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Lou Dobbs Moneyline
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Aired January 15, 2002 - 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: Tonight on LOU DOBBS MONEYLINE: Embattled accounting firm Andersen today has fired its top management in Houston. Senator Carl Levin will be our guest tonight. Levin's committee is investigating Enron's relationship with Andersen.
The New York Stock Exchange is preparing to delist Enron from trading on the big board. And the Senate Banking Committee is calling for investigations into financial reporting and employee retirement funds. Tonight, reports from Houston, Washington and New York.
We'll also have a live report from the White House. American John Walker will not face the death penalty, but he will face justice.
This is LOU DOBBS MONEYLINE for Tuesday, January 15. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.
We begin our coverage tonight in Houston, where the accounting firm Andersen has fired its top management team, the latest fall-out from the collapse of Enron, the biggest corporate bankruptcy in history.
Ed Lavandera is standing by in Houston and has the latest for us -- Ed.
ED LAVANDERA, CNN CORRESPONDENT: Lou, this afternoon, Andersen Consulting announcing here in Houston that it has fired one partner, put three partners of the firm on leave and relieved four managers of their management duties. Now, the one partner that was fired is David Duncan. He is the gentleman who has been in charge of overseeing the audit practices of Enron over the last few years, and he has been fired, the congressional investigators out of Washington saying today that they're looking forward to speaking with David Duncan, who's scheduled to appear in Washington tomorrow, and they're hoping that now that he no longer works for Andersen Consulting, that he will be a little bit more forthcoming with congressional investigators.
Also, 4,500 Enron employees were told -- we're told now have been let go by the company, and it comes at a time as the city of Houston is starting to come to grips with what has happened here so quickly over the last couple of months. Several businesses that operate around Enron's headquarters in downtown Houston, mainly restaurants, for example, that depend so heavily on the thousands of employees that work for Enron, who make their way at lunchtime to fill up the tables and make long lines at the restaurants -- taking a stroll through downtown today, we noticed that a lot of those businesses at lunchtime were virtually empty. And a lot of managers -- one manager -- owner of a restaurant we spoke with today saying that he had lost 50 percent of his business over the last couple of weeks.
And also one small anecdote, and in a way, it's just kind of another example of how much influence Enron has in this city. Downtown Houston is known for its notoriously congested traffic situations during rush hour commutes, and a lot of the people we spoke with who work I the area around Enron today saying that since 4,500 people have been laid off at Enron, the traffic situation in downtown seems to be running a lot smoother. Just a couple of the anecdotes that people here in Houston are experiencing.
Lou, back to you.
DOBBS: Yeah, Ed. To be clear, the number of people that Andersen let go today?
LAVANDERA: Five hundred. I understand there were 4,000 that have -- we've been talked about -- talked a lot about over the last couple of weeks, and 500 -- bringing that total to 4,500 now.
DOBBS: OK, Ed. Thank you very much. Ed Lavandera reporting from Houston.
Well, as we reported, not only was David Duncan, the senior partner, fired from Andersen, but three other partners placed on leave. And Andersen said it will fire anyone else who improperly destroyed audit work.
Allan Chernoff has more on that part of the story.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Andersen is laying the blame squarely on the partner in charge of the Enron audit, David Duncan, revealing details of its ongoing internal investigation. On October 23, Duncan called an urgent meeting, organizing an expedited effort to dispose of Enron-related documents.
Andersen says that was shortly after Duncan learned the Securities and Exchange Commission had requested information from Enron about its financial reporting. Andersen says employees deleted thousands of emails and disposed of, quote, "large numbers of paper documents."
PROF. ITZHAK SHARAV, COLUMBIA UNIVERSITY: It's common sense is that they figured out that by destroying the papers, they'll benefit more and be damaged less than by keeping the papers because these papers could serve as evidence against them.
CHERNOFF: On November 9, the day after Andersen received an SEC subpoena, Duncan's secretary sent an email to other secretaries at the company, saying "Stop the shredding." And attorney for Mr. Duncan told MONEYLINE, "Mr. Duncan is cooperating with all investigations of this matter. He did nothing wrong. He properly followed the instructions of an Andersen in-house lawyer in handling documents."
Included in those instructions, according to an Andersen memo released Monday, "Only final documents will be retained. Drafts and preliminary versions of information will be destroyed currently."
As the accusations fly, accounting experts say Andersen is fighting for its life.
LYNN TURNER, FORMER CHIEF ACCOUNTANT, SEC: They were already the smallest of the big five firms, and certainly, this is not going to help them and could bring them to their knees financially.
(END VIDEOTAPE)
CHERNOFF (on camera): Mr. Duncan is already in Washington, D.C., and the House Energy and Commerce Committee does plan to interview him tomorrow. Mr. Duncan has already provided six boxes of paper to the investigators, and it is quite clear, Lou, that this investigation is only just beginning.
DOBBS: Only just beginning, and the termination of -- of David Duncan -- the idea that he would suggest that an attorney told him it was all right -- is he saying that the attorney said it was all right or it was the attorney's idea? He was in charge of the office, was he not?
CHERNOFF: Seems to be the blame game. He's pointing to the attorney. Andersen is pointing to Mr. Duncan.
DOBBS: OK. Thank you very much, Allan. Allan Chernoff.
