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Chinese Officers Charged with Internet Hacking; People Arrested in Hacking Crackdown; Lavrov Calls for Reset with E.U. and NATO; U.S. Calls Russian Actions Menacing; Inevitable Label May Hurt Clinton in 2016; VA Hospitals

Aired May 19, 2014 - 13:00   ET

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

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WOLF BLITZER, CNN ANCHOR: Right now, the Justice Department is cracking down on hacking. For the first time ever, charges are being filed against Chinese state officials, accusing them of espionage.

Right now, Russia says it's withdrawing its troops from the Ukrainian border. NATO begs to differ. We're going to get a live report from Moscow and the White House.

And right now, Hillary Clinton is the talk of the town. But could all the attention now spoil her prospects for later? We'll discuss.

Hello, I'm Wolf Blitzer reporting today from New York. We start with a crackdown on cyber security threats. First, the Justice Department has filed charges against a handful of Chinese government officials. They're accused of hacking into American companies and entities to steal secrets. Among them, U.S. Steel, the Steelworkers Union and Westinghouse Electric.

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: This is a case alleging economic espionage by members of the Chinese military. The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. The indictment alleges that these PLA officers maintained unauthorized access to victim computers to steal information from these entities that would be useful to their competitors from China, including state-owned enterprises.

(END VIDEO CLIP)

BLITZER: China, meanwhile, responded to the charges saying they are, in their words, absurd.

Jim Sciutto, our Chief National Security Correspondent, is covering the story for us. This is the first time, I take it, Jim, this kind of crackdown against another country has occurred. So, what's going on? What potentially could be the cost if the Chinese reciprocate?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, it's a big question. In a way, China has already reciprocated, in that announcement, calling these charges absurd and fictional. They canceled this U.S. cyber working group. This is one example of U.S.- China cooperation. It doesn't sound like a big deal but at least they're talking. They canceled that.

It does have consequences. China does not like to have these things publicly exposed and this public shaming strategy, in effect, here is something that the U.S., in the past, had been reluctant to do but, basically, ran out of patience.

You know, the costs are estimated to be $100 billion a year in losses to U.S. businesses for cyber spying, as a whole, with China being the leader there, 500,000 lost jobs. You know, people back home watching this think that this is a distance problem. You know, it really reaches into everyone's pockets here because it has real costs.

And the other thing I always say, when you talk about these issues, you know, in China, this is not an issue of bad behavior. This is government policy. It's got the approval of the senior leadership. It's got the involvement, in this case, of the People's Liberation Army. It is something that happens with the full knowledge and direction of the Chinese government.

BLITZER: So, clearly, Jim, these were, by no means, isolated incidents?

SCIUTTO: They are not. And you -- you know, I spent a couple years in Beijing. And this is really, arguably, if not the top issue, one of the top issues of disagreement between the U.S. and China because it has real economic cost to U.S. businesses. And our trading relationship with China -- our relationship is principally a trading relationship. And so many companies have faced this, Wolf, you know, dozens of American companies face it on a number of levels.

And in the past, they've been reluctant to highlight it too much. One, because they worry about advertising that some of their, you know, pricey technology has been stolen. But, two, they also fear that if they come out and say this and kind of complain from the rooftops, that the Chinese government will punish them with access to the country.

You know, some companies looking at this as a cost of doing business in China. The trouble is it's a big cost. And it got to the point where it's just too much of a cost. And, really, you see in these charges here, U.S. officials and those companies involved running out of patience.

BLITZER: It's a big deal indeed. Jim Sciutto, thank you.

Also right now, more than a hundred people have been arrested in another hacking crackdown. It's centered on software called Black Shades which gives hackers access to everything on hundreds of thousands of home computers, and that includes being able to access Web cams and to steal credit card information.

(BEGIN VIDEO CLIP) PRETT BHARARA, U.S. ATTORNEY, SOUTHERN DISTRIC OF NEW YORK: We now live in a world where for just $40, a cyber criminal halfway across the globe can, with just a click of the mouse, unleash a rat that can spread a computer plague not only on someone's property but also on their privacy and their most personal spaces. In such a world, the law enforcement community must be committed to confronting cyber crime with sustained dedication and creativity and that is what we have done here.

(END VIDEO CLIP)

BLITZER: The FBI, along with police in around 20 countries, carried out the year-long investigation.

We are now less than a week away from the presidential elections in Ukraine. They're scheduled for Saturday. In the meantime, Russian president Vladimir Putin has, once again, said he'll pull back troops from eastern Ukrainian border areas.

Our Matthew Chance is in Moscow. Matthew, so what was Putin's order as far as the troops? There were, what, 30,000, 40,000 Russian troops along the Ukrainian border, on the Russian side?

