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American Morning

Face-Off Looms Over Controversial Ports Deal; An Out-of-Control Prank in Alabama

Aired March 09, 2006 - 08:00   ET

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

MILES O'BRIEN, CNN CORRESPONDENT: Good morning to you.
I'm Miles O'Brien.

SOLEDAD O'BRIEN, CNN ANCHOR: And I'm Soledad O'Brien.

A faceoff looms over that controversial ports deal as House Republicans use emergency funding for Iraq in a high stakes game of chicken.

M. O'BRIEN: An out of control prank in Alabama. Three college students held on federal charges this morning for burning down churches, allegedly.

S. O'BRIEN: A housing problem could hurt the search for bodies in New Orleans. We're live in the 9th Ward with more on the latest roadblock to recovery there.

M. O'BRIEN: Allegations of insatiable greed in the Enron case. But the bitter words aren't being directed at the defendants.

S. O'BRIEN: And being mobile -- a look at keeping your joints healthy, especially your knees, in our 30s and our 40s and our 50s series.

That's ahead on this AMERICAN MORNING.

Welcome, everybody.

Let's start with a CNN Security Watch this morning.

President Bush thrown a little bit of a curve ball by House Republicans. A key committee ties the controversial port deal to Hurricane Katrina relief and the ongoing mission in Iraq.

AMERICAN MORNING'S Bob Franken live for us in Washington this morning -- hey, Bob, good morning to you.

BOB FRANKEN, CNN NATIONAL CORRESPONDENT: Good morning.

Not a curve ball, really, but a bean ball. This was really, really a tough piece of action by the Republican-dominated, underline Republican-dominated, House Appropriations Committee, with the expectation when it gets to the House of Representatives, the same legislation will pass the Republican-dominated House of Representatives. Then it would go to the Senate with its version. And the Democrats performing what most believe to be some political mischief over there. Democrat Charles Schumer has come up with legislation, an amendment to another essential piece, another essential bill, which would "stop any company that 'is wholly owned or controlled by any foreign government that recognizes the Taliban'" -- who could that be? -- "would not be allowed to operate ports in the United States."

Now, that would include Dubai, which, of course, is the owner and the operator of Dubai Ports World, which is expected to -- was scheduled, rather, the takeover of these six ports in the United States.

The White House is floundering around, to be perfectly honest about it, looking for some sort of compromise, recruiting John Warner, the respected chairman of the Senate Armed Services Committee, to try and come up with some sort of compromise that would allow the United States government to take over many of the operations at the ports owned and operated by Dubai Ports World.

That is what is being shpd around. A lot of people are saying, however, that it's too little too late -- Soledad.

S. O'BRIEN: Yes, OK, so given all of that, and when you use words like floundering and searching for compromise, it gives you an indication that the president's capital, political capital, is eking away more and more.

FRANKEN: Well, eking, perhaps, is a little bit of an understatement. Let us not forget one of the primary rules of politics -- only kick people who are down.

S. O'BRIEN: You have been in Washington way too long, my man. My dear man, our man in Washington has spent a few too many days there.

Bob Franken for us this morning.

Thanks, Bob.

He's beginning to scare me.

M. O'BRIEN: Yes.

S. O'BRIEN: Of course, you want to turn to CNN day and night for the most reliable news about your security -- Miles.

M. O'BRIEN: Six months after Katrina they are searching for bodies in New Orleans' wrecked Lower 9th Ward.

Or are they?

It turns out the searchers and their specially trained dogs have no place to stay.

Why not? Well, you might be able to guess.

CNN's Sean Callebs joins us live now from New Orleans with the story -- Sean, how did this one slip through the cracks?

SEAN CALLEBS, CNN CORRESPONDENT: Yes, this one is hard to believe and I think it's going to give this entire operation down here a black eye. There's frustration on both sides.