Well, we reported to you last night excerpts from a letter written by an Enron executive to chairman Kenneth Lay last August. That letter expressed deep concern about Enron's finances and, in particular, its accounting practices. We have obtained the full letter.
Chris Huntington is here now and has some further details -- Chris.
CHRIS HUNTINGTON, CNN CORRESPONDENT: Lou, it's a dramatic document. It's clear that Sherron Watkins, who still works for Enron, had intimate details of the off-balance-sheet entities that are so much of the problem. Here are some other things that she pointed out in her letter.
"The business world will consider the past successes as nothing but an elaborate hoax. We are under too much scrutiny, and there are probably one or two disgruntled redeployed employees who know enough about the funny accounting to get us in trouble."
And finally, "I realize that we have had a lot of smart people looking at this and a lot of accountants, including AA & company have blessed the accounting treatment. None of that will protect Enron if these transactions are ever disclosed in the bright light of day."
Now, CNN has also obtained a letter from Enron's outside lawfirm, Vinson and Elkins, which kicked in a review of the accounting practices as a result of this letter. And what's clear is that...
DOBBS: When you say "kicked in" -- Ken Lay ordered that an outside legal firm conduct, within certain limits, an investigation of the Watkins claims.
HUNTINGTON: That's -- that's correct. And according to a letter that we've obtained from Vinson and Elkins to another Enron executive, Ms. Watkins met face to face with Ken Lay. Initially, she had delivered the letter anonymously...
DOBBS: Right.
HUNTINGTON: ... but then met with Ken Lay for approximately an hour, which presumably they discussed, you know, her concerns in the letter.
DOBBS: All right, the letter, at least on its face -- and of course, this is for now official interpretation by the Justice Department, the SEC and perhaps the Labor Department, as well. But on its face, it seems to suggest that Enron, at least in certain parts of its middle management, knew there were significant problems.
HUNTINGTON: She provides tremendous detail about the finances of these off-balance-sheet transactions. She worked with the then-chief financial officer, Andrew Fastow, who is seen as the architect of these. She's intimately familiar...
DOBBS: The chief -- the former chief financial officer of Enron.
HUNTINGTON: Of Enron. She raises very, very detailed concerns. It's not just broad brush. I mean, we gave you the broad brush quotes, but there are specific line-item money value concerns.
DOBBS: It is not a leap of logic to infer that if certain parts of middle management knew of the difficulties, that it is almost impossible that senior management did not know.
HUNTINGTON: And when they sat down for an hour, they probably weren't discussing baseball.
DOBBS: Exactly. Chris Huntington, thank you very much.
HUNTINGTON: OK.
DOBBS: Well, the New York Stock Exchange today suspended trading in Enron. This is the first step toward the New York Stock Exchange desisting the stock. Peter Viles tells us what this means for those who still hold Enron shares.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): The world's biggest stock market yanked the welcome mat out from under Enron, moving to delist its battered stock, citing, quote, "the expected protracted nature of the company's bankruptcy process." Those still holding Enron shares took it on the chin once again. The stock had already fallen 99 percent in a year to just 67 cents last Thursday. It was quoted this afternoon to 30 to 35 cents a share in its likely new home, the over-the-counter market.
WILLIAM LERACH, MILBERG WEISS: There's always some sort of a market available for a delisted stock, whether it's over the counter, under the counter, pink sheets. All the delisting really does is prove that the stock is essentially worthless.
VILES: Wall Street pros said the main trading in Enron lately had been by those treating it as a, quote, "lottery ticket," cheap but with little chance of paying off.
ARTHUR CASHIN, UBS PAINEWEBBER: We've seen time and time again many of these things, when they get to this level, they get delisted because just being listed sometimes allows for a little bit of false hope, and you don't want to encourage that.
VILES: If and when it is delisted, Enron will join this list: Polaroid, Sunbeam, Reliance Group Holdings, Fruit of the Loom and Planet Hollywood. And by revenue and market value and by the sheer velocity of its collapse, Enron's is the biggest bankruptcy ever. But by assets, it does have competition. Texaco, when it filed in 1987, listed assets of $35 billion. Adjusted for inflation, that's $56 billion. Enron listed assets of $49 billion. Penn Central, when it filed in 1970, listed $6.8 billion in assets. That's $31 billion in current dollars.
(END VIDEOTAPE)
Enron has two options right now regarding its stocks. It can fight the NYSE and try to stay on the big board -- very slim odds there. Or it can throw in the towel, apply for a delisting and get on with what is left of its corporate life. The company tonight says it is evaluating its options -- Lou.
DOBBS: Peter, thank you very much. Peter Viles.
More fallout in Washington as a result of the Enron collapse. The Senate Banking Committee has called for an investigation into financial reporting and into laws that govern employee stock ownership in retirement funds, such as 401(k)s. There are also questions about whether regulatory agencies are being overpowered by the companies they are supposed to be watching, and if so, what Congress should do about it.
Tim O'Brien reports from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Congressional investigators spent much professor the day sifting through the first 10,000 documents that have been turned over by officials at Enron and Arthur Andersen, 10,000 of an estimated two million documents requested. Investigators also released a copy of the seven-page memo from a former Enron vice president to CEO Kenneth Lay alerting Lay to what she called a "wave of accounting scandals."