MATTHEW CHANCE, CNN CORRESPONDENT: Yes, that's right, 30,000 or 40,000 according to NATO estimates. The Russians aren't confirming that. But Vladimir Putin, in a meeting today with the Russian National Security Committee, saying that he's giving the order to pull those troops back from the Ukrainian border, where he says they're on a routine training exercise that has now come to an end. It sounds very convincing, of course.

And it's -- if it's true, Wolf, then it could be a major step towards deescalating the crisis in Ukraine. The problem is, of course, that this is the third time that Vladimir Putin, the Russian president, has issued this order publicly, these troops to go back. So far, there's been no movement on them. NATO, the western military lines, have said -- seen no substantial movement of troops since this third order has been given.

The White House has commented as well. So, the whole order, at this stage, being treated with some skepticism. But, perhaps it gives the impression that Vladimir Putin is taking a softer stance, perhaps, towards the crisis in Ukraine.

BLITZER: Well, as they say, actions speak louder than words. We'll see if those troops actually are pulled back, especially in these coming days leading up to the presidential elections in Ukraine.

Meanwhile, as you know, Matthew, the Russian foreign policy, Sergey Lavrov, he had some poignant words for NATO, the E.U., the European Union. Tell our viewers what he said.

CHANCE: Yes, that's right, Sergey Lavrov speaking in Slovakia with his Slovak counterparts, saying that the whole relationship between Russia and NATO, Russia and the European Union, should be re-examined. I mean, there's been this huge fallout over the past couple of months, of course, over the crisis in Ukraine. These two sides, the old cold war battle lines perhaps being drawn, they're just not seeing eye to eye, the west, the European Union, NATO, the United States and Russia on this issue.

What Russia wants, more than anything else at this stage it seems, is a federal constitution in Ukraine. That would mean that it would control large areas of the country that speak Russian and who are ethnically Russian. That would mean it could prevent Ukraine from joining NATO and joining the European Union. That's what it wants unless they come to the negotiating table. I think we're going to see more trouble between the east and west in the future.

BLITZER: I think you're absolutely right. All right, Matthew, thanks very, very much.

Let's go to the White House right now. Our Correspondent there, Michelle Kosinski, is standing by. So, what are they saying about this latest announcement from the Russian president? As Matthew Chance says, the third time he says those troops are moving away from the border.

MICHELLE KOSINSKI, CNN CORRESPONDENT: Hi, Wolf. Well, in three words, not buying it. White House senior administration officials saying today that there is no evidence, in their assessment, that Russia is moving any troops away from that border region. And they said, you know, Russia has said that they were going to do so several times in the past, as early as March, in fact.

And two things really come to light here from what administration officials were saying that, first of all, no evidence of any movement and, secondly, no evidence that Russia has actually been conducting these military training exercises at the border which is the excuse Russia gave, in the first place, for moving those 10s of thousands of troops there by estimates of the Ukrainians and also western countries. And the U.S. isn't the only one who thinks so, at this point. The NATO secretary general is also saying they see no evidence of any movement.

So, today, the White House said that officials are watching the situation. They're tracking it closely but that they need clear, firm evidence that Russia is actually doing or going to do what it promised to do in Geneva last month, and that was take real steps to deescalate the situation. So, they really say they don't see anything to indicate that Russia's changing course, at this point -- Wolf.

BLITZER: Yes, we'll see exactly what Russia does in the coming days.

As you and our viewers know by now, the U.S., including the president of the United States, has made clear that if the Russians do interfere in these upcoming elections in Ukraine, that would result in even harsher U.S. and international sanctions against Russia. So, stakes are clearly enormous.

Michelle, thanks very, very much.

Just ahead, everyone assumes Hillary Clinton will run for president in 2016. Well, maybe not everyone, a lot of people do. That certainly does put her in a -- make her a prime target for some political attacks. One GOP strategist warning that going after her now could actually backfire, though, on the party.

And later, the long, often deadly wait times at veterans hospitals across the United States and alleged attempts to cover them up. Another hospital has now been added to the list.

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BLITZER: Hillary Clinton hasn't said if she'll run for president of the United States in 2016, but a lot of people, on both sides of the aisle, believe it's inevitable. In fact, that's exactly what concerns the Massachusetts Governor, Duval Patrick. He spoke with CNN's Candy Crowley on "STATE OF THE UNION."

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CANDY CROWLEY, CNN HOST, "STATE OF THE UNION": When you look at 2016, is this Hillary all the way, do you think?

