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CNN NEWSROOM

Four Inmates Escaped From Oklahoma Jail Through A Trap Door In A Shower; WSJ: Obama Not Aware U.S. Spied On Merkel And Other Leaders Nearly Five Years; New Problem For Obamacare Website; SNL Roasts Sebelius; Former Chief Information Officer Of U.S. On Failings Of The Obamacare Website; Hernandez's Friend Served With Subpoena; Red Sox Win After Pickoff Play; NYSE's Test For Twitter IPO A "Success"; Dorsey: Square Will Transform Commerce

Aired October 28, 2013 - 10:00   ET

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


POPPY HARLOW, CNN ANCHOR: And this -- does the smell of bacon get you out of bed fast? How about a hot cinnamon roll? Forget cooking, now, yes, you're smartphone can smell good enough to eat. The second hour of NEWSROOM starts right now.

Good morning from Atlanta. I'm Poppy Harlow in today for Carol Costello who has a well deserved day off.

Well, it has been an uneasy night in Anadarko, Oklahoma, 50 miles southwest of Oklahoma City. That is where four inmates are on the loose as we speak after a daring jailbreak and police say they maybe armed and dangerous. And how it happened reads like a far-fetched script straight out of Hollywood.

Their escape began in the shower. That's where they were able to open an access panel and climb into an area that houses the plumbing. Then apparently they followed those pipes, snaked their way through the building eventually reaching a concrete wall. Somehow they were able to bust through a concrete wall and then in an unsecured area.

So let's get the latest on this escape and man hunt for these four individuals. Gene Cain is the Caddo County sheriff. He joins us on the phone. Thank you for being with us this morning.

GENE CAIN, SHERIFF, CADDO COUNTY, OKLAHOMA (via telephone): Yes.

HARLOW: Let me ask you this first. Do you have any sense that these escapees had any outside help? Because we know that they ditched their orange jump suits so did someone leave clothed for them? Do we know anything about any potential outside help?

CAIN: At this time we're still investigating that possibility. As of now, we have no leads of who it might have been or even if they did have help.

HARLOW: I want to ask you also about this more importantly. Wouldn't they need some sort of blueprint to know that that hatch led to piping that would get them to an area with a door that may or may not be unlocked and indeed it was unlocked, any way that they could have had access?

CAIN: Really, I don't think so. They just when they got up in there, they just started crawl as far as it would go. When they got to the end of the wall, they were able to break some of the concrete blocks out and drop down in the access room there. I don't really think they knew where they were going. Just kind of one way you could go.

HARLOW: Do you keep blueprints? Would they have any -- would they be anywhere within the facility?

CAIN: I'm sorry.

HARLOW: Do you keep blueprints anywhere within the prison?

CAIN: I'm sorry, you don't have volume. I can't hear you.

HARLOW: OK, we are going on this. Stand with me for just one second. We're going to work on fixing this and try to get back to the sheriff in just a moment. We appreciate him taking the time. So we'll try to get him back on the line in a moment.

But before that, let's get to our other top story this morning. The NSA, we're going to have Bob Baer joining us now because a Spanish newspaper is claiming that the NSA monitored 60 million phone calls in Spain in just one month. This followed news that the United States reportedly intercepted millions of phone calls in France and Germany.

German Chancellor Angela Merkel is also very upset over reports that her cellphone calls were monitored for years. "The Wall Street Journal" reports that President Obama didn't know about this until this summer and then put a stop to it. The House intelligence chief said all in all the NSA surveillance programs abroad keep the U.S. and its allies safe. Listen.

(BEGIN VIDEO CLIP)

CANDY CROWLEY, HOST, CNN'S "STATE OF THE UNION": How damaging is it for the German chancellor or the French president to know that we've been keyed into their phone calls?

REPRESENTATIVE MIKE ROGERS (R), CHAIRMAN, HOUSE INTELLIGENCE COMMITTEE: Well, I think the bigger news story here would be, Candy, if the United States intelligence services weren't trying to collect information that would protect U.S. interests both home and abroad. So you have a big group of people sitting at the table deciding what we should do is right or wrong. They don't have that in our -- some of our European capitals and I would argue, by the way, if the French citizens knew exactly what that was about, they would be applauding and popping champagne corks.

