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THE SITUATION ROOM

Eric Shinseki Steps Down; Hillary Clinton Fires Back; Sterling Lawsuit

Aired May 30, 2014 - 18:00   ET

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


WOLF BLITZER, CNN ANCHOR: Happening now, breaking news: Sterling lawsuit. The embattled Clippers owners is reportedly planning to sue the NBA, even though sources tell CNN two doctors have deemed him mentally incapacitated. What impact would all of this have on the $2 billion deal to sell the team?

Hillary Clinton firing back. The former secretary of state tears into critics who blame her for the deadly attack on the U.S. consulate in Benghazi, Libya. How is she defending herself and the Obama administration?

Spiraling scandal, disturbing new revelations about the crisis inside the VA health care system, system -- scandal that's cost veterans' lives and now the VA secretary has lost his job. Will someone now face criminal charges?

I'm Wolf Blitzer. You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: We're following two breaking news stories this hour. Shocking new revelations of massive failures inside the Veterans Administration health care system coming just hours after the growing scandal forced the veterans affairs secretary to resign.

We have in-depth coverage coming up.

Also, stunning twists in the Donald Sterling NBA scandal. There are now reports the embattled Clippers owner is going to sue the NBA for $1 billion in damages. That comes as sources tell CNN two doctors have declared Donald Sterling mentally incapacitated.

Our correspondents and analysts are working all angles of the fast-moving story.

Brian Todd's got the latest. He's been working his sources.

Brian, what are you hearing?

BRIAN TODD, CNN CORRESPONDENT: Wolf, attorney Maxwell Blecher is not denying news reports saying Donald Sterling is suing the NBA for damages in excess of $1 billion.

It's not clear if this means Donald Sterling will contest the sale of the Clippers to Steve Ballmer. Also tonight, new information from sources on Donald Sterling's mental condition is throwing another wrench into all of this.

(BEGIN VIDEOTAPE)

TODD (voice-over): Tonight, sources tell CNN that doctors have declared Donald Sterling mentally incapacitated, a finding that opened the door for his estranged wife to sell the L.A. Clippers for a record $2 billion.

Sources say Donald Sterling was examined by two independent doctors, both neurologists, some time over the past month. It's an important finding because the Clippers are owned through a family trust with two trustees, Donald and Shelly Sterling. Tonight, CNN learned from one source a clause in that trust says if either Sterling becomes mentally unfit, the other would become the sole trustee.

Sources say Shelly was only able to negotiate the mega-sale because of that declaration. But it might not be that easy. Experts say Donald Sterling still has grounds to challenge the finding and the sale of the team.

NANCY FAX, TRUSTS AND ESTATES ATTORNEY: He would retain his own physicians, neurologists, psychiatrists, whatever it may be, and have those physicians take issue with the findings of the physicians that found him incapacitated.

TODD: All of which means which seems like a done deal could still wind up in court and Donald Sterling's attorney may be ready for that. Tonight, Maxwell Blecher tells CNN he believes the declaration of mental incapacitation was a -- quote -- "vast overstatement."

He said Sterling had a diagnosis of a modest mental impairment, what Blecher called a -- quote -- "slowing down." Blecher's comments come just one day after telling Wolf Blitzer Sterling will fight the NBA's efforts to throw him out.

MAXWELL BLECHER, ATTORNEY FOR DONALD STERLING: We don't think the team can be sold without Mr. Sterling's consent. Mr. Sterling is not going to consent unless the NBA does something about the scurrilous and illegal charges they filed against him.

TODD: Reached by CNN tonight, Blecher said he is not denying a new report that the Clippers owner is suing the NBA for damages in excess of $1 billion. Does that mean he's contesting the sale of the Clippers?

Not necessarily. Hours earlier, Blecher had told us Sterling would look at the sale of the Clippers to Steve Ballmer and decide where to go from there, saying -- quote -- "He doesn't want to fight with Shelly; that's the bottom line."

DREW ROSENHAUS, SPORTS AGENT: Anything is possible with Donald Sterling, but with $2 billion on the line, not even Donald Sterling will mess this up.

(END VIDEOTAPE)

TODD: Agent Drew Rosenhaus believes the NBA is going to approve this deal because the price is just too good not to.

For its part, the league is reserving judgment, saying in a statement today it's waiting for documents on the sale to Ballmer and the planned meeting of NBA owners to vote on kicking Donald Sterling out is still on for next Tuesday. We also as of now have no response from the NBA to reports of Sterling's $1 billion lawsuit against the NBA, Wolf.

