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LOU DOBBS MONEYLINE
Dow Surges Up Over 200 Points; Nasdaq Increases by Over 40
Aired June 17, 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: This is LOU DOBBS MONEYLINE for Monday, June 17th. Here now Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Tonight, U.S. troops have come under fire in the Philippines. This is the first assault against U.S. forces since they arrived in the Philippines.
Israel is moving ahead with plans to protect its borders. Yasser Arafat lashes out against the move. We'll have a special report for you.
The jury's verdict against Andersen rested on a single shred of evidence that had nothing at all to do with shredding. The principals in the trial will be here to talk about the case.
Wall Street's reputation and that of corporate America badly tarnished. Now institutional investors say it is time for got guys to stand up and be counted. We'll have a special report for you tonight on who can you trust.
Good evening.
U.S. forces came under fire today in the Philippines. Marines sent to the Philippines on a training mission were under attack by gunmen believed to be radical Islamists. It was the first time that U.S. forces in the Philippines have been attacked since they arrived earlier this year.
The firefight came amid reports that the United States is preparing a new strategy, a strategy to strike states and groups trying to develop weapons of mass destruction.
Senior Pentagon correspondent Jamie McIntyre has the very latest for us.
Jamie.
JAMIE MCINTYRE, CNN CORRESPONDENT: Well, Lou, although about 1,200 U.S. troops in the Philippines have not been involved in direct combat, they have been in a danger zone.
This incident involves some CBEs (ph), Navy construction engineers who are building facilities to assist the Philippine military in the war on terrorism. They were being guarded by both Marines and Philippine military troops when they came under fire from hostile forces.
(BEGIN VIDEO CLIP)
GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: We have a naval construction task force there that is helping with road construction and with some well drilling, and it was that force that was being protected by not only Marine security elements but also by the armed forces of the Philippines, and there was first reports which -- we know first reports can be -- can be in error -- there was an armed group that was found, and there were some fire exchange. Who shot, whether it was the Philippine armed forces or the U.S. military, is not clear at this point.
(END VIDEO CLIP)
MCINTYRE: It's also not clear who the hostile forces were that were attacking the U.S. troops.
In this incident, nobody was hurt that we're aware of and no injuries inflicted on the other side.
This comes, though, as the Pentagon is debating an expanded role for U.S. troops allowing some of those special forces advisers not just to provide training back in the barracks but to accompany Philippine forces on patrol in the jungle, to conduct the training in the field. If that happens, if the Pentagon gives that the go-ahead, then today's incident illustrates the kind of danger those troops will be under.
The Philippine constitution, though, prohibits any outside forces from engaging in offensive military actions, but they can -- U.S. troops can fire if they're attacked.
Lou.
DOBBS: Jamie, thanks very much.
Jamie McIntyre from the Pentagon.
Palestinian leader Yasser Arafat today blasted Israel's decision to build a wall around the West Bank, calling it, quote, "a fascist apartheid measure.
Israel began construction on a 75-mile section of an electronic fence yesterday. Israel also plans to extend that fence to run along the entire edge of the West Bank. Israel says that fence is necessary to end the series of suicide attacks.
More than 220 Israelis have been killed in suicide bombings over the past two years. All of the attackers originated in the West Bank.
On Wall Street, investors today reacted to four straight weekly declines with some frenzied buying. A solid advance in the chip sector helped to lift the markets.
A triple-digit advance for the blue chips. The Dow up 213 points, 2 percent on the day. The NASDAQ soared 48 points, gaining 3 percent. The S&P 500 up 29 points.
We'll have complete coverage later in the broadcast.
It required 10 days of deliberation for a jury to convict the whole of Andersen of a single count of obstruction of justice. That conviction pushes the 89-year-old accounting firm to extinction.
Attorneys were shocked when the jurors explained their reasons for the verdict. That verdict was not about shredding documents or even deleting e-mails. The verdict was delivered after consideration of a single misdeed by one Andersen employee.
Peter Viles has the report.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): One Andersen lawyer, when told how the jury reached its verdict, said he was flabbergasted because, in the end, a case about shredded documents came down to a single memo and how it was edited.
The media loved that image of shredded documents. It seemed to sum up the entire case, but the jury disagreed. It didn't see a crime in shredding.
OSCAR CRINER, ANDERSEN JURY FOREMAN: All this business about telling people to shred documents -- that was superficial, and a lot of it was circumstantial and not a lot of evidence on it.
VILES: And David Duncan, who pled guilty and told the jury he committed a crime -- the jury flat out didn't believe him.
DAVID SCHWAB, ANDERSEN JUROR: I don't think that we ever focused on David Duncan long enough to be able -- I don't think we ever even talked about whether he committed a crime or not.
VILES: The jury read these instructions closely. Obstruction of justice is corruptly persuading another person to, quote, "withhold, alter, destroy, mutilate, or conceal an object with the intent of undermining a government proceeding." The entire trial seemed to focus on that word "destroy."
But this jury, studying the instructions for days, seized on the word "alter," and they seized on this e-mail, Andersen lawyer Nancy Temple suggesting that Duncan change his internal memo on Enron's third-quarter earnings release suggesting, quote, "deleting some language that might suggest we have concluded the release is misleading." In other words, she told him to alter the memo.
