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INSIGHT

Hurricane Katrina One Year Later

Aired August 29, 2006 - 18:00:00   ET

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


JONATHAN MANN, CNN HOST: In the mess of Katrina, what happened to the money? One year after the storm, billions of dollars were promised, billions of dollars were spent, but with so much waste, so much delay and so much more money still needed.
Hello and welcome.

The air, the wind, the water. They're the elements of life, and a year ago the same powers, goaded by the unpredictability of nature, brought death instead to New Orleans and its surrounding areas. It was one of the worst natural disasters in U.S. history; 1,800 people died and 3/4 of New Orleans was submerged. A catastrophe compounded by several manmade failures; levees that couldn't withstand the waters and leadership that couldn't see the disaster swirling in front of it.

On our program today, after Katrina, the sorrow and the fury.

We begin with Soledad O'Brien, in New Orleans.

(BEGIN VIDEOTAPE)

SOLEDAD O'BRIEN, CNN CORRESPONDENT (voice-over): The last time we did this flight, we were with Coast Guard rescuers and the water was up to porches in some neighborhoods. This time, Eric Cavelle (ph) is our pilot and Councilman Oliver Thomas is our tour guide, and the first thing we notice, of course, is that it's finally dry.

We start in Lakeview, racially diverse. People here say they're tired of waiting for an official recovery plan. They're working on their own plan, getting the people who've come back organized and motivated.

OLIVER THOMAS, NEW ORLEANS CITY COUNCILMAN: Let me say this. We don't have any problem that money can't solve.

O'BRIEN: In New Orleans East, affluent Eastover looks good, at least from above. Impressive multimillion dollar homes owned primarily by African Americans. But just blocks away, no progress.

THOMAS: Twelve to 15 feet of water here for two months.

O'BRIEN: We fly over Jazzland. The Six Flags theme park is still standing, but it's rusted and abandoned.

(on camera): What's going on with it now?

THOMAS: Nothing. They've abandoned it. They want to give it back to the city.

O'BRIEN (voice-over): Damage to the marshland is obvious. Much of it is now under water. The cyprus trees, which would help protect the city in the next tropical storm or hurricane, are gone or dying.

(on camera): This is St. Bernard Parish we're coming up on?

THOMAS: Correct.

O'BRIEN (voice-over): In St. Bernard Parish, the economy is gone. The fishing and shrimping industry, once successful and very lucrative, is now decimated.

At the Lexington Place Subdivision, where the water hit with the force of a tsunami, homes are wiped off their slabs. Almost a year ago, we walked on those bare foundations. Today in the air we've found those houses.

THOMAS: That's not a subdivision. They came from the slab-strew streets back here. They floated here.

O'BRIEN (on camera): So that's where these houses ended up?

THOMAS: Yep.

O'BRIEN (voice-over): They're in a marsh a half mile away.

You can see the indecision in the real estate. Some homes look like the hurricane hit yesterday. Others are cleaned and gutted.

THOMAS: Home Depot, Lowes, Walmart, they're doing well.

Now you're in the Lower Ninth.

O'BRIEN: The Lower Ninth Ward is where Oliver Thomas grew up. He points out the repaired levee, which the Army Corps of Engineers says is built to pre-Katrina levels. Like most New Orleanians, Thomas speaks bitterly about the levees.

In the Lower Ninth Ward, areas once dotted with homes are replaced by high grass. Some homeowners are happy the city has carted away the debris. At least they didn't have to pay for it. But there's no plan in this area, and the future here seems so uncertain. Lots of people were renters. Many were poor and black and lack financial and political clout.

Then it's off to Plaquemines Parish, a swath of land that sits between the Gulf and the Mississippi River. Devastated by Katrina then practically ignored by the media in the aftermath, people here are struggling.

This was the brand new jail.

THOMAS: That was the jail.

O'BRIEN (on camera): You see pictures like this in Plaquemines Parish and you say nothing's been done.

(voice-over): Back at Lakefront Airport, we fly over a plane that lies upside down on the runway. It's been sitting, just like that, for a year. A sign at the airport says it all.

(on camera): Welcome to New Orleans. The building is kind of falling apart.

(voice-over): Soledad O'Brien, CNN.