What it boils down to, we told you last Sunday, the dog team from the State of Maine found the first remains in a house in Lakeview. Well, in just a couple of hours, that same team from Maine is scheduled to drive back to their home state. They have been pulled out of this operation by their major. The reason? They say promises made here that were simply broken.

One, their hotel room was set to expire tomorrow morning, meaning they had no place to stay. Secondly, they were supposed to have a vet for their highly trained animals. And it may sound somewhat petty, but it's very important if you think about the fact that these animals crawl around on debris all day. Last time Buddy, the German shepherd from Maine, who was here last October and November, got a piece of glass in his eye, had to have minor surgery.

So how did it get to this point?

Well, here's what it boils down to. FEMA does have a block of rooms that they are paying for. However, FEMA says this isn't their fault. Under the contract that was written to bring these three dog teams in -- one from Georgia, one from Missouri and the one from Maine -- the state contract read that the state had to authorize accommodations for these people.

Apparently that was not done. The state said they'd never had to do that in the past. So there is frustration.

Last night, and it was late, I spoke with a FEMA spokeswoman in Washington. She is very frustrated by this and said she was going to try and work it out this morning. But when I talked to the two dog handlers from Maine, they said, "it would take a miracle" at this eleventh hour for their major to allow them to stay -- Miles.

M. O'BRIEN: Sean, can we get them a room? Can we get them some rooms, I mean, just to -- so they don't leave?

CALLEBS: Yes, we...

M. O'BRIEN: Because what a shame that would be if they left town.

CALLEBS: We had -- we had a 73-year-old woman call here last night after we did that report offering to pay for this -- for their room.

Now, these game wardens did have the opportunity to pay for their room themselves and then get reimbursed, but they said they were here -- they haven't been paid for the work in October. And game wardens are not known for their excessive salaries, so it was something they simply couldn't do.

It is very frustrating. I know there's a lot, a lot that has been going on in the past 12 or so hours, trying to keep this team, because this is one of the best teams in the nation. This one was hand selected to come down here because it was so effective when it was down at the end of last year.

M. O'BRIEN: What a shame if they pulled out of town today.

Sean, keep us posted.

Let's hope they find a solution to it.

Thanks very much.

How long will this search last, you may ask? And how many bodies do officials think they'll find?

Louisiana's medical examiner is our guest in the next hour. We'll ask him about this problem we just talked about and see if he has a solution. And we'll ask him what lies ahead in the Lower 9th Ward -- Soledad.

S. O'BRIEN: The criticism, of course, of the federal government doesn't -- doesn't end there. Democrats and small business owners are complaining that the Small Business Administration is mismanaged, also not getting help to where it's needed.

Let's get to our chief national correspondent John King.

He's live for us in Washington, D.C. -- hey, John, good morning.

JOHN KING, CNN CORRESPONDENT: Good morning, Soledad.

Many Republicans also complaining, perhaps not as publicly as the Democrats. The head of the Small Business Administration's name is Hector Barreto. Most Americans probably have never heard of him. But in the Gulf Coast and here in Washington, some are comparing him and his agency to FEMA under the former director, Mike Brown. And trust me, it's not meant as a compliment.

(BEGIN VIDEO TAPE)

KING (voice-over): Fried, then glazed, then wrapped -- Hubig's Pies back in business, no thanks to the federal government.

DREW RAMSEY, HUBIG'S PIES: We're not waiting for them to be the savior. We're not -- we did it on our own, without the SBA.

KING: Not that it didn't want help. Drew Ramsey says the company applied for a Small Business Administration disaster loan in October and still hasn't heard back.

RAMSEY: No, I'm sorry to say we were not unique. I think that we were much more the norm than the exception.

KING: Promises made, promises broken is the verdict of this new report on SBA's hurricane response by John Kerry and other Senate Small Business Committee Democrats.

While nearly $6 billion in SBA disaster loans have been approved, less than $500 million of that money has been disbursed.

