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Some Sadr City Coalition Checkpoints To Be Lifted By al-Maliki, In Wake Of Cleric's Calls for Worker Strike; Back To Bargaining; The Fight For Iraq; America Votes 2006; Reconstruction Review

Aired October 31, 2006 - 10:00   ET

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

HEIDI COLLINS, CNN ANCHOR: Good morning, everybody, I'm Heidi Collins.
TONY HARRIS, CNN ANCHOR: And I'm Tony Harris. Spend the second hour in the NEWSROOM this morning and stay informed. Here's what's on the rundown.

North Korea, Iraq, we will take you live to the White House where Press Secretary Tony Snow and reporters face off. The briefing in just 30 minutes.

COLLINS: The business of politics. Ali Velshi is on the money trail as titans of industry hedge their bets on new friends in Congress.

HARRIS: And the money's running out and the clock is ticking. Rebuilding Iraq and Afghanistan.

It is Tuesday, October 31st, and you are in the NEWSROOM.

COLLINS: From is the sign of aggression to one of cooperation. Just three weeks after a nuclear test, North Korea says it is ready to return to nuclear talks. Our White House correspondent Ed Henry now has the details.

Good morning, Ed.

ED HENRY, CNN CORRESPONDENT: Good morning, Heidi.

The president this morning proclaiming himself very pleased that North Korea has finally agreed to come back to the six-party talks, aimed at ending North Korean Dictator Kim Jong-il's nuclear ambitions. The president making his first comments about this morning's development in the Oval Office a short time ago, at the end of an Oval Office meeting with Secretary of State Rice, as well as his special envoy to Sudan. The president saying he received a "grim report" about the situation, the humanitarian crisis in Sudan and pledging to help craft an international plan to deal with it, to stop the human suffering, to help save lives. But then he quickly also turned to North Korea and talked about this development.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm very pleased with the progress being made in the far east. Obviously, we've still got a lot of work to do. But I want to thank the secretary for her good work when she went out to the region and assure the American people we'll continue to work to resolve this in a peaceful way.

(END VIDEO CLIP)

HENRY: Now a lot of work to do, indeed. The president adding that the U.S. will be sending teams to the region to make sure of two things. Number one, that in the interim period before these talks actually get restarted, that North Korea complies with the sanctions already passed by the United Nations Security Council. And, secondly, to make sure that there's actual progress from these talks.

As you know, a lot of critics, particularly Democrats on Capitol Hill, have said that the six-party talks have yielded very little progress in terms of stopping the nuclear ambitions of North Korea and, instead, want direct talks between the U.S. and North Korea. And so while this may be a short-term vindication of the president's diplomatic strategy, in the long term he still has to show there's going to be some progress from these talks.

Heidi

COLLINS: And you know, Ed, this is taking place not long after Secretary of State Condoleezza Rice was in the region. We heard the president complimenting her on great work there. But interesting also that we heard from Assistant Secretary of State Christopher Hill who said, you know, I'm cautiously optimistic. Still a long, long way to go here.

HENRY: Absolutely. We've, in fact, heard from Japanese officials this morning suggesting that they do not want these six- party talks to start right away until North Korea actually does agree that it's going to end its nuclear ambitions. That they do not necessarily feel that there will be progress until North Korea makes that statement. Obviously, there will be pressure from the U.S. to get the talks started, get that statement from North Korea when they all sit down at the bargaining table. But, you're right, there's a long road to haul here and this is just really just the start of it.

Heidi

COLLINS: All right. We'll wait to see when those talks actually do take place. Very good.

Ed Henry, thanks so much.

HENRY: Thank you.

COLLINS: We want to remind you, though. Did U.N. sanctions drive North Korea back to the bargaining table? A closer look at U.N. Resolution 1718. It was passed earlier this month. The world body demanded North Korea abandon its nuclear weapons program. The resolution placed a ban on military and technology hardware and luxury goods. That is backed by international inspections of cargo going into and out of North Korea. HARRIS: A blighted Baghdad slum. It may be some of the most important turf in Iraq today. A radical cleric has ordered a work shutdown in Sadr City to protest a joint military crackdown. And more significantly, Iraq's prime minister has ordered those checkpoints be lifted. It is the latest challenge to U.S. influence in Iraq and it comes on the heels of a report that thousands of weapons are missing. Are they now in the hands of insurgents? Here's CNN Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN CORRESPONDENT, (voice over): More than half a million small arms weapons were provided to Iraqi security services, but the Pentagon's inspector general for Iraq was able to find serial numbers for only about 12,000 weapons. Some 490,000 weapons are simply unaccounted for. No one knows if they are stolen, being used by insurgents or still in the hands of Iraqi units.