CRINER: It's against the law to alter that document with the intent to impair the fact-finding ability of an official proceeding.
VILES: In the end, the jury was unanimous. It was Nancy Temple who sent the e-mail with criminal intent. So that sideshow about the legal ruling Friday by Judge Melinda Harmon saying the jurors could disagree on who acted criminally and still convict was just that, a sideshow.
SCHWAB: We had already decided amongst the 12 of us who the one person was and everybody agreed on that same person.
(END VIDEOTAPE)
VILES: So it came down to that single e-mail written by a relatively new employee just two years on the job, convicted an 89- year-old firm with 85,000 employees around the world.
You know, on Saturday, the jurors didn't even want to say Nancy Temple's name. One juror just said, "Bless her heart, but she shouldn't have done it."
Lou.
DOBBS: It's remarkably unclear, at this point, what she did. The memo was not written to distort the internal records of Andersen but simply the position one of their -- is that correct?
VILES: Well, she tells him we should change this going forward. She doesn't tell him he has to do it, but she tells him to change it going forward.
And if they followed the policy, eventually they'd get rid of the old stuff so what may survive is a document that doesn't include his original thought, which, I think, most of us would agree that Enron was misleading people.
She says, "Let's take that out until we've decided for sure as a company that's what we want to say." Eventually, they may put it back. They may not put it back. In this case, they certainly didn't destroy the records because we still have them.
But the policy would have been, in the end, when we decide what we want to say, we don't need to keep all the things...
DOBBS: You spent -- you and your associates, Bret Garing (ph), your producer, spent six weeks in Houston covering this trial. We knew going into it that all that was required under this law in the criminal code -- that one person found guilty meant that the entire firm was guilty.
VILES: Right.
DOBBS: It turns out to be someone that -- and a piece of evidence that the prosecution didn't even focus upon.
VILES: They mentioned it. They introduced it. That's why the jury had it -- they had it in their closing argument. That's why the jury had it to consider in the jury room.
But they never held it up and said, "You can convict just based on this. Look here. This is obstruction of justice." They never made that argument. They said, "Look at Nancy Temple's behavior. She's preparing for a legal fight. You can see it in this memo," arguing to her state of mind, not arguing explicitly that that memo showed a crime.
In the end, the jury picked through these things for days, and they looked at it almost as if they were playing prosecutor, and they said, "Aha. We found enough right here in this one memo."
DOBBS: Indeed, they did. Peter Viles, thank you very much. An outstanding job.
VILES: Thanks.
DOBBS: Pete Viles.
Well, later here, I'll be talking with Rusty Hardin, Andersen's lead defense attorney, and I'll be talking with Dr. Oscar Criner. He is the foreman of the jury that convicted Andersen.
The Supreme Court today ruled that missionaries, politicians, and salespeople have the right to knock on your door without a permit from authorities. The Supreme Court struck down a local law in Ohio that required a permit for any door-to-door soliciting, backing the Jehovah's Witnesses in the case.
That decision is the subject of tonight's MONEYLINE quick vote. The question is: Do you believe solicitors should have the right to go door to door for any product or cause without a permit? Please cast your vote at cnn.com/moneyline; cnn.com/moneyline.
The results later in the broadcast.
Still ahead here, Israelis -- the Israelis are constructing a new border fence. It's designed to make them feel safer. We'll tell you if it also makes the Middle East peace deal any more likely.
The Andersen jury's verdict caught just about everyone by surprise. The jury foreman Dr. Oscar Criner will be here to tell us what influenced his and his other jurors' thinking. And Andersen's lead attorney, Rusty Hardin, will give us his analysis as well.
The market rebounds. A rally. After four consecutive weeks of losses, technology stocks lead the recovery today, believe it or not. All of that and a lot more still ahead. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The Bush administration is preparing to launch a new Middle East initiative that could come as early as tomorrow, and it's likely to call for an interim Palestinian state. But this new initiative is not likely to address more controversial matters, such as the borders of such a state or the future of Jerusalem.
Meanwhile, Israel is taking new steps to improve its border security. It's building a massive fence. In Cairo, leaders warned that Israel was building a new Berlin wall.
Kitty Pilgrim reports.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): The construction is under way of the first 70 miles of fence which will be more than 200 miles and $220 million in cost and a focal point of controversy. The goal is to build a fence to make sure suicide bombers can't strike inside Israel.
BENJAMIN BEN-ELIEZER, ISRAELI DEFENSE MINISTER: We have set up the outline according to the best ability to prevent the infiltration of terrorists into Israeli territory.
PILGRIM: Monday, a suicide bomber triggered a blast near the site. Some Israelis are protesting, saying Israelis living on the wrong side of the fence may be subject to increased attacks.
For many Palestinians, the fence building represents an effort to seal them off and create a ghetto. That is compounded by the fact that thousands of Palestinians were once employed in Israel, and, since the violence began, that number has gone to a trickle, hampered by extensive checkpoints.