Meanwhile, Paul Sarbanes, chairman of the Senate Banking Committee, suggested that allowing the accounting profession to essentially regulate itself might be part of the problem. He called on the General Accounting Office to "evaluate the governance system of the accounting profession" to determine if it contributes to what he called "a proliferation of accounting irregularities." The Bush administration and others have suggested the SEC consider restricting the amount of company stock employees may contribute to their own 401(k)s, and rules governing pension funds may also be reassessed. But would greater regulation have prevented the Enron mess?
JOHN SAMPLES, CATO INSTITUTE: There's a tendency in Washington to have a pattern of simply getting excited about something when a big, bad thing happens in the economy. And then it's looked into more closely, and it turns out that not much can be done one way or the other. I think this will follow that pattern.
(END VIDEOTAPE)
O'BRIEN (on camera): That, of course, would not help those who lost their life's savings, but the entire Enron incident could be an object lesson both for corporations and their investors, an object lesson that at least those who favor limited government believe may, in the end, be far more effective than any new federal regulations -- Lou.
DOBBS: Tim, thank you. Tim O'Brien.
Senator Carl Levin heads up the Senate Governmental Affairs Subcommittee on Investigations. It's investigating Andersen's failure to see Enron's collapse coming.
Senator Levin, good to have you with us.
SEN. CARL LEVIN (D-MI), GOVERNMENTAL AFFAIRS COMMITTEE: Thank you very much, Lou.
DOBBS: Senator, at this point, I would like to ask you just simply what is your reaction to all of this? Every day, a new revelation, in terms of this business collapse.
LEVIN: I think there's a lot more layers of this onion to be unpeeled. That's my reaction to it. We got a long way to get to the core. It's a huge issue here. It's on two tracks. Now, one is the decision to use these outside entities and the willingness of Arthur Andersen to put their stamp of approval on those outside entities. That's one issue where we issued 51 subpoenas last week...
DOBBS: Right.
LEVIN: ... for material relative to that. And the other issue, of course, is now the destruction of documents, which becomes a very serious matter in its own right.
DOBBS: And in issuing those 51 subpoenas, how soon will you start bringing forth witnesses for these -- for the subcommittee?
LEVIN: It's going to depend on, of course, the complexity of the documents, the extent of the documents, what they show. But we're going to get those documents by February 1st. That's the so-called "return date" on those subpoenas.
DOBBS: Right.
LEVIN: And then it's going to take us a number of months, probably, to analyze all that material. So I would say probably sometime late in the spring or during the summer.
DOBBS: Revealed today that Sherron Watkins had had a one-on-one discussion with Ken Lay, the CEO of Enron. What is your reaction to the fact that a middle management, at least one member of middle management, had told the CEO in August of all of the extraordinary problems facing the company?
LEVIN: Well, it obviously shows that he knew by then, but my hunch is that she didn't tell him anything he didn't already know. It's pretty -- pretty -- almost apparent that the top management would know about the use of these entities, which were used in a way which hid obligations of the company and made the company's books look a lot better than the company really was, in terms of its financial situation.
So when he sent that into the lawyers to say, "Give us an analysis of this," of course, that was restricted, but even that, it seems to me, was a little bit like that scene in "Casablanca" where the police chief is saying "Round the usual suspects." I think Ken Lay knew that they used entities and that they were either on the line or over the line. And I believe they were highly deceptive entities which hid the situation of Enron's financial situation in order to put their stock at a higher level than it otherwise would have been at.
DOBBS: The regulatory climate here, Senator -- the SEC, without in any ways criticizing the SEC directly -- reports filed with the SEC -- there had been considerable discussion about the collapse, as you recall and our viewers recall. Enron stock had collapsed from its highs by August. Jeff Skilling, the former CEO, had walked out citing personal reasons. There were all sorts of warning signs around this company. "Fortune" magazine in February had written about it. Why is it that no one amongst the watchdogs, if you will, paid any attention here?
LEVIN: Well, that is going to be the subject of the investigation by the full Governmental Affairs Committee. They're going to look at the regulatory agencies, a number of them, as to why the warnings, the early warnings were not really acted upon, if, in fact, they weren't. I know Arthur Levitt, when he was head of the SEC, sure tried in number areas to reform...
DOBBS: Absolutely. LEVIN: ... some of these corporate practice. But my subcommittee, the permanent Subcommittee on Investigations, is going to look at the activities of the board and of the management and of the auditors to see just exactly what role they had in creating these entities, which were phony, which were -- belonged on the balance sheet, not off the balance sheet, and which were deceptive in my judgment. So we're looking kind of the inside, and Senator Lieberman will be looking at the regulatory agencies.
DOBBS: And Senator, surprisingly, partisan politics has entered into this -- this collapse of Enron, this scandal, as well, some criticizing Treasury Secretary Paul O'Neill for taking the call of Ken Lay, and others criticizing him for doing nothing, he and Commerce Secretary Don Evans. What, in your judgment, would have been the appropriate response? And did they -- did they make that response?
LEVIN: Well, I don't have any evidence that they acted inappropriately. And I take their word for it that they took no action following their calls. This is not a partisan issue at all. This is a very, very non-partisan issue or a bipartisan issue. We're talking about the markets of this country and as to whether or not people are going to be rely on the financial statements of companies. We're talking about tens of thousands of people who lost their savings, lost their retirement, employees who lost their jobs. This is not a partisan issue, should not be made a partisan issue, will not be made a partisan issue. And as far as I'm concerned, we've got to keep our focus on corporate governance. That's where it belongs.