STUART BOWEN, INSPECTOR GENERAL, IRAQ RECONSTRUCTION: We don't make any assumptions about where these weapons are in our audit. We just identify where the material weaknesses are.

STARR: Some of those half million weapons were provided by other countries. But the U.S. bought three quarters of them for $133 million. And yet, for thousands of them, no records were found at all. The inventory includes semiautomatic pistols, assault rifles, heavy machine guns, and rocket propelled grenade launchers, all vital to helping Iraqi forces fight against insurgents, militias and death squads. The report also found in some cases there were no spare parts and no repair manuals to give to Iraqi security units. The inspector general promises U.S. weapons provided to Iraq will be thoroughly tracked from now on.

BOWEN: My greater concern was the lack of tracking of serial numbers, but that issue has now been addressed by the multi-national security transition commander in Iraq and is being done now.

STARR: But a second report raises an even bigger question, whether Iraqi security forces will be able to stand on their own with spare parts, fuel, food, ammunition, weapons and training.

BOWEN: Upwards of 320,000 Iraqi security forces have been trained to date, but if they can't be supplied and sustained in operations in the field, then we're not going to get the full value of that investment.

(END VIDEOTAPE)

HARRIS: And Barbara Starr joins us from the Pentagon now.

Barbara, good morning to you.

A quick question. Maybe it's the obvious question. Any chance of us getting these weapons back?

STARR: Well, Tony, that is the question. Where are they? Now, they could be in the hands of the Iraqi security forces, which is what everyone hopes. They could be stolen, on the streets of Iraq, or they might be in the hands of insurgents. That's the problem.

What the inspector general found is there's little paperwork on an awful lot of guns out there. No one's really sure where they are.

HARRIS: And, Barbara, tell us about this new rapid response team that's being formed inside the Pentagon.

STARR: Ah, Tony, here in the area where the news media works, inside the Pentagon, just down the hall from our booth here, there is a new rapid response organization that is part of the Pentagon public affairs operation now. The Pentagon says they were planning to do it for a long time but it's an awful lot like the boiler rooms or bullpens that we have seen in campaigns. A number of people being assembled by the government to rapidly respond in part to news media criticism of Defense Secretary Rumsfeld or the war in Iraq. They say that's not really their job, but, in fact, we've already seen some evidence that that's what they're doing.

Tony.

HARRIS: Pentagon correspondent Barbara Starr for us.

Barbara, thank you.

COLLINS: Heading for the home stretch, the midterm elections now just one week away. At stake, control of Congress. Democrats need 15 seats to take back the House, six to regain control of the Senate. Several states considered pivotal in the fight for the Senate, and here's how the numbers stack up in the latest CNN poll of likely voters, by Opinion Research Corporation.

In Missouri, it's a dead heat. Forty-nine percent support incumbent Republican Senator Jim Talent, 49 percent back his Democratic challenger Claire McCaskill. In New Jersey, Democratic Senator Bob Menendez holds a 51 to 44 percent edge over his Republican challenger Tom Kean. In Ohio, Republican Senator Mike DeWine trails his Democratic rival Sherrod Brown by a margin of 54 to 43 percent.

In Tennessee, 52 percent of likely voters support Republican candidate Bob Corker and 44 percent back the Democrat Congressman Harold Ford Jr. Virginia now, Republican Senator George Allen trails his Democratic opponent Jim Webb 50 to 46.

The Democratic and Republican parties both pouring a ton of resources into a high-stakes Senate race in Tennessee. Today, First Lady Laura Bush campaigns in the state for Republican nominee Bob Corker. And tomorrow, former President Bill Clinton stumps for Democrat Harold Ford Jr. CNN's John King now is in Nashville.

(BEGIN VIDEOTAPE)

JOHN KING, CNN CORRESPONDENT: The Senate race here in Tennessee has been receiving national attention for a number of reasons. One is a number of negative ads that are quite controversial. Another is that this is a race for the seat now held by the Senate majority leader, Bill First, who is not seeking reelection and who many believe will perhaps seek the Republican presidential nomination in 2008.