SEN. JOHN KERRY (D), MASSACHUSETTS: Go ask them. They'll tell you they want the money now, they need the money now, they're just not getting it because the bureaucracy is in the way.

KING: SBA Administrator Hector Barreto says the numbers in Senator Kerry's report are misleading because many businesses that have loans approved decide not to take the money immediately.

HECTOR BARRETO, SBA ADMINISTRATOR: They don't have flood insurance or they can't get a building permit or they can't find somebody to actually rebuild their property.

KING: Several influential Congress Republicans are privately urging the White House to replace Barreto and sources familiar with the president's latest trip to Louisiana and Mississippi tells CNN he heard fresh complaints about the SBA.

BARRETO: We've learned a lot of things from this disaster. So, again, I can't pay attention to that criticism. We still have a lot of work to do.

KING: Gulf Coast Bank & Trust President Guy Williams says changing how the SBA works is more important than who runs it. Many of Gulf's branches were devastated, yet it made $20 million in loans last September, the month just after Katrina, compared to just $380,000 by the SBA.

GUY WILLIAMS, PRESIDENT, GULF COAST BANK: We in the banking industry suggested using the existing banking infrastructure to process loans. SBA instead wanted to hire 4,000 temporary workers. That inevitably created a delay.

KING: Just last week, the SBA said it would allow private banks to process some disaster loans -- too late to quiet the criticism and too late for Hubig's Pies, which says if it waited for SBA help, this 92-year-old New Orleans' landmark would not have survived.

(END VIDEO TAPE)

KING: Now, Mr. Barreto called before Congress again today. His own agency's inspector general is looking into the agency's response in the days and weeks immediately after Katrina. Mr. Barreto says the political criticism comes with the territory. He's confident he has White House support.

White House officials tell us, Soledad, they're looking for progress at the agency, but they take the complaints "quite seriously." S. O'BRIEN: Yes, and there are certainly a lot of them, aren't there?

John King for us this morning.

Thanks, John.

KING: Thank you.

S. O'BRIEN: Headlines now.

Carol has got those -- good morning again, Carol.

CAROL COSTELLO, CNN ANCHOR: Good morning.

Good morning to all of you.

We begin in Iraq, where a string of attacks have left at least 10 people dead. In the latest incident, a car bomb exploded outside of a hospital in central Baghdad. Two people killed there. Another attack today targeted an Iraqi Army patrol. The roadside bomb left at least six civilians dead, including one child.

Also, a deadly explosion in eastern Turkey today. At least three people killed there, more than a dozen others injured. The explosion taking place near a government office. Authorities are looking into whether it was a suicide attack.

Turning the tables on Andrew Fastow. The former chief financial officer for Enron testifying that founder Ken Lay knew all about the company's financial troubles and that he essentially lied about them. But his defense attorney hammered Fastow on Wednesday, describing him as a money grubber who ended up sending his own wife to jail because of his schemes. We're expecting more fireworks when things pick up again in Houston later this morning.

And the National Center for Men says that it is filing a lawsuit today. The suit contends that women have choices in the event of an unwanted pregnancy, but men don't -- you know, options like adoption, abortion or having the child. It's not that these men want a say in having the child or having custody. It's that they don't want to pay child support or be forced to. They want to opt out of a financial responsibility in those cases. They're calling it "Roe v. Wade" for men. We'll keep you posted.

Back to you -- Miles.

M. O'BRIEN: Thank you very much, Carol.

Let's get a check on the weather.

Chad kind of busy this morning with some wild weather in south central.

CHAD MYERS, CNN METEOROLOGIST: A little bit.

M. O'BRIEN: Hello, Chad.

MYERS: Yes, the south central parts of the country, all the way from Arkansas down into Louisiana.

(WEATHER REPORT)

M. O'BRIEN: Police are investigating a teenaged girl's mysterious disappearance. They aren't ruling out a hoax, but what makes this all intriguing are the cryptic text messages that were sent from her phone.

