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PAULA ZAHN NOW

Interview With Ambassador Joseph Wilson; Legislating Love in the Workplace

Aired September 29, 2003 - 20:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: Who blew the cover of a CIA operative? And could it mean a criminal investigation of the Bush administration?
(BEGIN VIDEOTAPE)

ZAHN (voice-over): Our debate tonight: One state is ready to legislate love in the workplace. Has office romance gone too far?

UNIDENTIFIED MALE: Yes. Keep the bosses away from the young ladies, the young ladies away from the bosses.

UNIDENTIFIED FEMALE: God, we have so many regulations in the world. Let's not bring romance into legislation.

And a crack in the glass ceiling. Women on the Forbes 400 top men in average net worth for the first time.

(END VIDEOTAPE)

ZAHN: Good evening and welcome. Glad to have you with us as we start off a new week here.

Also ahead: a $6,000 shower curtain here, a $2 million birthday party there. Pretty soon, it all adds up. Two executives go on trial for allegedly looting their company of $600 million to pay for their lavish lifestyles.

We also want to look at what the Bush administration is doing right, wrong, and needs to do to sell its policy on Iraq.

And Gloria Estefan joins us, back with her first English C.D. in six years.

First, though, here are some of the headlines you need to know right now.

Well, it looks as if California voters are ready to make Arnold Schwarzenegger their next governor. A new CNN/"USA Today"/Gallup poll shows that 63 percent of probable voters would vote to recall current Governor Gray Davis and that Schwarzenegger leads all replacement candidates. Meanwhile, Schwarzenegger has picked up a key endorsement from the executive board of California's Republican Party.

President Bush has signed legislation giving the Federal Trade Commission authority to enforce its do-not-call list. The FTC, however, is stilled blocked from taking any action regarding the list pending the appeal of a federal judge's ruling in Denver. In the meantime, the FTC had said it will endorse its own set of do-not-call rules.

And first lady Laura Bush met today with French President Jacques Chirac as part of a five-day tour on education and literacy. It is on her first trip overseas by herself since the war in Iraq began.

In Iraq today, U.S. troops ran into a fierce battle west of Baghdad. And an American soldier died in an ambush. But tonight, all eyes are on the war of words that threatens to engulf the Bush administration. "In Plain English": Did someone at the White House blow the cover of a CIA operative after her husband criticized the run-up to the war?

In a moment, we're going to talk to the man at the center of this controversy, the ambassador.

But first, joining me to take us through this story step by step is Doyle McManus, the Washington bureau chief of "The Los Angeles Times."

Welcome. Glad to have you with us tonight.

DOYLE MCMANUS, "THE LOS ANGELES TIMES": Good evening, Paula.

ZAHN: Let's go back to when this all started, with those famous 16 words in the State of the Union address of the president.

Let's listen to those together right now.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.

(END VIDEO CLIP)

ZAHN: For folks who haven't been following the story that closely, where does Joe Wilson, the ambassador, fit into all of this?

MCMANUS: Well, Paula, that allegation, that Saddam Hussein had been trying to buy uranium in Africa to feed his nuclear weapons program, had been rattling around the intelligence community for some time before President Bush said it in his State of the Union address.

In fact, almost a year before, it had come up from an Italian intelligence report. And Vice President Cheney asked the CIA to check it out. The CIA needed someone who knew about Iraq and who knew about West Africa. And they turned to Joe Wilson, who had been an American diplomat in both areas. Ambassador Wilson went to West Africa, talked to people he knew there, came back, and said, as far as he could figure out, it probably wasn't true. It probably wasn't even practical for Saddam Hussein to get uranium from West Africa.

He turned that over to the CIA and thought that was the end of it.

ZAHN: Then, of course, on July 14, in a column in "The Chicago Sun-Times," Rob Novak wrote this, a CNN contributor. Here's what he said: "Wilson never worked for the CIA, but his wife, Valerie Plame, is an agency operative on weapons of mass destruction. Two senior administration officials told me his wife suggested sending Wilson to Niger."

So, at the root of this, what is so controversial?

MCMANUS: Well, the controversy there, of course, is that someone in the administration, for reasons we still don't understand, decided to unmask Ambassador Wilson's wife, who, until then, had been a clandestine operative, if you like, of the CIA.

She wasn't overseas at the time. She wasn't going around with cloak and dagger. But her identity as a CIA operative had in fact been a secret at the time. And it's against the law to reveal the identity of a CIA operative.

ZAHN: Yes, the phraseology, what, is the intentional disclosure of an active CIA operative.

MCMANUS: That's right. And it's pretty clear from the context in the Novak column and the reports that have come out later that somebody deliberately blew her cover.

ZAHN: All right.

But this column goes all the way back to July. There wasn't much that happened as a result of that. It was buried in the papers, page 15, page 16. Why the big deal now? Why the front-page stories today?

MCMANUS: Well, two things happened in the last week or so. One is that the CIA completed its initial internal look at this. And under its rules, George Tenet, the director of the CIA, sent a letter to the Justice Department, asking for a formal Justice Department inquiry into the leak, an inquiry that could result eventually in criminal prosecution, although I have to say, leak investigations hardly ever do that.

The other thing that happened is that Ambassador Wilson himself came out and said that, in his view, Karl Rove, the president's chief political adviser, was probably the man behind the leak. At one point, he said Karl Rove probably ought to be marched out of the White House in handcuffs. He has since tempered that comment a little bit.

