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CNN Live At Daybreak
"Legal Grounds": Morning Coffey
Aired September 02, 2002 - 06:15 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLAWAY, CNN ANCHOR: And now to our regular DAYBREAK feature, "Legal Grounds" with legal analyst Kendall Coffey. He's joining us on the phone this morning from Miami to talk about what's on the court docket and this coming week.
And, Kendall, good morning.
KENDALL COFFEY, CNN LEGAL ANALYST: Hey, good morning -- Catherine.
CALLAWAY: Are you awake on this holiday?
COFFEY: I am awake. I've got a lot of coffee in front of me.
CALLAWAY: Good. No pun intended, right?
COFFEY: No pun intended.
CALLAWAY: On this Labor Day there are thousands of Americans out there losing their jobs in the wake of all the Wall Street scandals. A WorldCom official now due back in court, what can we expect there? What happens next?
COFFEY: Well this is a $5 billion set of fraud charges, one of the biggest, maybe the biggest in history. But what analysts will continue to watch is whether at some point you can move from the CFO,...
CALLAWAY: Right.
COFFEY: ... the chief financial officer, to the CEO, and that's not always a given because when the books are being cooked, it's really the CFOs who are the chefs in the kitchen. And to get up to the bosses what you're going to need is someone like a Scott Sullivan who will cooperate with prosecutors and say the boss made me do it or the boss knew everything. And so far, he hasn't showed up for let's make a deal with the government probably because they want him to spend a whole bunch of years in prison.
CALLAWAY: And don't you think most people are watching this to see if those on the top tumble?
COFFEY: Absolutely, because in a moral sense, even in a civil liability sense, it should go to the top of the corporate ladder. But remember in criminal cases what you actually got to prove is the boss actually knew and in some way participated in what happened. And a lot of these CEOs are playing the empty suit defense saying hey, I was the boss but I was really out there, not hands-on in the financial details. I was the vision kind of person...
CALLAWAY: Yes.
COFFEY: ... not the finance kind of person.
CALLAWAY: It'll be interesting to watch this. Of course we're all watching Enron as well. We saw Michael Kopper plead guilty. Anything coming up in the Enron situation?
COFFEY: Well I think with Kopper's plea and with the freezing of some of Fastow's accounts, it's very clear that former CFO Andrew Fastow is definitely in a situation of not whether but when charges will be brought. And then from there the question goes, if Fastow is charged, what, if anything, will induce him to cooperate to see if you can move up the ladder.
CALLAWAY: Right. Right.
COFFEY: With Fastow, as with Sullivan, the federal authorities are going to be looking for a lot of prison time, double-digit justice, perhaps, 10 years or more, that these particular individuals don't seem very enthusiastic about in terms of cooperating.
CALLAWAY: You know I was just going to ask you, on these kind of cases in the past, the paper trace is much easier to follow to middle management. Certainly the CEOs are going to be a little bit -- it's going to be a little bit more difficult to track it down to them, isn't it?
COFFEY: It is a big leap, and there aren't going to be a lot of people who are in close enough proximity to the CEO to actually have had significant verbal discussions with them. That's why the CFOs in these cases are critical and they have got to cooperate credibly if the CEOs are to be drawn into it. But again, the federal authorities, rightfully so, want a lot of prison time for the CFOs. They don't seem enthusiastic about that. And until you get the CFOs cooperating, it's going to be hard to move up the corporate ladder any further on most of these cases.
CALLAWAY: Well I'll tell you what, Kendall, there's a lot of unemployed people who you know lost all their savings in this that would be more than happy to testify if they had any evidence, right?
COFFEY: Well there is and I think there's going to continue to be great interest in seeing prosecutors move up as high as they can on the corporate ladders of these what appear to be criminal conspiracies.
CALLAWAY: All right, let's move on before we leave you this morning with a story that is fascinating and that is the latest on Yasser Hamdi. Now we know the Justice Department now preparing to appeal that ruling by the federal judge in Virginia which is actually requiring the government, the authorities to provide some more information on whether or not Hamdi, who was captured in Afghanistan, is an enemy combatant and if he can continue to be held indefinitely. What do you think is going to happen next? COFFEY: Well this is the most hotly debated of all the cases post 9/11 among constitutional scholars. And it really presents a classic collision between the power of the executive and the role of the judiciary in assessing the rights of people, because Hamdi's being held without charges indefinitely without access to counsel. I think bottom line though,...
CALLAWAY: Yes.
COFFEY: ... is the appeals court is going to be very unlikely to disturb the executive branch's decision making about prisoners who are captured on enemy battlefields. So I think what you'll see is an attempt to make a very, very limited decision so that you don't create a broader precedent that nonetheless essentially sides with the government.
CALLAWAY: How far do you think this case will go you think?
COFFEY: Well if it's kept to a very narrow kind of fluky set of circumstances,...
CALLAWAY: Right.
COFFEY: ... so far you've got one, at most two people who are in this unusual situation of being U.S. citizens held indefinitely. If it looks pretty narrow, it may not get to the Supreme Court. But if the federal appeals court that is deciding this case applies what seems to be broader principles, then it could get all the way to the top.
CALLAWAY: You know, Kendall, I have to say, new legal textbooks are being written with all the interesting cases we've seen in the last couple of months, right?
COFFEY: Oh it's a fascinating time. And I think it's too early to see how it's going to sort out, but times of crisis certainly create some evolution in U.S. law.
CALLAWAY: Kendall Coffey, get back to your coffee, and have a great holiday.
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