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PAULA ZAHN NOW

Inside Guantanamo Bay; Ken Lay Indicted

Aired July 7, 2004 - 20:00   ET

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


(BEGIN VIDEOTAPE)
JUDY WOODRUFF, CNN ANCHOR (voice-over): Six hundred suspected terrorists from 42 countries caged, interrogated, some of them in shackles, all just a short hop from Miami. Tonight, inside the place they call Gitmo.

And thousands of jobs lost, billions in savings wiped out and a record-breaking corporate crash. Today, former Enron chairman Ken Lay indicted.

(END VIDEOTAPE)

WOODRUFF: Good evening. And thank you for joining us. I'm Judy Woodruff. Paula is off tonight.

Tonight, Ken Lay says that he will turn himself in tomorrow to face charges in the collapse of Enron. A grand jury handed up an indictment today. It is still under seal. We will learn on Thursday the exact charges. But three years ago, Enron was ranked No. 7 on the Fortune 500 list with 20,000 employees. It was a company that once had been a no-name pipeline firm and grew into a giant of the new economy by trading energy.

But the truth behind Enron's phenomenal success began to emerge in the summer of 2001, inflated profits, more than $1 billion in hidden debt and accounting tricks. And while Lay tonight says he did nothing wrong, he was the man in charge.

(BEGIN VIDEOTAPE)

KEN LAY, FORMER ENRON CHAIRMAN: Really not this morning. Thank you.

WOODRUFF (voice-over): In his 10 years as Enron's chairman, Kenneth Lay led the company to record profits, but he also led Enron to disaster when, in 2001, the Houston-based energy giant went belly up. The largest corporate bankruptcy in U.S. history threw thousands of employees out of work and many also lost life savings when their 401(k) plans went bust.

CHARLES PRESTWOOD, ENRON RETIREE: I still have all my stock. But the most important thing about that stock is the ink on it. That's about what it's worth.

WOODRUFF: Ken Lay was used to rubbing shoulders with the rich, famous and influential. President George W. Bush reportedly called him Kenny-boy. Once considered a warm fatherly figure, he quickly grew to be reviled when people learned that, while pushing employees to buy Enron stock, he was selling off his own shares. And it didn't help when his wife, Linda, publicly complained about being bankrupt. She even opened a new store in Houston to sell family furniture when records show the Lays were still worth millions.

For more than two years, Ken Lay has denied he was responsible for the company's collapse.

LAY: I and my team are convinced there is absolutely nothing there that would even become close to being criminal. And, if is there not, there should not be an indictment.

WOODRUFF: Evidence to the contrary included a memo sent into him in August of 2001 from Enron whistle-blower Sherron Watkins, saying, quote -- "I am incredibly nervous that we will implode in a wave of accounting scandals." Later that year, in December, Enron was forced to file for Chapter 11 bankruptcy protection.

Since then, Justice Department prosecutors have charged nearly 30 people in connection with the company's collapse, among them, Jeffrey Skilling, Enron's disgraced and now indicted CEO, who pleaded not guilty to 35 felony charges in February. And former Enron chief financial officer Andrew Fastow pleaded guilty to charges related to accounting fraud.

(END VIDEOTAPE)

WOODRUFF: Joining us now, senior legal analyst Jeffrey Toobin. He's in New York. And in Houston, Mimi Swartz, co-author of "Power Failure: The Inside Story of the Collapse of Enron."

Jeff Toobin, I hate to remind you, but you wrote that last year that you didn't think Ken Lay was going to be indicted. What has changed to make that happen?

TOOBIN: Well, if you're reminding me to eat some crow today, I think you're right.

(LAUGHTER)

TOOBIN: I predicted it and it has not come to pass. He has been indicted.

I think the biggest thing that's happened is that Andrew Fastow, who was the CFO, the chief financial officer, he was indicted, pled guilty and is now cooperating. He was the key to the fraud in this -- at this company. He knew where all the bodies were buried, most of them in his backyard, as it were. But he made millions. He was clearly corrupt. His cooperation has to have made the difference.

I don't know what he said, but he's obviously the key player.

WOODRUFF: Jeff, what is likely to happen next? First of all, what do we think he's going to be charged with? When do we think this trial is going to get under way? TOOBIN: Well, the trial will take months. This is a very complicated white-collar case. There will be an interesting legal controversy about whether he and Jeff Skilling are tried together, the CEO. The prosecutors want them tried together. They undoubtedly will be tried separately.

And I think that's the -- so I think -- and it will be after the election, without question. You asked me something else. What else did you ask me?

WOODRUFF: Well, just what happens next, how long? Yes, go ahead.

(CROSSTALK)

TOOBIN: And what are the charges.

The charges are almost certainly relating to fraud to prop up the stock price when, according to the investigation, they knew, the executives knew that the company was bankrupt, was in trouble, that they were propping up the stock price, defrauding the investors in the company.