(END VIDEO CLIP)

HARLOW: Applauding and popping champagne corks, not sure about that. That's his take. Let's bring in national security analyst and former CIA operative Bob Baer. He joins me now. So Bob, let's talk about this first because this issue comes up getting all the headlines, all these attentions. Are you shocked by this? Because isn't there just an understanding that this kind of spying happens and not only by the United States?

BOB BAER, CNN NATIONAL SECURITY ANALYST: Well, the problem is we're not getting the full story out of the National Security Agency. If they had been simply running through Spanish calls looking for particular terrorists over the course of a month, 60 million calls running an algorithm through is no big deal. It's almost acceptable. I think the shock for most people is that the United States allowed this to be leaked out in documents.

That's what the French and Germans and Spanish are reacting to. Now as for listening, to heads of state, that's something else. And frankly, it would be highly unusual for the National Security Agency to monitor to the chancellor of Germany's phone and not tell the president early on. That would be completely opposite standard operating procedure.

HARLOW: And that's what the "The Wall Street Journal" is saying this morning citing several sources that the president wasn't notified of this until the summer and he then called for a stop to it. You have called this the worst damage to U.S. intelligence in 30 or 40 years. Was it worth it?

BAER: Absolutely not. Look, the National Security Agency, I depended upon it for my entire career. It's got brilliant information when it comes to counterterrorism. But when you're listening into European leaders, it's not worth it. It wasn't worth the risk and especially putting on paper and letting somebody like Edward Snowden, the NSA leaker put documents out. This is truly a catastrophe because the Europeans are going to back away. We need them for counterterrorism. The 9/11 was launched out of Europe not the Middle East.

HARLOW: You know, you said on CNN NEWSROOM yesterday, you said, we'll see people -- and you said quote, "backing off from Washington." Give me a sense of what you think that will look like and elaborate on what you mean, people strategic key allies that we need information from.

BAER: Look, let's take Britain. GCHQ, that's their national security agency. It's quite remarkable organization. They're very good. If they should come up with a very secret interceptive, somebody, I mean, they're going to have second thoughts about calling Washington and sharing it. They just will. I mean, they're worried about all the information we're leaking from Wikileaks and on. It's truly a culture of -- that can't be sustained.

HARLOW: So there's one thing to be very upset, feel violated, et cetera. But it's another to need your allies, to need the United States, right, to work collaboratively to prevent something very, very serious, catastrophe, right? Is there a line there or no? Do you think this has crossed the line -- go ahead.

BAER: We've crossed the line clearly, but espionage is based on secrecy. It's got to be based on secrecy, but we count on the spies of staying within their limits, monitoring, for instance, U.S. reporters is way beyond the pale and this is apparently what's happened with the National Security Agency and we are all going to pay the price. And I predict, it's impossible to tell for sure, but it's going to cost us lives in the end.

HARLOW: Cost us lives in the end?

BAER: We're not going to have the full cooperation of the world combat terrorism and something is going to slip through the cracks because some NSA monitoring system has been closed down.

HARLOW: I wonder if you think there's any way at this point to prevent that and I know you said that when you were in the CIA this was happening. But what's new here is the broad, broad, broad scope. Is this something that the president needs to come out and directly address? We know we had that phone call with German Chancellor Angela Merkel in recent weeks. Is this something that needs to be publicly addressed, you know, full just lay your cards on the table to the American public or frankly, there are so many things that need to be secret is the counter argument.

BAER: They need to be kept secret, but we need the congressional intelligence committees involved examining this, see if it's following the law, see if what's unnecessary, see if we got anything out of monitoring the chancellor's phone calls. I doubt it. But Congress should be looking at it, not you and me.

HARLOW: Appreciate it very much for the expertise. Thank you, Bob.

Well, the Obama care web site crashed again after yet another problem emerged last night. It is now back up and running. The administration is blaming a vendor networking issue saying an attempted fix actually turned out to crash the system.

