|
 |
CNN LOU DOBBS MONEYLINE
Dow Jumps 182 Points; Nasdaq Gains 21 Points
Aired August 7, 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.
LOU DOBBS, CNN ANCHOR: Tonight, two laptop computers containing classified military information are missing. The Pentagon says that it is creating a number of plans for a strike against Iraq that would be pursued with or without the help of Saudi Arabia. We begin our coverage tonight with Jamie McIntyre at the Pentagon.
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Lou, the Pentagon's war planning for Iraq includes options that call for limited access or perhaps even no access to bases in Saudi Arabia.
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: President Bush heads to Mississippi, not far from WorldCom's headquarters, to talk tough about corporate fraud; while Vice President Cheney says he can't talk about the Halliburton investigation.
ED LAVANDERA, CNN CORRESPONDENT: The outbreak of West Nile virus in Louisiana is causing concern in several more states tonight. A new case is discovered in Alabama.
CHRISTINE ROMANS, CNN FINANCIAL CORRESPONDENT: The Dow Industrials swing in a volatile 250-point range, finally ending up two percent.
GREG CLARKIN, CNN FINANCIAL CORRESPONDENT: And tech stocks are riding Cisco's coattails. The Nasdaq gaining on top of yesterday's nice rally.
DOBBS: Congress if off, the Supreme Court is away, and the president is out of town. Tonight, we'll take a look at sweet deals for Washington's power players, whatever the branch of government, a hard look at an easy life, working vacations.
The White House today says the chance of a double-dip recession is now remote. White House economic adviser Lawrence Lindsey will join me. Also, editor-in-chief of "U.S. News & World Report," Mort Zuckerman.
And taking corporate greed and CEO hubris to an entirely new level. A multimillion dollar spread including a $6,000 shower curtain. Guess who is paying the bill?
ANNOUNCER: This is LOU DOBBS MONEYLINE for Wednesday, August 7. Here now, Lou Dobbs.
DOBBS: Good evening.
Two laptop computers tonight are missing from the U.S. military command center responsible for coordinating the war in Afghanistan and the war against terrorism. One of those computers contains classified information. The Air Force office of special investigations is now looking into the theft of the computers from central command in Tampa, Florida. Central command would not release further details. The chairman of the joint chiefs of staff also had very little to stay about the case.
(BEGIN VIDEO CLIP)
GEN. RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: We think one of them contains classified information, and they have an investigation ongoing under the auspices of CENTCOM and General Tom Franks.
(END VIDEO CLIP)
DOBBS: The suspected theft is not the first time that government computers have gone missing. The Department of Justice this week also announced that the FBI, the Immigration and Naturalization Service and other agencies have lost 400 laptop computers over the past year. CNN has learned that Pentagon planning for a possible attack against Iraq is based on either limited access or no access at all to bases in Saudi Arabia. But the U.S. military does expect to be allowed to fly over Saudi Arabia. Senior Pentagon correspondent Jaime McIntyre reports from the Pentagon.
MCINTYRE: Well, Lou, today, the Saudi foreign minister, Prince Saud, said in a statement to the Associated Press that his government doesn't want the U.S. to use, quote, "any Saudi grounds for an attack against Iraq." That is consistent with Saudi Arabia's policy that any regime change in Iraq should be the result of internal action in Iraq, not outside military force.
While in the 1991 Persian Gulf War, Saudi Arabia was a key ally hosting over half a million U.S. troops. The Pentagon is insisting this time around, it won't be a problem to go without Saudi's help.
(BEGIN VIDEO CLIP)
DONALD RUMSFELD, DEFENSE SECRETARY: It is true with all the countries in the coalition that have been helping us with the global war on terror and who helped in other activities. I think it is generally best for them to say first what they would like to say about how they're assisting and that's fine.
(END VIDEO CLIP)
MCINTYRE: Now, Pentagon sources say that the war planning includes plans for either limited access or perhaps even no access to Saudi bases. At this base, seen in the satellite picture in Qatar, the U.S. is setting up an alternate command center in case they need to use a command center outside of Saudi Arabia. However, the U.S. would rather use the one in Saudi Arabia, and they're still expecting to get the nod from Saudi Arabian officials to use that command center at the Prince Sultan Air Base, where they have much more bandwidth.
In addition, the U.S. would absolutely have to have overflight rights, the ability to fly over Saudi Arabia, even if it didn't base planes there. And the U.S. is also expecting that it would be able to get some logistical support from Saudi Arabia, perhaps even basing for spy planes or refueling planes. But the Pentagon insists a couple of things. One is still no decision for President Bush to attack Iraq. There has been no request of Saudi Arabia made at this point. And the U.S. is confident if and when the time comes, it will get the help it needs from Saudi Arabia, even though it was not likely to be the same contribution from last time around, including last time, Lou, a lot of money from Saudi Arabia to help fund the effort.
DOBBS: Jamie, presumably, this president, this Congress would not approve an attack against Iraq unless they were a clear and present danger to the United States' national security. What would be the reason that the Saudis would reject the use of those bases?
MCINTYRE: Well, the Saudi royal family is very concerned about its own future. And the closer it seems to be to the United States, the more concerned they are about an uprising from their own population. The Saudi government has always tried to -- the ruling royal family always tried to walk a delicate line assisting the United States. The Saudi message to the United States has always been, "we'll help you if you need us, we'll be there, but don't ask us unless you really need it because it causes us problems in our own country." And the U.S. understands that.