WOODRUFF: Mimi Swartz, you've written about this company. You know so many people associated with it. There have been something like, what, 30 people indicted already. What difference does Ken Lay's indictment make?

MIMI SWARTZ, CO-AUTHOR, "POWER FAILURE": Well, I think it makes a big difference to people in Houston.

I think people have been waiting for this day for 2 1/2 years and everyone is very happy that it's come. There's 4,500 people who Enron put out of work and I think those are the people who are looking for satisfaction. I think now they think they're finally going to get it.

WOODRUFF: Do you think they thought this day would come?

SWARTZ: I don't think they did. I think there's been a lot of cynicism about government. I think people are really surprised to see that it has come. I'm surprised.

I think, once Skilling was indicted, I think then a lot of us thought that Lay's indictment might be inevitable.

WOODRUFF: Jeff Toobin, I, through e-mail, the miracle of e-mail, just got an eight-page statement from the Democratic National Committee. They're already all over this. They're talking about what good friends with President Bush Ken Lay was. They go on to talk about, this begs the question, this late indictment. They say, did Lay's relationship with the president have anything to do with the lengthy delay in this coming about?

TOOBIN: You know, I think -- I've read the same e-mail. I think it's a bunch of nonsense, Judy. This is no special treatment. Ken Lay is now looking at decades, not years, decades in prison. White-collar investigations take a long time. Fastow's plea wasn't that long ago. And these prosecutors, whom I know, are completely apolitical. I don't think there was any political shenanigans involved here at all.

WOODRUFF: Mimi Swartz, you were saying a minute ago some people thought, for political reasons, this might never happen. What did you mean by that?

SWARTZ: Well, I think people did think that Lay would be protected by the Bush administration. But I think, in fact, the Bush administration can spin this to their advantage and now show that even one of the president's largest contributors is now being going to be punished as a corporate criminal.

WOODRUFF: You mean the fact that it's happening during the campaign?

SWARTZ: Yes. I think the Bush administration can make hay with this now.

WOODRUFF: Jeff Toobin, what about that? I know you're not a political analyst, but from your perspective.

TOOBIN: Well, I think what I heard all of the time in covering the Martha Stewart case or any time you heard a white-collar case indicted, you'd always hear, well, but Ken Lay got away with it. Ken hasn't been indicted.

Well, that argument is gone now. But, keep in mind, this is far from a slam dunk against Ken Lay. Ken Lay was very much the supervisor. He was the chairman, not the CEO. It's going to be tough to pin actual criminal conduct on him.

WOODRUFF: Jeffrey Toobin, Mimi Swartz, thank you both. We're going to keep watching this moving story tomorrow when the indictment is unsealed. Thank you.

SWARTZ: Thank you.

WOODRUFF: When we return, victims of the Enron collapse, former employees who say they lost everything when the company went bust.

(COMMERCIAL BREAK)

WOODRUFF: When Enron collapsed, it cost thousands of people their jobs and their retirement savings.

Joining us now from Houston, Charles Prestwood. He retired from Enron in 2000 after 33 years as a plant operator. He says the company's downfall cost him more than $1 million. And in our studio in New York, Albane Perrine. She worked as an analyst at Enron and says she lost her 401(k) savings when she was laid off.

Charles Prestwood, what are you thinking now that you hear about the indictment of Ken Lay?

PRESTWOOD: Well, ma'am, it makes me feel real good to know that we're getting one closer. And just like I said on all the way back into November of 2001, that my total belief is anyone that had anything to do with the destruction of Enron should be held accountable and find out, you know, to the extent of their fate, you know?

WOODRUFF: Ms. Perrine, how do you feel about this?

ALBANE PERRINE, FORMER ENRON EMPLOYEE: I think it's a long time in coming and I think he's probably one of the last dominoes to fall of many and definitely responsible, maybe not as direct as Skilling or Fastow, but definitely he's been there since the beginning, definitely responsible.

WOODRUFF: So you think -- you hold him as responsible, if not more, than all the others?

PERRINE: I think so. He was there, too, to oversee. And I think he had the heart of the company because he had been there for so long. And I really feel like he didn't do the job that he was supposed to do. He should have been overseeing things a little bit more.

WOODRUFF: Mr. Prestwood...

PRESTWOOD: Yes.

WOODRUFF: ... has this happened quickly enough for you?

PRESTWOOD: No, ma'am, I don't think it has, because I just don't think it takes all this amount of time to find out if someone, you know, is involved in it and go ahead and indict, because I didn't know the process of this law was so slow myself.

WOODRUFF: You lost $1 million? Is that right?

PERRINE: No, ma'am, $1,310,000. That's how much my savings and my ESOP was worth when I retired.