DOBBS: All right. You know, you -- you talk about corporate governance -- very little been made of board of directors at Enron. It's an extraordinary group of people, amongst them Wendy Graham, the former -- or the wife of the former -- Senator Phil Gramm, Ken Harrison, the former chairman and CEO of the Portland General Electric Company, a utility operator, Bob Belfer, of course, with the Belfer family interest. You go through this with Jerome Myer (ph) of Wilsonville, Oregon, the chairman of Tectronics (ph), the president of the University of Texas Medical Center and one of his associates.
This is an unusual board. What, in your judgment, are your first -- your first judgments, in terms of the way they were fulfilling their responsibilities as a board of directors?
LEVIN: I have a lot of questions as to whether they were fulfilling their responsibilities. When I went to law school, we were told that boards of corporations are fiduciaries, that they're there as trustees. They have responsibility for the stockholders. They're supposed to keep the management in check, as a matter of fact. That's their responsibility. And I have a lot of questions as to whether this board, and indeed, other boards of corporations may be falling short of carrying out that fiduciary responsibility.
But hopefully, this is not a bigger problem than Enron. Hopefully, Enron alone is using these kind of entities, outside entities, special entities, in order to give a much better picture about a corporation's financial situation than is actually the facts. I hope it's unique. I hope it's not endemic. My fear is that they are not alone. They may be alone in their size. They may be alone in the extent to which they took this. But I just hope that other corporation do not have the same kind of situation. So my first question is, did the board do their job? And we're going to look at that. We've subpoenaed the documents from those members of the board since 1999.
DOBBS: Senator, thank you very much. Transparency, as you suggest, the -- the absolute cornerstone of this country's financial market and its securities markets and its corporate law. Enron was anything but transparent.
LEVIN: Exactly.
DOBBS: Senator, thank you very much. Senator Carl Levin.
Still ahead here: John Walker fought with the Taliban against fellow Americans. The Bush administration has decided that he will not face the death penalty. We'll have a live report for you from the White House coming up. And despite this recession and despite the Internet shakeout, eBay is making money. We'll be joined by CEO Meg Whitman. And we'll talk with the CEO of Pfizer about Pfizer's new and imaginative program that will help millions of low-income seniors buy the drugs they need.
ANNOUNCER: Next, Lou is joined by Pfizer CEO Henry McKinnell.
(COMMERCIAL BREAK)
DOBBS: Intel's earnings announced after the bell beat the street, but they were sharply lower than a year ago because of a sharp drop in PC demand. After the bell, Intel beat those forecasts by 4 cents a share. Revenues met expectations, but still down 20 percent from a year ago. And a sign Intel is struggling, drastically cutting back on spending for this year. And the stock is falling in after- hours trading.
Stocks closing higher on Wall Street. Blue chips ended a six- session losing streak, the Dow gaining 32 points today, the Nasdaq up 10. The S&P 500 rose almost eight points.
Christine Romans, Fred Katayama following the markets all day. They are here with me tonight.
Christine, a dramatic turnaround in the final half hour. What happened?
CHRISTINE ROMANS, CNN CORRESPONDENT: It was. Inconsistency all day. Folks just didn't know if they wanted to sell it, and then couldn't push it down too much, and then it came back. They started to get optimistic again about the earnings. They started to take a look at the morning's numbers, the retail sales numbers. And buyers...
DOBBS: Which were far better than any of the economists had expected. ROMANS: They really were. And by end of the day, you had buyers coming in in the last half hour, pretty fast and furious. Now, one thing everyone keeps talking about is the noise in the market, a lot of it caused by Enron. I mean, look at Kmart, look at Tyco, look at Dow Chemical, companies whose stocks have been pummeled lately because they've had issue issues one way or the other...
DOBBS: Issues?
ROMANS: Issues, whether it's asbestos litigations or whether -- or it's corporate strategy. But folks are telling me they don't think the stocks would be down so much if it weren't for Enron and what happened to Enron and nervousness in the market. People are much more willing to sell than buy right now, they say.
DOBBS: Well, frankly, we still have some high valuations here, and that's got to be factored into it. And I'm not sure those -- those traders you're talking with, Christine, aren't in the buy side.
(LAUGHTER)
FRED KATAYAMA, CNN CORRESPONDENT: We definitely do have a lot of overvalued stock. I mean, take a stock such as Intel. That stock us up 75 percent since hitting its low October 2. By one measure, someone was saying that the S&P 500 is trading at 49 times earnings. And so a lot of these things are already priced into these stocks, and so they say they've got to come down.
DOBBS: They've got to come down, maybe. But the valuations -- everyone seems to have a rationalization for these high valuations, despite the earnings performance of these companies. What's the answer?
ROMANS: Well, except if you look over at the airline sector. Today -- the only -- the only unanimous vote we had today was four positive notes on airlines. Those stocks all rallied sharply today. People are trying to find the values for an 18-month horizon. I mean, granted, airlines have really been beaten down, but you know, they're still trading in multi-year lows. So some people buying some things where they are finding good values.
DOBBS: Well, their earnings are also multi-year lows.
(LAUGHTER)
ROMANS: Yeah, exactly!