And we're going to find out why he has tempered that, because he is our very next guest.

ZAHN: Doyle McManus, thank you very much for walking us through that this evening. We appreciate your time.

MCMANUS: Thank you.

ZAHN: And joining me now is the man at the heart of this growing controversy, Ambassador Joseph Wilson. He joins us from Washington.

Welcome back, sir.

JOSEPH WILSON, FORMER U.S. AMBASSADOR: Hi, Paula. How are you?

ZAHN: I'm fine. Thanks.

Doyle probably just reminded you of something you had said back in August. And we can all witness this in tape. This is where you seem to link directly to this controversy Karl Rove. Let's listen.

(BEGIN VIDEO CLIP)

WILSON: It's of keen interest to me to see whether or not we can get Karl Rove frog-marched out of the White House in handcuffs

(END VIDEO CLIP)

(LAUGHTER)

ZAHN: You're laughing. Are you backing off this? And if so, why?

WILSON: Well, first of all, just to put it in context, it was in response to a question about the investigation. And what's left out of that is my saying that I intended to cooperate with the investigation, because, after all, one would like to see results, Karl Rove being the name that one puts to the White House political operation.

In fact, the chain of command from the CIA goes right up to the White House and to the president of the United States. In fact, the outing of my wife was obviously a political or communications move. The head of the political operation is Karl Rove. If I've tempered anything, it has been that I've dropped the frog-marching him out of the White House in handcuffs from my stock speech in this matter.

ZAHN: So what does that mean? Is he off the hook? Are you still saying this goes all the way to the top levels of the White House?

WILSON: No, on the contrary, I don't have any specific information. I would hope that an investigation would yield the information as to who was responsible for the precise leak.

What I do have are any number of journalist sources, none of whom I have any reason not to believe, who have said that the White House was pushing this story after the leak, after the Novak article, and including Karl Rove.

ZAHN: "The Washington Post" reported over the weekend that at least six Washington correspondents were fed this same information. Why?

WILSON: Well, I think, if "The Washington Post" article is correct, I think there were probably two waves. The one wave was being this -- of the phone calls to the six journalists. The only person who published an article was Mr. Novak. He's now claiming that he wasn't called. But it was in that timeframe, apparently. Then, I believe there was a second wave that occurred later on in the week, when I started getting phone calls from different journalistic outlets, saying things like, the White House is telling us that the real story here is not the 16 words. The real story is Wilson and his wife, culminating in the day that I actually did an interview on another network, saying that my understanding was that this might be against the law, after which those calls stopped.

ZAHN: And why do you think you're at the receiving end of all this?

WILSON: Well, I had assumed early on that it was probably because the White House wanted to discourage others from coming forward. And I have said that repeatedly, that there was nothing they could do to me. I had already told my story.

The accuracy or the validity, the veracity, of my story had been sort of agreed to by the White House 36 hours or 30 hours after my article appeared in "The New York Times." There was nothing particularly to be gained by going after me. But you might want to discourage other people from stepping forward. There were a number of people at the time who were speaking off the record to journalists about pressures that they felt out at the CIA.

Whether those were accurate or not, those were the stories that were going around. So I thought that it might be directed at them.

ZAHN: Do you believe your wife's life is in any increased danger as a result of this?

WILSON: Well, I don't know.

We've always thought about this in the context of what is compromised in terms of national security, what operations, what agents, what networks that have been put in place during her career. That was the focus of our thinking. I will tell you that, increasingly, people are asking that question. And I'm going to have to think about it. But I'm not -- we have not been the recipients of any general threats or even -- or specific threats.

ZAHN: So you're not sure whether you fear for her safety, when you say it's something you have to think through?

WILSON: Well, I'm certainly concerned about her safety, but it's -- we had not thought about it in those terms at this point. We had thought about it more in terms of the violation to our own national security.

ZAHN: And, finally, I wanted to share with you something that Robert Novak had to say a little bit earlier today about this controversy. Let's listen to what he had to say.

(BEGIN VIDEO CLIP, "CROSSFIRE") ROBERT NOVAK, CO-HOST: According to a confidential source at the CIA, Mrs. Wilson was an analyst, not a spy, not a covert operative, and not in charge of undercover operatives. So what is the fuss about, pure Bush-bashing?

(END VIDEO CLIP)

ZAHN: You want to answer that question? Is this Bush-bashing on your part?

WILSON: Let me make a couple of points about that.

First of all, Novak also said that I was a Clinton appointee. In actual fact, my first political appointee was as ambassador. And I was appointed by George H.W. Bush, the first President Bush. So I really am apolitical in all of this.

Secondly, somebody with Novak's self-described 46 years experience will know the difference between operative and analyst. And his report clearly says -- his article says operative.

ZAHN: So what does that mean?

WILSON: That means that I think that he knew and he was told that she was a CIA operative, which means that they come under the branch of the CIA that deals with clandestine operations.

ZAHN: So you're basically saying there's no doubt in your mind that this was a leak, when in fact he said, in the course of interviewing a senior White House official, that is what he was told, and your wife's -- not her name at that point, but at least her official capacity was shared with him?

WILSON: Bob Novak called me before he went to print with the report. And he said, a CIA source had told him that my wife was an operative. He was trying to get a second source. He couldn't get a second source. Could I confirm that? I said no.