DOBBS: Jaime McIntyre, senior military affairs correspondent, from the Pentagon. Thank you.
An American soldier shot in the chest during a firefight in eastern Afghanistan today. The soldier is listed tonight in stable condition. Yesterday, four Afghans were killed in a shootout with U.S. special forces in the same area. That fight took place after Afghans traveling in a car tried to shoot U.S. soldiers. The weapon apparently misfired. In a separate firefight, at least 12 people were killed when guerrilla attacked an Afghan army post on the edge of Kabul today. A large Afghan -- a local Afghan commander is saying the attackers were eventually surrounded and they were killed.
The head of a Palestinian delegation today rejected U.S. demands to find alternatives to Yasser Arafat's leadership. Saeb Erekat told officials in Washington that those U.S. demands are unacceptable. Meanwhile, two Arab/Israeli nursing students were arrested today for allegedly failing to warn of a suicide attack on a bus in northern Israel Sunday. The bomber apparently told one of those students something horrible was about to happen. Twenty minutes later, the bus exploded. Nine people were killed.
In Washington, D.C. today, a coalition group, including human rights and progressive Israeli organizations, urged Caterpillar to stop selling its heavy equipment to Israel's military. Israeli forces sometimes use Caterpillar bulldozers to destroy the homes of suspected Palestinian terrorists. A spokesman for the Caterpillar company says the company is concerned with Middle East unrest. However, the spokesman says Caterpillar has neither the legal right nor the means to police the use of its equipment around the world.
President Bush spent this first day of his working vacation working. The president traveled to Jackson, Mississippi, where he reassured a crowd that the economy will rebound. President Bush later attended a fundraiser for Mississippi Congressman Chip Pickering. Kelly Wallace joins me now from the White House with the story -- Kelly.
WALLACE: Well, Lou, President Bush and Vice President Cheney were both out talking up the economy and talking tough about corporate fraud. It is a strategy we will see this White House use over the next several weeks to boost investor confidence and help Republicans before the November elections. First, to the president, during that stop in Mississippi, he said the foundation of the economy is strong. He talked about low inflation and rising productivity. And then he did something else. He said he inherited an economic downturn when he came to Washington.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: When I took office, our economy was beginning a recession. That's what the facts have shown. Then our economy was hit by terrorists. Then our economy was hit by corporate scandals. But I'm certain of this, we won't let fear undermine our economy and we're not going to led fraud undermine it either.
(END VIDEO CLIP)
WALLACE: The president speaking not too far from the headquarters of WorldCom. He also met with two workers who lost their jobs at WorldCom. The president saying he is going to prevent other companies', quote, "shady practices" from hurting other workers like those at WorldCom.
Meantime, when the vice president was talking about corporate fraud in California, hecklers interrupted his speech. The vice president has faced some criticism for the accounting practices at the Halliburton Company during the time he served as the company's leader. That matter is under investigation by the Securities and Exchange Commission. And that is why the vice president said today he could say little about it.
(BEGIN VIDEO CLIP)
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: There currently is an inquiry underway by the SEC with respect to Halliburton's accounting practices. I am of necessity, restraint in terms of what I can say about that matter because there are editorial writers all over America poised to put pen to paper, and condemn me for exercising undue proper influence if I say too much about it since this is a matter pending before an independent regulatory agency, the SEC.
(END VIDEO CLIP) WALLACE: Now, Democrats were quick to respond to the comments of Vice President Cheney and President Bush about the economy. House Democratic leader Richard Gephardt saying that instead of providing new ideas or honest answers to deal with the economic downturn, he accused the president and the vice president of, quote, "offering empty rhetoric and blaming others for the recession."
Now, Gephardt is calling for an economic summit featuring policy experts and lawmakers. Lou, as you know, this administration has an economic forum planned for next week. No members of Congress, Democrats or Republicans, will be there -- Lou.
DOBBS: Kelly, thank you very much. Kelly Wallace from the White House tonight.
As Kelly mentioned that SEC investigation into Halliburton's accounting practices, we will have a report for you on the Halliburton accounting practices under the tenure of Vice President Dick Cheney when he was CEO later in the broadcast.
The president has been taking a lot of heat for what the White House calls a working vacation. And a lot of that heat is coming from people who are taking some working vacations themselves. You know them as Congress and the Supreme Court. Tim O'Brien reports from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Just through Labor Day, the Senate is out of session 13 weeks, the House 12 weeks. That doesn't necessarily mean members aren't working. Senator John Edwards, here working the beaches of North Carolina, pressing the constituent flesh. Taxpayers' rights group still question the lengthy congressional recesses.
PETE SEPP, NATIONAL TAXPAYERS UNION: Certainly, members of Congress can have a difficult job at times, but so does the average American worker. And when they see these kinds of massive breaks and recesses, they have to wonder, what is going on here?
O'BRIEN: The recesses do allow lawmakers time to go on factfinding missions. Critics call them junkets. Take Maurice Hinchey for example. In the past five years, the New York Democrat found time to visit 24 countries, from China to Liechtenstein, with $111,000 in expenses picked up by private groups or the taxpayers.
And when both Congress and the president take a protracted vacation, Washington is a decidedly different place. It's not that the town is deserted. It's not. But...
(on camera): Do you work here?
UNIDENTIFIED MALE: No, not yet. I wish I did.
O'BRIEN: Where are you from?
UNIDENTIFIED MALE: Israel.
UNIDENTIFIED MALE: I'm from Ft. Myers, Florida.
UNIDENTIFIED MALE: I'm from Texas.