But the number one reason this race is so important is the Democrats believe they must win this seat if they are to have any hope of picking up the Senate majority come January. The Democratic candidate is Congressman Harold Ford of the Memphis area. He hopes to become the first African-American in the Senate since reconstruction.

The Republican candidate is Bob Corker, the former mayor of Chattanooga, and the Corker campaign is encouraged by the new CNN/Opinion Research Corporation poll out today. Among all voters, it shows a dead heat. But among those who say they are likely to vote one week from today, Mr. Corker has, according to our poll, an eight point lead, 2 percent to 44 percent.

I spoke to congressman Ford this morning. However, he says other polls, including his campaign polls, show a much tighter race and he continues to voice confidence that he can carry this election one week from today. With all the negative campaigning, there has also been a debate over the Iraq War. Harold Ford casting Mr. Corker as a stay the course Republican.

Quite significantly, I spoke to Bob Corker last night and he said if he wins this election and goes to Washington, one message he will bring to the Republican White House is that perhaps it is time to have a new secretary of defense, Mr. Corker joining a number of Republicans questioning whether Donald Rumsfeld should stay on for the final two years of the Bush presidency.

Congressman Ford this morning called that a flip-flop. He says it is a sign his Republican opponent is worried about the toll the Iraq War might take on the race here in Tennessee. Again, one of those being the most closely watched one week to election day.

John King, CNN, Nashville.

(END VIDEOTAPE)

COLLINS: And speaking of, CNN Primetime next Tuesday night, beginning at 7:00 Eastern. Wolf Blitzer, Anderson Cooper, Paula Zahn, and Lou Dobbs lead the best political team on television as your votes are counted. The races, the results, the ramifications, Tuesday night, beginning at 7:00.

Hedging their bets. Big business spreads out the cash ahead of Election Day. We'll have that story for you coming up in the NEWSROOM.

HARRIS: And billions in taxpayer dollars for reconstruction in Iraq. So where is the money going and are the rebuilding efforts paying off? We get the lowdown. Straight ahead in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: And this just in to CNN. NASA's administrator Michael Griffin just announcing just moments ago that NASA will fly what's been described as a risky shuttle mission to service the Hubble Space Telescope. That to take place in 2008. It would actually be the final shuttle mission. You might recall that the mission was actually deemed too risky by the previous administrator, Sean O'Keefe, in the wake of the Columbia disaster. But once again, Michael Griffin announcing just moments ago that there will be a final mission of the shuttle and that mission will be to service the Hubble Space Telescope and that mission scheduled for 2008. More information on this. Another briefings from NASA come up later this afternoon.

And now a first hand look at reconstruction in Iraq. That's what we're talking about for a bit this morning. Most of us can't go there and check it out for ourselves, but we have the next best thing, Lieutenant General Carl Strock is commander of the Army Corp of Engineers and he is just back from a trip to Iraq and Afghanistan.

And, General, thanks for being here. We appreciate it.

LT. GEN. CARL STROCK, COMMANDER, ARMY CORPS OF ENGINEERS: Thank you, Tony. Good to be here.

HARRIS: $18.4 billion was allocated in 2003. How are we doing in the reconstruction effort? Let's talk about Iraq first.

STROCK: I'll go ahead and take it off the . . .

HARRIS: OK. Can you hear me?

STROCK: Yes, I can. Yes, sure. Yes, $18.4 billion was the total. Of that, the area that I have responsibility for, the infrastructure piece, is about $13.5 billion. We just passed a significant milestone on the 1st of October when we obligated about 99.9 percent of those funds, which means we have contracts underway for the entire commitment the United States has made. It's been a tough fight to get the work done, but I think we are making a difference and we have largely exceeded pre-war conditions in Iraq and I think we set the conditions for the country and the international effort to take them to where they really need to be in the long run.

HARRIS: Well, General, that's one of the critical questions that's been hanging out there, whether or not the reconstruction effort would -- actually exceed and bring the infrastructure in Iraq back to pre-war conditions. And you're suggesting that that, in fact, will happen?

STROCK: Most certainly. In the area of oil, we are routinely producing 2 million barrels a day, which was about what the Iraqis produced. We had been as high as 2.5. And we have another three or four projects that are close to being completed which should boost the production by about another million barrels per day or so. So we feel confident we can get to the 3 million barrel per day target, which exceeds pre-war conditions.