RAFIC HARIRI, LEBANESE PRIME MINISTER: It is a bad idea because what they are trying to do -- they want to put the Palestinian in a huge prison.
PILGRIM: The worry is the fence will, after time, be seen as a permanent border, established without any negotiation. A U.S. State Department spokesman was critical of, quote, "unilateral attempts to decide such issues." The timing of the fence may set up the issue for a stronger response.
GEOFFREY KEMP, NIXON CENTER: It's going to be interesting to see if Mr. Bush says anything about this when he makes his big Middle East speech, but it's something, I think, the United States should have an open mind about because, if it does reduce violence in the short run, then that makes the likelihood of a political dialogue greater.
(END VIDEOTAPE)
PILGRIM: The Israelis keep insisting the fence is tactical in nature, not political. They say it's simply designed to prevent terrorist attack. It's not a border. But building the fence, while attempting to establish peace, has failed to be a neutral act.
Lou.
Kitty, thank you very much.
Coming up next here, the Justice Department defeats Andersen in the obstruction of justice trial. But is Andersen going to appeal? I'll be talking with Rusty Hardin, Andersen's lead defense attorney, next.
Congress wants to prevent another Enron-like scandal. It is introducing tougher accounting standards. We'll take a look at just what those proposals are and what their chances of success are. And large money investors trying to spruce up Wall Street's image. We'll tell you how they plan to go about it. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Prominent Texas defense attorney Rusty Hardin had his work cut out for him, to say the least, in defending Andersen. Hardin was taking on a case that was simply a powerful and, some thought, overwhelming one. And as it turned out, it was. A powerful Justice Department that had decided to indict a firm rather than individual wrongdoers.
Rusty Hardin joins us now from Houston, Texas.
Rusty, good to have you here. I know this has got to be a difficult time. I know you were passionately involved in your client's case. Was justice served, in your judgment?
RUSTY HARDIN, ANDERSEN LEAD DEFENSE ATTORNEY: No. Justice was accomplished in terms of the jury verdict, and I have nothing but great praise for them. Dr. Criner -- you're going to hear from shortly -- I think was a very conscientious foreman, and I think that whole jury did what they thought was right based on the evidence they had before them.
So I have no quarrel at all with them, nothing but praise, but I'm very disappointed. I think, from a social societal standpoint, this was just a horrible event. This jury should never have been confronted with this decision to begin with.
DOBBS: Never confronted with the decision. In other words, the Justice Department, in your judgment, should never have brought the indictment. Is that correct?
HARDIN: Not against the company in the way it was done. They could have done the reverse.
If they thought individuals had committed crimes, whether it was David Duncan or, as they think now, Nancy Temple, they should have made a decision about those, and if they had brought those individual charges and neither of those people or both had pled guilty, they could have come to the company and said, "All right. Now this is what's happened. We want the company to survive, but you have to pay a price for this. But we don't think 26,000 people and an 89-year firm should go down because of it."
They didn't make that decision. Instead, they went after the company as a whole, only indicted David Duncan about a month later as a witness in the case, and then the irony of the whole matter is that, ultimately, they were unable to persuade a jury unanimously that the company illegally destroyed documents, which is what brought the firm down, or that David Duncan committed a crime, and what the jury decided was a very narrow focused question, and without quarreling or discussing that one way or the other, the fact is that that wasn't why we were indicted, and that wasn't what the prosecution was, and that is a horrible reason to destroy a firm. DOBBS: It is -- did you ever, in your wildest imaginings, Rusty -- did you ever believe that this one memo from Nancy Temple on the 16th of October could result in the verdict?
HARDIN: No, I did not. And, of course, we always knew that we were going to have a problem in addressing Nancy Temple's true motives, which we believe were totally innocent, because she wasn't available as a witness to either side, and we would love for Dr. Criner and the others to have heard from her and assessed her explanation. They were unable do so, and that was a big problem.
DOBBS: An appeal. You said immediately after the verdict was delivered that Andersen will appeal. You and I both know, as a matter of fact, that Andersen is dead. It's been dead for months. The judge said -- October 11th, I believe, is the sentencing date. You can't appeal until following sentencing. Is this totally a moot point? Will there really, in fact, be an appeal, and, if there is, what does it affect?
HARDIN: There will be an appeal. We may ask the judge to move it up. It will be her decision as to whether she's willing to do it. That appeal will decide not the fate of Andersen. That is probably too late.
But it will, we hope, remove the disdain from these employees and this company who we truly believe did not do anything criminal and should never have been charged.
By the way, that charge, I think, as Dr. Criner will agree, would authorize the jury to convict a company based if one employee did one thing with one document with the intent to impair the SEC, even if the employee thought what they were doing was legal and was nothing wrong with it.
That's a frightening basis to charge a firm, and I remind everyone all of this evidence was voluntarily provided by Arthur Andersen. Arthur Andersen self-reported this on January 4th. Everything was totally cooperated with, and we were still killed.
DOBBS: The Justice Department prosecutor said this will accelerate their momentum in the Enron investigation. What do you think?