(CROSSTALK)

WOODRUFF: And do you know the amount, Ms. Perrine, of your 401(k) that you lost?

PERRINE: Somewhere between $10,000 and $20,000. I think, for me, more importantly, was just about the career, financial analyst starting out. It's very cyclical. And when you have so many people put out on the street in the same industry, to bounce back was virtually impossible.

WOODRUFF: Mr. Prestwood, what should happen to Ken Lay? What do you think?

PERRINE: Ma'am, would you repeat that, please? WOODRUFF: What should happen to Kenneth Lay?

PRESTWOOD: Well, Ken Lay, he's just like everybody else to me. He's not above the law. And if a jury finds him guilty, he ought to go to jail just like everybody else does.

WOODRUFF: Well, he put out a statement today saying he's innocent. He said he's going to turn himself in, but he says that he did nothing wrong.

PRESTWOOD: That -- well, you know, I've heard that, too. But I tell you what. It would be easier for you to convince the Jews that Adolf Hitler didn't have anything to do with the Holocaust then it would be to convince me that Ken Lay is innocent.

WOODRUFF: Ms. Perrine, does it give you personal pleasure? What will it mean for you if he goes away to prison?

PERRINE: I don't think it's necessarily personal pleasure. I think it's more of satisfaction to know that those responsible are being held accountable. And, you know, in the end, I think the money lost is a loss. I'd like to have some of it recuperated, but it's nice to know that he's being brought to justice.

WOODRUFF: And, Mr. Prestwood, what about that? There are people who are looking at this, as you said a minute ago, wondering why he wasn't indicted long before now. I mean, is there anything that can happen to him or to any of the other top people at Enron that would make good or make whole what you lost?

PRESTWOOD: Well, if they're brought to justice, they should have to pay the money back that they got on ill-gotten gains, you know? And everybody else that had anything to do with it, in other words, all the Enron executives, all the banks and all the Savings and Loan, or whoever it might be, you know, they should be brought to justice, too.

In other words, us old retirees, we're just kindly a forgotten people anyhow, but we want our money back, because that's all we had.

WOODRUFF: Well, Charles Prestwood, we are going to have to leave it there. We wish you well, as we do Albane Perrine. Thank you both for being with us and sharing your stories. Thank you so much.

PERRINE: Thank you.

PRESTWOOD: Thank you, ma'am.

WOODRUFF: We appreciate it.

And when we come back, we're going to turn to the presidential campaign, a road tour and an advertising blitz, the selling of the Kerry-Edwards ticket.

And, later, the presidential candidates choose an unprecedented forum to speak to women voters. (COMMERCIAL BREAK)

WOODRUFF: Today in Ohio, for the first time, Senators John Kerry and John Edwards appeared on stage as running mates. They kicked off a new campaign together and they used the words optimism and values in an attempt to define it. At the same time, the Bush campaign, including the president himself, quickly tried to deflate the new Democratic ticket.

Here is Tom Foreman.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): Out on the campaign trail with headlines touting their new team, Kerry and Edwards are soaking up every moment.

SEN. JOHN EDWARDS (D-NC), VICE PRESIDENTIAL CANDIDATE: We believe that if we put our heart and minds behind it that anything is possible.

FOREMAN: Appearances like these and a half-dozen new commercials are making it clear they're going after voters with a double attack.

(BEGIN VIDEO CLIP, AD)

NARRATOR: A new team for a new America.

(END VIDEO CLIP)

FOREMAN: The ads show Kerry as the experienced master of politics and policy and Edwards as the popular newcomer.

(BEGIN VIDEO CLIP, AD)

NARRATOR: All his life has stood up for ordinary people against powerful interests.

(END VIDEO CLIP)

FOREMAN: All of it is timed to build momentum for the Democrats' convention later this month.

JOHN MERCURIO, CNN POLITICAL ANALYST: It's a turning point month for the Democrats in the sense that they really need to define themselves, define the ticket, define their agenda and define their message as they sort of try to generate excitement and energy for the campaign.

FOREMAN: But while getting a clear political message out is simple in theory, the details are devilish. The media scrutinizes every word. Entertainers poke fun.

UNIDENTIFIED MALE: It will be interesting to see how Republicans try to label the Massachusetts liberal and wealthy trial lawyer over the next few months. FOREMAN (on camera): And there is the opposition. In John Edwards' home state of North Carolina, President Bush pointed out what he's done for the economy.

(voice-over): And though he did not exactly say Edwards is inexperienced, listen.

QUESTION: He's being described today as charming, engaging, a nimble campaigner, a populist and even sexy. How does he stack up against Dick Cheney?

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Dick Cheney can be president.

FOREMAN: The president's latest ad focuses on his association with popular Senator John McCain.

(BEGIN VIDEO CLIP, AD)

SEN. JOHN MCCAIN (R), ARIZONA: I am honored to introduce to you the president of the United States, George W. Bush.