UNIDENTIFIED MALE: Toronto.
UNIDENTIFIED FEMALE: San Francisco.
O'BRIEN: And whoever is from here isn't. It's not necessarily a bad thing. When the president leaves town, the few power brokers left behind often breathe a sigh of relief.
MITCH DANIELS, DIRECTOR, OFFICE OF MANAGEMENT & BUDGET: Well, I don't want to say we don't miss him. We do, of course, desperately. But with the president on the road and Congress in recess, I will say it is about as comfortable a period as we're likely to see around here.
O'BRIEN: The Supreme Court is also in recess. The justices take pride in their allegiance to precedent. But one of the court's most honored precedents is summer vacation, three months of it. Chief Justice Rehnquist, who has a summer home in Vermont, also accepted a paid teaching gig in France last month. Justice Ginsburg will be spending part of her summer vacation lecturing in Siena, Italy.
(END VIDEOTAPE)
(on camera): In fairness to the justices and to members of Congress, while they all do get a great deal of time off, many of them work just as hard away from the office as they do in the office. Many of them -- Lou.
DOBBS: Nearly all of them, I'm sure, Tim. And I'm sure that the president is going to be working very hard. It is good to see all of these officials, whatever the branch of government, working while vacationing. Tim O'Brien, thank you.
Well, the West Nile virus is continuing to spread. A new confirmed case today in Alabama, and the first case of West Nile virus was discovered in Illinois last night. Meanwhile, officials in Louisiana are desperately trying to stop that virus from claiming new victims in that state. Louisiana is suffering the worst outbreak since West Nile was first discovered in this country three years ago. Ed Lavandera has the story.
(BEGIN VIDEOTAPE)
LAVANDERA (voice-over): Vita Brusard (ph) knows mosquitoes infected with West Nile virus are lurking all around Baton Rouge. So much talk of the killer mosquitoes makes her a little nervous.
UNIDENTIFIED FEMALE: We've heard so much about it on television that it has become alarming to us. We realize that we have an epidemic, worse than we've ever had before. LAVANDERA: Brusard (ph) lives in a Baton Rouge retirement community. And since the elderly are the most at risk to suffer severe symptoms of the West Nile virus, extra precautions are being taken here.
UNIDENTIFIED FEMALE: We have asked our residents to either empty their birdbath.
LAVANDERA: Where there is stagnant water, mosquitoes will follow.
UNIDENTIFIED FEMALE: The saucers in the bottom of the potted plants tend to be a place where water will stand and mosquitoes can breed in that environment. And so, we have eliminated that environment by adding sand to the bottom of the saucers.
LAVANDERA: Since 1999, West Nile cases have popped up all over the eastern half of the U.S. Health officials say it is just a matter of time before West Nile cases stretch from coast to coast. This summer, we have seen cases in Louisiana, Texas, Mississippi, and now Illinois.
DR. JOHN LUMPKIN, DEPARTMENT OF PUBLIC HEALTH: We believe that we are seeing West Nile activity in birds and mosquitoes throughout the state. And we felt it was just a matter of time before we would see our first human case. And we believe we'll probably see more human cases as the season goes on.
(END VIDEOTAPE)
LAVANDERA: Now, that case you were talking about, Lou, is a 71- year-old man in Dale County, Alabama, which is in the southeast corner of the state. As you mention, it is the first reported case of West Nile in a human this year. And the governor of that state is also announcing that they're activating the emergency plan for spraying there and activating these mosquito spray units that go throughout the state and spray, killing the mosquitoes and trying to prevent the spread of this West Nile virus.
Something that folks here in Louisiana and the officials of this state are asking the federal government for more money to do, is they fear that in the coming months, there is still about three months left in this mosquito season, and they're afraid that money is going to run out to continue that spraying process that they desperately want to continue for the next two to three months -- Lou.
DOBBS: Ed, thank you very much. Ed Lavandera.
The West Nile virus is the subject of our poll tonight on MONEYLINE. The question is, in your opinion, are health officials doing enough to stop the spread of the West Nile virus? Please cast your vote at cnn.com/moneyline. That's cnn.com/moneyline. And as always, we will have the results for you later in the broadcast.
Stocks today moving higher on Wall Street. The Dow Jones Industrials, in fact, posting now back-to-back triple-digit gains. Another encouraging sign, market breadth was decidedly positive today, two stocks moving higher for every stock that fell. The Dow soared 182 points. The Nasdaq gained 21 points. Both indexes gaining just about two percent. The S&P 500 up 17 percent (sic), gaining two percent on the button. Jan Hopkins will be here with coverage of the market later.
Also ahead, our latest corporate America, Enron criminal charges scoreboard. We will have that for you.
Also, we'll be joined by White House economic adviser Lawrence Lindsey. We'll be talking about the president's policies and new approach embarked upon today by both the president and the vice president.
The violence continues in the Middle East. A Palestinian delegation arrives in Washington. "U.S. News & World Report" editor- in-chief Mort Zuckerman will be my guest to talk about the Middle East, the economy and the prospects for a double-dip recession.
Former ImClone Systems CEO Sam Waksal has been indicted for insider trading and a host of other charges. We'll have that story for you a great deal more still ahead here. We'll be back in one minute.
(COMMERCIAL BREAK)
DOBBS: The International Monetary Fund today signed its largest bailout ever. It has agreed to a $30 billion deal with Brazil. That agreement will allow the country to slash its foreign currency reserves by $10 billion. The deal is intended to avoid the risk that Brazil would default on more than $250 billion of debt. That signing took place just days after U.S. Treasury Secretary Paul O'Neill visited Brazil.