HARDIN: No, it will have no effect on Enron because Arthur Andersen was totally cooperating before this, and there aren't going to be Arthur Andersen employees that come in and plead guilty if they're indicted because none of them believe they committed a crime and we don't, and so they haven't gained anything by this except a delay. It's unfortunate. The issues in Enron are totally separate than what Dr. Criner and his jury faced.
DOBBS: Well, every legal professional with whom I've spoken, every attorney, everyone observing the trial comments on the remarkable job that Rusty Hardin did because, as you walked through the door of that courtroom, you already had a -- the star witness, David Duncan, had pleaded guilty to obstruction of justice. By the terms of the law, the firm was guilty the day the trial began.
Your performance there absolutely remarkable. And the assessment by the jury -- did you ever imagine that you would be totally successful as you began the trial in showing that David Duncan was not a credible witness as to his own guilt?
HARDIN: No, I didn't. I didn't know whether we would or not, and I appreciate those comments.
But the truth is Davis Polk, Mayer Brown, and Biggett Dane (ph) are three great firms, had people that did every bit as much as I did, and this is really not a reflection on me. There was a team of us totally dedicated to the idea that this firm was not guilty, and I hoped that we'd be successful. We weren't successful.
I take my hat off to an incredibly hard-working and well-meaning jury. I wish we could have given them more evidence that would have helped them reach a different decision.
DOBBS: One last question. Judge Melinda Harmon -- 96 percent of the prosecution's objections were sustained. An extraordinary number. Do you want to leave this with some concluding thoughts about the judge's conduct of this trial?
HARDIN: No. I make it a point -- the judicial kind of ethics don't allow a judge to respond to accusations out of the courtroom, and I -- therefore, I think it would be unfair for me to make things she can't respond to.
It's my view that, when lawyers have disagreements with judges, they should express them in the courtroom and not outside. So I will leave my comments to what was said in the court, and I'm sure she'd like to have her comments on the record, too. She had some strong feelings of her own.
DOBBS: She did indeed. And for those who don't know, Judge Harmon was trying to conduct, in her words, at one point "a lawsuit." You were trying to conduct, I believe, as she put it, "a circus." You said that your client wasn't receiving a fair trial, given her obvious prejudice for the prosecution.
We'll let the facts present themselves in the -- and the law work its mysterious ways as usual.
Rusty Hardin, thank you very much for taking the time to be here. I know this is a difficult moment for you.
HARDIN: It is. You'd like to get your -- to have your moment of humbleness to be on a smaller scale, but I appreciate it.
DOBBS: Yeah, the -- 26,000 innocent people being humbled is quite a dimension.
HARDIN: It certainly is.
DOBBS: Rusty Hardin, thank you. HARDIN: Thank you.
DOBBS: Well, the last person on the jury to be persuaded of Andersen's guilt is the jury foreman Dr. Oscar Criner. He is a computer science professor. He's at Texas Southern University and joins us now Houston.
Dr. Criner, good to have you here.
CRINER: Thank you.
DOBBS: I know this had to be -- in just assessing 10 days -- I mean, I want you to know I have said on this air that I found your performance and that of your fellow jurors remarkable, the care, the diligence that you placed on this. It's almost unheard of in a jury trial, and you're to be commended.
CRINER: Thank you.
DOBBS: What was -- when you were deadlocked on Thursday, what did -- what went through your mind? Did you think that you would receive the Alan (ph) charge? Were you aware that there would be the so-called dynamite charge to get you to go back to reach a verdict?
CRINER: Well, I don't really recall it as a dynamite charge, but there were some of us who were a little concerned that we weren't moving toward the verdict fast enough.
They were concerned about some of the facts that some of the people were still holding, and so they thought we were at a deadlock, and they asked to have the judge to -- to tell the judge what was going on. The judge simply said, "Go back to work," and so we did.
DOBBS: Did you find the judge in this case to be impartial?
CRINER: I suppose so. I've not really been in court before, and so I really can't tell what was going on there. She gave us in her instructions to ignore anything she may have done or said.
(LAUGHTER)
CRINER: So we did that. So we went on.
DOBBS: Good for you.
CRINER: Yes.
DOBBS: Good for you. Because it's interesting to all of us observing it that she sustained 96 percent of the prosecution's objections. A number of your fellow jurors have said that that -- they found that troubling.
CRINER: We didn't count them, but I did see that there were -- there was a majority.
DOBBS: And Dr. Criner, David Duncan -- this, at the beginning, was an open-and-shut case. David Duncan pleads guilty. If he's guilty, the firm's guilty. Yet you all resisted that connection and relationship in conclusion. Why?
CRINER: Well, David Duncan was already a cooperative witness. He had confessed to the crime with the FBI, and so he had made some arrangements with the FBI for some advantage, and we just didn't believe that that gave him the -- the credibility that he needed to be believed.
DOBBS: As you watched him, did you think he was -- if I can put it this way -- a sympathetic figure?
CRINER: Oh, yes. He was very sympathetic. But, you know, I really don't want to say -- he seemed a little too sad, if you know what I mean, sort of pathetic. It was not something that I really enjoyed watching.
DOBBS: There was little that was enjoyable watching.
