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CNN Live At Daybreak

Angelo De La Cruz is Free; Berger Under Investigation by Justice Department for Allegedly Walking Away with Sensitive Materials

Aired July 20, 2004 - 06:00   ET

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

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


BETTY NGUYEN, CNN ANCHOR: Free from his captors, the Philippine government met their demands to pullout troops. This morning, this man is free.
It's Tuesday, July 20 and this is DAYBREAK.

Good morning, from the CNN global headquarters, in Atlanta. I'm Betty Nguyen, in for Carol Costello.

Now, in the news, a Philippine truck driver taken hostage in Iraq earlier this month is a free man this hour. A spokesman for the United Arab Emirates says he is now safe in their Baghdad embassy. His release came after Manila agreed to remove its small contingent of humanitarian troops.

Former National Security Adviser Sandy Berger is under investigation for allegedly removing classified material from a National Archive screening area. Berger, who served in the Clinton administration, was in charge of reviewing numerous sensitive documents for consideration by the 9/11 Commission. Berger says he took the documents by mistake.

Israel's West Bank barrier, the International Court of Justice says it should come down. This afternoon, the U.N. General Assembly could vote on whether to back the court.

Federal Reserve Chairman Alan Greenspan is talking to Congress today. He's making his regular appearance before the Senate Banking Committee on the state of the nation's economy. Analysts don't expect him to break any major financial news this afternoon.

Haiti's prime minister is seeking $1.3 billion at an international donor's conference going on today in Washington. Secretary of State Colin Powell addresses the group just about two and a half hours from now.

Keeping you informed CNN, the most trusted name in news.

After being held hostage for nearly two weeks, Angelo de la Cruz is free. The Filipino truck driver is now at the Philippine Embassy in Baghdad. This release comes one day after the government pulled the last of its troops out of Iraq.

We want to go now to our Maria Ressa in Manila, with more on this development, this morning. Very good news for his family, Maria.

MARIA RESSA, CNN CORRESPONDENT: Absolutely, Betty. Right now, there are pictures on national television here in the Philippines, showing Angelo de la Cruz walking into the Philippine Embassy in Baghdad. Well-wishers there -- that simulcast, along with reactions from his hometown. People cheering, people watching the video of him. He looks like -- certainly, he looks like he's lost some weight. But he looks like he is in good health.

Just a little less than an hour ago, he had a five-minute phone telephone call with Philippine President Gloria Macapagal Arroyo. Shortly after that, she gave her first statement in nearly a week in a half, since this hostage situation began. It's the first time that she's appeared on national television. This is what she had to say.

(BEGIN VIDEO CLIP)

GLORIA MACAPAGAL ARROYO, PRESIDENT OF THE PHILIPPINES: I'm happy to announce that our long, national vigil involving Angelo de la Cruz is over.

(APPLAUSE)

ARROYO: I thank the Lord Almighty for His blessings. I just spoke to him. His health is good, his spirits high and he sends best wishes to every Filipino for their thought and prayers.

(END VIDEO CLIP)

RESSA: A 46-year-old Angelo de la Cruz was a truck-driver when he was kidnapped in Iraq. He has got eight children. His wife and his brother are in the Middle East now. We just saw a reunion with his brother.

At this point, Philippine President Arroyo has a victory at this present moment. But at the same time, she faces stinging international criticism. A short statement addressing that, she said, quote, "With over one million OFWs, overseas foreign workers, in the Middle East, and over eight million Filipinos the world over; my government has a deep national interest in their well-being wherever they live and work. I made a decision to bring our troops home a few days early, in order to spare the life of Angelo. I do not regret the decision."

Those are the words of Filipino President Gloria Macapagal Arroyo in -- on -- over her decision to give into kidnappers' demands -- Betty.

NGYUEN: Maria Ressa, a happy moment for many folks there in Manila, today. Thank you.

Former National Security Adviser Sandy Berger says he had no intention of withholding classified documents from the 9/11 Commission. Berger is under investigation by the Justice Department for allegedly walking away with sensitive materials. CNN's Bob Franken joins us on the phone from Washington, with more on this investigation.

Very interesting, Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Very interesting. And the timing is interesting. This information came from the Justice Department just a couple of days before the 9/11 Commission is going to be putting out a report that is expected to be very critical about several of the Justice Department operations. Nevertheless, the FBI earlier in the year searched the home of Sandy Berger. Sandy Berger was President Clinton's National Security Adviser for the entirety of his final administration.

And they were searching for documents that Berger admits that he accidentally -- he says, accidentally took from the National Archives, as he researched at the behest of President Clinton, former President Clinton. Researched classified material for presentation before the 9/11 Commission. Berger testified before the committee. We know that President Clinton also spoke with the committee.