GOV. DEVAL PATRICK (D), MASSACHUSETTS: Well, I don't know. I guess I worry a little bit. She's an enormously capable candidate and leader. But I do worry about the inevitability thing because I think it's a -- I think it's off-putting to the average -- the average voter. And I think that was an element of her campaign the last time. And I would just -- you know, I -- it's -- as an enthusiastic Democrat, I just hope that the people around her pay attention to that this time around.

(END VIDEO CLIP)

BLITZER: Clinton's enemies are already gunning for her. Last week, the GOP strategist, Karl Rove, hinting she may have suffered a brain injury back in 2012.

Fellow Republican strategist, Alex Castellanos, though, warned that that kind of attack could end up hurting Republicans, in an op ed article hosted on CNN.com. He writes this, right now, the GOP is a cause few are proud to join. We are a dark and purposeless confederation known for primarily -- known for primarily for saying no and telling people not what they can be but what they should not do. We seem to employ our principles only -- with only the darkest and the most offensive intentions. This assault on Hillary Clinton will only aggravate that perception of the GOP and the moment couldn't be worse.

Let's bring in our Political Analyst Maggie Haberman who also writes for Politico. Maggie, let's talk a little bit. Should Hillary Clinton be worried about all this attention she's getting now as the almost certain if she runs Democrat nominee?

MAGGIE HABERMAN, CNN POLITICAL ANALYST: A major test for her is going to be when this book comes out next month. And that's where --

BLITZER: Her book.

HABERMAN: Her book, that - you know, "Hard Choices" -

BLITZER: Yes.

HABERMAN: Which is her retrospective about her time at the State Department. Then we will see what the fire in the belly level is. What the inevitability thing is something she is sort of riding along on.

There is concern among Democrats that inevitability sank her last time, but last time Barack Obama was already known to be sort of waiting in the wings. I'm hard pressed to point to another candidate who's as strong as Obama this time around who could challenge her from the left. But I think Deval Patrick is right, the voters do want to see you work for it and that's something her folks are pretty mindful of.

BLITZER: Because Joe Biden, there's been a whole bunch of other news -

HABERMAN: Sure.

BLITZER: If she doesn't run. But a lot of folks just assume, if she runs, you know, the Martin O'Malleys -

HABERMAN: Yes.

BLITZER: The Andrew Cuomos, the Joe Bidens, the Elizabeth Warrens, they're not going to run.

HABERMAN: Uh-huh. Elizabeth Warren has said she's not going to run. I actually take her at her word. She was one of the people who signed a letter, Senate women, urging Hillary Clinton to run. I believe Andrew Cuomo will not run if she does. Joe Biden is a question mark. O'Malley has actually said he is running regardless, but I could easily see him running for vice president as opposed to running, you know, to really challenge her. She's very formidable this time (ph) in a way she was not in '08.

BLITZER: Let's talk about the New Jersey governor, Chris Christie. He seemed to take a swipe at her - at her tenure as the secretary of state. Let me play this little clip. This is Chris Christie, the New Jersey governor.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: We are and have become a dysfunctional government, that even our own people snicker, laugh at, ignore and are disgusted by. There (ph) was a time in this world when America's government was something to emulate.

(END VIDEO CLIP)

BLITZER: So is that an attack more on Hillary Clinton or Barack Obama?

HABERMAN: A little of both. It - it's equal opportunity, in my opinion, where he's going. And you're seeing a lot of Republicans taking aim at her State Department tenure these days. Rand Paul has been doing it. Marco Rubio has been doing it. You're going to see a lot more. But it's also something that Republicans are attempting to keep the element where she can carve out some distance from President Obama. They want to keep her from doing that. His numbers remain low, and that is a problem for her.

BLITZER: And her book that's coming out, the book is coming out in June, basically is a strong defense of her record at the State Department as secretary of state.

HABERMAN: As we understand it, yes. There's supposedly a whole chapter about Benghazi or a very substantial section about Benghazi that's going to be her laying out her defense just as these hearings are going on. I think you can expect you will hear a lot about that in the lead-up to the book. She has a section on Iran. She has a section about a lot of different things. She's going to have to articulate during this book tour very clearly for people what she accomplished as secretary of state. That is something where Republicans see a gap where they can take aim at and she has to have a very definitive answer.

BLITZER: And I assume she'll explain what she meant when she said, was difference does it make -

HABERMAN: Yes.

BLITZER: That clip you keep hearing over and over again, referring to the view of what happened at Benghazi.

HABERMAN: Yes. I mean Democrats say and her people say she was being taken out of context when that clip gets played over and over. She was talking about what difference does what happened make. She was talking about the specific motives about how this came to be. But, yes, I expect you will hear a lot more about that.

BLITZER: Maggie, thanks very much.

HABERMAN: Thank you.