Let me ask you further. The issue of proportionality -- as I say, it was all but a foregone conclusion that the firm would have to be found guilty given the act of one person who had already pleaded guilty. You focused, obviously, on Nancy Temple's e-mail.
Did the issue of proportionality here, the fact that you were deciding a guilty verdict against a firm that, in this country, represented 26,000 people -- did that ever enter into the discussions or the thinking of the jury?
CRINER: That was expressly ruled out by the instructions of the judge. We could not consider the impact or the potential punishment that the company might get. The judge reserved that for herself. We didn't consider that -- the impact in society.
DOBBS: And how much did it weigh -- because this is one of the issues argued, Dr. Criner -- the introduction of evidence that Andersen in a civil settlement with the SEC in the case of Waste Management and Sunbeam -- how much did that influence, in your judgment, your fellow jurors and yourself?
CRINER: Well, what happened there was we were -- that evidence was introduced to show motivation, and, in fact, it did provide the motivation. It seemed as though, as we came back from the admonishment by the judge, we began to study the evidence and the testimony most diligently, and we went through it bit by bit.
We -- there were days -- two or three days where we just sat and read the evidence very carefully, and, all of a sudden, we began to see between the evidence and the instructions left by the judge that this particular act fit precisely into the definition.
DOBBS: I've got, if I may quickly, two quick questions. We're just about out of time.
CRINER: OK.
DOBBS: But the wonderful question that came back from the jurors, asking the judge whether or not it was required that intent be, if you will, domiciled in one person, or could the jury have differing views of which three people had that intent? Who originated that question? Because it stumped the judge for a day and a half.
CRINER: I did.
DOBBS: Well, I would have to say, hats off to you, sir. Good work. You had a bunch of lawyers and law professors scratching their head.
CRINER: I didn't know what happened to them, but by the time they answered the question we had already settled on one person.
DOBBS: You were accelerating the wheels of justice. Your last thought, Dr. Criner, if I may, what is the lesson that American business should take from what happened in Houston?
CRINER: I think we need to look at ethics and integrity in American business. And I think we need to do those things and arrange our processes and systems so that firms don't have conflicts of interest that are noncontrollable. So that it may be that we need to restrict auditors to be auditors, solely. And so that the marketplace and people in general will have faith in the reports that they see when they are signed off on by a particular audit firm.
DOBBS: OK, Dr. Oscar Criner, we thank you very much for your being on this broadcast, and for your diligence and care that you and your fellow jurors exercised 10 days, to decide an issue that was open and shut, most people thought. Remarkable, my hat is off to you, sir.
CRINER: Thank you.
DOBBS: Thank you.
Coming up next, a series of scandals have shattered investor confidence in corporate America. Tonight we'll tell you what institutional investors are doing to restore that confidence. Our special report: who can you trust?
And a meltdown of the medical system. Philip Howard joins us to talk about the growing number of medical malpractice claims in this country -- the threat they pose to American health care. Stay with us.
(COMMERCIAL BREAK)
DOBBS: A rally to talk about on Wall Street today. A reminder of the times at the height of the bull rally. Stocks charged high right from the open following four consecutive weekly declines. More than two stocks advancing for every decline. Over a quarter of a trillion dollars added to the market cap today. The Dow gaining 213 points. The Nasdaq surged 48 points. The S&P 500 rose almost 29 points.
Christine Romans at the Big Board and Joya Dass at the Nasdaq -- Christine.
CHRISTINE ROMANS, CNN FINANCIAL NEWS: Lou, strong guidance from McDonald's. A DuPont upgrade sparked the early Dow advance. And by the end, 90 percent of the day's volume came at higher prices.
Tyco rallied 5 percent. And late today it said it filed suit against a former director and its ousted legal counsel. Qwest's CEO Joe Nacchio resigned and that stock soared 20 percent. Also active, GE, AT&T and AOL Time Warner.
JP Morgan, Citigroup and American Express rallying at least 6 percent. Lehman and Bear Stearns jumped more than 3 percent each. Lehman reports its earnings tomorrow. Now to the Nasdaq and Joya Dass.
JOYA DASS, CNN FINANCIAL NEWS: Well, Christine, biotech and Internet stocks led gains today as the Nasdaq finished higher by 3 percent. Oracle rallied 7 percent ahead of its earnings tomorrow. Amgen gained 6 percent after getting an analyst upgrade. Intel and Applied Materials rallied ahead of those May book to bill numbers tomorrow. And eBay was a strong gainer among the Internet stocks, rallying 6.9 percent.
Back to you, Lou.
DOBBS: Thank you very much, Joya.
We just reported Qwest today replaced CEO Joseph Nacchio with telecom veteran Robert Notebaert. He's got quite a challenge. Qwest faces an SEC investigation, in addition to all of the other problems and a $26 billion mountain of debt.
Like many other CEOs, Nacchio was rewarded while shareholders suffered. Nacchio has already netted more than $300 million in stock sales. Now Nacchio is entitled to twice his annual salary and target bonus of about $10.5 million -- not a bad separation package. Or perhaps it is a bad separation package.