A spokesman for Verizon said the company immediately began working on that problem to fix it as quickly as possible. The ongoing Obamacare web site fiasco was fodder for, what else, "Saturday Night Live" on NBC. Check out this spoof of Health and Human Services Director Kathleen Sebelius.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Consider using our low res (ph) website with simpler fonts and graphics. Nice or if the regular English site isn't working, try signing up in a different language like, say, Icelandic and then choose one of four simple plans (inaudible). Now that's fun. And if our site keeps freezing, we've also provided linking to other helpful websites, such as kayak.com where you can purchase airline tickets to Canada and buy cheaper prescription drugs.

(END VIDEO CLIP)

HARLOW: Well, Republican Senator John Barrasso may have been watching SNL and on a more serious note, he called Sebelius, quote, "The laughing stock of America."

(BEGIN VIDEO CLIP) SENATOR JOHN BARRASSO (R), WYOMING: We've had more people since October 1st, George, get letters of denial where they're losing the insurance that they have than have been people actually able to sign up for the Obama health care law. And you talk about Secretary Sebelius and her comments, she's already as of "Saturday Night Live," last night, the laughing stock of America. So she's lost considerable credibility --

(END VIDEO CLIP)

HARLOW: Well, Sebelius is expected to face a lot of tough questions on Wednesday. She'll be on Capitol Hill appearing before a House panel looking into all of the web site has been going through.

More now on the Obama care web site problems. Our Laurie Segall had a fascinating exclusive interview with Vivek Kundra. He is the first chief information officer for the United States. He's a man with very unique insight into exactly happened here with the site. Good morning to you, Laurie. Talk to us about some of what he said that really stood out to you.

LAURIE SEGALL, CNNMONEY TECH CORRESPONDENT: The one think he said, he said it was built with a 1960's architecture, which is very eye opening when you think about innovation. And he really kind of got into the innovation problem within the White House walls. He talked to me about some of the problems with the government using contractors. Listen to what he said, Poppy.

(BEGIN VIDEO CLIP)

VIVEK KUNDRA, SALESFORCE: There is actually closed ecosystem of players that know how the procurement process works. They have people, you know, who know how to look at it and recognize that the way you make money is by throwing more bodies at the problem and engineering your favor from a profit perspective. Rather than figuring out a way to deliver the best production, best solution at the lowest cost.

(END VIDEO CLIP)

SEGALL: Obviously some pretty good insight because he has been within the White House walls. Now he works from the valley. He's essentially saying that they're putting a lot of money and effort into putting bodies in the mix. But not the Silicon Valley lean start up mentality that seems to be successful in the valley. They don't have that within the government he said.

HARLOW: Did he work under the Obama administration? He did, didn't he?

SEGALL: Yes. He did and he was very much part of the push towards technology and towards bringing the best and buy test technologists into Washington.

HARLOW: So he now works in Silicon Valley. He wasn't any part of this roll-out. I'm wondering what he thinks specifically they could have done better, right? So lean and you talk about this all last week having too many people, too many agencies involved and all that red tape and so many people and cooks in the kitchen. But specifically, does he think anything else could have been better?

SEGALL: Absolutely. He spoke about outsourcing. If you're going to out-source to contractors, why not out-source to the people who know the most about this, which would be a lot of the folks and a lot of the entrepreneurs in the Valley. I asked him about this. Listen to what he said, Poppy.

(BEGIN VIDEO CLIP)

KUNDRA: At the agency level, unfortunately, this is a case where decisions were made to actually implement and custom build everything rather than saying who does this best on the planet. How do we actually look at some of the best practices in Silicon Valley, whether it's companies like Amazon or salesforce.com, or Google that can scale with billions of users. And how do we bring them in to help solve this?

(END VIDEO CLIP)

SEGALL: And Poppy, he gave me a pretty interesting example. He said there was a decision made to have people register before they're allowed to browse. He joked he said at Amazon, he's said that's like having people register before Christmas to browse the site. That's not how the technology works, that's not a decision they would have made.

HARLOW: So is he come back to help fix it?

SEGALL: He's staying in Silicon Valley. I joked with him, and he said maybe they'll call you. He said they haven't called. But a lot of folks, they kind of shake their heads a little bit. He says that he trusts they are in good hands. He says the people they're bringing in will make a difference and that this will be fixed.

