about that because that's not material.
And what apparently happened was that there 10 or 15 different things that individually weren't material, but when they all came together they were very material. And I'm not sure anybody, unfortunately, had the overall picture.
DOBBS: Well, the overall picture on Enron is getting unfortunately clearer for all of us.
BYRNE: Yes, it's so sad.
DOBBS: The visibility for the market itself, if I may turn to that, perhaps a little clearer. It feels better, anyway, after seeing the Dow move 130 points.
BYRNE: It feels better now because it was up today. But I get the feeling that the market is in a trading range of let's say 8,000 on the bottom and 10,000 on the top. and the market seems to want to go to 10,000, when it thinks that we're going to have a recovery within the next six months. And then when you get economic news indicating that it's not going to happen, we move down to the 8,000 area.
And today, we saw trading where cyclical companies, including energy, moved ahead nicely. And the foods and the tobaccos and the electric utilities, which are the defensive names, didn't participate. So we'll see. I'm not sure it's all over. We have some important employment numbers toward the end of week. And they could be disappointing for people.
DOBBS: Your best advice to investors?
BYRNE: Get some yield. Buy yield, just whatever it is, an energy company, a food company. If you can get 3.5 percent in a stock today, buy it and wait out the storm.
DOBBS: OK, Susan Byrne. Thank you very much for being with us.
BYRNE: Thanks, Lou
DOBBS: Just ahead, the scandal that rocked the art world. The latest on the case involving Sotheby's and Christie's, accused of cheating the art world out of millions of dollars. We'll also take a look at your thoughts. And we'll attempt to answer a burning question for investors. Is the market fairly valued? We'll have an answer for you. Maybe even the answer. Stay with us. (COMMERCIAL BREAK)
DOBBS: The jury is still out tonight after hearing the case against Alfred Taubman, the former chairman of the auction house Sotheby's. Taubman is on trial for teaming up with his counterpart at Christie's and masterminding an international price fixing conspiracy that lasted nearly a decade, according to prosecutors.
Allan Dodds Frank has the story of two venerable auction houses, who stand accused of cheating art buyers and sellers out of tens of millions of dollars.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): In the mid- 1990s, Sotheby's and Christie's controlled 90 percent of the $4 billion art auctions market, but their profits were slipping badly.
That was the situation, prosecutors say, when Alfred Taubman, then chairman and controlling shareholder of Sotheby's, conspired with his counterpart at Christie's to rig prices.
Prosecutors say Taubman secretly met 12 times with Christie's chairman Sir Anthony Tenent, to fix prices beginning in 1993. The two men then allegedly instructed their respective CEOs, Diana O'Brooks at Sotheby's and Christopher Davage of Christie's, to work out the details.
During the three-week trial, Brooks and Davage were the star witnesses for the prosecution, testifying they first met in secret in the back of Brooks' car at John F. Kennedy Airport.
CHRISTOPHER MASON, AUTHOR, UPCOMING BOOK ABOUT CASE: It's not just because it's about the art world. It's not a huge number of people who care deeply about the art world. But it's the irresistible combination of huge amounts of money, the very glamorous world of the auction houses, and the sense of corruption in high places.
DODDS FRANK: Taubman's defense team, led by former Whitewater independent counsel Robert Fiske, portrayed Brooks as the architect of the conspiracy, interested in protecting her $40 million worth of stock options.
Fiske said Brooks, known in the art world as Dee Dee, dominated Taubman. Fiske painted Taubman, who made more than $700 million developing shopping centers, as a kind elderly gentleman, who paid more attention to lunch than the financial details of Sotheby's.
Prosecutor John Green ridiculed what he called dumb and hungry defense. Saying, "you don't become a billionaire but not paying attention to the bottom line."
(on camera): If the jury finds Taubman guilty, he faces as much as three years in prison and fines of $350,000 or more. He already has paid out more than $180 million, is his share of settlements in civil suits brought by shareholders and customers -- Lou. DOBBS: Allan, thank you very much. Allan Dodds Frank from the courthouse in downtown Manhattan.
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DOBBS: Wolf, thank you very much.
Coming up next here, we'll be taking a look at your thoughts and a little of what you might expect tomorrow. Stay with us.
ANNOUNCER: Tomorrow night on Lou Dobb's MONEYLINE, the fate of the nation's economic stimulus package now lies with him. Bill Thomas, chairman of the House Ways and Means Committee joins Lou to talk about how Capitol Hill will respond to recession. Tomorrow night on Lou Dobb's MONEYLINE.
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DOBBS: Well tomorrow, Ford will hold a conference call with Wall analysts. Ford Motor is updating its financial position. Also, the firm of Challenger Gray releases November layoff survey numbers. Almost 1.5 million people have been laid off since the beginning of this year. And Walt Disney's 100th birthday will be celebrated at Walt Disney World in Orlando, Florida. All of that tomorrow.
Now to take a look at your thoughts. Tommy So writes in to ask a simple question, are stocks cheap or are they expensive? He writes to say "I have heard about the P/E ratio of the S&P 500 as a benchmark for checking if the market is overvalued. What's the P/E ratio of the S&P 500 now and how should we evaluate the index?"
Well, the P/E ratio of the S&P is 30. That's more than double its historical average, which is why some say stocks are overvalued. But it's a little more complicated than that. The S&P 500 has more technology stocks now. So some analysts justify the high valuations.
Investors are willing to pay more for a high growth stock, of course. For example, Ebay's P/E is much higher than Alcoa or Philip Morris. In figuring out the right price for stocks, many strategists point to the Fed model. That model shows how closely expected earnings yields follow the 10-year Treasury bond. Now the premise being that the values should never stray too far apart. And it's proven to be remarkably accurate. So using that earnings forecast for the S&P 500 and the current yield on the 10-year bond, 10-year note, according to the Fed model at least, stocks are now fairly valued.
Send us your thoughts, moneyline@cnn.com. Please include your name and address as always. And as always, we love to hear from you.
That's MONEYLINE for this Tuesday evening. Thanks for being with us. I'm Lou Dobbs. Good night from New York.
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