Another shocking disclosure at Enron today. In the month before the company filed for bankruptcy Enron managed to pay more than $744 million in cash and stock to 140 of its top managers. These so-called retention bonuses included at least $152.5 million in cash and potential stock for former chairman and CEO, Kenneth Lay.
Another former CEO of Enron, Jeffrey Skilling, was paid almost $35 million. This disclosure, part of a filing in federal bankruptcy court. It comes just days after Enron's former rank-and-file employees learned they would receive a maximum in severance compensation of $13,500 each.
Well, investors may have been celebrating on Wall Street today. But much of the past year has been filled with anger, anxiety, scrutiny, doubt and some fear. Between SEC investigations, board room battles and corporate greed, many on Wall Street and Main Street are asking: who can you trust?
We examine this pressing question with our report tonight on institutional investors. Greg Clarkin with the report.
(BEGIN VIDEOTAPE)
GREG CLARKIN, CNN CORRESPONDENT (voice-over): They still come to Wall Street to get a glimpse of the most famous street in American capitalism. But the scandals of the last few years have made them wiser.
UNIDENTIFIED MALE: We're much more conservative than we used to be.
CLARKIN: Others have grown more cynical.
UNIDENTIFIED MALE: I actually have no trust of Wall Street right now. It's a sad state of affairs that we're in.
CLARKIN: It's a state of affairs brought on by the likes of Enron, Andersen and ImClone. And even the behind-the-scenes players stand accused. Knight trading, one of the largest market makers in the country, of people matching buyers and sellers, has been accused of improper trading practices.
Knight dismisses the charges as a product of a former employee. But if nothing else, the headline added to the growing credibility problem of Wall Street.
(on camera): In speaking with people around Wall Street, one of the things that we found was that there was already a healthy dose of skepticism towards corporate America. What the scandals of the last two years has done is reinforce that view. There is also a genuine perception that the big investors, the institutional investors, have a decided advantage over the individual investors.
(voice-over): Those institutional investors are the big players, the pension and mutual funds, the hedge funds and money managers. They can sway the markets with a single trade. Large investors that control almost half of all the stock in the country, according to Jack Bogel.
The legendary fund manager of Vanguard estimates 44 percent of all the stock in the U.S. is owned by the 75 largest institutions. He says with that kind of leverage, big investors need to speak up.
JACK BOGEL, THE VANGUARD GROUP: We run money as an industry, for these big corporations. We'd like to run their pension plans. We'd like to run their 401ks. And we're a little afraid to take them on in the governance area for fear we'll lose their business.
Well, that's just not right. There is a time in life, you know, when you have to stand up and be counted, no matter how painful.
CLARKIN: And Wall Street veterans say what may be even more painful is further erosion of confidence.
FELIX ROHATYN, PRES., ROHATYN & ASSOC.: We need a billion dollars a day from abroad to support our foreign deficits and trade. And this money has always been coming in as investments in our stock market. Now, that's slowing down, which is why the dollar is falling and possibly why the stock market has been weak.
CLARKIN: As for what's being done to restore trust, well, Bogel and other mutual fund managers are banning together to pressure corporations to behave properly. And money mangers are increasingly speaking up. All of this in an effort to bring about change in board rooms across the country.
Greg Clarkin, CNN Financial News, New York.
(END VIDEOTAPE)
DOBBS: A reminder to vote in our MONEYLINE poll tonight. Do you believe solicitors should have the right to go door to door for any product or cause without a permit? Please cast your vote at cnn.com/moneyline. We'll have the results momentarily.
Coming up next, the Supreme Court rules that the IRS can estimate tip income for restaurants in this country. It could cost restaurants and other small businesses billions of dollars. The IRS apparently pleased to be able to estimate revenue. We'll have that report for you.
And Philip Howard, the author of "The Common Good" is my guest next. He'll tell us why the fear of litigation may be compromising health care in this country. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The Supreme Court today ruled in favor of the Internal Revenue Service in a case that affects restaurants and tens of thousands of their employees. The high court said the IRS may use a reasonable estimate to calculate Social Security taxes owed on estimated customer tips. That ruling, a defeat for an Italian restaurant in San Francisco which had argued the IRS lacks the authority to assess taxes by using estimates of tip income.
The American Medical Association met in Chicago today. That meeting itself not necessarily newsworthy. But its choice of keynote speakers is of some interest here. Philip Howard, lawyer, author, has written and talked extensively about the effect of frivolous lawsuits in the medical profession. He joins us now.
Good to have you with us, Phil.
PHILIP HOWARD, "COLLAPSES OF COMMON GOOD": Good afternoon, Lou.
DOBBS: I hear you had a standing ovation.
HOWARD: It was really quite nice. There were a thousand doctors who had spent the morning listening to extraordinarily depressing news about doctors retiring early, moving out of states, not going into specialties. And I stood up and told them that the one thing that they assumed, that everyone has the right to sue, in fact, was not true.
And that they all had to band together and create a new system of medical justice. And they apparently liked the idea.
DOBBS: You may be the only attorney ever cheered by the American Medical Association in this country. How likely is it, in your judgment, that we're going to see substantive reform, irrespective of what the AMA does? But a broad reform in this country for frivolous lawsuits and for unreasonable lawsuits -- even when well-based and well-founded, extraordinarily egregiously, unbelievable damage awards -- how likely reform?