KATAYAMA: Well, a lot of analysts will also be looking for guidance this time, especially on capital spending, Lou. You know, consumers helped us get through this economy so far, but it's capital spending, and that's where Intel really weighs in heavily...
ROMANS: Yeah.
KATAYAMA: ... down to $5.5 billion is what it plans to spend this. Analysts were looking for $6.5 billion. DOBBS: OK. Thank you both.
Well, a major initiative today to help seniors pay for prescription drugs. This new plan is not sponsored by the government. It doesn't come out of Washington. It is the idea of the world's largest drug company, Pfizer. Using a discount card, Pfizer will supply its blockbuster drugs to low-income seniors for a flat fee of $15. The drugs in the plan treat diseases most common amongst the elderly, such as high blood pressure and diabetes. Pfizer says it will lose money on every prescription filled through the plan, adding, "It's not a money-making proposition."
Joining me now, the man who runs Pfizer, its chairman and CEO, Hank McKinnell.
Good to have you here.
HENRY MCKINNELL, CEO & CHAIRMAN, PFIZER: Lou, good to be with you.
DOBBS: Now, other -- the drug business has offered these discounts, but this is a remarkable discount. Your average prescription is what, right around $65?
MCKINNELL: That's a pretty good estimate. you should think of this as not a discount but as a benefit to the 70 million seniors who need help in securing access to necessary pharmaceuticals.
DOBBS: Well, let's call it a benefit. Why is Pfizer the one providing the benefit?
MCKINNELL: Well, this builds on 20 years of Pfizer experience, insuring access to necessary medicine to those who need help in affording medicine. Last year alone, we provided free drug with a wholesale value of $320 million to 1.4 million patients through our patient assistance programs, which provide drugs through doctor offices and our Sharing the Care program, which provides free drugs through the nation's community health clinics.
DOBBS: So how -- how many prescriptions do you expect these seniors will come running to Pfizer for?
MCKINNELL: Well, with the help of the media, we hope to reach every single one of the seven million elderly Americans.
DOBBS: How many?
MCKINNELL: Seven million Americans below the 200 percent of poverty level who need help affording prescription drugs.
DOBBS: Well, we're going to do our best right here to help you lose money, Hank. We're going to get that word out as quickly as possible. In terms of this, there was one drug, as I recall, that you had exempted from this. What was that one drug?
MCKINNELL: No, I think it covers all 80 Pfizer prescription pharmaceutical products. In fact, of the top 50 products required by the elderly, 9 of them are Pfizer products. No other company has as many.
DOBBS: And for some reason, it stuck in my head that there was an arthritis drug that had been exempted, but I am often wrong, and this is obviously one of those cases.
MCKINNELL: Two of our co-promotion partners, Azai (ph) with the Alzheimer's drugs, Arisept, and UCB Pharma, with the antihistamine Zirtek, have joined the program. Pharmacia, which does market with us in a co-promotion arrangement an arthritis drug, Celebrex, has not joined the program yet. They, of course, have their own patient assistance programs through doctors' offices.
DOBBS: And you have turned over documents that had been sought in price -- on your pricing, finally. Are you at this point satisfied you'll have sufficient confidentiality?
MCKINNELL: We routinely provide the General Accounting Office with information on our best prices so the GAO can audit our best prices under the Medicaid program, a different program. They recently asked for prices by customer, which, of course, is highly confidential information. We wanted assurances that the confidentiality of that data would be protected. That has been provided, and we provided the information.
DOBBS: And if seniors watching this broadcast want $15 prescriptions -- Pfizer.com?
MCKINNELL: Pfizer.com, an 800 number, 800-717-6005. We'll also have enrollment information in pharmacies, in emergency rooms, in senior centers and doctor offices.
DOBBS: Hank McKinnell, congratulations on an imaginative and helpful initiative.
MCKINNELL: Thank you, Lou.
DOBBS: Thanks for being with us.
Still ahead here, we'll tell you what the government plans to do with John Walker, the American Taliban. We'll also have a special report for you on women CEOs. And we'll talk to one whose Internet company not only survived the Internet bubble burst but continues to set records and keep pace with profits.
Stay with us.
ANNOUNCER: Next, Lou talks with Meg Whitman, president and CEO of eBay.
(COMMERCIAL BREAK)
DOBBS: One of the few dot-com businesses thriving these days is eBay. Tonight, the online auctioneer topped estimates for sales and earnings by reporting its 13 straight profitable quarter. eBay's stock has also been among the top performers over the past year, almost doubling in price easily outperforming the broader market to say the very least. eBay President and CEO Meg Whitman is here with us tonight. Actually, she's there with us tonight.
Meg, good to have you here. Congratulation on another quarter. Can we put this into context...
MEG WHITMAN, PRESIDENT AND CEO, EBAY: Thank you very much.
DOBBS: ... we put this in the context of the Internet business or the new media business. This is a remarkable performance for any company in any industry. How are you doing it?
WHITMAN: Well, I think first of all, eBay is incredibly unique business model that is a level playing field for buyers and sellers of all shapes and sizes and our strategy, growing the U.S. business, expanding internationally, really managing our costs and growing revenues faster than costs, has paid off over the last 12 to 18 months.
DOBBS: What do you do to keep driving it?
WHITMAN: Well, we have a, I think, an enormous market opportunity. We could not be more excited about the opportunities in front of the company. So in 2002, we're going to build out the categories that are growing very rapidly in U.S., like consumer electronics, computers. Our oldest business, collectibles grew 31 percent year-over-year, so we're excited about continuing that growth.