(END VIDEO CLIP)

FOREMAN: Still, Judy Phair from the Public Relations Society of America says the campaigns are missing something.

JUDY PHAIR, PUBLIC RELATIONS SOCIETY OF AMERICA: I don't think either campaign has completely hit upon its main message. But I would advise both candidates to really determine that early on and make sure that everything you do has that embedded within it.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED ACTOR: Bad cheetah.

(END VIDEO CLIP)

FOREMAN: She says popular ads like this one let you know immediately what they are saying. You want youth, adventure, health? Drink our soda. And she believes neither the Democrats, nor the Republicans have yet been able to do that.

(END VIDEOTAPE)

WOODRUFF: Tom Foreman with the latest on the campaign trail.

Well, joining us now to further analyze today's political developments, "TIME" magazine columnist and regular contributor to this program Joe Klein, and Ken Rudin, political editor for National Public Radio.

All right, Ken Rudin, first of all, do you agree with what that public relations expert said, that we haven't heard the main message yet?

KEN RUDIN, POLITICAL EDITOR, NATIONAL PUBLIC RADIO: Well, I think that's pretty true.

First of all, we're just being introduced to John Edwards, even though we did see him during the primary campaign. Of course, that nomination was basically over by Iowa and New Hampshire, so John Edwards fizzled, even though he was very -- the voters liked what they saw, but didn't see much of him. I think, once we start to see the conventions, once we start to see the debates in the fall, I think the issue will be joined, the campaign will be joined and we'll have a better idea of what is going on.

WOODRUFF: But, Joe Klein, a lot of people were giving pretty high marks to that picture today at least of the Kerry-Edwards ticket, with the wives and the children walking out. Do they get some credit for that?

JOE KLEIN, CNN CONTRIBUTOR: Oh, yes, it was a nice picture.

But, Judy, I noticed this really cool bit of body language there. John Kerry, who has a reputation for being aloof, is really a very huggy guy. John Edwards, who has a reputation for being a back- slapper, hail-fellow, well-met, is kind of standoffish. And the couple of times they tried to hug, Kerry made the move. Edwards kind of held back a little bit and then made the move. There is still some coordination that needs to be done there.

WOODRUFF: But in terms of the second day, how does this ticket look to you, Ken?

RUDIN: Well, the second day is great. I think the Mondale- Ferraro ticket on the second day in 1984 looked great, too, and, of course, they lost 49 states. But, again, this is not 1984. This is a 50-50 race. John Edwards does bring the kind of quantities that John Kerry clearly needs.

And, again, watching the second day, John Kerry smiled today. You don't see that happening much. And even though John Edwards

(CROSSTALK)

WOODRUFF: Noticed that.

RUDIN: That's right. And even though John Edwards may have said the same thing we have heard before, it looked very good 24 hours later.

WOODRUFF: Joe, we were talking about this before we came on the air. And that is, the president seemed pretty tight-lipped when he was asked about John Edwards today. What did you make of what he said?

RUDIN: Well, he seemed angry. He seemed a little angry and testy., And I think that these have been very, very difficult months for the president. The next few weeks may also be difficult, as the 9/11 Commission report comes out, as the report on the CIA comes out and so on. And I think he was showing the strain a little bit today. The other interesting thing about what the public relations person said is that messages have now come down to single words. The word that you heard repeated again and again and again today was values. The president said it. John Kerry said it. John Edwards said it. I think it's testing well in focus groups.

WOODRUFF: Yes, the word truth, too, we heard

(CROSSTALK)

RUDIN: Pessimism. The Republican mantra for the longer time was that Kerry was a candidate of pessimism. John Edwards was anything but pessimistic the last 24 hours.

WOODRUFF: And they made a point of saying, we are the team of optimism and hope and they kept talking about returning hope to America.

KLEIN: Well, it was almost like the president's father saying, message, I care. John Kerry said today, we are the ticket of optimism and values. And I don't know how effective that is.

WOODRUFF: Is this, Ken Rudin, truly a narrow window in which John Kerry and John Edwards have got to sell themselves to the American people, reintroduce themselves?

RUDIN: This has been a very truncated system. In the old days, we don't know who -- the old days -- in 1980, for example, we didn't know Ronald Reagan until he gave that great convention speech in Detroit.

Now we are supposed to know everybody, the candidates, right away. Basically, the Democratic ticket has the field and the attention spotlight for themselves for the next three weeks. And I think the money they are going to raise, the campaigning they're going to do, they're going to go into that Boston convention with the message saying that, we can be the future, we will be the future and we'll win in November.

KLEIN: I think, yes. I think that this election is going to come down to those debates in the fall. And that's when we're really going to see who these two guys are in real time, where they can't, you know, use talking points in advance. We're just going to be their gut, your ears.