Berger says in a statement, quote, "I inadvertently took a few documents from the Archives. When I was informed by the Archives there were documents missing, I immediately returned everything I had, except for a few documents that I had apparently discarded." He says, "I deeply regret the sloppiness involved."

He had taken notes and had removed his notes; that is not the issue. He says that he accidentally put in some documents that had to do with the review of the Clinton administration's handling of the millennium threat by al Qaeda, in what were called, "After Action Reports." Considered highly sensitive. He says he believes he discarded those items. An investigation continues.

It should be pointed out, Betty, that the mishandling of classified material, particularly of an upper level administration -- officials of any administration, is considered an extremely serious matter.

NGUYEN: Absolutely. A little interested about the documents that he discarded. You alluded to a little bit about what they contain. Anything else, valuable information in those papers that were thrown away?

FRANKEN: Well, that is always the fear. obviously because they were so deeply classified, there has been very little information about them. However, Richard Clarke, you remember Richard Clarke, who's the person who became so critical of the Bush administration, and its reaction to terror, had been the person who had written several drafts of the so-called "After Action Reports." That had to do, as I said, with the December 1999 millennium threat. And the apprehension of somebody of who, we are told, had been sent to the United States to try and blow up LAX, Los Angeles Airport.

In any case, they were documents relating to that. Berger, who as I said, testified before the commission, is now being investigated for the mishandling of these documents.

NGUYEN: CNN's Bob Franken on the phone with us. Thank you.

More legal troubles to tell you about. This time, it's the Halliburton Company. The Texas-based company says it's received a federal grand jury subpoena for documents from its Cayman Islands subsidiary, which has operations in Iran. The US has trade sanctions against Iran. A U.S. company cannot own or manage a foreign subsidiary in Iran.

Now Halliburton, one of the world's largest oil field companies, says it will work with the government to resolve this matter.

The Senate Intelligence Committee is debating a bill this afternoon that would establish a director of National Intelligence. The recommendation is expected to be part of the 9/11 Commission's final report, which is due out this week. And President Bush hasn't said yet if he believes a new national security chief is necessary. He says he will comment, after seeing the report.

British police are launching an all-out investigation into how a top-secret file ended up on the side of the road, near Heathrow Airport. The dossier reportedly outlined 62 places at the airport al Qaeda is most likely to strike. Plus, it lists escape routes, police patrols and other security measures. Still, security officials say Heathrow isn't as vulnerable as it may seem.

(BEGIN VIDEO CLIP)

DAVID CLARIDGE, RISK ADVISORY GROUP: Heathrow, in comparison to most other potential targets around in the U.K., is much less vulnerable, probably, than others. But it is equally very attractive target. And we know that terrorist will continue -- continuously looking at aviation as a potential target. That is attractive to them and which gets their message across.

(END VIDEO CLIP)

NGUYEN: Sources say the driver who found the report supposedly called a British tabloid, before calling police. The "Sun" newspaper is running excerpts of the file.

Here are some stories making news "Across America" this Tuesday. A month after disappearing, under mysterious circumstances in Iraq, a Marine corporal offers his first public explanation of what happened. The military is investigating whether Wassef Ali Hassoun's reported kidnapping was a hoax, and whether he deserted his unit. Hassoun says he wants to set the record straight.

(BEGIN VIDEO CLIP)

CPL. WASSEF ALI HASSOUN, U.S. MARINE CORPS: I did not desert my post. I was captured, and held against my will by anti-coalition forces for 19 days.

(END VIDEO CLIP) NGUYEN: Investigators have yet to question Hassoun, who has not been charged with any wrongdoing. He'll soon return to his unit's home base in Camp Le Jeune, North Carolina.

People are returning to their homes in Southern California. Weekend wildfires forced the evacuation of more than 1600 houses in Santa Clarita. But residents have returned to all but 350 houses. Firefighters have been able to surround the fire, which is now about 45 percent contained. A Santa Clarita fire burned nearly 6000 acres.

And a fire caused serious damage to the Florida home of Steve Sipek. He is the owner of Bobo the Tiger. As you remember, Bobo was killed by officers after escaping last week. Firefighters responding to that house fire were delayed, while Sipek rounded up his other big cats. Deputies stood by with shotguns, just in case any of those animals escaped.

And we do have some dramatic video of hostage rescue in South Carolina. In Spartanburg, police were making a routine traffic stop Monday morning. But like so many similar stops, this one turned tense and ugly. The video is courtesy of our affiliates WHNS and WSPA.

(BEGIN VIDEO CLIP)

NGUYEN (voice-over): It began about 8:00 Eastern Monday morning, and ended 13 hours later. Police say a 38-year old man ran from officers into a convenience store, taking a female hostage. About 8:30 in the evening, construction equipment tore a hole inside of the store. Shortly after that, the man who had run from police appeared in the rubble, holding his hostage.