Well, here in the United States, the White House is doing everything possible to raise investor confidence of both the markets and the economy. Today, President Bush said he would not let fear or fraud undermine this economy. Vice President Dick Cheney said the economy is poised for sustained growth without inflation. But investors speculating that disappointing growth figures could mean the Federal Reserve will cut interest rates soon.
Joining me now, the president's chief economic adviser, White House economic adviser, and former governor of the Federal Reserve, Lawrence Lindsey. Good to have you here.
LAWRENCE LINDSEY, WHITE HOUSE ECONOMIC ADVISER: Great to be here, Lou. Thanks for having me.
DOBBS: This is quite an assault. Both the vice president and the president out on the -- stumping and pushing confidence in the markets and the economy. This is a marked change in approach.
LINDSEY: Well, no, I think the president has been talking about the strength of the economy all along. He has been pursuing policies to achieve it. And getting Congress out of town gives us a chance to get out in the country too.
DOBBS: Well, out in the country, where we now have a 5.9 percent unemployment rate, where we have learned, thanks to the revisions of the Commerce Department, that we did indeed have a recession last year, three negative GDP quarters, and a very much tougher economic set of fundamentals than we were led to believe. This has got to make your job a lot tougher.
LINDSEY: Well, it is. You know, the president was, I think, forewarning of possible trouble as early as December '99. The speech he gave in Des Moines, Iowa warned that, you know, we may have trouble ahead. We had a summit back in January of 2001 just before he became president. We had CEOs in from all over the country, and they were very clear that things were falling apart quickly. That was not in the data that was being reported by the government at the time.
But we now know that the economy was in a recession when the president came to office.
DOBBS: But as...
LINDSEY: He was ready with a tax cut. And, you know, I think that tax cut really paid off. It stabilized the economy. We have been having growth since it -- we put money in people's pockets, and we're moving ahead.
DOBBS: Fortuitous or not, that tax cut of about $300, you really think it made that big of difference?
LINDSEY: Well, between July 1 of last year, 2001, and July 1 of this year, a family of four making $50,000 had an extra $1,000 to spend. That's quite a bit of money. I think that's the key to holding consumer confidence up, to keep consumer spending up. We had been admittingly a weaker than we wanted second-quarter GDP report. But that same report said that people's income, disposable income, was up at a 3.8 percent annual rate. That means people have enough money both to increase their spending and to repair their balance sheets from problems they have been having in the market. So, I think the days will look pretty good on balance.
DOBBS: With the consumer in -- at unprecedented levels of bankruptcies, with defaults rising, with installment debt at historic levels, you make it sound as if the consumer in this country who is, as you well know, certainly better than me, is the bowl (ph) work of this economy. I mean, aren't you concerned?
LINDSEY: Well, I think the key to keeping the consumer is that we continue to have real income growth. And with the tax cut, with the data that is coming in on wages, it looks like we're going to continue to have increases in real income. The key here is that, you know, wages are going up at about a 4 percent rate, and inflation is about one. That means consumers, households are going to have more money to spend as well as more money to set aside in savings. And I think as long as that continues, we're going to be fine.
DOBBS: Corporate fraud, the president addressing that issue today, saying neither fraud nor fear will undermine this economy. Fraud has, by every indication, played a significant role in undermining confidence in this market. What new is the administration going to do to combat fraud?
LINDSEY: Well, again, most of the fraud occurred during some of the excesses of the '90s and 2000. The key here is to arrest the people who committed the fraud, put them through the criminal justice system and have them face the consequences. Of course, the best thing to do, of course, is to stop the fraud when it is occurring. We couldn't do that. But at least we can catch the guys now and we can have them face the consequences.
DOBBS: Mr. Lindsey, I understand it's a political year. But you make it sound almost as if the administration and the respect of law enforcement agencies and regulators will deal with only those criminals who committed those acts during the watch of President Clinton.
LINDSEY: Anybody who is committing fraud is going to face the consequences. The president made that clear.
DOBBS: Well, surely, you would concur that this culture of greed extended from the mid '90s right through Enron and its revelation in the scandal and the debacle that ensued.
LINDSEY: There is no question that we had a widespread culture of greed. And I think the president was asked specifically the question that you just implied. You know, this was not Bill Clinton. But we have to go after the criminals who did commit the fraud. And the president is committed to doing that.
You know, we're going to have a big event next Tuesday. For the first time ever, we're going to ask CEOs to sign personally and vouch for the authenticity of the numbers that they're reporting. I think that's a big step. We're finally going to hold people accountable and we're going to say, you know, your the guy whose name is on the line. I think that is going to go far to really improve things.
DOBBS: I think it's an extraordinary and certainly positive step, as you suggest. It is -- is it in any way to you and other members of the administration troubling that with now less than a week remaining before that deadline, just a little over five percent of the CEOs of almost 1,000 companies have so stipulated and certified?
LINDSEY: Yes, well, Chairman Pitt gave about 45 days to review all of their accounting for the previous year and put their names on the line. I think he knew at the time there was a lot of work to do, and I don't think there was much expectation that a lot of people would complete it with a lot of time to spare. I think you are going to see those people certify and I think those that feel that they have to restate are going to do so. But the key is we're finally going to hold people accountable for their corporate company's financial statements.
DOBBS: Surely, you expect that those financial statements by those almost 1,000 largest corporations were in such good shape and so well audited and considered 45 days would be more than ample time.