WOODRUFF: It seems like a long way away, but we know it is only a few months from now, less than four months until the election.

(CROSSTALK)

WOODRUFF: Joe Klein, Ken Rudin, terrific to see both of you. Thanks very much.

KLEIN: Good to be here.

WOODRUFF: And, tomorrow, John Kerry will give his views on the race for the White House when he and his wife, Teresa, talk with none other than CNN's Larry King Thursday night at 9:00 Eastern.

Next, an unexpected call to arms. A reservist explains why he is fighting an Army call-up that could ship him off to Iraq.

(COMMERCIAL BREAK)

WOODRUFF: Pentagon officials went before Congress today to defend the call-up of 5,000 former soldiers who are part of the Individual Ready Reserve. Some members of Congress believe the call- up is a sign the military is stretched too thin.

The Ready Reserve is made up of discharged soldiers who still owe the government some service. Although, unlike National Guard and Reserve troops, the Ready Reserves do no regular training.

The activation is a surprise to many of these ex-soldiers, and at least one of them is fighting it. David Mattingly has his story.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN CORRESPONDENT (voice-over): After four rewarding years of active duty as an artillery officer and four years in the reserves, 1st Lieutenant Todd Parrish said goodbye to the Army life.

1ST LT. TODD PARRISH, U.S. ARMY: I was proud to be in a uniform for the United States Army.

MATTINGLY: But now, six years after he last fired off a round and five years after he last held a rifle, Parrish could be bound for Iraq.

(on camera) At what point did it sink in that you're back in the Army now?

T. PARRISH: Pretty much when it said to the order of report date.

MATTINGLY (voice-over): A letter from Army human resources spelled it out in black and white. Parrish is one of 5,600 Individual Ready Reservists being called back into service.

The only problem is, he and his wife thought his obligation to the military ended in December.

COLLETTE PARRISH, WIFE: I just burst into tears. I burst into tears, and he tried to calm me down. And we kind of had to go from there.

MATTINGLY: Parrish only recently married his girlfriend, and the newlyweds were already planning a family. They bought a house.

He started a new job as a civil engineer, not knowing that the Army could change everything in a heartbeat.

(on camera) Parrish has his orders to leave his civilian life behind and report for duty on Sunday.

A military spokesman tells us it's because he was an officer that he can be called up not only now, but at any time for the next 20 years. That, according to the Army, is the law.

(voice-over) But that's news to Parrish, because he says it wasn't mentioned anywhere in the contract he signed with the Army back in college when he joined the ROTC.

His attorney is seeking an injunction in federal court and wonders how many more former officers might be having the same problem.

MARK WAPLE, TODD PARRISH'S ATTORNEY: It's only common sense for them to understand that when those eight years expire, that is the end of their obligation.

MATTINGLY: An Army spokesman says Parrish isn't the only former officer unaware of the rules, and his request to be exempt from reactivation is being considered.

In the meantime, Parrish, now 30 years old, in need of glasses and 20 pounds thinner than before, looks for a way to fit back into the uniform he never thought he'd wear again.

(END VIDEOTAPE)

WOODRUFF: And our David Mattingly with that story.

Joining us now from Raleigh, North Carolina, Todd Parrish, the man you saw in that report, and his attorney, Mark Waple.

Todd Parrish, what do you say to the Army? They are telling you that you owe them this obligation. You were an officer and when you're an officer in the Army, you're expected to be available for the next 20 years.

T. PARRISH: What I say to that is that I was never made aware of any information such as that when I sat down and signed a contract, when I first -- when I proceeded to get my ROTC contract from them.

WOODRUFF: Are you absolutely certain of that? Because they say it is -- it's part and parcel of the obligation.

T. PARRISH: I'm absolutely certain about my obligation through my contract.

WOODRUFF: Now, let me turn to your attorney, Mark Waple. You're seeking an injunction? Is that right? Are you making any headway in the courts?

WAPLE: Judy, we're prepared to file Todd's lawsuit in federal court tomorrow. The last word I had from the Department of the Army litigation division and the human resources command is that they were considering issuing a second 30-day delay in Mr. Parrish's case.

But, regardless of whether we get -- get a delay for Mr. Parrish, we intend to file his case in federal court tomorrow.

WOODRUFF: Todd Parrish, has this been -- has this been hard for you to go through? I mean, I can't even imagine what it's been like, but what -- what have you and your wife -- what has it been like?

T. PARRISH: It was very tough in the beginning. We had to sit down and we talked through a lot of things. We started looking through my information.

We started also, I mean, you guys still take the corrective measures you need to do in case I do have to be deployed and in case a federal court judge tells me, "Hey, you've got to go." Then, of course, I'm going to respond to that.

So I prepare in -- for the worst-case scenario, which would be to go and serve for my country again. I call it the worst-case scenario just because it was never in the plan. It was never part of the contract or the obligation. It was never informed to me that there was anything further I needed to do outside my first resignation from active duty.