Internationally, we now operate in 17 countries outside the United States. Germany is our fastest growing market outside the United States. Germany will do as much volume as eBay U.S. did in 1998 this year. So they really hit their stride and then of course, continuing to introduce the fixed price trading format, which a lot of users like because they're familiar with it. Fixed price was 18 percent of what we call our growth merchandise sales this quarter. So as steady as she goes, we're going to continue to execute against tat strategy and continue to draw leverage on every line item of the company.
DOBBS: Now, amongst of the complaints that we hear here, one of them is about you switched over to your new search engine in November. Some of your users are upset about that. What are you going to do for them?
WHITMAN: Well, our users are the strength of eBay. Every time we do something, we know how the users feel and that's been true from the beginning. I say to my management team, the day the users stop calling and writing is the day we're in trouble at the company. So we love the instantaneous feedback that we get from our users and we try to respond. When they have issues with what we've done, we try to respond. At the same time, we have the -- you know, we have the responsibility to manage the entire trading platform for now a community of over 42 million registered users.
DOBBS: And Meg, right now, we've just put up -- we just, in after-hours trading -- you're out there in San Jose, California, which by the way, I should have explained is the reason for some delay as Meg and I talk here -- your stock is off about $3 in after-hours trading right now despite those results. Any concern on your part about that 200 multiple, 200 times earnings that your stock is carrying right now in the market?
WHITMAN: You know our job is to continue to deliver the results, articulate a coherent strategy and execute against the strategy. And in the end, Lou, as you know, it's all about results and we intend to continue to deliver the results.
DOBBS: Well, congratulations, Meg, on another 13 consecutive quarter-end results at eBay. Good to have you here.
WHITMAN: Thanks very much, Lou.
DOBBS: Well, Meg Whitman's success at eBay, Patricia Russo's recent appointment as CEO of Lucent are just two examples of women, leadership and business. Both women are also part of a very small pool of top management. Currently, there are only six women CEOs running Fortune 500 companies. Because there are so few women at the very top of the corporate ladder, some say they are held to a higher standard. Susan Lisovicz has their story.
(BEGIN VIDEOTAPE)
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): Newly-named Lucent CEO, Patricia Russo, knows she is walking down a difficult path.
PATRICIA RUSSO, PRESIDENT AND CEO, LUCENT TECHNOLOGIES: It's a terrific opportunity to come back and lead the leading player in this space, and help restore the luster that I think is possible.
LISOVICZ: Lucent is not the only troubled company with a woman at the helm. Hewlett Packard is run by Carly Fiorina. Xerox is led by Anne Mulcahy. "Business Week" magazine named three women in its top 25 managers list -- media mogul, Oprah Winfrey, eBay's Meg Whitman and Carole Black, who is credited with transforming lifetime television into the number one watched cable network for 2001.
CAROLE BLACK, PRESIDENT AND CEO, LIFETIME TELEVISION: And there is still room for improvement, and we're seeing that happening. And I think that's a great sign. It's great for women, but it's also great for business.
LISOVICZ: But it's lonely at the top. While women comprise nearly 50 percent of the U.S. workforce, only 12.5 percent are corporate officers at Fortune 500 companies, and only 1.2 percent, six are top executives. Experts say the highly publicized failures by Sotheby's Diana Brooks, Warnaco's Linda Wachner and Mattel's Jill Barad put even more pressure on women who reach such high levels.
SHEILA WELLINGTON, PRESIDENT, CATALYST: Of course, the spotlight always burns brighter on something that's rare. It's the old dog bites man's nose story, man bites dog story, when you're a scarce commodity, a woman at the very top, the spotlight focuses on you.
LISOVICZ: Meanwhile, women have made huge strides in small business. Women now own 6.2 million firms, employ more than nine million workers and generate $1.2 trillion in sales.
JUDY ROSENER, UNIV. OF CALIFORNIA AT IRVINE: They say, "Look it, I can do it. Why should I sit around and wait? You know, I'm not invited to play golf. I'm not in the same clubs." And gain, it's not having a chip on their shoulder, it's just saying I know I can do it.
(END VIDEOTAPE)
LISOVICZ: But that conviction is yet to resonate in the boardrooms of corporate America. Management experts say it's impossible to assess women's performance as CEOs because their numbers are still statistically insignificant -- Lou.
DOBBS: And it's still all about performance.
LISOVICZ: It sure is, even more so, their tenure is shrinking. So you better do it quickly.
DOBBS: All right, I think I understand what you mean.
LISOVICZ: Yes.
DOBBS: Susan Lisovicz, as always.
Coming up next, John Walker, he will not face the death penalty, but he will face justice. We'll have a live report for you from the White House. U.S. Marines find a cache of weapons in an area near the airport in Kandahar, Afghanistan that they thought had been cleared. And Afghanistan's finance minister, Hedayat Amin Arsala will be here next. We'll be talking about what it will cost to rebuild his country.
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DOBBS: Today, attorney General Ashcroft announced that John Walker, the American Taliban will be transferred to civilian court where he will face four federal charges, none of those charges carry the death penalty. White House correspondent John King broke this story earlier today and joins us from the White House with more -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: No death penalty, as you noted, Lou, but the attorney general says the investigation continues, more charges are possible. Justice will be done is reaction from the President tonight. He OK'd this strategy and we are arrangements now being made to the Defense Department to turn John Walker over to the FBI and U.S. Marshals. They will bring him back to the United States. He will be arraigned in federal court in northern Virginia.