LINDSEY: But now their name is on the line. I think they're going back and they're checking all the assumptions that they have to check. You know, the interesting thing about accounting is that it looks like it is numbers and, therefore, precise. But, in fact, it is the assumptions behind the numbers that are always the key. And I think people are going back and looking carefully at those assumptions as well.
DOBBS: Mr. Lindsey, thank you very much, as always, for being here. Lawrence Lindsey.
LINDSEY: Thank you, Lou. I appreciate it.
DOBBS: Coming up next, we'll have our latest look at the scoreboard our corporate America, Enron criminal charges scoreboard.
Also, we'll report on former ImClone Systems CEO Sam Waksal. He has been arrested. Now, he has been indicted. The charges include securities fraud, insider trading and a number of others as well. We'll have that story for you.
Vice President Dick Cheney answers a question in public about his controversial role at Halliburton. We will have a report on accounting practices at Halliburton during his tenure, at Halliburton, and we will also tell you what he said today.
The massive and unrestrained spending habits of former Tyco CEO Dennis Kozlowski, extraordinary by any measure. That story and a great deal more still ahead. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The man at the center of the ImClone Systems insider trading scandal, Samuel Waksal, indicted by prosecutors in New York City. The former ImClone CEO indicted on a variety of charges. Those charges include obstruction of justice, perjury, securities fraud. Waksal is a friend of Martha Stewart, who is also the focus of investigators for her sale of almost 4,000 ImClone shares. Steve Young has the report.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN FINANCIAL CORRESPONDENT (voice-over): Two months after he was arrested at his home, Samuel Waksal, the one-time CEO of ImClone Systems, was indicted by a New York federal grand jury. The charges include insider trading, obstruction of justice, perjury and bank fraud.
The indictment says Waksal learned on or about December 26 of last year the FDA was expected to refuse to approve ImClone's cancer drug Erbitux without further testing. It says he passed on that material information to a close, unnamed co-conspirator whom he recommended sell ImClone stock. That person placed an order December 27 to sell more than 111,000 shares, worth close to $7 million, and placed a second sale worth about $1.5 million. The indictment adds that Waksal unsuccessfully tried to sell nearly 80,000 shares in his own account. If convicted, Waksal faces a maximum of five years in prison on each of the five counts. But securities lawyers say they think hard bargaining is still going on.
DANIEL SULLIVAN, SALANS HERTZFELD: Defendants charged with crimes negotiate both before and after charges are made. Negotiations probably will continue.
YOUNG: The ImClone case has received much notoriety because Martha Stewart is Waksal's friend, and sold thousands of shares just a day before the adverse news. She says she did nothing wrong. But the man who broke the story that the FDA considered ImClone's drug trial flawed said Waksal must answer to harder charges than the legal ones.
PAUL GOLDBERG, THE CANCER NEWSLETTER: If you're structuring a trial in such a way that will not reduce an answer or carrying it out in such a way that will make the answer meaningless, well, that is a little bit worst than insider trading. It's a little bit worse than a crime. It is a sin.
(END VIDEOTAPE)
YOUNG (on camera): Late this afternoon, Waksal's lawyers said, quote, "this is a painful chapter in Dr. Waksal's life, but he continues to believe in Erbitux, holding out real hope for millions of cancer patients. Like all Americans, he is presumed to be innocent and he will respond to those charges as required." Lou.
DOBBS: Innocent of the crime or the sentence?
YOUNG: Perhaps both.
DOBBS: Steve, thank you very much. Steve Young.
Vice President Dick Cheney responded today for the first time to public questions about his tenure as CEO at Halliburton. But the vice president refused to comment on the SEC investigation into Halliburton's accounting practices. Allan Dodds Frank has the report.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN FINANCIAL CORRESPONDENT (voice-over): The questions about Halliburton's accounting started in late May, gaining momentum daily without any answers from the vice president.
DR. GLORIA DUFFY, MODERATOR: Now, people want to know, how would the accounting practices at Halliburton while you were there hold up under the current new corporate checks and balances law?
FRANK: The vice president chose his words carefully, saying he did not want to be accused of influencing the Securities and Exchange Commission investigation of Halliburton's accounting.
CHENEY: If you're interested in facts of the Halliburton situation, I would refer you to the Halliburton Web site. FRANK: On the Web site, remarks by CEO David Lesar to analysts in which he blamed politics and the media for the focus on the company. The controversy is whether the company properly accounted for revenue from cost overruns beginning in 1998. The company disclosed the accounting change in early 2000.
Lesar said, quote, "our accounting is absolutely legal. It's thorough and it's fully in accordance with generally accepted accounting principles." The issue is whether Halliburton inflated its profits by declaring as revenue money that customers were balking at paying.
PROF. PAUL BROWN, NYU STERN SCHOOL OF BUSINESS: It falls in line with gap accounting so long as the company is reasonably assured that this revenue was ultimately going to collected.
FRANK: Analysts and engineering and construction industry experts agree with Halliburton's argument that most large companies use similar accounting. Lawyers suing Cheney and Halliburton for alleged securities fraud were not impressed.
LARRY KLAYMAN, CHAIRMAN, JUDICIAL WATCH: It was tantamount to a claim of Fifth Amendment privilege. He didn't want to incriminate himself. He didn't want to answer the questions of the media, and those questions were legitimate.
(END VIDEOTAPE)
FRANK (on camera): Halliburton's chief financial officer concedes in a perfect world, the company would have disclosed the accounting change sooner. But the SEC almost never prosecutes companies for failing to disclose on time unless the failure to disclose caused material changes in the company's revenue and investor losses. And the company insists, and many analysts agree, that is not the case here -- Lou.