HARLOW: Is an equivalent of him now in the same position in the White House now?

SEGALL: There are a lot of folks in the White House and a lot of people talking about innovation. There's still a lot of frustration. Some of the most innovative people are afternoon times frustrated by the agency level of innovation, with the idea that you want to go in and change things. But there's so many ways. And you're really knocking up against a door. These people have been doing it for a certain way for a very long time. It's difficult to go in and completely switch things up.

HARLOW: Right. Laurie, great interview. You've been covering this throughout. So thank you for that. Folks, if you want to see more, go to cnn.com and see more of her talk with him.

All right, coming up, still ahead, you've seen the ads possibly for Square. You know, you swipe your credit cart. It's attached to the cell phone. We're going to hear from the man who invented it and why he said it will transform the way we're exchanging money.

(COMMERCIAL BREAK)

HARLOW: Checking your top stories now. This morning the Israeli Air Force launched an air strike on the Gaza Strip. We are told they targeted two rocket launching squads that maybe responsible for an attack on Southern Israel. Earlier, two rockets were fired across the border, one of them intercepted by the Israel iron dome defense system. There are no reports of injuries.

Meantime, Conrad Murray is a free man this morning. He was released from the Los Angeles County Jail after serving two years for causing Michael Jackson's death. A jury found that his negligence led to the singer's death from an overdose of Propofol. Murray's medical licenses were suspended after his conviction, but he plans to file for the reinstatement of those licenses so that he can practice medicine once again.

Meantime, a recall involving broccoli salad, Taylor Farms has recalled more than 5,000 pounds of broccoli salad kit products because of possible listeria contamination. They were shipped from Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, and Vermont. No reports of anyone getting sick so far.

And Miami Dolphin's center, Mike Pouncey, has been ordered to testify before a grand jury in the Aaron Hernandez murder investigation. According to "Sports Illustrated," He was served with a subpoena an hour after his team lost to the New England Patriots.

Our Rachel Nichols is here to talk to us about that then we'll talk about the World Series. So let's start with this, Rachel. How does he if we know fit into this Hernandez investigation?

RACHEL NICHOLS, CNN SPORTS CORRESPONDENT: We should make it clear, Poppy, that he is not being charged with anything and no expectation that he will be charged with anything. The expectation is that they just want him as a material witness in this case. Both Mike, and his brother who plays with the Pittsburgh Steelers were roommates of Hernandez' at the University of Florida, still close friends.

In fact, the two twin brothers were seen wearing "Free Hernandez" hats over the summer supporting their friend and former Gator teammate although they later thought that they thought that was in poor judgment. And the big question is whether any other NFL players might eventually get drawn into this as witnesses.

There's been request made to the Steelers asking if the brother was hit with a subpoena. They haven't answered that yet, so it's possible that the other brother may also end up testifying, but we are not expecting to see a rash of NFL players drawn into this. This is an isolated case although certainly a very ugly one.

HARLOW: Yes, and that's very important to mention, no charges or anything like that. This is a subpoena for a testimony. Let's talk about the World Series. Wow, I mean, two really whacky endings to the last two games. Things we've never seen before in a World Series. Tell us about that and then about the brighter moments that you think are getting overshadowed by all of this.

NICHOLS: Yes, you know, there's never been an obstruction call in the World Series. That's what we saw to end game three and a lot of Red Sox fans this should be more like an NBA game. Yes, we know it's a rule but you don't call it at the end. Don't call it on a technicality. Unfortunately, baseball fans know that that whole game is made up of technicalities.

So umpires did have to call the fact that a Red Sox player was obstructing the base. However, I think that rule may get looked at, just like in football. We saw a big decision on the tuck rule a few years ago and after that, the owners took that tuck rule out so that could change. Last night's game, game four, definitely a strange way to have a guy just basically take on out on base.

And it's funny, the pictures, did you read that on the "Scouting Report?" He said, I don't read the "Scouting Report" so certainly an odd game all the way around. But I think this home run by Johnny Goems is really the thing we should be talking about, Poppy. This is a guy who wasn't even supposed to there that night.