HOWARD: Well, I think we have a choice. We have a choice between having a healthy medical system, which is, as you said, about to melt down, or we're going to have to do reform. Because, well, just yesterday a Methodist hospital in Philadelphia announced it's closing its maternity ward.
These people are not doing this because they're mean spirited. They're doing it because they can't afford the premiums and the liability. The same thing is happening to emergency rooms around the country.
Counties in Mississippi no longer have certain surgical specialties. So the medical association is thinking of putting up a billboard that says drive slowly and safely, because the next trauma center is in the next state.
DOBBS: Amazing. And, in terms of medical malpractice, what is the role of the insurance companies here? They seem to be at once, part of the problem and part of the possible solution. What is your view?
HOWARD: I think insurance companies are just charging premiums that are actuarily determined. Most of them don't think the business is worth it. So St. Paul, for example, has gone out of the medical malpractice insurance business altogether. They represented almost 50,000 doctors.
Even the doctor-sponsored insurance companies are going out of business. They can't afford it. They're victims like everyone else.
DOBBS: Philip Howard, as always, thank you for being here.
HOWARD: Thank you.
DOBBS: See you next Monday.
Coming up next, the threat from Iraq is rising, and so are odds that the United States will strike Iraq first. Terrorism expert Greg Treverton is my guest next.
And, a forest ranger is now being held without bail for starting the biggest forest fire in the state of Colorado's history. Those stories and more still ahead. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Today Iraq dismissed reports that the CIA is authorized to use any means necessary to remove Iraqi President Saddam Hussein from power. A top Iraqi official says this is nothing new. He accused the United States of conspiring against Iraq for three decades.
For more on U.S. plans to topple the Iraqi leadership, as well as first strike capability against Iraq or other rogue nations, I'm joined by Greg Treverton. He is an expert on terrorism and national security.
It's good to have you here.
GREG TREVERTON, SR. POLICY ANALYST, RAND: Thank you.
DOBBS: Give us your sense of the appropriateness of the United States utilizing a first-strike capacity.
TREVERTON: Well, certainly the idea that we would like to be able to get the bad guys before they get us. That, I think, is a pretty age-old idea. And the idea of weapons of mass destruction, the worry about chemical, nuclear, biological weapons, has sharpened, since that's something we don't want to shoot second with respect to.
So in that sense, this is part if a long line of trying to get an advantage, be more proactive, take the first step. In this case, it's always hard to know the source of leaks. We always say that the ship (UNINTELLIGIBLE) is like no other, it only leaks from the top. So it's hard to know exactly the point of these latest revelations.
But it may well be that it's, again, an effort to drive home to the Iraqis and others that, yes, we're prepared to act. We'll try and get them by whatever means, or almost whatever means possible.
DOBBS: But you do -- you for some reason doubt that Saddam Hussein and his government didn't know that?
TREVERTON: Well, I think they probably did know it. It's, again, I think this is an administration that feels, particularly in that part of the world, what matters is being perceived to be tough, ready to do what you need to do. And so this is -- could be, who knows, given Washington rumors -- but it could be yet a reminder to not just Iraq but others in the region that we are powerful and are prepared to use that power, even in ways they may not expect.
DOBBS: As you know, this administration, like the one that preceded it, has been talking about the weapons of mass destruction held by Saddam Hussein. And in addition, the weapons that they are trying to secure. Yet nothing has happened over a period of at least three years, three and a half years.
At what point is action required, given all of the bellicose talking and, if you will, saber rattling? Or should we expect it to go on without action?
TREVERTON: Well, I think at some point there will be action. I would say if you look at the record over the last three administrations, we've done a pretty good job of keeping Saddam Hussein in a box. Now, we haven't been able to do as much with respect to inspections and staying on the ground and knowing absolutely what their weapon programs are. But we've done a pretty good job of containing Iraq generally.
And now it seems to me, the choice the administration faces is really a pretty straightforward trade-off. Yes, we'd all like to do something about Saddam Hussein. On the other hand, there is the maintenance of this coalition, this very successful coalition against terrorism that, so far -- particularly given that Saddam hasn't visibly misbehaved lately -- that could easily come dramatically apart over some preemptive, unilateral American effort do something about Saddam soon.
DOBBS: And your judgment about first strike itself. There are issues raised here, which is, for example, we are told for years that Iraq has weapons of mass destruction. Yet neither the Clinton administration nor this Bush administration has chosen to act.
Should they act based on the same evidence or should they just continue? When would first strike be employed? What are the criteria for a first strike?
TREVERTON: I think it is hard to set out absolute criteria. I think if there were compelling evidence that a country, Iraq or some other country, were not only in possession of, had developed weapons of mass destruction, but were about to use them in some way, that, I think, would justify some strike if one could be done.
The plain fact is this is hard. Countries go to great efforts to conceal their weapons programs, to put them under ground, to pretend they're something else. And given the spill-overs between commercial products and these chemical and some biological weapons, it's very hard to make an absolute case.