We are producing more electricity than they could before the war. A challenge there, though, is that demand has increased because we have turned loose the economy and people are buying more goods that require electricity and so demand is increasing. We also have a situation in electricity where we are more evenly distributing electricity. Saddam used services as a way to reward those that he favored and punish those that he didn't. So, in Baghdad, you had 24 hours or so of power a day under Saddam, but in Alcoot (ph) 100 kilometers away, you had no power.

Today the entire nation of Iraq gets about 11 to 14 hours of power a day. But on a good day, Baghdad only gets 9 hours. Twenty- five percent of the population is in Baghdad, 75 percent outside. So 75 percent of the Iraqi people have more power than they had before the war.

HARRIS: OK. But, General, it's not a perfect picture. You just sort of illustrated that. Far from a perfect picture. The strategy of clear, hold and build has been, let's face it, under attack. We see the pictures every day coming out of Baghdad. How much of the money, the $18.4 billion, has had to be diverted to a stepped up security effort?

STROCK: Well, the good portion of the money that we've used is going to a security effort. That reconstruction effort is not just about infrastructure, it's about institutions. And a large part of that is security institutions of Iraq. We have had to move money out of the infrastructure sectors into security sectors, police and army. I don't know the specific figures of how much has been moved.

Another factor, though, that's related to that is that we expected a more benign security environment and we anticipated that about 10 percent of the cost of any project would go to security. In some places in the country, we're spending 40 percent of the actual cost of a project simply to provide a secure work environment. And in other places it's far less than 10 percent. About 14 of the 18 provinces in Iraq are relatively calm and stable and they're about four troubling provinces that make our work much more difficult.

HARRIS: Hey, General, let me have you address this. The basic question, and I'll come back to it in a different form in just a moment, is the question of whether or not money is being wasted. You know of the report, the special inspector general for Iraq reconstruction, seems to be suggesting that it's been difficult to get a handle on just how much money has been wasted because contractors there have been improperly hiding data. So, does that allegation, first of all, disturb you? And then the larger question as to whether or not money has been wasted.

STROCK: Well, the allegation that's referred to there is one of our contractors, Kellogg, Brown & Root, that provides logistics support for deployed forces, was treating everything that they do as proprietary data because they're in a very competitive environment. They've been doing that for 10 years or so. Sigger (ph) has raised that, that's the special inspector general for Iraq, has raised that as an issue for now. I really can't comment on that. I don't have anything to do with that particular contract.

Is money being wasted? You know, I think you need to understand the context in which we're working. The insurgents, the enemy, is very sophisticated. They understand how these system work and they know that any improvement that we make in the quality of life for the Iraqi people is a setback to them. They want to demonstrate that things are worse under the Americans and the coalition forces.

And so we are facing a battle as we build these projects and so they are not as efficient as you might find a construction project in Memphis, Tennessee. People are actually shooting at you, they're intimidating the workers we have working for us. It's remarkable that these Iraqis continue to come back and continue to invest in the future of their country. So it has not been the most efficient process, but we are at war and we are being shot at while we're trying to do our job.

HARRIS: Yes, that's important to note. Lieutenant General Carl Strock is the commander of the Army Corps of Engineers.

General, thanks for your time. We appreciate it.

STROCK: Thank you very much, Tony.

COLLINS: And now to that deadly wildfire in southern California. It is now contained. Investigators are still looking for arson suspects. But this just in now to CNN. We are able to confirm that apparently two persons of interest were brought in by the Riverside County Sheriff's Department and questioned yesterday. They were also released.

Once again, two persons of interest were brought in and questioned yesterday. They have since been released. We are checking on that to find out exactly what it could mean. As you remember, four firefighters were killed in the blaze. A fifth remains in critical condition today. The fire, which erupted Thursday, destroyed 34 homes and scorched more than 40,000 acres.

Chad Myers now in the Weather Center with more on that and the rest of the weather across the country.

Hey, Chad.

(WEATHER REPORT)

HARRIS: Another health scare, believe it or not. This time it's salmonella. What you need to know in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: Heidi, take a look at this. We were off to such a quick start. The Dow, immediately at the opening bell, up 17. And it's gone the other way. Not good.

COLLINS: It's tired.