With television cameras rolling and a crowd watching from a distance, a police sniper shot him in the shoulder. A few uneasy moments later, the hostage came running out: scared but safe. After a few more minutes, police moved in, cuffing James "Jimmy" Colin Johnson.

(END VIDEO CLIP)

NGUYEN: Now, the suspect was being treated overnight at Spartanburg Regional Hospital, and is expected to face several charges related to the hostage-taking incident.

Still to come here on DAYBREAK, here what Martha Stewart told CNN's Larry King last night.

At 17 past the hour, a match brewed in heaven. A big name beer merger could be in the works.

Then 10 minutes from now, Arafat and the Palestinians. Amid all the ongoing chaos and political instability, how tight is his grip on leadership?

Plus, at 30 past, we'll go live to Baghdad where a Filipino hostage, held for nearly two weeks, is now a free man.

And at 50 past the hour, the writers who make that "dark and stormy night" line look like a novel masterpiece.

This is DAYBREAK for July 20.

(COMMERCIAL BREAK)

NGUYEN: Welcome back. Your news, money, weather and sports. The time right now is 6:16 Eastern and here's what's all-new this morning.

The president of the Philippines says a former hostage is in good health and his spirits are high. These are pictures just into us this morning. The truck driver is free after being held by insurgents in Iraq for nearly two weeks. The release comes one day after the Philippine government agreed to hostage taker demand to remove its troops from Iraq.

The regulation of gun dealers is woefully insufficient. That's the finding of a Justice Department investigation. It found gun laws are being under enforced and no action is being taken when violations are uncovered.

In money, $2 billion, that's how much money Delta Airlines says it lost last quarter. But the airlines' worst ever loss didn't seem to bother investors. Shares of Delta's stock rose 8 percent.

In culture, do you have a little Ted Nugent in you? Well, the on demand TV service Mag Rack is looking for the perfect guitar face. So warm up that snarl and get ready to wango tango.

Also in sports this morning, Dale Earnhardt, Jr. is back home in North Carolina. Earnhardt was released from the hospital after suffering second-degree burns on his face and legs during a racing wreck in California. Check it out. He is expected to race this weekend in New Hampshire, which is good news.

Martha Stewart says she hasn't decided yet if she'll go through with an appeal. In an interview with CNN's Larry King, Stewart says serving her 5-month prison sentence would bring what she calls, "finality" to her legal woes and would be good for business. But she says she wants to clear her name and restore her reputation.

(BEGIN VIDEO CLIP)

MARTHA STEWART, CONVICTED ENTREPRENEUR: No. You would be very frustrated. Everyone would be frustrated because you want people to know what you think, what the truth is, you want to tell them everything. And you just can't speak about it because anything you say might be held against you.

I think that there have been so many kind of misrepresentations of me and...

LARRY KING, HOST "LARRY KING LIVE": What's the biggest misconception do you think?

STEWART: Mean!

(LAUGHTER)

KING: Meanie?

STEWART: I'm a softie.

KING: How did that begin?

STEWART: I don't know.

KING: How did -- where did that start?

STEWART: Where does stuff like that start? I don't know.

KING: Well, maybe it's because you're a perfectionist. And perfectionists can get labeled meanie because they'll say, "move that tray!" Right?

STEWART: Well...

KING: Are you a perfectionist?

STEWART: I am a perfectionist. But I want to make sure that everybody understands that I'm not personally perfect.

(END VIDEO CLIP)

NGUYEN: A perfectionist but not a meanie. Stewart says she is considering writing a how-to book to help others dealing with legal troubles.

Well, the situation in Gaza is so chaotic and uncertain, even the U.N. is taking notes. We'll have much on that coming up.

So stay with us here at DAYBREAK.

(COMMERCIAL BREAK)

NGUYEN: The situation in Gaza is so chaotic and uncertain, even the U.N. is taking notes. Secretary-General Kofi Annan is calling on Palestinian Authority President Yasser Arafat to take the time to listen to his prime minister and cabinet members.

But as CNN's Alessio Vinci explains, Arafat is no stranger to troubled times.

(BEGIN VIDEOTAPE)

ALESSIO VINCI, CNN CORRESPONDENT (voice-over): Meeting school children, Yasser Arafat appeared unphased by two days of unprecedented rebellion against his authority. His prime minister insists he will quit over chaos in Gaza. Ahmed Qorei urged the Palestinian leader to seriously consider demands for reforms; it is his strongest criticism ever of Arafat.

AHMED QOREI, PALESTINIAN PRIME MINISTER (through translator): I call on you and tell you that the time has come to reactivate all the security operators on a proper basis. And the time has come to put the proper persons in the proper positions.

VINCI: Qorei spoke after hundreds of armed Palestinian militants went on a rampage this weekend in Gaza, burning a police station, attacking the headquarters of the Palestinian Intelligence Service. Militants violently rejected, as meaningful reforms, Arafat appointing his own nephew as new security chief.