DOBBS: Two fundamental questions. Halliburton, did they have to restate base on the change in the accounting?
FRANK: No, not so far.
DOBBS: Two, their competitors. Did they employ precisely the same methods of accounting?
FRANK: Most of their competitors that are public companies do. Private companies often do not.
DOBBS: So, in other words, those companies in analogous positions in their industry do precisely the same thing as Halliburton?
FRANK: That is correct.
DOBBS: All right. Allan Dodds Frank, as always, good work. Thank you. It seems the former CEO of Tyco International, Dennis Kozlowski, has taken corporate greed to a whole new level, and that is difficult to do these days. The "Wall Street Journal" today reported that Kozlowski effectively looted Tyco to the tune of $135 million. Not a penny of this was disclosed to shareholders.
Most of the money was in the form of forgiven loans and handouts for everything from real estate deals to personal expenses, all, presumably, board approved. The cash paid for Kozlowski's 15,000 square-foot mansion in Boca Raton, Florida, complete with pool, tennis courts. The cost, an estimated $20 million. The "Journal" says Tyco picked up the tab on a range of other expenses. Now, those expenses include somewhat larger items, such as $11 million for art and antiques; and somewhat smaller items, household items, like $6,000 for a gold and burgundy floral-patterned shower curtain. Tyco also chipped in $1 million for a 40th birthday party for Kozlowski's wife on the Italian island of Sardinia, complete with a performance by singer Jimmy Buffett, who is certainly worth the money. Tyco is currently under investigation by the SEC. Kozlowski is facing charges of tax invasion.
Kozlowski's brush with the law has earned him a spot on our corporate America Enron scoreboard, of course. The number of criminal charges in the wake of Enron's collapse stands at 18. The number beside Enron, actually below corporate America, is Enron, which is 0. And we want to update the only number we can. The number of days since Enron's collapse, no charges filed, 248 days.
Still ahead here, a late-day rally lifts the market, a second straight winning session. Jan Hopkins will have the market for us.
Firefighters in California continue to battle to control a big wildfire raging east of San Diego. Dozens of residents have been forced to evacuate their homes.
And the shrinking glaciers in the Arctic Ocean north of Norway. All of that and more when MONEYLINE continues.
(COMMERCIAL BREAK)
DOBBS: Well, down 1,000, up 700 down and then back up, up more than 400 points. In point of fact, over the past two sessions, nearly half a trillion dollars in market value created. Jan Hopkins has the market for us, and another pretty good day.
JAN HOPKINS, CNN FINANCIAL CORRESPONDENT: That's right, Lou. You might start wanting to call the market "The Comeback Kid." Not quite yet, but soon...
DOBBS: I don't think so.
HOPKINS: Cisco's positive earnings started things off on a good note today, and Cisco gained eight percent. The rally actually fizzled in the midst of the day, but then came roaring back. The market actually closed at its highs. The Dow Jones Industrial Average gained two percent. The Nasdaq gained 1.75 percent. The S&P recaptured two percent.
Christine Romans is at the New York Stock Exchange. Greg Clarkin is at the Nasdaq marketsite -- Christine.
ROMANS: Well, Jan, strong earnings helped here. Clorox profit rose 36 percent and the shares vaulted five percent higher. HealthSouth's second quarter bottom line grew 37 percent. And Ethan Allen profit grew on cost cuts and a new furniture line.
Now, financial stocks were strong. And after the close, Citigroup announce it will expense stock options. The losers: credit card and insurance stocks. Auto financing company AmeriCredit profit rose. But analysts worried about rises in delinquencies and deferments.
Now, followthrough tomorrow is critical. The Dow hasn't put three higher days in a row since early May. And, in fact, it scored three in a row higher just four times this year. Now to the Nasdaq and Greg.
CLARKIN: And, Christine, Cisco's coattails were long enough today to lift many technology sectors. As for Cisco itself, again, up almost eight percent on the strength of its earnings report released after the close of trading yesterday. And Cisco helped give a boost to a lot of the network and telecom equipment stocks such as Tellabs, which gained 11 percent on the day.
TMP Worldwide, the stock there plunges. This is the parent of online job site Monster.com. The company cutting its profit forecast. TiVo though rose sharply, that after the company which makes a digital -- personal digital recorders, doubled its revenue forecast. And then Sun Microsystems joining most of the other big caps on the upside today. All in all, not a bad day for the Nasdaq, makes it two in a row. Jan, back to you.
HOPKINS: Thanks, Greg.
The market is continuing its trend of moving sharply up or down. We have seen five days in a row of triple-digit moves. First, the Dow rallied 1,000 points off its lows, then it went straight down. By Monday, it had lost 700 of the 1,000. Now, in the last two days, we have reclaimed 400.
Now, Lou, traders say that they aren't seeing much movement of investors into or out of mutual funds recently, but they are seeing pension funds moving out of bonds and into stocks, or at least that is starting to happen.
DOBBS: And so, we're -- we shouldn't worry at this point about mutual fund redemptions.
HOPKINS: We'll see tomorrow what the total picture is.
DOBBS: Appropriate caution and wariness, Jan. I compliment you. Thank you.
HOPKINS: You're quite welcome.
DOBBS: Now, a reminder to vote in our MONEYLINE poll tonight. The question tonight: Are health officials doing enough to stop the spread of the West Nile virus in this country? Please cast your vote at cnn.com/moneyline. We will have the results for you later here.