There are four charges in this complaint filed today, two charges of supporting terrorist organization, one charge of conspiring to kill American citizens overseas and one of engaging in prohibited contacts with the Taliban regime in Afghanistan.
Walker came into U.S. military custody back in November. He has been held by military since, tough words from attorney general as he announced this criminal complaint. He said John Walker continued to side with the Taliban, continued to side with al Qaeda and Osama bin Laden even after learning of the devastation of September 11.
(BEGIN VIDEO CLIP)
JOHN ASHCROFT, UNITED STATES ATTORNEY GENERAL: The United States does not casually or capriciously charge one of its own citizens with providing support to terrorists. We are compelled to do so today by the inescapable fact of September the 11th, a day that reminded us in no uncertain terms that we have enemies in the world and that these enemies seek to destroy us.
(END VIDEO CLIP)
KING: Charging Walker in the federal court system was recommendation of the attorney general and the secretary of defense. The President signed off, we are told, 10 days ago. He received final word of the charges today as he flew back to Washington, aboard Air Force One, and told the attorney general to press ahead -- Lou.
DOBBS: John, thank you very much. Senior White House correspondent John King.
In the war against terrorism, there was another security breach at the Kandahar airport today. At least seven intruders were detected inside the airport's security perimeter. Marines searched an area near the airport. They found weapons stashed in caves and underneath houses. A Marine spokesman says they blew up those locations.
Last Thursday, gunfire erupted from the very same area. Three hundred Taliban and al Qaeda fighters are being held at the Kandahar Airport. Fifty recently flown to the U.S. Naval base in Guantanamo Bay, Cuba. More, of course, will be sent there as well.
U.S. officials are checking into reports of an American being kidnapped in Afghanistan. The man is described as a political and humanitarian activist, a friend of California Congressman Dana Rohrabacher, a U.S. Congressman. U.S. officials say the man reportedly called his wife and said that he'd been kidnapped and that his captors were demanding a ransom. Investigators say information on the kidnapping appears -- quote -- "rather spotty at this point."
After more than two decades of war, Afghan cities lay in, of course, disrepair and ruin. Many cities are without fresh running water or electricity. And experts say the cost of rebuilding Afghanistan will reach billions of dollars and take years. Kitty Pilgrim has the story.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The country has been bombed into rubble. Before that, 22 years of conflict and widespread famine. Current estimates put costs for reconstruction over the next two and a half years at $5 billion. The ten-year figure, $15 billion.
BILL BYRD, WORLD BANK: Children have not gone to school. Health services are mostly nonfunctional. Children are suffering from diseases that shouldn't exist anywhere on the globe. The roads have been destroyed.
PILGRIM: During the first 30 months, money will go to pay salaries of civil servants and new government hires because the country will not be able to collect taxes for some time. That will cost $1.8 billion.
MARK MALLOCK BROWN, ADMINISTRATOR, UNDP: The big difference between spending well and spending badly is we can all go in and build an American highway or a French high school, but what actually matters is that the new government of Afghanistan is seen by its people to be delivering services to them.
PILGRIM: Those with vast experience in rebuilding war torn economies, such as the Balkans, say it's important to get the funds to local households, to replant crops and rebuild farms, so people can become self-supporting as soon as possible.
ERIC CHENOWETH, INSTITUTE FOR DEMOCRACY IN EASTERN EUROPE: The main problem is that throwing money just corrupts the society. If you're not using it in a focused or purposeful way, it generally goes tends to go to elites or warlords or people who can just accumulate money.
PILGRIM: In the past 10 years, USAID figures the humanitarian assistance from the U.S. government show the pattern of support, including other funding from the Defense and State Department. The United States sent 183 million last year and is sending 200 million for 2002.
(END VIDEOTAPE)
PILGRIM: And the $15 billion target is now up to the individual countries to reach the goal and one hurdle is that many countries are reluctant to pledge funds for multiple years. That will be one of the biggest challenges in the upcoming meeting in Tokyo -- Lou.
DOBBS: Thank you very much, Kitty.
Well, for more now on the task of rebuilding Afghanistan, I am joined by the finance minister of Afghanistan, Hedayat Amin-Arsala. He will be certainly amongst those attending the meeting in Tokyo on the 21 and 22, one of five vice-chairman of Afghanistan's interim government.
Good to have you here, Mr. Minister.
HEDAYAT AMIN-ARSALA, AFGHAN FINANCE MINISTER: Thank you very much for the -- a pleasure to be here.
DOBBS: The estimate of 15 billion to rebuild Afghanistan, is that a number that you think is correct?
AMIN-ARSALA: Well, my own assessment will be a little higher than that, roughly about $20 billion, but this is something that we will be discussing in Tokyo, I hope, with the donors.
DOBBS: At this point, I suppose, the question looming in the minds of most of us is, what will the money be used for?
AMIN-ARSALA: Well, as you know, the entire infrastructure of Afghanistan is gone. The institutions have become absolutely weak, both financial and economic, and schools, hospitals, agriculture system, everything is gone, so it will require, of course, a lot of investment, a lot of funds in order to be able to rebuild and reconstruct Afghanistan.