BLITZER: I don't know if he's filed it. Right?

TODD: He may not have. That's right.

(CROSSTALK)

BLITZER: They're just talking about a lawsuit. Presumably, fairly soon, we will hear whether or not it's going forward.

TODD: That's correct. We hope to hear in a few minutes whether this is going forward.

BLITZER: You will let us know as soon as you hear, Brian. Thanks very much.

TODD: Yes.

BLITZER: Let's get more now.

CNN anchor Don Lemon is joining us from New York. Our CNN legal analyst, Jeffrey Toobin, is here in Washington. And our CNN commentator L.Z. Granderson is in Chicago.

So, Jeff, first of all, what do you make of this possible lawsuit?

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST: Well, there are all sorts of things he could claim. He could claim an antitrust violation. He could file a separate lawsuit trying to stop the sale.

But the important thing to remember is one of two things is going to happen. There is going to be a voluntary sale to Steve Ballmer before the meeting on June 3, or at June 3, they will take the franchise away from him, and then the NBA will sell the franchise to Steve Ballmer.

But the bottom line is, Steve Ballmer is getting this franchise sooner rather than later.

BLITZER: What do you think, Don? You think this is a lot of posturing going on, but in the end, by Tuesday, there will be a deal, the Clippers will be sold?

DON LEMON, CNN ANCHOR: Well, I think that, regardless of what happens, I think that the NBA is going to go on with their June 3 meeting. I'm not sure about the sale, where it's going to be, where they're going to be in the process. But, again, I'm very skeptical, as I have been saying here for weeks, as I have been spending the evening with you, Wolf, that I'm very skeptical of these two people because I just don't trust what comes out of their mouths. I think they're in cahoots and I think they're scheming together, so I think the NBA is going to go forward and do what they said they're going to do, but I'm not so sure about Donald and Shelly Sterling. I don't know what's up their sleeve.

BLITZER: Because, you know, L.Z., a lot of people suspect this is -- they're working together, good cop/bad cop kind of scenario. What do you think?

L.Z. GRANDERSON, CNN CONTRIBUTOR: Well, absolutely. If you look back at some of the accusations in the depositions ranging back from the issue with the Department of Justice and how it wasn't just Donald Sterling's name that was implicated in racist behavior, but Shelly Sterling as well, video of her masquerading as an official to check out the race of the people that was occupying the apartments they were renting, I mean, they have been working side by side, you know, in this kind of shady behavior, if you will, for decades.

And so it would not surprise me at all if this was just an extension of that.

LEMON: Everything, Wolf, has been a contradiction. They have said, OK, so he goes, you know, the tapes come out, right, the V. Stiviano tapes, and he says, I'm not a racist, and then you clearly hear on the tape that he's a racist.

And then she goes to dinner with him. First, she says, I cannot believe, I disavow everything he said. Then she stands up for him. And then she says, OK, I'm going to sell the team and then he says no. Every single thing has been a contradiction, so, you know, there's something weird going on here and I just -- I don't know what. But something...

(CROSSTALK)

TOOBIN: That's the understatement of the year, that there's something weird going on.

(CROSSTALK)

LEMON: Hear me out, Jeffrey. My math is not great, but hear me out here.

My mom says something is not sitting right. Right? Well, something is not sitting right here. I don't -- I can't put my finger on it, but we will figure it out when it happens.

BLITZER: All right.

Jeffrey, legally speaking, this notion that two neurologists checked him out, did a thorough check and they found him mentally incapacitated, that has major legal ramifications. TOOBIN: Well, it -- under the trust a agreement, it gives Shelly the right to sell the team on her own without Donald Sterling's approval.

BLITZER: She basically becomes 100 percent in control of that trust, which owns the Clippers.

TOOBIN: Correct, which she has now used that control to sell the team to Steve Ballmer.

Now, he could go to court and say that was invalid. What we heard from Brian Todd and what we heard from Max Blecher, Don's lawyer, yesterday is that he doesn't want to sue Shelly. He maybe wants to sue the NBA, but doesn't want to sue his wife/ex-wife, whatever she is at the moment.

So I think he could be suing the NBA for some sort of damages to try to get his capital gains tax paid. But unless he sues Shelly, I don't see any way he could intervene in the sale at all.

BLITZER: L.Z., like all of us, you watched...