After the article appeared, I called him and I said: "You told me it was a CIA source. You wrote senior administration officials. What was it, CIA or senior admiration?" He said to me, "I misspoke the first time I spoke to you." That makes it senior administration sources.

ZAHN: Ambassador Wilson, we're going to have to leave it there this evening. Thank you very much for sharing your side of the story with us.

As he was telling his side of the story, our own expert, Joe Klein, has been standing by. We asked Robert Novak to appear on our broadcast. You heard what he had to say on "CROSSFIRE." Joe Wilson just described himself as apolitical, although he has been highly critical of the Bush administration leading up to war.

What do you make of all of this?

JOE KLEIN, CNN CONTRIBUTOR: This is very strange and it is pretty serious.

At the top of the program, Doyle McManus said that leak investigations usually go nowhere. But this is a leak investigation that involves a serious violation of a war -- of the law. The first President Bush is quoted as saying that these kind of violations are the -- these kind of violators should be considered traitors. And so I don't know where the leak came from. In fact, Novak was very careful in saying that it was an administration official.

He didn't say it was a White House official. That could mean it came from the Pentagon, the CIA, or the State Department. So we don't know the details there.

ZAHN: But "The Washington Post" has confirmed that at least six correspondents were told by a senior White House official.

KLEIN: And the other key thing about what Novak said that should be elucidated is this.

The White House or the administration may not have called him about this, but in the course of a conversation -- I have these kinds of conversations three times a day. At that point, he would have asked, what about this Niger situation? What about this yellowcake? And his source would have said, well, we hear Wilson's wife was CIA.

That's how it would have happened. It might not have been the administration calling him, but just letting it...

ZAHN: So is that good reporting or was that a good leak?

KLEIN: It's called reporting and being leaked to.

(LAUGHTER)

ZAHN: All right. He answered my question.

If you wouldn't mind standing by, I want to catch up now with Torie Clarke to take a closer look at what is at stake here inside the White House, another one of our contributors, former Pentagon spokeswoman.

Welcome back, Torie.

VICTORIA CLARKE, CNN CONTRIBUTOR: Hi, Paula.

ZAHN: If the White House has nothing to hide here, which so far, that is the basic word we're getting from the White House, why not agree to a special prosecutor?

CLARKE: Well, it is a very, very serious issue. And it should be handled as such. And the first actions out of the White House lead me to believe they're taking it very seriously.

But the best thing to do is have a very thorough and very fast investigation, find out what happened. And if what we think may have happened did happen, identify and fire and prosecute those people. If the best way to get it done well and get it done fast is to turn it over to an independent counsel, then I say, turn it over to an independent counsel.

ZAHN: It doesn't sound, though, like it's moving that direction. You heard Charles Schumer, the senator, saying this morning he doesn't trust the Justice Department to investigate the Bush administration. He does think there should be a special prosecutor. What are the chances of that happening?

CLARKE: I don't know what the chances are. I think we're only about 24 hours into this full-fledged story, so I think you have to wait and see a day or so.

But I personally don't have any problems turning it over to an independent counsel, if that means it's the best, fastest way to get the job done well. One thing that I do hope comes out of this is a greater awareness of the problems hi leaks. It is not just this instance. It is pervasive in this government. And it has been going on for years of people leaking classified information, which is a violation of federal law.

So I hope people don't get excited about leaks just when it may be political advantageous or punishing to do so. I hope people take a serious look at the problem of leaking across the board and do something about it.

ZAHN: When you were at the Pentagon, how aware were you of the consequences of leaking? You heard Joe Klein just describe the art of good reporting. The art of good reporting is placing yourself in a situation where a good source will give you information that no one else has.

CLARKE: Constantly aware of it.

If you are in a position that you're going to be the recipient of classified information, you have gotten briefings, you get repeated briefings, depending on how long you are in there. You sign papers that say you are fully aware of the consequences if you leak classified information. Secretary Rumsfeld made it a point to regularly and frequently speak about the problems of leaking classified information.

If you were at the Pentagon, you were very aware of it. Having said that, it went on there. It happens in all agencies of the government. It's Republican. It's Democrat. It's across the board.

ZAHN: Let's hear what White House spokesperson Scott McClellan had to say earlier today about these allegations.

(BEGIN VIDEO CLIP)

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: The president believes leaking classified information this is a very serious matter and it should be pursued to the fullest extent by the appropriate agency. And the appropriate agency is the Department of Justice. If anyone in this administration was involved in it, they would no longer be in this administration.

(END VIDEO CLIP)

ZAHN: All right. You heard the White House point of view, Joe Klein. The Department of Justice is the perfect place to investigate this from. True or false?

KLEIN: Well, it depends.

We went through a decade in the '90s where they threw a special prosecutor at somebody who jaywalked in the Clinton administration, more or less. You don't want to go back to that. And I think that there's one very easy way, as Torie said, to avoid that. And that is that the White House has to make sure that the two officials who were spreading this story to at least six different reporters fess up, resign. And that's the way it will end.

This White House has been the most leakproof White House that I've ever seen. And that makes this story all the more remarkable. It seems as if it were an orchestrated campaign. You don't get these kinds of leaks out of this White House unless it's intentional. And so, therefore, you're dealing with some fairly heavy-hitters, by implication.