HARRIS: A little tired. A lot of heavy lifting over the last couple of weeks. The Dow down 28, 29 points inside the first hour of the trading day. We'll find out what's going on with Susan Lisovicz a little later this hour. COLLINS: Health news from the Centers for Disease Control today. There's an outbreak of salmonella. No source identified so far. But 172 people in 18 states have gotten sick. No one has died, but 11 people have been hospitalized. Salmonella symptoms include diarrhea, cramps, nausea, fever and headache.

HARRIS: A slum in Baghdad. A line in the sand. A radical cleric on one side, the U.S. on the other and possibly tipping the scales. An Iraqi government at odds with Washington. We'll explain all of that in the NEWSROOM.

COLLINS: And hedging their bets. Big business spreading out the cash ahead of Election Day. That story right here in the NEWSROOM.

(COMMERCIAL BREAK)

COLLINS: Violence erupts across Baghdad today, with the single deadliest attack hitting a wedding party. Police say a car bomb exploded near a wedding convoy in the northeastern part of the capital. At least 15 people were killed. Among the dead, women and children. Police are not sure whether the wedding was the bomber's target.

A showdown in Sadr City today; the Baghdad slum is a proving ground for an Iraqi prime minister apparently at odds with Washington.

Here's what we know right now. Nouri al Maliki has ordered the lifting of joint U.S.-Iraqi military checkpoints around the city. The crackdown was implemented last week during the unsuccessful search for a missing U.S. soldier. Prime minister's al-Maliki's move seemingly gives weight to a shutdown strike called by a radical Islamic cleric.

HARRIS: The war on terror in Pakistan. The Pakistani army says it used U.S. intelligence to carry out air strikes Monday. About 80 people were killed near the Afghan border. Pakistan says the religious school targeted was a front for an Al Qaeda training camp.

The Pakistani military calls those killed suspected militants, among them an associate of terrorist leader Ayman Al Zawahiri. But thousands of people are protesting in towns across the region. They say innocent students and teachers were killed.

Movement from North Korea, an announcement today that North Korea will join six-party talks aimed at reining in its nuclear ambitions, this comes about three weeks after North Korea's nuclear tests, about two weeks after the U.N. passed a resolution passing sanctions on the reclusive region.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We will be sending teams to the region to work with our partners to make sure that the current United Nations Security Council resolution is enforced, but also to make sure that the talks are effective. That we achieve the results we want, which is a -- a North Korea that abandons her nuclear weapons programs and her nuclear weapons. (END VIDEO CLIP)

HARRIS: Those talks expected to begin as early as next month.

COLLINS: Corporate America is seeking new political friends? Just in case. CNN's Ali Velshi with the story.

(BEGIN VIDEOTAPE)

ALI VELSHI, CNN FINANCIAL CORRESPONDENT, CNN NEWSROOM (voice over): Corporate America likes Republicans.

BUSH: Thank you, all.

VELSHI: For the most part, Republicans have kept hourly wages and taxes low, and they keep their hands out of business as much as possible.

Republicans like corporate America, and its hefty donations. According to one mutual fund company, 76 percent of the firms in the S&P 500 lean Republican in their political donations, but with Republican fortunes flagging, corporate America is looking for some new friends. Remember, big business is big for a reason. It's smart. It's not that corporate America wants the Democrats to win, but if they do win, big business doesn't want to lose.

According to a "New York Times" analysis, as the campaign entered its final month, American corporations shifted more than 10 percent of their political donations from Republicans to Democrats. Lockheed Martin, for instance, went from being a mainly Republican supporter to being a mainly Democratic supporter, at least in October.

Still, some on Wall Street are staying solidly red. Democratic threats to raise taxes on the oil industry mean that so far this year, 83 percent of big oil's money has gone to Republicans. The drug companies aren't looking for new friends, either. Democrats want to renegotiate the lucrative Medicare prescription drug plan. So far this year, 69 percent of the pharmaceutical and health care industry's political donations have gone to Republicans.

Restaurants and small businesses are worried about Democrats raising minimum wage, which has been stuck at $5.15 since 1997. But Wal-Mart has been preparing for that for two years. Though it still gives more to Republicans than to Democrats, it now spreads the donation love more evenly.

Now, some industries aren't just doing it to get in good with the Democrats. They actually stand to gain from a Democratic win. Life insurance companies, for instance, could get a big payout if the Democrats bring back the estate tax, because people would need more life insurance. And an alternative energy companies could get a boost from Congress that isn't so much about big oil.