Coming right up, we'll have "The Dobbs Report," a few thoughts and some questions, and we'll also have your thoughts.
Also, Israeli and Palestinian officials have resumed security talks, but the violence continues. "U.S. News & World Report" editor- in-chief Mort Zuckerman will be here. We'll be talking about the Middle East, the economy and a number of other issues. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The talks in Washington between the United States and Palestinians are not expected to produce a breakthrough nor even much more than limited progress if that. But they are raising some hopes that the international peace efforts in the Middle East can be revived.
Joining me now is Mort Zuckerman. He's chairman -- editor-in- chief of "U.S. News & World Report." Also a leading member of pro- Israel organizations in this country. Mort, good to have you here.
MORT ZUCKERMAN, EDITOR-IN-CHIEF, "U.S. NEWS & WORLD REPORT": Glad to be here.
DOBBS: The violence continues to escalate. The last time we talked, you were not hopeful, even though there were signs at that point that were decidedly positive. What is your read now?
ZUCKERMAN: Well, I think it is still in a stalemate position, and I think the concern that is going to be reflected in action on the ground is that nobody is there to control the terrorists. And as long as that continues to inflame the passions on both sides, I think we're going to be on a very, very difficult patch that's going to go on for quite a while.
There has got to be a fundamental change on the ground. And the president called for Arafat stepping aside, which is going to be critical, I think, to the confidence in the process going forward.
DOBBS: The president has made that decision and for, obviously, what this administration considers good reasons. But if Arafat does not have the capacity to control Hamas, Hezbollah, the other terrorists organizations, to what end do we seek, if you will, a regime change there?
ZUCKERMAN: Well, I think, you know, the largest number of terrorist actions were, in fact, committed by wholly-owned subsidiaries of Arafat, the Al-Aqsa Martyrs Brigade and Tanzim. These are totally dependent on Arafat for guidance and for funding. So, it's not as if he wasn't involved. And whatever it is, he signed eight or nine agreements, there has been a breakdown of confidence, not only between him and the Israelis, but between him and the United States.
DOBBS: And the Sharon government, the Israeli government's response, has not been effective in shutting these incidents down. Are we simply blighted with the cycle of violence that is going to be unending? Is there not some way to bring this to, at least the beginning of resolution?
ZUCKERMAN: Well, you know, the only thing I guess you can hope for in these situations, and it is a rather desperate hope, is one side or another gets tired. I mean, at some point, one side or another or both sides will have to be exhausted enough to be able to work out some kind of compromise on the basis of which they can live together for a while. It is going to require, in my judgment, some extended period of some relative peace in order for the parties to be able to get together as parties, per se, and reach any kind of an agreement. I don't see that happening for quite a while.
DOBBS: Well, let's hope that it beats your forecast. The last time we talked in terms of forecasting, talking about the economy, Mort, you were probably more negative than any other forecaster with whom I spoke last year. It turns out that you were exactly right, that economy was in far more difficult shape than most people -- obviously, the issue of double-dip recession has come back with some trepidation, knowing your negative outlook from last year. What do you think the prospects are for a double-dip recession this year?
ZUCKERMAN: Well, I must say to you that as the vice president said, we're poised for sustained growth, but that means that we're not in it. And I think we are in an inflection point. It can go both ways. And therefore, I hope that the Federal Reserve board does what it can do additionally to what it has already done. It did a brilliant job, in my judgment, in preempting a lot of the decline because...
DOBBS: Through 11 interest rate...
ZUCKERMAN: Through the interest rate cuts really before anybody knew we were in a recession. That is what saved the auto industry and the housing industry. And they need to do more of that in order to make sure we don't slide into a recession. And I think the federal government can do a few things too.
DOBBS: Mort Zuckerman, as always, good to have you here.
Still ahead, "The Dobbs Report." We'll take a look at your thoughts.
Also, firefighters working to contain a southern California wildfire near San Diego.
And there is a new warning about glaciers in the Arctic. It is troubling. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Firefighters are working tonight to contain a southern California wildfire. It's a fire that has burned more than 53,000 acres east of San Diego. Officials say that fire near Julian is now more than half contained. It is moving northeast toward the desert. The fire jumped across a fireline outside San Diego Monday. Officials say it started when a helicopter, believe it or not, clipped a power line while searching for marijuana plants in the area.
Glaciers on the Arctic islands north of Norway are now melting away. According to a Greenpeace research expedition, those glaciers are shrinking by as much as 450 feet a year. The environmentalist organization blames climate changes for the glacier's retreat. Greenpeace fears that many glaciers could disappear by 2035. And, of course, that would have an immense impact on the source of water for millions of people as well as the condition of the oceans themselves.
Now, let's take a look at the results of our poll tonight. The question: Are health officials doing enough to stop the spread of the West Nile Virus in this country? Forty percent of you said yes, 60 percent reply no. A reminder that our poll is unscientific, but nonetheless important.
"CROSSFIRE" begins in just a few minutes. Speaking of important, let's go to Bob Novak and Paul Begala in Washington to find out what they have for us -- Gentlemen.
PAUL BEGALA, CO-HOST, "CROSSFIRE": Well, Lou, we're going to have the best-selling author of the book "Stupid White Men," Michael Moore, who I'm sure you're very familiar with from his "Roger and Me" movie. So, I guess, Bob and I and Moore maybe more all together will form a trio of stupid white men tonight.