ZAHN: Do you agree the appearance of this -- and I think you sort of hinted this at the top -- looks pretty bad, Torie?

CLARKE: I think it depends on what happens in the next 24, 48 hours.

ZAHN: And are you going to let him, Mr. Klein, get away with that jaywalking line?

CLARKE: I think it was a little bit more serious than jaywalking.

But I do agree with this point. We have to be careful about how and when we use those kinds of powers. It shouldn't just be at the drop of the hat. If the people who did this, if people did actually do what we've read in the papers, came forward quickly, that would be the best for everybody.

ZAHN: You get the last word about where you think this goes from here.

KLEIN: This is a serious business. And if the Bush administration is smart -- and they tend to be quite smart about these sort of things -- they're going to get it cleared up very, very quickly.

ZAHN: Joe Clarke -- Joe Klein -- and that would be Torie Clarke over there. Thank you for both of your perspectives.

(LAUGHTER)

KLEIN: We're melding already. ZAHN: I know. They've morphed into each other here this evening, even though they often don't agree with each other. Thank you both.

CLARKE: Thank you.

ZAHN: Still think greed it good? Well, the man with a $15,000 umbrella stand goes on trial for his part in allegedly looting his company of some $600 million.

And a visit from Gloria Estefan, as her first English C.D. in six years hits the charts.

(COMMERCIAL BREAK)

ZAHN: Welcome back.

Next, we turn to a story of apparent greed and boundless excess in the corporate world and what can happen when executives allegedly cross the line. Former Tyco chairman Dennis Kozlowski is facing charges of grand larceny, accused of looting Tyco International of millions of dollars. But whether Kozlowski is guilty as charged or whether he just took the compensation the company's board allowed is the question we will ask our two guests this evening.

Jeffrey Toobin is our legal analyst. And Andy Serwer writes for "Fortune" magazine.

Back to -- have you guys -- good to have you back together again.

Andy, let's take a look at some of the things Mr. Kozlowski has bought over the years, accused of buying them with company funds.

ANDY SERWER, "FORTUNE": Great stuff.

ZAHN: We've got the antique toilet kit for $17,100.

SERWER: Yes.

ZAHN: And your personal favorite, the poodle-shaped umbrella stand.

SERWER: That is a good one.

JEFFREY TOOBIN, CNN LEGAL ANALYST: That's only because Andy has one.

SERWER: Oh, no, no. I thought I saw one at your house.

(CROSSTALK)

ZAHN: Except his cost $200, not $15,000. Then you go on to the shower curtain everyone's talking about..

(CROSSTALK)

SERWER: The famous shower curtain. That's right.

ZAHN: Two sets of sheets, $5,960.

SERWER: Where do you find stuff that costs that much?

ZAHN: Gilt metal wastebasket, $2,200.

SERWER: Right.

ZAHN: Over the top, maybe. But illegal?

SERWER: Well, that's what we're going to find out in the trial, right, Jeff?

The whole point here is, did the board or did corporate officers sign off on this, even in a general sense? And if they did, I think it is going to be hard for the government to make its case.

ZAHN: What if they did?

TOOBIN: He's got a real defense here.

He can say -- he can embrace those purchases. He can say, you know what? I did buy all this stuff. And you know what? It was my money. And the board said I could have it and the accountants said I could have it.

A very important pretrial ruling in this case that came our recently. The defense is going to have the permission to call the accountants, who will say that -- who will, they claim, say, we authorized this money going to Kozlowski. And if he chose to spend it on this, that's his decision.

(CROSSTALK)

SERWER: That's right.

ZAHN: Outline for us some of the other excesses he's accused of garnering over the years.

SERWER: Well, the most famous, of course, is this party he gave in Sardinia for his wife that apparently cost $2 million. And then Jimmy Buffett played there. And, of course, there's the famous ice statue with vodka coming out of an appendage, I think is what we say, Jeff.

TOOBIN: I think appendage is

(CROSSTALK)

SERWER: Yes. And all these other trips.

ZAHN: And you're not going to be gender-specific on this one?

(CROSSTALK)

SERWER: Michelangelo's "David."

TOOBIN: It is a gender-specific appendage, I believe.

SERWER: That's right, wasn't it? It was a replica of Michelangelo's "David."

(CROSSTALK)

ZAHN: All right, so he spent a lot of money on this party. And some people would have found it in bad taste. But so what? What?

SERWER: Exactly.

It's so interesting, because so many other corporate executives these days are spending all kinds of money. Look at Jack Welch from GE, Michael Eisner from Disney. These people receive half-billion pay packages from their companies. Now, no one is accusing them of doing illegal things, per se, as in the Kozlowski case.

But it's interesting. These guys took home lots of money. The stocks went up. Now the stock are down. We're living in a very different time now, aren't we?

ZAHN: We certainly are. And we've certainly seen the evidence of corporate greed. But talk to us about the reality of what happens in the courtroom when it comes to these accusations.

TOOBIN: And this is why you're going to see a lot of skirmishing in this trial about how much the prosecution can focus on these memorable objects and the party and the excess.

The defense is going to say, you're just trying to tar this guy. You're just trying to make him look like a bad guy, so that the jury doesn't focus on the issue that's in front of them, is that whether taking this money was unauthorized. That's what this case is about.