VELSHI (on camera): Now, not all businesses are shifting their donations. The Republicans have companies that remain solidly in their column, and so do the Democrats. Companies like Coach, Starbucks and COSTCO all donate more to Democrats than they do to Republicans. In fact, companies like Apple Computer and Google say that they give more than 90 percent of their political donations to the Democrats. Ali Velshi, CNN, New York.

(END VIDEOTAPE)

COLLINS: CNN "Prime Time", next Tuesday night, beginning at 7:00 Eastern, Wolf Blitzer, Anderson Cooper, Paula Zahn, Lou Dobbs, they will be leading the best political team on television, as your votes are counted. The races, the results, and all the ramifications, Tuesday night, beginning at 7:00 Eastern.

HARRIS: So how safe is your vote? Now questions now about just who makes some of those electronic voting machines. CNN's Brian Todd takes a look.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT, CNN NEWSROOM (voice over): Venezuelan President Hugo Chavez has made clear his feelings about his American counterpart.

HUGO CHAVEZ, PRESIDENT OF VENEZUELA (through translator): Yesterday, the devil came here, right here, right here, and it smells of sulfur still today.

TODD: Now, just days before midterm elections, questions are being raised by a member of Congress and public interest groups about a voting machine company called Smartmatic, linked to Chevez's government. A company that owns a subsidiary that makes electronic voting machines used in 16 states and Washington, D.C. The whole company is owned by Venezuelan nationals.

CHELLIE PINGREE, COMMON CAUSE: You have a company that clearly, if not now in the past has had some ties with the Venezuelan government, and people are asking, what does it mean to have foreign ownership of the company that produces the voting machines in this country?

TODD: Last year, after winning lucrative contracts from the Venezuelan government, Smartmatic bought an American company called Sequoia, another long-time maker of voting machines.

Smartmatic had previously run machines for Venezuela's 2004 elections, a vote that returned Hugo Chavez to power. Some outsiders question those election results but they were certified by the Carter Center and the Organization of American States. Smartmatic's CEO was very clear.

ANTONIO MUGICA, CEO, SMARTMATIC: There's absolutely no foreign government ownership or control of Smartmatic.

TODD: But Smartmatic officials acknowledge the Venezuelan government owned nearly a third of the stock in a subsidiary, after giving that company a small business loan. Smartmatic says --

JEFF BIALOS, ATTORNEY, SMARTMATIC: The loan was paid off. The government ownership went away.

TODD: Smartmatic officials say they didn't even own that subsidiary until the loan was paid off and the Venezuelan government gave up the stock. Smartmatic also says it voluntarily asked the U.S. Treasury Department to review its purchase of the American vote machine company. A Treasury official tells CNN that review is ongoing.

(END VIDEOTAPE)

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT, CNN NEWSROOM: I'm Susan Lisovicz at the New York Stock Exchange.

First there was the delay of PlayStation 3, then the massive battery recall. I'll tell you about Sony's latest problems when NEWSROOM returns. You are watching CNN, the most trusted name in news.

(COMMERCIAL BREAK)

COLLINS: Do not cry wolf or you could land in jail. This is what has happened, a story we're going to update you on. Over to Betty Nguyen who has the very latest.

A Boynton Beach man made sort of a fake call to the Coast Guard?

BETTY NGUYEN, CNN CORRESPONDENT, CNN NEWSROOM: Not sort of, he made a fake call. And he is facing federal prison time, in federal prison, no less.

Here's what we know: 45-year-old Robert Jay Moran is going to get 30 months in federal prison. Now, he was also fined $347,000 to repay the Coast Guard for this search response, this false search. But because he can't afford to pay that, he's going to serve a period of three years supervision after his federal sentence.

Here's exactly what happened. Back in June of this year, he knowingly made a series -- not just one, but a series of false calls to the Coast Guard, claiming that his 33-foot vessel, the Blue Sheep, was taking on water and that there were nine people onboard, including four children and his injured wife. Well, the Coast Guard responded. That search lasted for almost two full days, covered 1,000 miles, and neither the boat, nor the injured people were ever found.

So, it was all a hoax. Now he is facing prison time -- Heidi.

COLLINS: Any sort of psychological interviews they did with him? I can't figure out why you would do this.

NGUYEN: Why? Yeah, why would you do that? For what? Well, apparently he's paying the price for it today, in federal prison, for 30 months. And on top of that, three years of supervision, because he can't pay back the $347,000 it took to pay for that search by the Coast Guard.