BASSIM EID, PALESTINIAN ACTIVIST: By appointing Mr. Mussa Arafat yesterday or the day before, as the head of the Palestinian security -- the national security in Gaza, I think that Arafat proves by such kind of appoint that he's still interested in the corruption.

VINCI: Prime Minister Qorei appealed for calm, saying the Palestinian cabinet appointed a committee to address the current crisis.

QOREI (through translator): Who is corrupt and who isn't corrupt? These are the questions that are being raised. But this is not how corruption is solved.

VINCI: While Arafat clearly faces a growing challenge, some analysts predict the crisis may be resolved with new security officials. But Arafat, they say, will survive.

MAHDI ABDEL HADI, PALESTINIAN ANALYST: Arafat has been and will continue to be a maestro of tactics and the survival. And this is one of the serious crisis he has been facing since '83, like Lebanon. It's not a mutiny. It's not a coup d'etat. It's a real crisis between the old guards and the young guards. And he has to know that it's time for the old guards to leave the stage as soon as possible.

(END VIDEOTAPE)

VINCI: Addressing all those issues, the Palestinian cabinet is meeting for a third straight day in an emergency session in the town of Ramallah, the West Bank town of Ramallah. On the agenda, of course, the resignations of the -- the resignation of the prime minister, as well the situation in Gaza.

Chairman Arafat basically left with a few choices. He can accept those resignations and perhaps plunge the situation into even further chaos. Or reject them, perhaps demanding a reshuffle and begin talks perhaps of appointing a powerful interior minister. The current one is so weak. If you think about it, we haven't heard from him once in the last few days, despite the chaos in Gaza.

Betty, back to you.

NGUYEN: Alessio Vinci in Jerusalem, thank you for that.

We do want to get some analysis on this fragile situation in Gaza. Jon Alterman is a Middle East expert with the Center for Strategic International Studies and he joins us this morning from Washington.

Good morning to you. JON ALTERMAN, CTR. STRATEGIC INT'L. STUDIES: Good morning, Betty.

NGUYEN: Well, we understand this emergency meeting is underway at this hour. The whole situation is confusing and very complicated. Kind of help us understand exactly the root of this power struggle.

ALTERMAN: There has been this younger generation of people who basically lived in the Israeli occupied Gaza in the West Bank, through the whole period when the PLO was away. The PLO came back after the Intifada in the 1980s, they said OK, we're running the show. And the young people who had created the Intifada, who they thought had gotten Palestinian independence felt shunted aside.

Now that same group of people is saying look, it's time for us to take over. It's time for us to take power. It's time for the corrupt old men, who'd been sitting in Tunis and Beirut and everywhere else to leave the stage, and we will take the Palestinian national cause in our hands.

NGUYEN: Let's talk about that corruption because a lot of protesters are very upset over the fact that Yasser Arafat has appointed a relative to one of the top security positions. Is it as corrupt as these protesters say it is?

ALTERMAN: It's more corrupt than the protesters say it is. Either protesters are corrupt, or at least loyal to corrupt people as well. There are a lot of very wealthy security people in the West Bank, in Gaza; and you don't get wealthy taking a government salary. You get payoffs from foreign governments. You get payoffs from people if you turn a blind eye from criminals and everything else.

And corruption is an issue where Palestinian look around and say there's rubble all around us, but the security people are getting wealthy; something is really wrong.

NGUYEN: Ahmed Qorei has put in his resignation several times now. What happens next? Again, we're understanding that this emergency meeting is happening right now. Do you expect Arafat to accept that resignation?

ALTERMAN: I don't. Whenever you hear emergency, Yasser Arafat becomes more comfortable. Don't forget, he's basically been holed up in this compound in Ramallah, in Mukata for more than two years. He can't go out, but he's a master at playing one party off against the other, at balancing one person against the other. But he's getting older, things are getting worse on the ground. Ariel Sharon has been trying to provoke a crisis for him. Whether this is the crisis, I think it's probably not. But things could certainly come out differently than we're going into this week.

NGUYEN: Chaos, corruption, instability; what does this mean ultimately for the future of this peace plan in the Middle East?

ALTERMAN: Well, everybody's sense had been that you can't get peace as long as Yasser Arafat is there. That's certainly the sense that President Clinton's peace negotiators had, that's certainly Ariel Sharon's sense; and he's been trying to isolate and delegitimize Arafat for years. I don't think this is where Yasser Arafat leaves the stage, but Yasser Arafat could be weakened. He can have an awfully hard time.

The question though, is what happens next? And we have absolutely no clue what that might be.

NGUYEN: But we will be watching. Jon Alterman, thank you very much.

ALTERMAN: Good to be with you, Betty. Thank you.