SERWER: And you know what's so interesting to me is the judge today instructing the prospective jurors. He said, we're not here to send messages to anybody. This has nothing to do with Enron, nothing to do with WorldCom. And it has nothing to do with how much corporate CEOs are paid.

This has to do with the charges that this man faces. That is going to make it tougher for the government.

TOOBIN: Judges always instruct that way. And they should. The question is, do jurors really take it seriously?

(CROSSTALK)

SERWER: That's right.

TOOBIN: That's a mystery.

ZAHN: And my question to you, Mr. prosecutor, will Mr. Kozlowski ever spend a day in jail, given everything you've told us this evening?

TOOBIN: If he's convicted, absolutely. And he'll be doing state time.

ZAHN: You're skirting the question.

TOOBIN: Well, no, I'm of course skirting the question, because I don't know whether he'll be convicted.

ZAHN: What do you think?

(CROSSTALK)

TOOBIN: He faces other charges for avoiding sales tax on the purchase of paintings, where he looks like he's got a very strong case against him. Bottom line, yes, I think he'll be doing time. I think it's the sales tax case that is stronger than this case.

SERWER: Right. It's just like Al Capone and Leona Helmsley. And I agree with Jeff. It's not going to be this case. I don't think the government is going to get him. It's always the tax man that gets you. And I think that is what's going to happen here.

TOOBIN: A lesson to us all.

ZAHN: I hadn't thought about that little Al Capone-Leona Helmsley anecdote there in a while.

(CROSSTALK)

ZAHN: Andy Serwer, Jeffrey Toobin, thanks.

SERWER: OK.

ZAHN: We're going to take a short break here.

Israeli police say they have made a big bust in their crackdown on terror, but the people they rounded up aren't exactly the usual suspects. We're going to tell you who's at the center of that investigation.

And an affair at work practically brought the nation to a halt, but should relationships like that be regulated by the government? One state agency says yes. That's the subject of our debate tonight.

(COMMERCIAL BREAK)

ZAHN: Police in Israel say they have foiled a terrorist plot to kill civilians. The suspects -- an underground band of Jewish militants.

Matthew Chance reports.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CORRESPONDENT (voice-over): Israel's crackdown on terror, but this is no Palestinian militant. Instead, alleged members of a radical Jewish gang who police say were bent on violence are now in custody.

MAJ. GEN. SHAHAR AYMON, ISRAELI POLICE: This is a small group that were victims of Palestinian terror, and it's revenge. We stopped them. It's all right. It's good. This is the law. This is how countries like Israel has to do.

CHANCE: Imagine the carnage these weapons and explosives could have caused. Police say the militants were planning to bomb a school for Palestinian girls. Some of the guns have been linked to unsolved murders in the West Bank.

The children of Bed Taadasar (ph) and Hebron, contentious Jewish settlement and the home of at least one of the accused. Built on occupied land, this is a community under constant threat.

Residents deny there are violent Jewish extremists living among them.

DAVID WILDER, JEWISH COMMUNITY IN HEBRON: Arabs are demanding. They're saying you're killing our people and you're arresting our terrorists. Why don't you deal with the Jewish terrorists? So then the Israeli government has to come up with something to show the world, Look, we're doing something about our own.

CHANCE: Israel's own have proved devastating in the past. Prime Minister Yitzhak Rabin here assassinated by a right-wing Jewish student Higal Amir opposed to the Oslo peace process.

A year earlier, Barak Goldstein stormed a mosque in Hebron, opening fire on the worshipers. Twenty-nine Palestinians were killed before he was overpowered and lynched.

Today, known radicals like Baruch Marzel, who wants Palestinians evicted from Israel and the West Bank, publicly distance themselves from violence. But he says revenge will be exacted if the Israeli army can't stop attacks against Jews.

BARUCH MARZEL, JEWISH SETTLER ACTIVIST: I think there is a great danger, unfortunate, that if the government will do exactly what America does in Iraq and in Afghanistan to the Arab terrorists, people will take these in their hands.

CHANCE: It seems that on both sides of this Israeli-Palestinian conflict, extremism, left unchecked, poses a deadly threat.

Matthew Chance, CNN, Hebron.

(END VIDEOTAPE)

ZAHN: And on to more information now. If you had an affair with someone you worked with, would you report it to your boss? Well, thousands of workers may soon be required to do just that. Office romance worked for people like Bill Gates and his wife, but now there's a crackdown and we'll debate it. And singing star Gloria Estefan is out with her first English CD in six years. She'll be here live.

(COMMERCIAL BREAK)

ZAHN: Welcome back. We're going to update you now on some things you need to know at this hour.

The Securities and Exchange Commission is seeking a federal court order to get subpoenaed documents that former Enron chief Ken Lay refuses to turn over. The SEC is probing fraud allegations involving the failed energy company. Lay is invoking the Fifth Amendment right against self-incrimination.

And we've always heard the opera is not over under the fat lady sings. Now the ballet may not be over til she dances. Russia's Labor Ministry has ruled the Bolshoi Ballet must rehire a ballerina it fired for being overweight. She weighs all of 109 pounds, big by the ballet standards.

Thousands of workers in Washington state may soon have to file a report if they have an affair with their boss. The state's Department of Social and Health Services is worried about the costs of sexual harassment suits. Yet with 44 percent of office romances ending in marriage, is cracking down on love on the job really that good of an idea after all? That's our debate tonight.