(CROSSTALK)

BLITZER: Hold on. Hold on one second. You watched Anderson Cooper's very lengthy interview with Donald Sterling.

All of us watched it. Did you get the sense this guy is -- he may be a racist, but did you get the sense he's mentally incapacitated?

GRANDERSON: I got the sense that he was delusional, but not mentally incapacitated.

And the question I would ask Jeffrey would be, what happens if Shelly is found mentally incapacitated by two neurologists as well? Now you have two -- or four neurologists saying that both of the principal holders of this trust are mentally incapacitated. Does it not indeed go to next of kin? And if it goes to next of kin, doesn't that derail the entire mission that the NBA is trying to do, which is get the Sterlings to sell the team?

TOOBIN: L.Z., that sounds a little more like a miniseries than what is actually happening here.

LEMON: This is a miniseries, Jeffrey.

(CROSSTALK)

GRANDERSON: What are you talking about?

(LAUGHTER)

(CROSSTALK)

GRANDERSON: We just said this whole thing was strange. (CROSSTALK)

TOOBIN: This is true.

LEMON: If the language is -- listen, again, this is not CNN's reporting, but the language that I read says if one or the other, then it would go -- possibly go to the next. So, you know, I think that...

(CROSSTALK)

LEMON: If it's a miniseries, if it's a miniseries, it will be continued, to be sure. We may get more information this hour. So, guys, please do me a favor. Don't go very far away.

I want to wrap it up, though, for now and move on to another important story we're following involving Hillary Clinton.

She is firing back at critics who continue to hammer her over the 2011 attack on the U.S. Consulate in Benghazi, Libya, which left a United States ambassador and three other Americans dead.

Our senior political correspondent, Brianna Keilar, is joining us now with the latest details -- Brianna.

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, Wolf, Hillary Clinton in her book defends the initial intelligence assessment about Benghazi. She defends President Obama's initial reaction to the attack.

And this is really the most controversial part of the book being released more than a week-and-a-half before the book is officially out.

(BEGIN VIDEOTAPE)

KEILAR (voice-over): Weeks before hitting bookshelves, fireworks are already erupting over a leaked excerpt from Hillary Clinton's long-awaited memoir. In a section about her time at the State Department, Clinton slams Republicans, saying their outrage over Benghazi is nothing but politics.

"I will not be part of a political slugfest on the backs of dead Americans. It's just plain wrong and it's unworthy of our great country," she writes in "Hard Choices," dedicating a much-anticipated chapter called "Benghazi Under Attack" to the 2012 terrorist attack that left four Americans dead in Libya, including Ambassador Chris Stevens.

Politico obtained the 34 pages and published the excerpts. Clinton stands by this initial claim by the Obama administration.

SUSAN RICE, U.S. NATIONAL SECURITY ADVISER: There was a hateful video that was disseminated on the Internet. That sparked violence in various parts of the world.

KEILAR: In the days after the attack, senior State Department officials told CNN the incident appeared to be a preplanned terrorist attack unrelated to the video.

Clinton writes: "It is inaccurate to state that every single one of them was influenced by this hateful video. It is equally inaccurate to state that none of them were."

But Clinton refutes claims that in the midst of the attack, the U.S. government refused to help, saying President Obama -- quote -- "gave the order to do whatever was necessary to support our people in Libya. When Americans are under fire, that is not an order the commander in chief has to give twice. That anyone has ever suggested otherwise is something I will never understand."

And she gives context to that controversial moment which has come to define her testimony before Congress in early 2013.

HILLARY RODHAM CLINTON, FORMER U.S. SECRETARY OF STATE: What difference at this point does it make?

KEILAR: Saying she was not minimizing the tragedy, as some Republicans accused her of doing. She writes: "Of course that's not what I said. Nothing could be further from the truth, and many of those trying to make hay of it know that, but don't care."

But the political battle over Benghazi is far from over. House Republicans have formed a select committee to investigate yet again the Obama administration's response.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: But it is clear to me, and it has been clear, that the American people have not been told the truth about Benghazi, and we're committed to getting it.

(END VIDEOTAPE)

KEILAR: And this is a very carefully coordinated book rollout for Hillary Clinton. Democratic surrogates who support both Hillary Clinton and President Obama were at the White House this week meeting with top aides to the president. And those top aides, I'm told by a source, made it clear that they want it to be very out there that there is no daylight between the president and Hillary Clinton on foreign policy as this book is rolled out, Wolf.

BLITZER: All right. Brianna, don't go too far away. In fact, you're going to be here.