DOBBS: So primarily, this money would be used for infrastructure?
AMIN-ARSALA: Well, not only that, but of course, for education purposes. I mean, we have lost almost two generations within the last -- over two decades of war and destruction and students have not been going to school and particularly, women, as you know in the last few years have had no opportunity to go to school or to have proper jobs and things like that. So it will -- that will be also be a part of it. And then, of course, the health infrastructure and at the same time other economic and financial...
DOBBS: In terms of the economy itself, Mr. Minister, what industries do you believe can be sustaining to Afghanistan in the short-term and can begin to contribute to the dynamism of the country you're trying to build?
AMIN-ARSALA: Well, first of all, as you know, Afghanistan is basically an agriculture economy, so we have to do something about agriculture and whatever is related to agriculture. But at the same time, we would like to be able it do some small scale industry and also to try to sort of, again, reactivate the exports so far of natural gas resources and -- because that was one of our income earners. And my hope is that we'll be able to do that in a not too distant future.
DOBBS: The opium trade central to the Afghanistan economy for so many years, is it the determination of this government that there will be no opium trade, that it will not form any part of the agriculture of Afghanistan in the years ahead?
AMIN-ARSALA: Well, I mean it's absolutely our objective to prevent that from happening. But we do, of course, need substantial assistance in order to be able to sort of provide alternative crops to the farmers and -- so that they will have a livelihood, which is not equivalent, but at least close to that.
DOBBS: We have talked about how much you would -- you think it will require to rebuild Afghanistan. You'll be meeting with Treasury Secretary Paul O'Neill, amongst others. What is the amount that you think that you will be able to receive in the way of donations and help, specifically from the World Bank and other countries?
AMIN-ARSALA: Well, as you know and previous speakers spoke about it, that there has been an assessment made by the World Bank and the Asia Development Bank and others and they have approximately set something about $14 to 18 billion in over -- about 10 years.
DOBBS: Mr. Minister...
AMIN-ARSALA: That's roughly the amount. It may be a little more than that. But our hope is that, of course, pledges will come in Tokyo for those amounts.
DOBBS: Mr. Hedayat Amin-Arsala, finance minister of Afghanistan, pleasure to talk with you, thanks for being here.
AMIN-ARSALA: Thank you very much.
DOBBS: The U.S. government is expected to double the reward money in the anthrax investigation. That reward is rising to $2.5 million for information that leads to the arrest and conviction of anyone who sent anthrax letters. Law enforcement officials say they hope this higher amount will generate new leads in the investigation.
Coming up next, one of Hollywood's major studios has put up a "For Sale." That story and more still ahead. Stay with us.
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DOBBS: In tonight's corporate news, shares of Kmart lower again today. Investors increasingly concerned the retailer will be forced to file for bankruptcy. Kmart's board met again for the second day of a regular meeting.
Shares of MGM today up more than $2 a share. MGM confirming its soliciting bids for a possible deal and no one does deals like billionaire Kirk Kerkorian. Meanwhile, Kirk Kerkorian's ex-wife is asking a court for the biggest child support award ever in history of California. Lisa Kerkorian claims $320,000 month is needed to care for their three-year-old daughter, Kyra. That figure includes monthly expense of $144,000 for travel, $14,000 for parties, playdates, $2,500 for movies, theater and outings and $436 to care for Kyra's bunny and other pets.
"WOLF BLITZER REPORTS" begins in just a few minutes. Let's go to Wolf in Washington to find out what's ahead -- Wolf.
WOLF BLITZER, "WOLF BLITZER REPORTS": Thank you very much, Lou. The Taliban American, John Walker, has been in the custody of the U.S. military for weeks. Now, he'll be handed over to the U.S. Justice Department. Today, the Attorney General John Ashcroft outlined the charges Walker will face. We'll have details.
We'll also have special interviews with the Vice Chairman of the U.S. Joint Chiefs of Staff, General Peter Pace and with terrorist expert Brian Jenkins. It's all ahead at the top of the hour -- Lou.
DOBBS: Thanks, Wolf.
Coming up next here, we'll look a look at some big earnings reports and economic reports that will be out tomorrow. Stay with us.
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ANNOUNCER: Tomorrow on LOU DOBBS MONEYLINE, sorting out cyberterrorism's tangled web. Why the Feds took notice of one Internet company linked to Islamic charities. Tomorrow on LOU DOBBS MONEYLINE.
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DOBBS: Tomorrow, we'll have quarterly reports from Dow components, General Motors, J.P. Morgan Chase, as well as Continental Airlines, Apple Computer, Compaq and Yahoo! All of those earnings reports coming tomorrow. And we'll have also economic reports, including the Consumer Price Index for the month of December, Industrial Production and the Fed's Beige Book.
Well, a Nokia executive could set a new record in Finland -- the highest price ever paid for a speeding ticket. Onsa Van Yoken (ph) was ticketed for speeding on his motorcycle. Now, fines in Finland are based on the offender's income. Van Yoken (ph) made $12 million two years ago, which means he's facing a fine of more than $100,000. He's appealing to have that fine linked to last year's income, which fell to just a million dollars.
That's MONEYLINE for tonight. Thanks for being with us. Good night from New York City. "WOLF BLITZER REPORTS" begins right now.
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