Here with me in New York to talk about that, Linda Stasi, a columnist with "The New York Post."

And from Watertown, Massachusetts, tonight, Wendy Murphy, a former prosecutor and professor at New England School of Law.

Good to see both of you. Welcome.

(CROSSTALK)

ZAHN: Thank you.

I want to start off with some statistics that we could all analyze together. If you look at your screen right now, you'll see that at least 30 percent of employees surveyed have dated in the office, and of those, 77 percent dated a peer, 44 percent of office relationships end in marriage.

Now, Linda, I know you believe that everyone working 12 hours a day, the workplace is probably, like, the best dating service you can find. Why are you so opposed of this Washington state idea?

LINDA STASI, COLUMNIST, "N.Y. POST": Well, I am not opposed to this Washington state idea -- oh, I'm sorry I am opposed to this Washington state idea, but I think the statistics are very high. There's something like 60 percent of people meet their spouse in the job. So I mean, dating is sort of like -- I mean, working is sort of like a dating service. But I'm very opposed to it for a number of reasons. For one thing, it's a tremendous invasion of privacy. For another thing, why would you -- why would you volunteer that? Suppose it's a gay relationship. Does that go for straight relationships? Gay relationships? What -- what does it mean if you're having a relationship? Sex? Kissing? A drink? Lunch? I mean, it's just crazy.

ZAHN: And Wendy, would you acknowledge that this is fraught with all kinds of challenges, especially when it comes to the various definitions that Linda just talked about?

WENDY MURPHY, FMR. PROSECUTOR: Well, no, I don't think that this is all that radical or controversial. Frankly it's based on the Supreme Court's decision from 1998 where the court said when a supervisor is involved in a consensual off-hours relationship with a subordinate employee, that raises a very serious risk of exploitation and it really presents a serious problem of sexual harassment in the workplace, which is -- which is an important issue in this country. It's been important for many years. It's a civil rights issue.

Women in particular have fought long and hard to have equality in the workplace. That means a place free from gender discrimination, the most severe form of which is sexual harassment. So really what employers are saying is, Look, we know that romance can bloom in the workplace. I met my husband in the workplace, you know, and we're still married. And it does work. But the issue is not, Can you date but. The question is can you also date the person you're in charge of? And employers are simply going to separate people who are involved in relationships, not punish them.

ZAHN: Linda, talk about some of the other consequences of this now. And here are some more, I think, really staggering constituents -- that there are 52 percent complaints of favoritism, claims of sexual harassment that Wendy just talked about, decreased productivity and divorce of married couples.

STASI: Well I also -- but I also think that those are -- those are interesting statistics, but why do we have to say sexual harassment is the same thing as dating? I mean, it's two separate and complete different things. If someone is harassing you, you have every right to go to the higherups, and say, I am being harassed and I want to take action, which is not the same as a consensual date. I mean, if someone -- if I went out with someone at work -- I work in a newspaper. I mean, we work very long hard hours at a newspaper, and a lot of people are dating. I mean, if I went out with someone, I would not necessarily want anyone to know right away. I wouldn't want my whole life exposed. I wouldn't want it exposed to my best friends.

Why would I want it exposed to my boss?

It's a terrible situation, I think. And I think that it will never hold up, because I think it's a tremendous invasion of privacy.

ZAHN: What about the privacy issue, Wendy? What do you think would be the comfort level of any boss making public or making -- yes, public some sort of intimacy he or she has a with a peer?

MURPHY: Well, we're not talking about posting the information on the workplace e-mail system or announcing it or putting it in print in the workforce newsletter. We're talking about, I assume, a private conversation with someone high up in the company so that they're aware of the relationship so that they with protect against sexual harassment and exploitation.

ZAHN: And you know how long that would stay private, Wendy.

(CROSSTALK)

ZAHN: It wouldn't stay private very long.

MURPHY: But the point is we have to have realistic expectations about what rights of privacy we have in the workplace. There's really no constitutional right to privacy. It's not the same as being in your home, for example. There are lots of things you give up in the work force. And we have to remember we're talking about the liability exposure of corporations that did change in the 1998 decision, I mentioned from the Supreme Court.

They basically said it doesn't even matter if the corporation knows or should have known that there's a relationship going on between a superior employee and inferior employee. The corporation is on the hook for sexual harassment if there's any kind of exploitation in that relationship. And so what they're doing is protecting their bottom line. You may not like it, but that's the law.

ZAHN: Linda, you get the last word.

STACY: Why are we assuming it will be the woman whose's being exploited?

And number two, I don't see the whole point of exposing that. At what point does it become a relationship, a kiss, after a lunch, after a date?

At what point do you have on to go in and tell the principal?

ZAHN: Well, that's a good question to end with. That's something that will be debated as this continues to be looked at in Washington State. Linda Stacy, Wendy Murphy, thank you for both of your perspectives.

President Bush's approval ratings have been going downhill for months now, so how can he right the ship?

We are going to talk about the commander-in-chief and what he can do to improve his sells man-in-chief pitch when it comes to his agenda.

And tomorrow Defense Secretary Donald Rumsfeld is hearing calls for his resignation, including some for the GOP. Has Rumsfeld become too much of a lightning rod to ignore?