NGUYEN: In the next half hour, we'll tell who is ahead in the race. The latest Gallup numbers on Bush-Kerry and a whole lot more.

(COMMERCIAL BREAK)

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Aired July 20, 2004 - 06:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BETTY NGUYEN, CNN ANCHOR: Free from his captors, the Philippine government met their demands to pullout troops. This morning, this man is free.
It's Tuesday, July 20 and this is DAYBREAK.

Good morning, from the CNN global headquarters, in Atlanta. I'm Betty Nguyen, in for Carol Costello.

Now, in the news, a Philippine truck driver taken hostage in Iraq earlier this month is a free man this hour. A spokesman for the United Arab Emirates says he is now safe in their Baghdad embassy. His release came after Manila agreed to remove its small contingent of humanitarian troops.

Former National Security Adviser Sandy Berger is under investigation for allegedly removing classified material from a National Archive screening area. Berger, who served in the Clinton administration, was in charge of reviewing numerous sensitive documents for consideration by the 9/11 Commission. Berger says he took the documents by mistake.

Israel's West Bank barrier, the International Court of Justice says it should come down. This afternoon, the U.N. General Assembly could vote on whether to back the court.

Federal Reserve Chairman Alan Greenspan is talking to Congress today. He's making his regular appearance before the Senate Banking Committee on the state of the nation's economy. Analysts don't expect him to break any major financial news this afternoon.

Haiti's prime minister is seeking $1.3 billion at an international donor's conference going on today in Washington. Secretary of State Colin Powell addresses the group just about two and a half hours from now.

Keeping you informed CNN, the most trusted name in news.

After being held hostage for nearly two weeks, Angelo de la Cruz is free. The Filipino truck driver is now at the Philippine Embassy in Baghdad. This release comes one day after the government pulled the last of its troops out of Iraq.

We want to go now to our Maria Ressa in Manila, with more on this development, this morning. Very good news for his family, Maria.

MARIA RESSA, CNN CORRESPONDENT: Absolutely, Betty. Right now, there are pictures on national television here in the Philippines, showing Angelo de la Cruz walking into the Philippine Embassy in Baghdad. Well-wishers there -- that simulcast, along with reactions from his hometown. People cheering, people watching the video of him. He looks like -- certainly, he looks like he's lost some weight. But he looks like he is in good health.

Just a little less than an hour ago, he had a five-minute phone telephone call with Philippine President Gloria Macapagal Arroyo. Shortly after that, she gave her first statement in nearly a week in a half, since this hostage situation began. It's the first time that she's appeared on national television. This is what she had to say.

(BEGIN VIDEO CLIP)

GLORIA MACAPAGAL ARROYO, PRESIDENT OF THE PHILIPPINES: I'm happy to announce that our long, national vigil involving Angelo de la Cruz is over.

(APPLAUSE)

ARROYO: I thank the Lord Almighty for His blessings. I just spoke to him. His health is good, his spirits high and he sends best wishes to every Filipino for their thought and prayers.

(END VIDEO CLIP)

RESSA: A 46-year-old Angelo de la Cruz was a truck-driver when he was kidnapped in Iraq. He has got eight children. His wife and his brother are in the Middle East now. We just saw a reunion with his brother.

At this point, Philippine President Arroyo has a victory at this present moment. But at the same time, she faces stinging international criticism. A short statement addressing that, she said, quote, "With over one million OFWs, overseas foreign workers, in the Middle East, and over eight million Filipinos the world over; my government has a deep national interest in their well-being wherever they live and work. I made a decision to bring our troops home a few days early, in order to spare the life of Angelo. I do not regret the decision."

Those are the words of Filipino President Gloria Macapagal Arroyo in -- on -- over her decision to give into kidnappers' demands -- Betty.

NGYUEN: Maria Ressa, a happy moment for many folks there in Manila, today. Thank you.

Former National Security Adviser Sandy Berger says he had no intention of withholding classified documents from the 9/11 Commission. Berger is under investigation by the Justice Department for allegedly walking away with sensitive materials. CNN's Bob Franken joins us on the phone from Washington, with more on this investigation.

Very interesting, Bob.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Very interesting. And the timing is interesting. This information came from the Justice Department just a couple of days before the 9/11 Commission is going to be putting out a report that is expected to be very critical about several of the Justice Department operations. Nevertheless, the FBI earlier in the year searched the home of Sandy Berger. Sandy Berger was President Clinton's National Security Adviser for the entirety of his final administration.

And they were searching for documents that Berger admits that he accidentally -- he says, accidentally took from the National Archives, as he researched at the behest of President Clinton, former President Clinton. Researched classified material for presentation before the 9/11 Commission. Berger testified before the committee. We know that President Clinton also spoke with the committee.