About 90 minutes before the game, he finds out that another player is having back problems. He's going to get inserted into the line and he has had a terrible run of bad luck at the plate. He's definitely a character player and provided big numbers last night, no question.

HARLOW: Talk about making the most of an opportunity, right. Sink or swim, you get thrown in last minute and go for it. It's been so exciting to watch game five tonight. Rachel, appreciate it.

NICHOLS: Thank you.

HARLOW: All right, we'll be right back.

(COMMERCIAL BREAK)

HARLOW: Well, after last year's botched Facebook on the Nasdaq, officials are not taking any chances in the run up to the Twitter IPO. They conducted a systems test over the weekend. They say it was a success. No word yet on what date we will see that IPO. But the company's cofounder, he's not talking a lot about it. His name is Jack Dorsey.

What he is talking about is his latest venture. It's called "Square." Dorsey thinks it's going to revolutionize commerce. He spoke recently with CNN International business anchor, Maggie Lake. She joins me now from New York.

You know, Maggie, I find him fascinating. I went recently to hear a talk of his in New York City talking about all of things he tried and then, you know, eventually led him to start Twitter. After the Twitter IPO, he could retire, right? Very, very wealthy instead he's trying to disrupt a whole other big, big industry?

MAGGIE LAKE, CNN INTERNATIONAL BUSINESS ANCHOR: Yes absolutely. It would be tempting, Poppy, because certainly a billionaire on paper. While Twitter is on their road show with bankers, he's on the road meeting with small business owners in different cities across the U.S. and Canada. We caught up with him in Toronto. He's really focused on an area that he says needs help. It's commerce.

He said small business owners have to spend too much of their time with back office stuff. They are not able to be out in front, working on their actual business, trying to grow their business. He thinks that this is an area that he could contribute with. Squares has been around since 2009, but they're lunching it to other areas including analytics and a service where you can send cash over e-mail.

So it sounds really promising, but listen, the reason people are paying attention to this is because of the success of Twitter. I asked him about those very high expectations. Have a listen to what he said.

(BEGIN VIDEO CLIP)

JACK DORSEY, CEO, SQUARE: It's not something I really think about that much. This is an entirely new canvas. Twitter is focused around communication. This is around commerce. I think they're both fundamental to humanity. I think both are extremely complex and both companies are trying to make each simple.

(END VIDEO CLIP)

LAKE: And Poppy, he really sees that technology as a way to level the playing field. He's around talking to these business owners and by the way, intensely private person. He's very sort of quiet and soft spoken, but very engaged when he talks to these business owners. And I said, what are they telling you?

He says that the government is failing them. The local governments aren't doing enough. They need help and he sees technology as one way that can help these small businesses grow and put some of these people back to work who we know are frankly are sort of left out of this economy. It's a really fascinating stuff.

HARLOW: Yes, we see it all over with my cab driver today had a Square and also this big partnership with Starbucks. So they also work with big companies. There's been a lot of hype, a lot of talk about Jack Dorsey given the Twitter IPO filing. You know, not all good, I wonder if her responded to that?

LAKE: I did. I asked him about that. And by the way, he can't talk about Twitter because of the SEC. They're actually banned from discuss it, but I asked him about all of it around it because some of it has been personal about his role, how much he contributed or not. He said listen, he sort of smirked and said, I have people around me to keep me focused on what's important.

And what's important is trying to get these tools into the hands of small businesses so that they can help the economy. He really sees this as key if we can get these small businesses going, something that's going to help transform the economy. You know, Poppy, he's going against some big names, Google, Paypal. There are other people who are trying to do this, but when you ask him about it, he says they're not doing it in a seamless way. It's not really click jet and some of these small business owners will say just by looking at the analytics. They can see who is coming in their shop, tweak their hours and grow their business by 20 percent.

That's the kind of stuff he's locked into and focused on, and he thinks is going to be the next big thing. But they are both about community, interestingly, when you talk to him, community where Twitter was everyone. Community here is getting these small business owners together to mentor each other and try to grow their business.

HARLOW: Yes, and big business, big business for him if it's a success.