(COMMERCIAL BREAK)

ZAHN: It's been a ruffle couple months for President Bush. Intelligence flaps, U.S. casualties in Iraq and a sputtering economic have resulted in new lows for the presidents approval ratings. Is there anything he can do to turn the tide and better sell his agenda?

Donny Deutsche says, just the facts.

Mr. Deutsche joins us now, he's the chairman and CEO of Deutsche Incorporated an advertising firm based here in New York.

Always good to see you. Welcome back.

DONNY DEUTSCH, CHAIRMAN & CEO, Deutsch Inc.: Great to see you, Paula, thanks.

ZAHN: We know historically every president has had to be sort of a salesperson.

DEUTSCH: Part of the job.

ZAHN: What kind of job has this president done?

And I guess you have to look at...

(CROSSTALK)

DEUTSCH: Exactly. To date, the jury is out. And if you took a snapshot today, not very good. A lot of people are feeling did they have the facts up front. You know, this $87 billion number on the war, the length of time. Once again, I think people were clearly behind him going forward.

I think the issue is now, did they get everything?

Were they holding back?

And I think the reality is any good advertising, any good marketing, any good selling assumes intelligence on its audience, that they can take the facts, we don't have to hide anything from him, and I think that's where he's fallen short a bit.

ZAHN: Take a look this evening with some of the images the American public has had to confront. Let's go back to the famous "mission accomplished" speech aboard the USS Lincoln. You can look at this along side me.

The Bush administration must have believed it had gotten this right, right?

DEUTSCH: Once again, those images, clearly American people want to see images of Bush in powerful positions, you know, hands on, all that sort of stuff. ZAHN: And the president's people would argue this wasn't about him, they say he was there to honor of troops whose jobs were finished at that point.

DEUTSCH: Yes. Yes. Clearly this is all well-crafted stuff, but the big issues once again the people are saying now is why did we not get the number up front? Why were we not told the extent of what -- clearly, I don't think people said, this is a surprise and the Bush administration is finding out about this. I think people feel they get spoon-fed what and when the administration wants to give it to them, and I don't think that's sound marketing.

ZAHN: Which explains the cover story of "Time" magazine cover story this week, "Mission not accomplished."

DEUTSCH: Well, that's it. And you know what, the American public once again is behind Bush. They would accept from the get-go, this is going to be much longer than we thought. This is going to be very expensive. I think where Bush fell down once again was omission. And he has got to recover from that. Going forward, up front, everything, laid out there. People will be behind him.

Where he'll start to lose it is, and that 50 percent approval shows it is everything being put up front?

ZAHN: Can you give us insight to how often advertising companies are consulted by or consult with the White House?

DEUTSCH: The White House is doing this internally. You know, they are not reaching out. This is not Madison Avenue's job. You know, clearly this is what they do for a living. And obviously with Bush, up until recently have done it, you know, masterfully. The question now is going forward once again.

How do they handle it, how do they get him out of this 50 percent situation?

And I think there's a long road to head.

ZAHN: What would your campaign look like? In 15 seconds or less, Donny, if you could turn this around.

DEUTSCH: Very, very simple. A concept, the total truth, the total facts, everything up front. That's when a brand gets empathy, that's when a president gets empathy. No different.

ZAHN: It sounds like you have succeeded with that formula in the past, which explains your multi-billion dollar company. Donny Deutsch, thank you for dropping by.

We're going to take a short break. Gloria Estefan is back with her first English compilation in six years. She'll joins us live.

(COMMERCIAL BREAK)

(MUSIC) ZAHN: And that is the song "Wrapped" from Gloria Estefan's new CD called "Unwrapped." It is her first compilation in English in six years, and her most personal and revealing ever. For two decades, she's been famous for bringing the conga beat to the American audience, but her life and her music have taken her far beyond the dance floor, and Gloria Estefan joins us now. Congratulations.

GLORIA ESTEFAN, MUSICIAN: Thank you so much.

ZAHN: It's so nice to see you.

ESTEFAN: I'm happy to be here. I'm a big fan of yours. I watch you everywhere.

ZAHN: Well, this is a mutual admiration society. I watch you wherever you travel. I've never been fortunate enough to see you in person before. But tell us a little about (UNINTELLIGIBLE) CD. Now, when you're thinking about marketing something in English, is it a much different challenge than when you do it in Spanish?

ESTEFAN: It is different for many reasons. I mean, it's been quite a few years since I've done this. English is my first language -- I mean, I spoke Spanish first -- but it's the language that really is -- that I deeply know. I studied in it. And they wouldn't let me take Spanish in school, because I knew too much conversational Spanish. So I studied French instead.

It's different. It's a challenge. In Spanish there's no such thing as being too sweet with anything. It's -- you can really be dramatic and over the top with your emotion. English is a little more cerebral. You need to contain your emotion more. So I guess when you're writing, it's a different thing. I say I have an American head and a Spanish heart.

ZAHN: You were thinking very hard to sort of veer away from the Latin American sound and broaden out with this?

ESTEFAN: Well, no, actually there's a lot of Latin American sound in the musical part. And that's what I wanted to bring that was very different. This first song, "Wrapped," is actually a folkloric Peruvian tune, called "Iguano (ph)," and it was a challenge to put English lyrics to it, because it's a very circular melody, it doesn't stop. And I thought if there was going to be anything new, this would be a fantastic thing to bring.