(END VIDEOTAPE)

MANN: Katrina was hardly kind to other areas in its path. It lumbered through Louisiana and Mississippi with winds of more than 200 kilometers an hour and storm surges more than 9 meters high. Whether it was New Orleans or Gulfport, the storm's aftermath looked eerily similar; homes resembling piles of matchsticks, waterlogged furniture and photos and shell-shocked people plundering their next move.

Dan Lothian reports now on Mississippi's progress.

(BEGIN VIDEOTAPE)

DAN LOTHIAN, CNN CORRESPONDENT (voice-over): Along Mississippi's devastated coastline, Scott Winn (ph) still has his breathtaking waterfront view, but not the house Katrina took away.

UNIDENTIFIED MALE: Basically, the foundations look exactly the same as they did the day after the storm.

LOTHIAN: He's been living in a FEMA trailer on his property in Gulfport waiting for insurance money and a government grant.

UNIDENTIFIED MALE: I knew that nothing was going to happen that fast.

BRENT WARR, GULFPORT MAYOR: We lost every significant historical landmark on the beachfront.

LOTHIAN: Gulfport Mayor Brent Warr says so much was taken away from his city, but with sales tax revenue picking up from residents who are rebuilding, the news isn't all bad.

WARR: I'm very optimistic and pleased. Yes, it's too slow, you know, but it would have been too slow if it was three times faster than it's been.

LOTHIAN: In Waveland, 30 miles west of Gulfport, where much of the shoreline was wiped out, it still looks like last year. Eleven communities in Mississippi are still trying to recover physically and emotionally.

JENNIE HILLMAN, PROJECT RECOVERY: They've been concerned about getting a house and getting a car and getting a job, getting their life back together. Now the emotional issues are starting to creep in.

LOTHIAN: Project Recovery, a FEMA-funded organization, has recently seen a sharp increase in suicide calls to its hotline and overall, a rise in the number of people seeking assistance. Volunteer counselors like Dick and Marion Brown go door to door offering help and a listening ear.

UNIDENTIFIED FEMALE: It helps them just to unload.

UNIDENTIFIED MALE: It's as important today as it was when we started.

LOTHIAN: A few days ago they met Gloria Tardeho (ph), a Waveland resident who lost just about everything and whose son became critically ill after the storm.

(on camera): A year later now, is it any easier to deal with this?

UNIDENTIFIED FEMALE: No. As a matter of fact, it seems like it gets harder, because you think you should be more ahead than what you are.

LOTHIAN (voice-over): The threat of more hurricanes, she says, adds even more mental stress.

UNIDENTIFIED FEMALE: You're just sitting there hoping, please don't come this way, please don't come this way.

LOTHIAN: In this hard-hit state, the stories of loss can be overwhelming, but even here there are people who have a lot to smile about.

UNIDENTIFIED FEMALE: I'm like a kid in a candy store. It is so beautiful.

LOTHIAN: Biloxi native Linda McLoughlin's (ph) home was renovated after Katrina left it under 7 feet of water and forced her and her family into these backyard tents. She had no insurance, no money, but she did have volunteers.

UNIDENTIFIED FEMALE: We couldn't have never did what was done.

LOTHIAN: The gift came from Habitat For Humanity and Boat People SOS, two groups now helping others just around the corner.

UNIDENTIFIED MALE: You put somebody in a house, and it's a Band-Aid on their whole life.

UNIDENTIFIED MALE: It's not going to happen quick, but we're making slow, steady pressure on it and getting them done, little by little.

LOTHIAN: Dan Lothian, CNN, Gulfport, Mississippi.

(END VIDEOTAPE)

MANN: The storm left behind indelible memories and lingering grief for those who lost their lives. There were memorials Tuesday throughout the Gulf region.

U.S. President George Bush attended prayer services in New Orleans as part of his 11th visit to the area since the hurricane hit. The president, along with Louisiana's governor and New Orleans' mayor, faced scathing public criticism after the storm for the government's slow response to the disaster.

Mr. Bush said today there is still much work to be done, but he was impressed by the region's determination to rebuild.

The public outcry over Katrina didn't stop with the storm. In fact, for many it was just the beginning of a whole new set of problems. Katrina damaged an area about the size of Great Britain, 230,000 square kilometers. More than 280,000 homes were destroyed. Neighborhoods became unlivable. Thousands of people lost their jobs.