COLLINS: All right. Betty, thank you.

HARRIS: In New Orleans, police are looking for a gunman. They say someone shot and wounded five people in a French Quarter bar early this morning. A police sergeant says three men are hospitalized, one in critical condition. Two women were reportedly grazed by bullets. Officials say violent crime has been on the rise in the city as Katrina evacuees return home.

COLLINS: Sony already struggling under the weight of the laptop battery recall, and sinking profits, but now it's facing another headache. Susan Lisovicz, anything but a headache, joining from the New York Stock Exchange with details on this.

Not good news for Sony, that's for sure.

LISOVICZ: What a series of setbacks for this big, proud company.

The Department of Justice, Heidi, opening an investigation into Sony's electronics unit. The DOJ not providing details, but the move seems to be part of an industry-wide probe into sales of a particular type of memory chipped called S-Ram. Sony says it is cooperating fully.

The chips aren't as widely used in personal computers as other types, but they are found in disc drives, communications equipment, and networking gear. Earlier this month, another S-Ram chip also said it was under investigation.

Sony says it will cooperate and does say that it appears to be an industry-wide probe, Heidi.

COLLINS: How is the company holding up, though, under all of these problems?

LISOVICZ: Well, not too well. We've been talking about it. Last week, Sony said its profits fell 94 percent in the latest quarter. It also lowered its forecast for the full year, loss mostly due to the big lithium ion battery recall, which affected pretty much every major laptop maker in the world. Sony has to cover the cost of recalling nearly 10 million of the batteries because they could overheat and burst into flames.

And there's some of the gristly pictures of that.

The company also having major issues with its PlayStation 3 video game console. Sony had to delay its launch in Europe until March because of production problems. Its game division is a big money- maker, and so that is holding it back.

Sony shares, well, they have been affected, too. They have fallen about 15 percent since May. They're down, right now, about three- quarters of a percent.

Overall, well, stocks are up, barely up. It's been a wobbly session. Started higher, report at the top of the hour showed that Consumer Confidence fell unexpected this month. Stocks took a dip. Well, they haven't recovered fully. The Dow, however, up about 2 points to 12,088. The Nasdaq doing a little better; it's up about 5 or about a fifth of 1 percent. That is the latest from Wall Street on this Halloween. Heidi and Tony, back to you. I see you are wearing your orange, Heidi.

COLLINS: I am wearing my orange, I know. I think of you will us are, except for you. I like you're --

LISOVICZ: This is not a good color. It's not my season.

COLLINS: All right. Susan, we'll check back with you later. Thank you.

HARRIS: Seven days and counting until the midterm election, straight ahead in the NEWSROOM, Bill Bennett joins us with his take on the fight for control of Congress.

And a new movie pokes fun at the people of Kazakhstan. And they're ready to poke back. Borat, in the NEWSROOM.

(COMMERCIAL BREAK)

HARRIS: His name is Borat. He's crude, lewd -- I just like saying the name! He's getting a lot of laughs these days.

COLLINS: Boraat, Borot?

HARRIS: Yeah.

COLLINS: But the people of Kazakhstan say the joke's on them and they're really not all that amused. CNN's Inigo Gilmore has a look at their beef with Borat.

(BEGIN VIDEOTAPE)

INIGO GILMORE, CNN CORRESPONDENT, CNN NEWSROOM (voice over): A proud people with a proud culture, yet a nation ridiculed around the world by Borat. But here on Kazakhstan's national day, signs that they're prepared to fight back.

Borat has cast Kazakhstan as a primitive, Jew-hating nation, where horses are better treated than women, and goat punching is a traditional sport. And they're not too happy about it.

This man recognized the comedian and praised his mustache, but he says facial hair is where the comparison with Kazakhs begins and ends.

"There's 150 ethnic groups here, but no one looks like Borat," he says dismissively. "And we don't cage up our women, I promise."

The Kazakhs I met denied they were anti-Semitic, but they're certainly anti-Borat.

(On camera): If he came here, what would happen to him?

UNIDENTIFIED MALE: I think they would kill him.

GILMORE: They would kill him? (LAUGHTER)

One of Borat's jokes is that Kazakh women are working en masse as prostitutes. We did fine some, but Kazakh's claim is no different from any other major city in the West.

There's no denying, however, that the local cuisine is, well, unique.