ZAHN: There was also a song called "Famous," that I listened to pretty closely today, and these lyrics I found incredibly personal. And we're not able to isolate them on the CD, but you say something, "where in this world can I hide? Where can I find someone that sees me inside, to confide? How in this world can I go on wondering if you'll think of me when I'm gone? Shielding my eyes from the pitiless light of the glare. Should I care?" Sounds like you've really been hurt along the way.

ESTEFAN: Well, I'll tell you this, fame has been wonderful to me, I can't complain, but there are moments, as anybody that's had any kind of celebrity knows, where you are going through painful situations that you would much rather be in private. And that song is very much of an analysis. I think my fans will really be able to see how I think on there. I didn't realize until I finished writing it that every first word of the verse is a question -- because I'm a question girl. I'm looking for answers, constantly in my life. And when I say, should you care? It really means, like, I chose this, so there is really no reason for you to have to worry about this. So it's -- a lot of them are tongue-in-cheek, a lot of the lines, some of them are from, you know, pain that I've been through having to be exposed at very difficult moments, through fame.

But fame has been fantastic. I've really gotten a lot of love. And when I had my accident, a lot of people sent great vibration my way that I used in my recoveries.

ZAHN: And yet sometimes do you think with the profile you have that when people are mean-spirited, they somehow don't think it's going to puncture you in some way, that somehow the money should protect you from it, that somehow your status will protect you from it?

ESTEFAN: Well, I'll tell you this. You know, there's that age- old saying, if you can't take the heat, get out of the kitchen, which is true. I think every celebrity that reaches fame has got to know that that comes with the territory. But we're human beings. I mean, I purposely don't read a lot of the things that come out or even reviews sometimes, because no matter what, you're trying to do your art, you're trying to do what you love, and people forget sometimes that you're human. And of course your feelings can get hurt. That's for certain.

ZAHN: But I guess you can count on your husband and your lovely son, who spent the better part of the last two years recording your life on videotape.

ESTEFAN: Yes, he did.

ZAHN: In a documentary form.

ESTEFAN: More than two years, actually. There's a lot of footage on there that goes back 15 years that he shot when he was a little kid on the road with me.

ZAHN: Are they completely honest with you?

ESTEFAN: Yes.

ZAHN: If they don't like a song?

ESTEFAN: Oh, yes.

ZAHN: (UNINTELLIGIBLE) Gloria.

ESTEFAN: My husband -- my husband is brutally honest. And I love that. You know, I may not like it at the moment, I may say, oh, but then I look at what he's saying in his own inimitable way, and I say, well, he's got something there, and I'll go back to the drawing board or whatever. And my son, who contributes the DVD to this CD, it comes along as a gift, because I wanted something as intimate as the music to accompany it, and I gave him free reign. I thought the only value is if he really had freedom and I don't manipulate anything. So I trust him a lot.

ZAHN: What did you two learn about each other?

ESTEFAN: Well, I already knew he was very talented. He blew me away. I didn't see it until the end, because he kept making excuses. I wanted to see something, but he made excuses. And I think that he had a wonderful experience. I think that despite everything and the traveling, and he really loved it, and he had a great time, and I think he captured his parents. He really knows his parents well, and I think he shows us on the DVD.

What did he learn about me? I guess you'd have to ask him, because he's hermetic. I mean, I ask him things and he never tells.

ZAHN: Well, the other thing we should mention, that as a result of your injury, and I guess you still feel pain from that today, right?

ESTEFAN: If I don't work out. I'm titanium reinforced.

ZAHN: It sets off every little radar?

ESTEFAN: No, I'm not magnetic.

ZAHN: You're not magnetic? OK.

ESTEFAN: (UNINTELLIGIBLE) metal.

ZAHN: But you've raised some $40 million for spinal cord research.

ESTEFAN: Yes.

ZAHN: ... which is a great triumph.

ESTEFAN: Yes, and several songs that I've written, "Coming Out of the Dark," "Path of the Right Love" and "Always Tomorrow" go directly into the foundation, because to me they were gifts, they came from somewhere else, these songs, and they're meant to be shared, and I'm really looking forward to the day when that cure happens. And it's very -- it's right around the corner. I'm convinced.

ZAHN: We're all feeling very hopeful about that...

ESTEFAN: I am, too.

ZAHN: ... with some of the major advancements we've seen in science. Gloria Estefan, what a gift you have.

ESTEFAN: Thank you so much.

ZAHN: Thank you for sharing it with us.

ESTEFAN: Thank you. My pleasure.

ZAHN: Appreciate you stopping by. And good luck in Las Vegas.

ESTEFAN: Thank you.

ZAHN: Bring down the house at Caesar's Palace.

ESTEFAN: You should come check it out.

ZAHN: We would love to.

ESTEFAN: All right.

ZAHN: We might come there live.

ESTEFAN: That would be great.

ZAHN: Good luck to you, Gloria.

ESTEFAN: Thanks.

ZAHN: We're going to be right back.

(COMMERCIAL BREAK)

ZAHN: And that wraps it up for us this evening. Thanks so much for being with us. "LARRY KING LIVE" is next. He talks with Neil Diamond. And tomorrow night, we're going to talk about the future of Donald Rumsfeld. A lot of calls for his resignation. We'll see what the root of those are. Please join us tomorrow night. Until then, have a good night.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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