WOODRUFF: I'm just reading a little bit more from the statement that the Pentagon gave us when we asked them about your case. And, basically, they're saying that, unless you resigned or you were removed for unsatisfactory service, that this obligation holds.

Is it -- are you contending that you did actually resign?

PARRISH: I resigned from my active duty service with the understanding that, upon the acceptance of that resignation, I complete my four years in my IRR for my eight-year contractual agreement, and then I would be discharged from the military.

WOODRUFF: And did you get a confirmation of that from the Army?

PARRISH: Did I ever get confirmation from the United States Army that I had been discharged?

WOODRUFF: Correct.

PARRISH: To the question, no, I did not.

WOODRUFF: Didn't that -- did that not make you wonder, though, about your status?

PARRISH: No. The contract is very black and white.

WAPLE: Judy, that's the...

WOODRUFF: Go ahead. Mark Waple.

WAPLE: You know, the -- I read this response that you received from the Army human resources command, and with all due respect to the -- to those folks, their argument just -- their position doesn't hold water. Todd Parrish's mandatory military service obligation expired on the 19th of December of last year. And for the Army to take the position that he's still subject to their jurisdiction because he didn't resign from the Reserves after that date is borderline on being absolutely absurd.

The federal courts have interpreted these ROTC scholarship contracts and agreements as contract law. And what Todd Parrish contracted to do was to serve in the Army Reserves for eight years and, in turn, the Army was going to send him, provide him three years of college tuition at North Carolina State University.

The Army got from Todd Parrish what he -- what they bargained for. And Mr. Parrish got from the Army what he bargained for. And that obligation simply expired on the 19th of December of last year.

That's really the issue here, despite what the human resources command folks have tried to say in their three-page single-spaced reply.

WOODRUFF: Clearly, a difference of opinion. Well, we're going to continue to follow this story. Follow it with the court proceeding starting tomorrow. Mr. Waple, Mark Waple, Todd Parrish, we thank you both for being with us.

WAPLE: Thanks for your interest.

PARRISH: Thank you.

WOODRUFF: And as I mentioned -- We thank you. As I mentioned, we did ask the Pentagon about the Todd Parrish case, and in a statement, the military says his request for a mobilization exemption is under consideration. You just heard that from the attorney.

When we return, Cuban soil under American control: inside Guantanamo Bay. A rare look at the U.S. military base with a controversial role in the war on terror.

(COMMERCIAL BREAK)

WOODRUFF: Americans will get to choose between President Bush and Senator Kerry a lot sooner than you may think. Next week, in fact.

But this choice won't be made at the polls. Instead, it will happen at newsstands across the country.

The upcoming issue of "Ladies Home Journal" will offer an unprecedented look into the lives of the Bushes and the Kerrys, and it will be up to you to decide which family you want on your coffee table.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): This a first: same magazine, two covers. One with the Bushes, one with the Kerrys. Readers choose which "Ladies Home Journal" to buy. Same content, different covers.

UNIDENTIFIED FEMALE: Obviously, it depends upon which candidate you favor.

UNIDENTIFIED FEMALE: Which one would you buy?

UNIDENTIFIED FEMALE: That's also asking which party I'm affiliated with.

WOODRUFF: This is a first. President Bush has not spoken to a women's magazine since taking office. "Ladies Home Journal" has 14 million readers, predominantly women. They are voters both Kerry and Bush want.

UNIDENTIFIED FEMALE: You know where I am.

UNIDENTIFIED FEMALE: And why would you choose this one?

UNIDENTIFIED FEMALE: Because I like the couple better.

UNIDENTIFIED FEMALE: I think the cover with George W. Bush and his wife.

WOODRUFF: The magazine's Diane Salvatore had exclusive access to the Bush ranch and caught the Kerrys on the campaign trail.

There was a poignant moment with each couple. For the Kerrys, when asked what advice they would give if, hypothetically, their children joined the military and went to Iraq, the Senator answered, "My advice to them on shipping out would be to do their duty and remember their fellows and people around them and beside them as they serve."

For the Bushes, the moment was, when asked, if Osama bin Laden could ever change, "I absolutely believe that people can go from evil to good. But I think it's too late for Osama bin Laden. As far as I'm concerned, there's nothing redeemable about him."

From the interviews, we also gain personal insight. As a husband, President Bush is charming and jokes with Laura, praises her compassion and warmth, says she's part of who he is. Bush also admits, "All marriages require work. I mean, marriages need to be saved nearly every day. Seriously, I mean, it is an accommodation."

As a husband, Senator Kerry calls Teresa "Sweetie," reaches for her hand occasionally, says she is a loving mother, and that neither of them have been labeled fairly by the press.