ROBERT NOVAK, CO-HOST "CROSSFIRE": And, Lou, we're going to talk about the situation on Capitol Hill, where after kicking out Traficant and censuring Torricelli, they say there is no more congressmen with ethical problems. Do you really believe that?
DOBBS: Well, Bob, if you say that, I certainly do. And by the way...
NOVAK: I sure don't.
DOBBS: I'm really looking forward to your interaction with Michael Moore. He is a terrific fellow. I'm sure you're going to have a mind meld of incredible proportions. Thanks, gentlemen.
An injured tortoise in Rio de Janeiro, Brazil has been given a new lease on life. That tortoise lost the use of its hind feet after being hit by a stray bullet. But veterinarians came up with the idea of attaching a pair of wheels from a television rack to the tortoise's shell. Since then, there has been no stopping the turtle.
There's a lot more to life than money. Coming up next, "The Dobbs Report," your e-mails and "In Their Words." Please stay with us. (COMMERCIAL BREAK)
DOBBS: One of my first responsibilities on this broadcast each evening is to bring you answers to questions. That's what journalists do. And to bring you some perspective to the day's news events. That's what older journalists do.
But tonight, as happens occasionally, I have more questions than answers about at least one particular news development. It is about Saudi Arabia. The Saudi government today said it would not allow the United States to use Saudi soil to attack Iraq. Now, the president and Congress haven't decided whether to attack, but the Saudi position does make one wonder what the Saudi reaction would be should Saddam Hussein use weapons of mass destruction against the West. Would they then consider the use of Saudi soil?
Secretary of State Powell yesterday called the Saudis to remind them that we consider them great allies and friends. And there's no doubt at all that we are great customers. The United States buys almost $15 billion of oil from the Saudis each year. They export about $55 billion of oil each year to the world.
Now, I'm not saying that oil plays any part in the double talk, but sometimes passes for diplomacy in the Middle East. I'm just wondering about being allies and friends when the Saudis also champion a religion that is not only authoritarian, but the foundation of the violence that we're now fighting in the global war against radical Islamist terrorists. But the United States doesn't officially, of course, call those terrorists radical Islamists. They're just faithless, ideologically neutral apparently ecumenical terrorists.
And some politicians in this country are picking up the mantra that the Israeli/Palestinian conflict should be well on its way to resolution before the president and Congress consider an attack against the regime of Saddam Hussein. Those politicians apparently worried about the region being destabilized. But how, I wonder, will the Israeli/Palestinian conflict be worsened or resolved, for that matter, by any attack on Iraq should it come? Isn't the issue of an attack against Iraq based on the fear that Saddam Hussein would use weapons of mass destruction. Now that would be pretty destabilizing too, I bet.
I am just wondering what happened to all that straight talk following September 11. Maybe oil does play a part here. I'll just have to figure that out.
Let's take a look at your thoughts. Margaret in Virginia writes in to say: "Since when did fundraising become work for the president of the United States? Isn't George Bush supposed to be working for us, not the Republican Party? And what does our vice president do for a living, fundraising? What do our elected congressmen do for a living, fundraising? And from whom do they receive their funds? Ahh, therein lies the answer to why we ordinary Americans are, in fact, no longer relevant to our democracy."
Ron Hancock in Georgia writes in to applaud me for saying a few nights ago that maybe we should all take a working vacation to give ourselves time to sort out all the so-called overexaggerations that have been bombarding us this summer. Ron writes in to say: "I did just that. I'm taking time to finish my basement and spend time with my kids. Thanks." Good for you.
Marilyn Clement (ph) sent us a list entitled "Financial Terms in Everyday Language." It's a list you may have seen this before. But for those of you who haven't, we thought we would share it with you because it's an impressive list: "Bull market: a random market movement causing an investor to mistake himself for a financial genius. Momentum investing: the fine art of buying high and selling low. Value investing: the art of buying low and selling lower. Market correction: the day after you buy stocks. Stock analyst: idiot who just downgraded your stock. And, Standard and Poor: your life in a nutshell."
And finally, Mike Bartlett in California says, "keep the scoreboard going. It's the only way to let the Justice Department know we will not forget Enron."
We always appreciate hearing from you, enjoy your thoughts. E- mail us at moneyline@cnn.com. Please include your name and address.
Those are your words. Now, let's go to their words.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And the task force I put together is beginning to make progress. They're investigating, arresting and will soon be prosecuting.
DONALD RUMSFELD, DEFENSE SECRETARY: The people are developing hypotheticals on hypotheticals on hypotheticals, and that is about as unuseful as anything I can imagine.
CATHY SCHEMP, BATON ROUGE, LOUISIANA: Mosquitoes don't bother me. If I get bitten by mosquitoes, that doesn't bother me. I have lived with mosquitoes all my life. So, I've never used bug repellent unless I happen to be in an intense place -- in a jungle, where I should have them. But now, I carry it in my car. I carry it in my car. And when I get out, where I'm going to be outside, I put it on.
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: In respect to my health, it's good. I have been probably better watched now than I have ever been. I've got, you know, the doctor following me around every place I go. Literally, when I get on the elevator, there is a guy there with a black bag. Actually, two guys with black bags. One has the football, the other has medical capabilities.
(END VIDEO CLIP)
DOBBS: And that's our broadcast for this evening. Thanks for being with us. Join us tomorrow when our guests will include James Reston, author of "Warriors of God." We will be talking about that new book on "The Dobbs List." Please join us.
Thanks for being with us tonight. For all of us here, good night from New York City.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
|
|
|
|
|