Money has come to the rescue in some places. So far, $110 billion has been approved by the federal government in hurricane aid, but only $44 billion of it has actually been spent. Charities have given an addition $5.3 billion. But one year on, many areas still look exactly the same as they did the day after the storm.

One reason for the delays, although just one of many, is the lack of money that some people expected and needed to rebuild. Many insurance claims, for example, haven't been paid because of disputes over whether wind or water caused the damage. Some homeowners say that legal loophole just adds insult to injury.

Ali Velshi reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: When the Gulf of Mexico comes into your living room, it's all gone.

ALI VELSHI, CNN CORRESPONDENT (voice-over): Cecil Tillman says his insurance agent told him he'd be covered if a hurricane hit. So when Katrina came ashore, bringing the Gulf of Mexico with it, he figured he was protected. Apparently not.

UNIDENTIFIED MALE: This is the window that blew out. When Nationwide is saying that the surge of water got here before the wind, the hurricane winds.

VELSHI: Nationwide Mutual Insurance Company says water, not wind, caused most of the $43,000 in damage to Tillman's home.

UNIDENTIFIED MALE: Nationwide, I think, gave me $4,600.

VELSHI: $4,600 for wind damage. Nationwide told Tillman the water damage wasn't covered under his policy.

Like Tillman, 1.7 million homeowners filed property insurance claims after Katrina. More than $40 billion in property damage payouts made the hurricane the most costly disaster in U.S. history. But the cost to homeowners is greater.

(on camera): So, was this damage caused by wind or water or both? Well, to the homeowners, they say they thought they had hurricane coverage and that the question is just a technicality. But the insurance companies say the question is all that matters.

(voice-over): We wanted to ask Nationwide about Tillman's case, but the firm wouldn't comment, so we went to the Insurance Information Institute, the industry's public relations arm.

ROBERT HARTWIG, INSURANCE INFORMATION INSTITUTE: Homeowners' insurance policies have never covered for flood and since 1968, 38 years ago, the federal government established the National Flood Insurance program so people throughout areas affected by hurricanes or river or lake flooding can in fact buy flood coverage.

VELSHI: But if this fact was widely known, Katrina proved it wasn't well understood, and Mississippi lawyer Richard "Dickie" Scruggs says the insurance companies are profiting by claiming that water damage from a hurricane isn't part of the hurricane.

RICHARD "DICKIE" SCRUGGS, ATTORNEY: The policies themselves are very difficult to interpret. They don't use words like storm surge. They don't even have the word hurricane in most of them. They call in wind storm. You know, what the heck is that? That can be anything.

VELSHI: Scruggs says he represents more than 3,000 Mississippi hurricane victims against five insurance companies. Jointly, they reported profits of more than $12 billion last year. Despite the record policy payouts, 2005 was the insurance industries most profitable year ever.

But it wasn't a profitable year for Cecil Tillman.

UNIDENTIFIED MALE: I was reading in the paper where if each individual case is heard separately, that it could take 60 years. Of course, I won't be here to see it, but I'm going to let it run its course.

VELSHI: A course he hopes that doesn't have any hurricanes in it.

Ali Velshi, CNN, on the Gulf Coast of Mississippi.

(END VIDEOTAPE)

MANN: We take a break now. When we come back, Katrina's money trail. There was a lot of it spent. Where did it go?

Stay with us.

(COMMERCIAL BREAK)

MANN: There are more than 100,000 trailers dotting the Gulf Coast of the United States. Monuments to good intentions and uneven results. Their residents complain they were built with dangerous chemicals and locks that can be opened with the same keys, and there are still thousands of them that have never been used at all.

Welcome back.

In just one community, ironically named Hope, Arkansas, there are nearly 9,000 mobile homes that are brand new and entirely empty, purchased at a cost of $300 million, and yet thousands of people elsewhere are still waiting for government help to find housing.

Joining us now to talk about what's gone wrong is Pratap Chatterjee, program director of CorpWatch, an investigative and activist organization based in San Francisco.

Thanks so much for being with us.

$44 billion should be solving a lot of problems, and yet people say the money isn't there, the help hasn't been there, only the problems are there. Why has the relief effort gone so badly?

PRATAP CHATTERJEE, CORPWATCH: Well, the problem is what we call a contracting pyramid. What you have is big companies at the top that get contracts, get paid a lot of money, and then very little trickles down to the ground.