Berger says in a statement, quote, "I inadvertently took a few documents from the Archives. When I was informed by the Archives there were documents missing, I immediately returned everything I had, except for a few documents that I had apparently discarded." He says, "I deeply regret the sloppiness involved."

He had taken notes and had removed his notes; that is not the issue. He says that he accidentally put in some documents that had to do with the review of the Clinton administration's handling of the millennium threat by al Qaeda, in what were called, "After Action Reports." Considered highly sensitive. He says he believes he discarded those items. An investigation continues.

It should be pointed out, Betty, that the mishandling of classified material, particularly of an upper level administration -- officials of any administration, is considered an extremely serious matter.

NGUYEN: Absolutely. A little interested about the documents that he discarded. You alluded to a little bit about what they contain. Anything else, valuable information in those papers that were thrown away?

FRANKEN: Well, that is always the fear. obviously because they were so deeply classified, there has been very little information about them. However, Richard Clarke, you remember Richard Clarke, who's the person who became so critical of the Bush administration, and its reaction to terror, had been the person who had written several drafts of the so-called "After Action Reports." That had to do, as I said, with the December 1999 millennium threat. And the apprehension of somebody of who, we are told, had been sent to the United States to try and blow up LAX, Los Angeles Airport.

In any case, they were documents relating to that. Berger, who as I said, testified before the commission, is now being investigated for the mishandling of these documents.

NGUYEN: CNN's Bob Franken on the phone with us. Thank you.

More legal troubles to tell you about. This time, it's the Halliburton Company. The Texas-based company says it's received a federal grand jury subpoena for documents from its Cayman Islands subsidiary, which has operations in Iran. The US has trade sanctions against Iran. A U.S. company cannot own or manage a foreign subsidiary in Iran.

Now Halliburton, one of the world's largest oil field companies, says it will work with the government to resolve this matter.

The Senate Intelligence Committee is debating a bill this afternoon that would establish a director of National Intelligence. The recommendation is expected to be part of the 9/11 Commission's final report, which is due out this week. And President Bush hasn't said yet if he believes a new national security chief is necessary. He says he will comment, after seeing the report.

British police are launching an all-out investigation into how a top-secret file ended up on the side of the road, near Heathrow Airport. The dossier reportedly outlined 62 places at the airport al Qaeda is most likely to strike. Plus, it lists escape routes, police patrols and other security measures. Still, security officials say Heathrow isn't as vulnerable as it may seem.

(BEGIN VIDEO CLIP)

DAVID CLARIDGE, RISK ADVISORY GROUP: Heathrow, in comparison to most other potential targets around in the U.K., is much less vulnerable, probably, than others. But it is equally very attractive target. And we know that terrorist will continue -- continuously looking at aviation as a potential target. That is attractive to them and which gets their message across.

(END VIDEO CLIP)

NGUYEN: Sources say the driver who found the report supposedly called a British tabloid, before calling police. The "Sun" newspaper is running excerpts of the file.

Here are some stories making news "Across America" this Tuesday. A month after disappearing, under mysterious circumstances in Iraq, a Marine corporal offers his first public explanation of what happened. The military is investigating whether Wassef Ali Hassoun's reported kidnapping was a hoax, and whether he deserted his unit. Hassoun says he wants to set the record straight.

(BEGIN VIDEO CLIP)

CPL. WASSEF ALI HASSOUN, U.S. MARINE CORPS: I did not desert my post. I was captured, and held against my will by anti-coalition forces for 19 days.

(END VIDEO CLIP) NGUYEN: Investigators have yet to question Hassoun, who has not been charged with any wrongdoing. He'll soon return to his unit's home base in Camp Le Jeune, North Carolina.

People are returning to their homes in Southern California. Weekend wildfires forced the evacuation of more than 1600 houses in Santa Clarita. But residents have returned to all but 350 houses. Firefighters have been able to surround the fire, which is now about 45 percent contained. A Santa Clarita fire burned nearly 6000 acres.

And a fire caused serious damage to the Florida home of Steve Sipek. He is the owner of Bobo the Tiger. As you remember, Bobo was killed by officers after escaping last week. Firefighters responding to that house fire were delayed, while Sipek rounded up his other big cats. Deputies stood by with shotguns, just in case any of those animals escaped.

And we do have some dramatic video of hostage rescue in South Carolina. In Spartanburg, police were making a routine traffic stop Monday morning. But like so many similar stops, this one turned tense and ugly. The video is courtesy of our affiliates WHNS and WSPA.

(BEGIN VIDEO CLIP)

NGUYEN (voice-over): It began about 8:00 Eastern Monday morning, and ended 13 hours later. Police say a 38-year old man ran from officers into a convenience store, taking a female hostage. About 8:30 in the evening, construction equipment tore a hole inside of the store. Shortly after that, the man who had run from police appeared in the rubble, holding his hostage.