Among many other things, Borat has insulted Kazakhs with some outlandish claims about what they eat and drink. No horse urine on the menu here, but there is this, fermented horse milk. It is pretty unusual, to say the least.

A this is the national dish, boiled and boiled camel. But it's other perceived insults that have really upset Kazakhs, so much so some seem prepared to boil him up themselves.

(Voice over): Out in the rural areas, plenty of goats, but as for punching them, no hard evidence. Borat may not get off so lightly.

UNIDENTIFIED FEMALE: "What he's saying is just a load of old rubbish and gravely insulting to us. He should be careful."

On this basis, it seems maybe Kazakhs do have the right to feel rather bruised. Then again, we did meet this man, on his horse.

"I have two horses. I love them very much, and, yes, I treat them better than my woman," he says.

(LAUGHTER)

GILMORE: Inigo Gilmore, CNN, Kazakhstan.

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HARRIS: Still to come, a slum in Baghdad, a line in the sand, a radical cleric on one side, the U.S. on the other, and possibly tipping the scales, an Iraqi government at odds with Washington. We will explain in the NEWSROOM.

COLLINS: And October, the deadliest month this year for Americans in Iraq. That pain stretching back home. The communities left behind, ahead in the NEWSROOM.

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COLLINS: So, 103 American troops killed this month, but it's more than just a number.

HARRIS: For each casualty, there's a grieving family and a community in mourning. Here's CNN's Kareen Wynter.

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KAREEN WYNTER, CNN CORRESPONDENT, AMERICAN MORNING (voice over): Sergeant Norman Taylor, Blythe, California; Sergeant Lester Baracini, Bakersfield, California; Corporal Kenny Stanton, Hemet, California, just some of the faces of American servicemen killed this October, the fourth deadliest month on record for U.S. forces since the start of the Iraq war.

Gloria and Kenny Stanton just buried their son.

KENNY STANTON, SR., FATHER OF SOLDIER KILLED IN IRAQ: I've never had such a traumatic thing happen to me. I don't know how to go on.

WYNTER: Twenty-year-old Corporal Kenny Stanton, Jr., was a Hemet, California high school graduate and military police officer who wanted to make his family proud. Gloria Stanton grips her son's dog tags, a small piece, she says, of what's left of him.

GLORIA STANTON, MOTHER OF SOLDIER KILLED IN IRAQ: It's my way of feeling I have him close to my heart. I mean, he's already there, but this is a part of him that he had with him.

WYNTER: Stanton was killed in October 13, by a roadside bomb in Baghdad. Days later, still fresh with grief, the town of Hemet buckled under more crushing news.

DR. PHIL PENDLEY, SUPERINTENDENT, HEMET SCHOOL DISTR.: Well, it's just an incredible run of bad luck.

WYNTER: The death of yet another serviceman, 23-year-old hospital Corpsman Charles Sayer, killed by enemy fire in western Iraq October 23rd. District Superintendent Doctor Phil Pendley says Sayer is the fourth hometown hero to die in combat since the war began.

PENDLEY: You think, one happened so we paid our dues, but then another one happens. And you think, well, it couldn't be us again. Now here we are at four.

WYNTER: Sadness also filled the small desert town of Blythe, California. Where 21-year-old Sergeant Norman Taylor, nicknamed "Buddy", was a high school standout and cadet battalion commander, eager to serve his country.

1St SGT. GERALD EDWARDS, U.S. ARMY: He understood, that death was there. That was not an issue. I think he knew the reality of living and dying.

MICHAEL GILMORE, PRINCIPAL, PALO VERDE VALLEY H.S.: I hugged him before he left and I said, "Keep your head down, Buddy." He said, "I'm going to try." I was thinking of that one -- (SOBBING) -- that wasn't enough. Sometimes keeping your head down isn't enough in war.

WYNTER: Unlike their Hemet neighbors, who've lost four servicemen, residents here say this community's first war tragedy cuts deep.

(on camera): Since the start of the war in Iraq, more than 280 servicemen from California have been buried in cemeteries like this one all across the state. Each grave, a symbol of the family's grief, and some say, a reminder of the cruel casualties of war.

G. STANTON: I think of all the pain that all the families are going through, those that have lost their children. I don't want anybody to feel the same way I do right now.

(CHURCH BELLS CHIME)

WYNTER: Kareem Wynter, CNN, Hemet, California.

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HARRIS: You're with CNN...

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