S. O'BRIEN: Oh, it's really bizarre, isn't it?

Also this morning, three college students are arrested in the Alabama church fire investigation.

Why would promising students allegedly commit such a serious crime? We're going to talk with a forensic psychologist this morning.

M. O'BRIEN: 30s, 40s and 50s time -- creaky knees you have?

S. O'BRIEN: I have one of those braces, actually.

M. O'BRIEN: I have the creaky knees and maybe I need the brace. Maybe that'll help. I'm going to be paying attention and maybe you should, too, if the knees are failing you.

Stay with us.

(COMMERCIAL BREAK)

S. O'BRIEN: A joke that got out of hand -- that is apparently the explanation for a series of church fires in Alabama. Three college students now face federal charges in the case and lengthy jail time if they are convicted.

But if they're guilty, what could have led them to these seemingly pointless attacks?

Joining us this morning, forensic psychologist N.G. Berrill.

Nice to see you.

N.G. BERRILL, FORENSIC PSYCHOLOGIST, JOHN JAY COLLEAGUE OF CRIMINAL JUSTICE: Good morning.

S. O'BRIEN: You know, it has been positioned as a prank. And when you see, though, the number of attacks of these three, who are innocent until proven guilty, that seems like a very odd explanation to me.

BERRILL: Well, it is, in a way. But, you know, young men in this demographic are capable of the most stupid and violent behavior, you know, that we've ever seen on a crime scene.

So it sounds superficial, it sounds trite, but, you know, give young men some booze and boredom and they're capable of coming up with absolutely absurd type behavior.

S. O'BRIEN: Let's take a look more closely at the three suspects.

You've got Matt Cloyd, a pre-med and Spanish major, 20 years old. His father is a doctor. You've got Benjamin Moseley. His father is a county constable, and a theater major. And you've got Russ DeBusk, 19, a theater major, as well.

By all accounts, good students, regular guys. We talked to their friends earlier today.

BERRILL: Sure.

S. O'BRIEN: Does it shock you that this would be the people they end up nabbing for this crime?

BERRILL: Not really. You know, you're talking about bright, privileged, bored...

S. O'BRIEN: Right. To me it says why -- why?

BERRILL: ... entitled, grandiose...

S. O'BRIEN: Oh.

BERRILL: ... you know, gee, we're above the fray. Again, a little alcohol, what do we want to do here to cause a stir? Let's (UNINTELLIGIBLE)...

S. O'BRIEN: The second time you've mentioned the alcohol.

BERRILL: Sure.

S. O'BRIEN: So you're saying that there is sort of this element of not only drunkenness, but kind of group think, where one might not do something, but three might?

BERRILL: One alone wouldn't have done this. It took, you know, sort of three guys to put their heads together and come out less than one. So, you know, silly, absurd, dangerous behavior.

S. O'BRIEN: All right, well, why churches? I mean, you know, we talked to their friends earlier this morning, a couple of friends, and other people who have interviewed their other friends have said no, there doesn't seem to be any religious issues, no obvious sense of a problem with organized religion or Baptists -- which, honestly, some of the victims of the crime, the people whose churches were burned down, really thought that they were being targeted by someone who hated them.

BERRILL: Well, you know, given the historical reality of that part of the country, I think it's even a bigger slap in the face. I mean these guys were educated. I think they were aware of what took place 40 years ago, 30 years ago down South. So it's thumbing their nose at the authorities and just saying look, we're going to -- we're going to goose the community. We're going to bring back sort of the terror and fear that we read about in our history books.

S. O'BRIEN: So they knew kind of the right way to do it, you're saying?

BERRILL: I think so. I don't -- yes.

S. O'BRIEN: Are they arsonists?

BERRILL: They are technically, but I don't think that...

S. O'BRIEN: I mean...

BERRILL: ... yes?