With television cameras rolling and a crowd watching from a distance, a police sniper shot him in the shoulder. A few uneasy moments later, the hostage came running out: scared but safe. After a few more minutes, police moved in, cuffing James "Jimmy" Colin Johnson.

(END VIDEO CLIP)

NGUYEN: Now, the suspect was being treated overnight at Spartanburg Regional Hospital, and is expected to face several charges related to the hostage-taking incident.

Still to come here on DAYBREAK, here what Martha Stewart told CNN's Larry King last night.

At 17 past the hour, a match brewed in heaven. A big name beer merger could be in the works.

Then 10 minutes from now, Arafat and the Palestinians. Amid all the ongoing chaos and political instability, how tight is his grip on leadership?

Plus, at 30 past, we'll go live to Baghdad where a Filipino hostage, held for nearly two weeks, is now a free man.

And at 50 past the hour, the writers who make that "dark and stormy night" line look like a novel masterpiece.

This is DAYBREAK for July 20.

(COMMERCIAL BREAK)

NGUYEN: Welcome back. Your news, money, weather and sports. The time right now is 6:16 Eastern and here's what's all-new this morning.

The president of the Philippines says a former hostage is in good health and his spirits are high. These are pictures just into us this morning. The truck driver is free after being held by insurgents in Iraq for nearly two weeks. The release comes one day after the Philippine government agreed to hostage taker demand to remove its troops from Iraq.

The regulation of gun dealers is woefully insufficient. That's the finding of a Justice Department investigation. It found gun laws are being under enforced and no action is being taken when violations are uncovered.

In money, $2 billion, that's how much money Delta Airlines says it lost last quarter. But the airlines' worst ever loss didn't seem to bother investors. Shares of Delta's stock rose 8 percent.

In culture, do you have a little Ted Nugent in you? Well, the on demand TV service Mag Rack is looking for the perfect guitar face. So warm up that snarl and get ready to wango tango.

Also in sports this morning, Dale Earnhardt, Jr. is back home in North Carolina. Earnhardt was released from the hospital after suffering second-degree burns on his face and legs during a racing wreck in California. Check it out. He is expected to race this weekend in New Hampshire, which is good news.

Martha Stewart says she hasn't decided yet if she'll go through with an appeal. In an interview with CNN's Larry King, Stewart says serving her 5-month prison sentence would bring what she calls, "finality" to her legal woes and would be good for business. But she says she wants to clear her name and restore her reputation.

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MARTHA STEWART, CONVICTED ENTREPRENEUR: No. You would be very frustrated. Everyone would be frustrated because you want people to know what you think, what the truth is, you want to tell them everything. And you just can't speak about it because anything you say might be held against you.

I think that there have been so many kind of misrepresentations of me and...

LARRY KING, HOST "LARRY KING LIVE": What's the biggest misconception do you think?

STEWART: Mean!

(LAUGHTER)

KING: Meanie?

STEWART: I'm a softie.

KING: How did that begin?

STEWART: I don't know.

KING: How did -- where did that start?

STEWART: Where does stuff like that start? I don't know.

KING: Well, maybe it's because you're a perfectionist. And perfectionists can get labeled meanie because they'll say, "move that tray!" Right?

STEWART: Well...

KING: Are you a perfectionist?

STEWART: I am a perfectionist. But I want to make sure that everybody understands that I'm not personally perfect.

(END VIDEO CLIP)

NGUYEN: A perfectionist but not a meanie. Stewart says she is considering writing a how-to book to help others dealing with legal troubles.

Well, the situation in Gaza is so chaotic and uncertain, even the U.N. is taking notes. We'll have much on that coming up.

So stay with us here at DAYBREAK.

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NGUYEN: The situation in Gaza is so chaotic and uncertain, even the U.N. is taking notes. Secretary-General Kofi Annan is calling on Palestinian Authority President Yasser Arafat to take the time to listen to his prime minister and cabinet members.

But as CNN's Alessio Vinci explains, Arafat is no stranger to troubled times.

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ALESSIO VINCI, CNN CORRESPONDENT (voice-over): Meeting school children, Yasser Arafat appeared unphased by two days of unprecedented rebellion against his authority. His prime minister insists he will quit over chaos in Gaza. Ahmed Qorei urged the Palestinian leader to seriously consider demands for reforms; it is his strongest criticism ever of Arafat.

AHMED QOREI, PALESTINIAN PRIME MINISTER (through translator): I call on you and tell you that the time has come to reactivate all the security operators on a proper basis. And the time has come to put the proper persons in the proper positions.

VINCI: Qorei spoke after hundreds of armed Palestinian militants went on a rampage this weekend in Gaza, burning a police station, attacking the headquarters of the Palestinian Intelligence Service. Militants violently rejected, as meaningful reforms, Arafat appointing his own nephew as new security chief.