I'll give you an example of where most of the money has gone, which is to hauling debris. There is a company called AshBritt. AshBritt is from Florida. They're well connected to Jeb Bush, the brother of the president, and they got $23 a cubic yard to haul debris.

Well, they subcontracted to another company called C&B Enterprise, and they paid them $9 a cubic yard. C&B Enterprise then hired a company called Amlee transportation, and they paid them $8 a cubic yard. Amlee then hired a guy by the name of Chris Hessler, paid him $7 a cubic yard and he, in turn, hired a guy by the name of Les Nirdlinger from New Jersey and paid him $3 a cubic yard. And this is repeated again and again.

Halliburton, in Plaquemine Parish -- actually, sorry, Halliburton in Mississippi got the contract to cleanup the Gulfport Base. So they hired a company called Tipton Friendly Rollins, who then subcontracted to a company called Kansas City Tree, who subcontracted to another company called Tobar (ph), Karen Tobar (ph) Contracting.

So what happens is at the very top, you get a lot of money. At the very bottom, you know, the workers get very little of it. It's all taken up by overhead, administration and profits. So 1/6 of the money, on an average, ends up actually in the pockets of the workers, and very little work gets done, because in addition to a government bureaucracy that has properly been well criticized, you now have this layer, this pyramid of contracting, which is eating up 80 percent of the money. So you have twice the bureaucracy.

MANN: You're making a point that very few people do. Most of the attention, most of the criticism, has been focused on the bureaucracy itself, the fact that the federal government may make decisions and come up with money that isn't properly communicated to the states or the state government may have some of that money that isn't properly communicated to municipal governments, or the municipal governments themselves just fall down on the job. That's really what has been criticized in the case of New Orleans in particular.

How much of what we're seeing is government lethargy and how much of what we're seeing is money being filtered through the system and ultimately frittered away by private companies?

CHATTERJEE: I think it's a combination. I think you have to share the responsibility, and I speak of this as somebody who has investigated the same thing in Iraq and in Afghanistan. I've been to the Middle East and Central Asia several times. So this is not new. It's not unusual.

But one of the key numbers to remember here is that 1/6 of the contracts in dollar numbers goes to companies from Louisiana and Mississippi and Alabama, so that's less than 17 percent. Thirty percent goes to companies in Virginia. When you look at the size of the business, 87 percent of the dollar value goes to big businesses, 13 percent to small companies. That's on the total number of contracts.

So you see this pattern and you look at.

MANN: Well, let me jump in and ask you about that, because wouldn't you expect that to happen anyway? If a storm hits an area and wipes out small businesses, it will be larger businesses from areas of the country that were not hit that are still going to have the equipment in place, the manpower in place and the ability to move quickly while everyone on the Gulf Coast is still trying to pick up the pieces and find out where they were going to spend the night.

CHATTERJEE: That's partly true, but not entirely true.

Right when the storm hit, in fact, the numbers were even lower. It was 10 percent of the contracts went to local businesses. But a year later you would think that they'd be able to set up and be able to do work. And oftentimes, these are the people that know best what to do.

Let me give you the example of a company called Kenyan (ph). Kenyan (ph) was hired from out of state to pick up bodies. They picked up 1/3 of the bodies, 535 bodies. When you're searching for bodies in a place that's flooded, the best people to do that are local companies who know the back alleys, the back doors and that sort of thing. But when you hire someone from out of state who doesn't really know the geography, and everything is under water, you're going to end up paying what we paid, as taxpayers, to Kenyan (ph), $6 million for 535 bodies. That's $12,500 per body. This company was buying, you know, its workers model cars, beef jerky, DVD players, when at the same time local business had volunteered to help, African American funeral parlors in Louisiana were willing to do this job. They were willing to do it for free and, in fact, in one of your previous news pieces that you did they actually talked about how local businesses and local volunteers are putting back, you know, Mississippi and Alabama and Louisiana together.

Common Ground in the Ninth Ward, this is one of the most devastated communities, the federal government hasn't shown up to fix anything. The local people, Common Ground is run by Malik Wahim (ph), have fixed houses, without being paid. The same thing in the community of Versailles (ph). The Vietnamese American community there, 45 out of 53 businesses have been restored with no help from the federal government. And what do they get in return? Big business, Waste Management, Incorporated, is hauling debris from other parts of town and dumping it in the Chef Menteur landfill.