DOBBS: It's going to require very sophisticated intelligence.
TREVERTON: It requires very sophisticated intelligence to keep partners with you. That's the hardest part.
DOBBS: Greg Treverton, thank you very much for being with us.
TREVERTON: Thank you.
DOBBS: Greg Treverton of RAND.
Now the results of our MONEYLINE vote tonight. The question, do you believe solicitors should have the right to go door to door for any product or cause without a permit, yes or no? This question obviously follows the Supreme Court's decision to permit the same. Well, you don't quite go along with the Supreme Court. Or, as others might say, the Supreme Court is out of step with this audience. Eighty-two percent of you said no. And 18 percent saying yes.
"CROSSFIRE" begins in just a few minutes. Let's go to Tucker Carlson to find out what's ahead -- Tucker. TUCKER CARLSON, "CROSSFIRE": Lou Dobbs, it sounds like judging from your program, among many others, the United States will be invading Iraq sometime soon. Has the Bush administration made the case? We'll ask Ken Adelman that very question.
And then, it's the 30th anniversary of Watergate, as you know. Was Richard Nixon a villain, a criminal? Was he a guy with a dark streak who accomplished some pretty decent things? We'll debate his legacy.
And then...
JAMES CARVILLE, "CROSSFIRE": And then, sweet Lou, you're not the only thing that's sweet out there. Apparently food manufacturers have been dumping gallons of sugar in these kids' food, and fat and everything else. And we're going to be talking to the food police to see about the nutritional habits of American people, and particularly, its children. So we have a hell of a show tonight. Stay tuned.
DOBBS: We'll do that, James, Tucker. Thank you very much.
Terry Barton's job was to prevent forest fires. Tonight she's accused of starting the worst wildfire in Colorado's history. Barton admitted starting the fire when she burned a letter from her estranged husband. Now the 38-year-old is being held without bail on charges of damaging federal property and lying to investigators.
If convicted on these charges, Terry Barton faces up to 20 years in prison and a half-million dollar fine. That fire, by the way, is now nearly half contained. It has consumed more than 100,000 acres of Colorado land and destroyed at least 22 homes near Denver.
An air tanker fighting a wildfire near Walker, California, has crashed. Few of the details are known at this time. That fire has been burning out of control for some time. Two homes destroyed, 6,000 acres destroyed as well.
More than 100 firefighters are struggling to control a blaze near Myrtle Beach, South Carolina. Although that fire is now, we're told, nearly 80 percent contained, resources have been stretched thin. And it is a difficult fire to manage. Authorities say they believe lightning may have started that fire Saturday.
Still ahead here, we'll hear what you have to say about the war against radical Islamists and the Andersen guilty verdict. Also, "In Their Words."
(COMMERCIAL BREAK)
DOBBS: The Justice Department has won its case against Andersen and, in the process, basically demonstrated that the Justice Department's star witness, David Duncan, should never have pleaded guilty to obstruction of justice.
The jury couldn't agree that he was guilty of anything, nor does it help that Duncan testified there was no accounting fraud at Enron. That certainly won't help the Justice Department investigation of Enron and its executives.
After claiming for months that Andersen illegally shredded tons of Enron-related documents, the guilty verdict handed down Saturday had nothing do with shredding. That verdict was based on the e-mail of an attorney and the Andersen general counsel office that advised David Duncan to alter a draft memo pertaining to an Enron press release.
Everyone has known that since last year Enron's management had issued a misleading press release. The prosecution team didn't even focus on that e-mail, nor apparently did they realize its persuasive importance to the jury. That alteration of that e-mail certainly won't help the investigation of Enron.
The Justice Department prosecutors say they're not through with Andersen. Now, that's a pathetic statement because there is simply no Andersen since the Justice Department decided to indict the firm three months ago.
Let's hope that what the Justice Department really means is they're about to prosecute individual wrongdoers, whether at Andersen or Enron, which is what they should have been doing in the first place.
Now let's look at your thoughts on the subject of Andersen and the guilty verdict. Carl Grieco thinks the firm is a victim of governmental abuse of power. He says: "The message that this conviction sends to businessmen in this country is that a minor functionary in the Justice Department can bring down any company, no matter how large or small, for the actions of one or a few."
Andersen employee Olga Abilleira writes in to say that she has a much more specific target for her blame. She writes: "the only thing we're guilty of is having voted for George Bush, who has so vigorously protected his oil industry friends by making Andersen the scapegoat."
In our continuing dialogue of what to call America's new war, Marvin Demchick writes in to say: "Thanks for your interview on MONEYLINE concerning the war against radical Islamists. I believe it's imperative that we're dealing with a religious crusade against all non-Islamic religions and cultures."
Reverend Stephen Frost bridges a couple of issues: attacks against America and corporate misbehavior. "Why is it we seldom hear about the vicious aggression of radical capitalists, only radical Islamists? There seems to be little critique of American commercial self-interest abroad. There won't be peace until we balance the scorecard a bit."
We love to hear from you. E-mail us at moneyline@cnn.com. And as always, please include your name and address. We thank you for being with us. That's this edition of MONEYLINE. For all of us here, good night from New York.
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