BASSIM EID, PALESTINIAN ACTIVIST: By appointing Mr. Mussa Arafat yesterday or the day before, as the head of the Palestinian security -- the national security in Gaza, I think that Arafat proves by such kind of appoint that he's still interested in the corruption.

VINCI: Prime Minister Qorei appealed for calm, saying the Palestinian cabinet appointed a committee to address the current crisis.

QOREI (through translator): Who is corrupt and who isn't corrupt? These are the questions that are being raised. But this is not how corruption is solved.

VINCI: While Arafat clearly faces a growing challenge, some analysts predict the crisis may be resolved with new security officials. But Arafat, they say, will survive.

MAHDI ABDEL HADI, PALESTINIAN ANALYST: Arafat has been and will continue to be a maestro of tactics and the survival. And this is one of the serious crisis he has been facing since '83, like Lebanon. It's not a mutiny. It's not a coup d'etat. It's a real crisis between the old guards and the young guards. And he has to know that it's time for the old guards to leave the stage as soon as possible.

(END VIDEOTAPE)

VINCI: Addressing all those issues, the Palestinian cabinet is meeting for a third straight day in an emergency session in the town of Ramallah, the West Bank town of Ramallah. On the agenda, of course, the resignations of the -- the resignation of the prime minister, as well the situation in Gaza.

Chairman Arafat basically left with a few choices. He can accept those resignations and perhaps plunge the situation into even further chaos. Or reject them, perhaps demanding a reshuffle and begin talks perhaps of appointing a powerful interior minister. The current one is so weak. If you think about it, we haven't heard from him once in the last few days, despite the chaos in Gaza.

Betty, back to you.

NGUYEN: Alessio Vinci in Jerusalem, thank you for that.

We do want to get some analysis on this fragile situation in Gaza. Jon Alterman is a Middle East expert with the Center for Strategic International Studies and he joins us this morning from Washington.

Good morning to you. JON ALTERMAN, CTR. STRATEGIC INT'L. STUDIES: Good morning, Betty.

NGUYEN: Well, we understand this emergency meeting is underway at this hour. The whole situation is confusing and very complicated. Kind of help us understand exactly the root of this power struggle.

ALTERMAN: There has been this younger generation of people who basically lived in the Israeli occupied Gaza in the West Bank, through the whole period when the PLO was away. The PLO came back after the Intifada in the 1980s, they said OK, we're running the show. And the young people who had created the Intifada, who they thought had gotten Palestinian independence felt shunted aside.

Now that same group of people is saying look, it's time for us to take over. It's time for us to take power. It's time for the corrupt old men, who'd been sitting in Tunis and Beirut and everywhere else to leave the stage, and we will take the Palestinian national cause in our hands.

NGUYEN: Let's talk about that corruption because a lot of protesters are very upset over the fact that Yasser Arafat has appointed a relative to one of the top security positions. Is it as corrupt as these protesters say it is?

ALTERMAN: It's more corrupt than the protesters say it is. Either protesters are corrupt, or at least loyal to corrupt people as well. There are a lot of very wealthy security people in the West Bank, in Gaza; and you don't get wealthy taking a government salary. You get payoffs from foreign governments. You get payoffs from people if you turn a blind eye from criminals and everything else.

And corruption is an issue where Palestinian look around and say there's rubble all around us, but the security people are getting wealthy; something is really wrong.

NGUYEN: Ahmed Qorei has put in his resignation several times now. What happens next? Again, we're understanding that this emergency meeting is happening right now. Do you expect Arafat to accept that resignation?

ALTERMAN: I don't. Whenever you hear emergency, Yasser Arafat becomes more comfortable. Don't forget, he's basically been holed up in this compound in Ramallah, in Mukata for more than two years. He can't go out, but he's a master at playing one party off against the other, at balancing one person against the other. But he's getting older, things are getting worse on the ground. Ariel Sharon has been trying to provoke a crisis for him. Whether this is the crisis, I think it's probably not. But things could certainly come out differently than we're going into this week.

NGUYEN: Chaos, corruption, instability; what does this mean ultimately for the future of this peace plan in the Middle East?

ALTERMAN: Well, everybody's sense had been that you can't get peace as long as Yasser Arafat is there. That's certainly the sense that President Clinton's peace negotiators had, that's certainly Ariel Sharon's sense; and he's been trying to isolate and delegitimize Arafat for years. I don't think this is where Yasser Arafat leaves the stage, but Yasser Arafat could be weakened. He can have an awfully hard time.

The question though, is what happens next? And we have absolutely no clue what that might be.

NGUYEN: But we will be watching. Jon Alterman, thank you very much.

ALTERMAN: Good to be with you, Betty. Thank you.

NGUYEN: In the next half hour, we'll tell who is ahead in the race. The latest Gallup numbers on Bush-Kerry and a whole lot more.

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