S. O'BRIEN: ... if they're convicted, I'm talking about. But, you know, do they fit the pattern? Is there a description? Is there a, you know, a textbook case of an arsonist and you say oh, yes, these guys would, you know, fall under that description?

BERRILL: No, I don't think they are. I don't think they're firebugs. I don't think that they become excited or, you know, feel the compulsion to light things on fire.

I think this was, you know, a crazy idea and it was hatched in the car, easy to do. It doesn't take great brilliance to do it. And they just got carried away and said, you know, gee, we're on a sleigh ride here.

S. O'BRIEN: Oh, it's really just quite a crazy story, isn't it?

BERRILL: Horrible.

S. O'BRIEN: Well, especially when you look at the consequences of what they face.

I mean, they're educated young men. They certainly have to know going in how risky this crime is. It's a federal crime. I mean it's a minimum mandatory five years per church.

BERRILL: You would think, but that's the grandiosity of, you know, sort of young adulthood and perhaps privilege. You know, we're above the fray. You know, it's a sort of a prank. What's really going to, you know, come of this thing?

S. O'BRIEN: So lest we won't get caught then -- then, well, it's just a prank.

BERRILL: Just a prank.

S. O'BRIEN: Gosh, it's weird.

Matt Cloyd, Ben Moseley, Russ DeBusk, we should mention again, all suspects in this case.

BERRILL: Sure.

S. O'BRIEN: They obviously have not been tried and certainly not been convicted in this case.

But, boy, if they do, they face a lot of time.

Thank you, N.G.

Nice to see you, as always.

BERRILL: My pleasure.

S. O'BRIEN: We certainly appreciate it, from John Jay Criminal College -- Miles.

M. O'BRIEN: Coming up on the program, a closer look at the Enron criminal trial. Andy Fastow, the star witness, looked like he was on trial yesterday. We'll ask a courtroom insider whether this spells any trouble for the prosecution going after Ken Lay and Jeff Skilling.

And next, worried about knee trouble as you get a little bit older? We've got some tips on protecting them in our health serious, 30s, 40s and 50s. And everybody else can listen in, too. It's OK.

(COMMERCIAL BREAK)

S. O'BRIEN: Former Enron finance chief Andrew Fastow is going to be back in the hot seat today in Houston at the fraud and conspiracy trial of his former bosses. Fastow underwent just a blistering cross- examination on Wednesday. Admitted architect of the fraud that brought Enron down, he is now the key witness for the government in the case against Ken Lay and Jeff Skilling.

Peter Elkind is covering the trial for "Fortune" magazine.

He joins us this morning from Houston.

He's also the co-author, we should mention, of that book, "Enron: The Smartest Guys in the Room."

Nice to see you.

Thanks for talking to us, Peter.

PETER ELKIND, SENIOR EDITOR, "FORTUNE" MAGAZINE: Good to be with you this morning.

S. O'BRIEN: What was it like in the courtroom, because, you know, this trial has been going on for quite a while now, but, boy, the way it read yesterday was just incredible.

ELKIND: It was a dramatic day. Certainly everyone has been looking forward to Fastow's testimony and what he had to say for the government was very interesting. But everyone has especially been looking forward to the cross-examination because the defense has been vilifying him from the start, making him out as the bad guy. And it was clear they were going to go after him very hard.

S. O'BRIEN: Yes...

ELKIND: And they did.

S. O'BRIEN: Yes, we -- I mean you sort of knew it was coming, but I thought even in -- even knowing that it was coming, it was surprising at how tough Daniel Petrocelli was, who, of course, is Jeff Skilling's attorney, just how tough he was.

Give me some examples of what he did.

ELKIND: Well, he went after him very personally. He noted that Fastow had enlisted his wife and his two children in one of his sleaziest schemes, which was taking kickbacks from the company. He not only was masterminding, if you believe his own testimony -- he was masterminding the dealings where Enron mislead the world, but he was stealing money from Enron, too, behind everyone's back.