So, something is wrong here. The local community can pull together and has pulled together, but big business and corporations and big government bureaucracy, and really the responsibility is shared. Another example.

MANN: I'm going to cut you off. I think you could probably give us examples for a good long time.

CHATTERJEE: I could.

MANN: Another year, probably.

Pratap Chatterjee, of CorpWatch, thanks so much.

CHATTERJEE: Thanks so much.

MANN: We take another break. When we come back, why bother to rebuild? We'll hear from one survivor after the break.

Stay with us.

(COMMERCIAL BREAK)

MANN: Hurricane Katrina left the Gulf Coast with the largest garbage disposal problem in U.S. history. By one estimate, New Orleans alone had 12 million tons of ruined houses, fallen trees and abandoned cars, roughly seven times as much debris as the World Trade Center when it collapsed. It's a cleanup job that's only getting started.

Welcome back.

Even with all of the money that's been spent, because perhaps of some of the way it's been misspent, a lot of the people of Louisiana feel the job has been left to them.

Joining us now to talk about cleaning up and starting over is Donna Duhe, of Plaquemines Parish, on the very southern tip of Louisiana, where the storm first hit.

Thanks so much for being with us.

I guess there were, what, 25,000 people living in your parish when the storm hit? How many are there now and what are they up to?

DONNA DUHE, KATRINA SURVIVOR: We had approximately 28,000 in population in Plaquemines Parish, and it's estimated that we have a little more than half back. They have returned. And what are they up to? They're in the process of rebuilding.

As you know, Plaquemines Parish was the first hit by this Category 5. So we were the first hit, the hardest hit. We were inundated with a 28- foot tidal surge and winds at times sustained in excess of 190 miles per hour. And with that, it basically, if you can envision a margarita churning for 18 hours, I'm told that the wind, it came in and it took 18 hours to actually clear this land mass. So there was total annihilation of everything.

So what are they up to now? The cleanup, thanks to the great government that we have, basically, tapped into their reserves and started the cleanup immediately before the federal assistance starting coming in, and so the debris is I want to say 90 percent gone as far as that end. Businesses are in the process of rebuilding.

MANN: Now, I want to jump in. You say the "great government" that you have. Are you being sarcastic or are you really grateful for the government assistance you got?

DUHE: No. We have actually superior leadership in Plaquemines Parish. That's very sincere.

MANN: It's the local government that you're grateful.

DUHE: It is the local government. And we've also had the support of the government of Louisiana and the leadership as a whole has come together and has highly complimented the leadership in Plaquemines Parish for the work that our parish president has done.

He's basically took the bull by the horns in advance of the recruits coming in. And we also got an incredible amount of help from volunteers as well as our military.

MANN: This is what we keep hearing, is that local people and volunteers have made the difference and the federal government has really not, and the insurance companies, have not been there to help people.

DUHE: We can start with the insurance companies. They've been a great disappointment. And for our businesses, I can start with that, because, you know, that drives the economy. For our local businesses, when I say that the land was annihilated, the properties were annihilated, that's not an exaggeration by any means. And what comfort they had in thinking "I've got insurance, I'm going to be okay," once they digested what had just occurred to them, when they got with the insurance adjusters they found out that no one questioned that it flooded, but the wind portion of their policies is not being honored, which means basically.

MANN: We've heard this story over and over again, the enormous devastation, the insurance company that isn't there or is there with an excuse. How many people aren't going to come back to your parish? How many people just aren't going to bother starting over?

DUHE: You know, it's estimated that about 1/3 possibly may not come back, of the total population, and I find that hard to believe. I think eventually everyone is going to come home.

Plaquemines Parish is not a location of the New Orleans area that you hear very often. You probably don't hear -- you probably haven't heard about it prior to Hurricane Katrina making landfall, quite honestly, but it is a postcard, most beautiful, uncommercialized location that -- it's a treasure that's been kept secret for a very long time. And so for that reason, they're going to come home. Their memories are there. Their children were brought up there. They have -- you know, they're ranked No. 3 in the state for education. The crime is basically nil. And it's mostly mom and pop local business owners. It's noncommercialized. It's quite beautiful.

MANN: Donna Duhe, of Plaquemines Parish, thanks so much and good luck with the work ahead.

DUHE: Thank you so much.

MANN: That's INSIGHT. I'm Jonathan Mann.

END

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