BLITZER: We'll be hearing a lot more from you as well.

HABERMAN: Thanks.

BLITZER: Maggie Haberman reporting for us.

Up next, the outrage over the V.A. hospital scandal. That outrage is growing. Our Drew Griffin, he broke the story. He's got more. The latest developments coming up.

And later, are we ready for a possible outbreak of the MERS virus in the United States? We're going to see what hospitals are doing to prepare.

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BLITZER: Outrage is growing in the scandal over the long, sometimes deadly wait times that veterans are across the - veterans at hospitals across the country have to endure. CNN first reported that as many as 40 veterans died while waiting for appointments at the Phoenix V.A. hospital alone. Now the list of hospitals is growing. The White House has come under increasing pressure from veteran groups to take action. Our senior investigative correspondent Drew Griffin broke the story. He's been following up for several months now.

Drew, as you know, "The Washington Times" now reporting the Obama administration was put on notice more than five years ago about these problems. What can you tell us about what the White House knew about it and when?

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: Well, I mean, you could find evidence back to 2007 when Senator Barack Obama, Wolf, was on the campaign trail and telling the VFW, which he gets in office, he's going to end these wait times, saying that no veteran should wait months and months or years to get an appointment. So certainly the candidate knew it. And now "The Washington Times" is reporting that in the transition period in 2008, the incoming Obama administration was not only warned about these wait times, Wolf, but also specifically warned that the V.A.'s data is unreliable. That's something that we have been reporting and, quite frankly, the Government Accountability Office has been warning the government in general for up to a decade now.

BLITZER: Now that's reporting from "The Washington Times." And I take it we have not yet matched that reporting, is that right?

GRIFFIN: We do not have that. "The Washington Times" claims it has that information from (INAUDIBLE) documents. We have, once again, gone to the V.A.'s press office. They asked for that information and have not gotten it yet.

BLITZER: There's also the question of an actual so-called secret list in Phoenix. The allegation that somehow records were destroyed. What's the latest on that, Drew?

GRIFFIN: The House Veterans Affairs Committee subpoenaed the V.A.'s top brass. That subpoena is due back today to Congress to find out exactly whom in the V.A. was doing any kind of e-mailing or passing back information on this quote/unquote secret list, and specifically to your point, wolf, whether or not there was any prior knowledge that the evidence of this list was being destroyed. The House Veteran Affairs Committee claims they've been stymied by the V.A. brass in getting information. That's why they had that subpoena. That subpoena is due back today. We're waiting to hear just kind of what evidence has been accumulated from that request.

BLITZER: There's another story out there on "The Daily Beast," this one, that another hospital has been linked to the scandal. The report suggesting that veterans with heart conditions, even brain tumors, were forced to wait for months at the V.A. hospital in Albuquerque, New Mexico. So what do we know about that? How extensive are these problems, not only in Phoenix, but elsewhere?

GRIFFIN: As we're finding more and more whistleblowers come forward, more and more whistleblowers are finding the courage to come forward. This latest coming forward to "The Daily Beast." We've reported lately in Gainesville, Florida, in Heinz V.A. Center outside of Chicago, in San Antonio, Texas, there are currently 10 different sites across the country where investigations are going on. And we've also reported that in -- there have been 23 deaths linked to delays in care in these nine states. So this is reported deaths confirmed by the V.A. due to delays in care. So you can see this is a widespread problem not only in delays and care but also as we move forward now 10 different sites are being investigated for what we've called, what the clerks at these V.A., what the whistleblowers call cooking the books to try to hide these numbers from not only us and the veterans, but also apparently from V.A. headquarters in Washington.

BLITZER: And they, as you know, the Veterans Affairs secretary, Eric Shinseki, he's promised to get to the bottom of all of this. How are the veterans responding to his latest promises? I guess in short, how much credibility does he have with some of these mainstream veterans organizations?

GRIFFIN: You know, he's gotten a lot of leeway in the five years he's been in office I think because he is a well-respected decorated war general. But the groups are running out of patients. As you know and have reported, the American Legion called for his ouster. Other groups aren't so sure if his ouster is going to do anything. I guess the big question for the Obama administration is, who's next? Who will come in and lead this organization and try to change what we believe is the culture, the bureaucracy, that is allowing this stuff to happen over and over again?

BLITZER: Drew Griffin reporting for us. Excellent reporting indeed. Thank you.

GRIFFIN: For the first time ever, a case of the MERS virus was transmitted right here in the United States. We're going to find out if the health care system is ready to cope with an outbreak.

And CNN travels inside the stronghold of Boko Haram inside Nigeria. When someone joins the terror group, they never leave. We'll have a live report. Our own Arwa Damon is inside Nigeria right now.

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