"I am who I am," Kerry says. "I love having fun. I love laughing. I love making jokes. The stereotypes are very deceiving."

KAREN TUMULTY, "TIME" MAGAZINE: It's always fascinating just to see the dynamic of a couple. It doesn't tell you so much what kind of leader that this person would be, so much as what kind of person he is.

WOODRUFF: It's left to the reader to decide, to choose which cover and, ultimately, which candidate.

UNIDENTIFIED FEMALE: I wouldn't be confused at all. I would just choose the one I wanted, just like always.

(END VIDEOTAPE)

WOODRUFF: Joining us now from New York, the editor-in-chief of "Ladies Home Journal," Diane Salvatore.

Diana Salvatore, first of all, congratulations on getting these interviews.

DIANE SALVATORE, EDITOR-IN-CHIEF, "LADIES HOME JOURNAL": Thanks, Judy.

WOODRUFF: So President Bush says he has to work at marriage, is that right?

SALVATORE: Well, you know, we were talking about "Ladies Home Journal's" column, "Can This Marriage be Saved?"

And that's why he referenced and said, you know, "I understand that. I get that." He said, you know, perfect marriages, happy marriages don't just happen. You do have to work on them every single day. So that was the sense in which he was referencing it.

And certainly it seems clear that the Bushes do have a happy marriage. They have a lot of the same opinions. They're big supporters of each other.

WOODRUFF: So he didn't give any details on how they have to work at it?

SALVATORE: No, although he had said when -- when we interviewed him last year that Mrs. Bush does get on his case about leaving wet towels on the bathroom floor. So I think is there's a lot of ordinary fighting that goes on in that house, too.

WOODRUFF: Gosh, I think a lot of people will identify with that.

What about the Kerrys? What did you see that maybe the rest of us haven't seen yet?

SALVATORE: You know, there was almost a feeling of still newlyweds about them. And you know, it's important to remember, of course, that this is a second marriage for both of them. Mrs. Heinz- Kerry is obviously a widow and the senator is divorced.

And there was a sense that they were really grateful to have found each other late in life, that it was colored a little bit by loss and pain and sadness. They don't take anything for granted.

And what's an interesting contrast is that the Kerrys are both clearly very independent people. They're very separate people. They were not afraid to disagree about issues in front of me, particularly about gay marriage, for instance. Whereas, the Bushes are very much like-minded. They've been married for a long time, since their early 30s. And they've kind of grown up together. And there's a kind of more sympathy and synergy between them where they can finish each other's sentences.

But the Kerrys also have a happy marriage. Just clearly different.

WOODRUFF: I can't wait to read it. Why two covers?

SALVATORE: Well, I felt it was important for our 14 million readers, first of all, to understand that we had both interviews inside, that both campaigns felt it was important to speak to women.

And as we know, that this election is very likely to be decided by the undecided voter and a large hunk of those are, in fact, married suburban women, which is the "Ladies Home Journal" reader.

So I wanted to be able to communicate that both interviews were inside and that readers should read deeply, understand the issues, and vote on November 2.

WOODRUFF: So you didn't do it because we keep hearing the country is so polarized that each side doesn't want to hear about the other side?

SALVATORE: No. In fact, I think the whole point is to communicate that we were not making an endorsement. This was not about a choosing or polarizing. It was really about making the candidates express their views to this powerful voter base that is women today.

WOODRUFF: How -- are you going to announce to the world how many of each cover sold?

SALVATORE: We actually won't be able to know precisely without having to do with the retail marketplace today, but actually that -- that wasn't our main interest. It wasn't -- it wasn't about making it a bake-off. That will, of course, happen at the polls.

This was really about saying that "Ladies Home Journal" had access on your behalf to both of the candidates. The candidates want to speak to women, and they were generous with their time.

WOODRUFF: Well, if you figure out a way to find out how many of each sold, you know we'd be interested in reporting that.

SALVATORE: OK. Thank you, Judy.

WOODRUFF: Thank you very much, Diane Salvatore, editor-in-chief of "Ladies Home Journal." Thank you very much.

When we come back, a rare look inside the American base at Guantanamo Bay, Cuba, where hundreds of suspected terrorists are being held.

(COMMERCIAL BREAK)

WOODRUFF: The Pentagon says nine more prisoners held at the U.S. naval base on Guantanamo Bay, Cuba, could face trials before military commissions.

In its announcement today, the military accused the prisoners of participating in terrorist attacks or being members of al Qaeda. No charges have been filed against them, just like no charges have been filed against most of the nearly 600 detainees held at Gitmo.

The debate over their legal rights is just the latest chapter in Guantanamo Bay's controversial history.

Cuba's leader, Fidel Castro, has long considered the base illegitimate. The U.S. obtained a lease for it in 1903. The rent is about $4,000 a year. Castro has refused the money, but his defiance hasn't slowed U.S. activity on the land.