And he pointed out, Petrocelli pointed out and underlined hard that he was involving his family, his babies, in receiving checks that were disguised as gifts that were really, really kickbacks.

S. O'BRIEN: Basically trying to say, you know, here is -- he's not credible because undermining his credibility is the only thing that's going to work in this case, right?

ELKIND: Sure. He's absolutely trying to destroy him. I mean the evidence he gave about the involvement of Ken Lay and Jeff Skilling in the effort to mislead the world about Enron, it was very strong.

But if the jury thinks that the man cannot believe that he's a thief, a liar and a crook, which he's basically admitted to being, and if they, as a result, give no credibility to what he's saying, then it makes a big difference for the defense.

S. O'BRIEN: He kind of admitted it on the stand, too, in the cross-examination. I thought that was an interesting sort of retaliatory strategy. You know, he didn't say stop picking on me. He sort of said yes, I am a slime ball. Yes, I am -- I did all those things. I have no moral compass -- you know, on and on. I'm paraphrasing, obviously. But he sort of...

ELKIND: Yes.

S. O'BRIEN: And that was an interesting strategy, I thought.

ELKIND: Well, that's exactly right.

But the truth is Fastow had admitted that when the government testified -- when he testified for the government. He acknowledged that he had lied, he had stolen, he cheated, he had lost his moral compass. And, actually, Petrocelli didn't advance the ball in terms of the substance of that, but the tone of it was very strong and he kind of rubbed Fastow's nose in just how evil and venal and greedy his activities were.

S. O'BRIEN: So then are you saying that he was not a convincing witness in the cross-examination, that Fastow really didn't do what he needed to do for the prosecution?

ELKIND: Well, no. I think Fastow gave strong evidence. The question is whether the jury is going to buy it or dismiss everything he said. The truth is so far most of what Petrocelli has focused on has been the personal theft. He hasn't addressed the very strong allegations that Fastow has made about both Lay and Skilling in terms of what they had to say about Enron misleading the world, about Lay and Skilling playing a part in Enron misleading the world about its finances.

S. O'BRIEN: And that's got to be a strategy because, of course, I mean jurors are not financial CEOs digging through the stuff, as you well know.

ELKIND: Sure.

S. O'BRIEN: Because it's -- 99 percent of what you do at "Fortune" magazine, you know, the money part of it is actually very complicated. The scheme part of it is hard to figure out. The moral compass failing, everybody gets that.

ELKIND: Yes. Nom, you can understand someone letting his wife go to jail because of his crimes and how horrible that seems. You can certainly understand secret bank accounts and quiet meetings in the Cayman Islands. You can understand someone stealing tens of millions of dollars. It's a lot less complicated than lying to the world about whether you're going to hit your earnings target in a given quarter.

S. O'BRIEN: Right.

Well, Petrocelli is only half done.

We'll see how the other half goes. I be it's going to be fascinating.

Peter Elkind is senior editor at "Fortune" magazine.

Peter, nice to see you.

Thanks for talking with us.

ELKIND: Good to be with you.

Thank you.

S. O'BRIEN: Miles.

M. O'BRIEN: I guess we don't have to tell you, there's still a lot of debris to cleanup in Katrina's aftermath. But not all of it is headed for a landfill. We'll show you how some uprooted trees, live oaks, trees you'd never cut down, are actually being used for a good cause.

And later...

(BEGIN VIDEO TAPE)

UNIDENTIFIED MALE: I enjoy being who I am.

JEANNE MOOS, CNN CORRESPONDENT: Well, I understand that.

UNIDENTIFIED MALE: This is too much fun as it is.

(END VIDEO TAPE)

M. O'BRIEN: CNN's Jeanne Moos talks about that new reality series, "Black/White." We told you about it the other day.

Would you be willing to swap races? Stay with us for the interesting answers.

(COMMERCIAL BREAK)

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