(BEGIN VIDEOTAPE)

WOODRUFF (voice-over): For decades, some Cuban refugees seeking asylum in the United States have been sent to Guantanamo after being intercepted on the high seas.

And in the 1990s, thousands of refugees from Haiti were brought here and, unable to find asylum, remained in legal limbo for months before being returned to Haiti.

But in 2002, Guantanamo Bay faced its biggest challenge when the U.S. government began sending hundreds of suspected al Qaeda and Taliban prisoners, captured in and around Afghanistan, to the naval base, arguing that, because they were housed outside the United States and designated enemy combatants, not prisoners of war, the detainees had no constitutional rights and could be held indefinitely without knowing the charges against them.

DONALD RUMSFELD, SECRETARY OF DEFENSE: They are not common criminals. They're enemy combatants and terrorists who are being detained for acts of war against our country. And that is why different rules have to apply.

WOODRUFF: That is the stance that has enraged the international community and raised questions about the detainees' uncertain legal status, even from our closest political ally, British Prime Minister Tony Blair.

TONY BLAIR, BRITISH PRIME MINISTER: Guantanamo Bay is -- is an anomaly that at some point has got to be brought to an end.

WOODRUFF: Last week, the U.S. Supreme Court rejected the U.S. government's argument that detainees at Guantanamo Bay were outside the law, saying prisoners had a right to access American courts.

(END VIDEOTAPE)

WOODRUFF: Our own national correspondent, Bob Franken, is at Guantanamo Bay, Cuba. And today, he was given a tour of the U.S. facility there. He joins us now with a rare inside look.

Bob, what did you see?

BOB FRANKEN, CNN CORRESPONDENT: Well, what we saw, of course, is what the government wanted us to see. It was a tightly controlled tour.

We were allowed to shoot detainees, as you would be able to see from the video. We cannot show their faces. That is one of the claims by the Bush administration that it adheres to one of the provisions of the Geneva Convention. At the same time, it doesn't recognize the convention applying here.

We were allowed to watch an interrogation. Obviously, no abuse. The concerns were that there have been some abusive sessions here. Officials here adamantly insist that's not the case. What we saw today was an animated but almost cordial conversation between the interrogators and the detainees -- Judy.

WOODRUFF: How do you know, Bob, that they weren't just putting on a nice show for you and other reporters?

FRANKEN: Well, we certainly don't. And as a matter of fact, because of very severe restrictions, some are left with that suspicion.

However, they make the point that there has been no indication that there has been abuse here, only that some of the procedures that were developed at Guantanamo were then exported to the Iraqi prisons, where things got out of control.

They say that here -- this is their claim -- that they have very, very tight command control here. And that also Guantanamo Bay is just a different animal from Iraq, mainly because of its long, long distance from the battlefield.

WOODRUFF: Bob, very quickly, did you hear any opinions there or comments about what happened at Abu Ghraib in Baghdad?

FRANKEN: Just about everybody here who's involved in a security position said he or she was embarrassed about what happened over there.

WOODRUFF: Let me ask you about the Supreme Court ruling the other day, Bob. Clearly, that's a victory for the detainees. You talked today, I gather, with one of the lawyers representing one of them. What do they say about what's next?

FRANKEN: Well, she's a military lawyer for one of the detainees who is facing a tribunal. She says, that notwithstanding the Pentagon' announcement, it's not going to allow lawyers to deal with all the detainee hearings.

She does represent a detainee. She's going to allow him to -- to have civil proceedings in court, even though she said the military has left her with resources that are woefully inadequate. (BEGIN VIDEO CLIP)

LT. COL. SHARON SCHAEFER, U.S. AIR FORCE: Mission impossible. How can it even be accomplished when we're not having -- when we don't have the basic resources we need to do our jobs?

(END VIDEO CLIP)

FRANKEN: And, of course, now there are 15 detainees who have been moved to the special section of the prison which is dedicated to them and the lieutenant criminal who -- Sharon Schaefer says that's going to make the resources even less adequate.

WOODRUFF: So Bob, we should just assume Guantanamo Bay will continue to be used for these kind of prisoners for the indefinite time -- indefinite period ahead?

FRANKEN: That seems to be the administration's plan, even though the Supreme Court has said it is not beyond the reach of the courts. It is still way away from the United States and any danger there, and of course, from the battlefields.

WOODRUFF: Bob Franken, who today was given a tour of the facilities at Guantanamo Bay, Cuba. Bob, thank you very much and travel safe.

We will be right back.

(COMMERCIAL BREAK)

WOODRUFF: That's all we have time for tonight. Thank you for joining us.

Tomorrow, the president and the press. They don't meet often, and not many sparks fly when they do. We'll look at whether the American media isn't aggressive enough when it comes to questioning the president.

"LARRY KING LIVE" is next. 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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