I want to continue this conversation. I also want to bring in CNN political analyst Maggie Haberman. There she is. She is in New York. And our foreign affairs correspondent Elise Labott, she's here in Washington.

Maggie, you wrote this article in Politico today. You were given -- I assume you were just given advanced copy of this one chapter from Hillary Clinton's upcoming memoir on Benghazi. Was this one of those deliberate leaks? Was it just great reporting? Did they want this to come out now? What can you tell us?

MAGGIE HABERMAN, CNN POLITICAL ANALYST: I can tell you that I think I do great reporting, Wolf. I'm not going to get into how I got hold of this.

I think that the chapter is pretty clear in terms of what I wrote about in Politico today. What the tone is, certainly -- I'm looking at this through a political lens, as we are talking about a woman who is widely seen as the front-runner for the 2016 Democratic nomination for the presidency.

The tone that she chooses is one of defiance. She's very clearly pushing back at her Republican critics on Benghazi. The chapter is "Benghazi Under Attack." She is making very clear, as far as I could tell from the read, and really from what I have heard today after I reported on the chapter, that they are looking to sort of move past litigating the facts of what happened repeatedly.

This comes, obviously, as this new House select committee is getting started. I think that this is what you're going to hear from her. And I think this is what they're hoping that other Democrats will echo in the weeks going forward.

BLITZER: Hold on for a moment, because Elise is here.

Elise, you cover the State Department. You covered Hillary Clinton when she was secretary of state for four years. That famous line, "What difference does it make?" she's now trying to explain what she really meant because she's been getting a lot of grief for that.

ELISE LABOTT, CNN FOREIGN AFFAIRS CORRESPONDENT: That's right. And she's trying so say, listen, I wasn't trying to minimize their deaths. In fact, I was saying, listen, I have four dead Americans here. I have 185, more than -- close to 200 consulates and embassies around the world that I need to think about preventing this from ever happening again.

So, what she was saying was, listen, it doesn't matter right now why they died. There's plenty of time for that. But we need to look forward. But, Wolf, I thought a couple of other things, as Maggie was saying, looking through the political lens -- she went back -- I thought more interesting that she talked about the decision not to be on the TV shows, on those Sunday shows, and that Susan Rice did it instead.

And she said, listen, this is not something that is required to speak to Americans on Sunday morning. In fact, at the time, what she said, what her aides were saying was that she was so distraught and emotional, which is true, over the deaths of Chris Stevens and those other three Americans, is that she -- and she was at the memorial service. She didn't feel up to it.

I think this is a little bit of a revisionist history now, saying -- this defiant attitude, saying, well, that's not really a requirement.

BLITZER: And, Maggie, in your article in Politico, which is an excellent article, good reporting on your part, you also point out that in this chapter that you got from her upcoming book -- and the book won't be out for another couple weeks or so -- she does say at least some of those protesters in Benghazi were, in fact, motivated by that anti-Islam video, that they weren't all just al Qaeda-affiliated terrorists.

HABERMAN: She pushes very hard on that line. She says something to the effect of, I know that people don't want to hear that a video played a role in this, but it did.

She says that, in real time, she went back and forth on how much of a role it played, but then later, with additional reporting and additional focus and additional investigations, that it is -- there was a quote from Brianna's piece that it is inaccurate to say every protester was influenced by this and it was inaccurate to say none were. She's saying very clearly it did play some role.

BLITZER: You want to weigh in on that, Elise?

LABOTT: Well, I think that in some ways it is true that, you know, those terrorists really kind of took advantage of the opportunity, but the State Department officials were saying the night after the attack that this was a preplanned, organized terrorist attack.

And you had State Department officials saying that night that it was. So it does, again, seem -- obviously, Secretary Clinton is going to frame it the way that the Obama administration and she wants to see it, but they were not saying that at the time.

(CROSSTALK)

BLITZER: Brianna, in your reporting, you have come out. There's a very sophisticated rollout of this book, I assume, with a double- pronged objective, one to sell as many copies as possible -- and we're hearing a million advanced copies have already been sold by Simon & Schuster -- but, two, to help her get ready for the 2016 race for the White House.

And in that regard, you're hearing they're about to assemble a war room?

KEILAR: Yes, that's right. It's sort of one and the same in a way.

It's sort of -- and it feels very much like a campaign, because what are some of the elements of a campaign? A war room, which we understand from a source familiar with the rollout here, that there will be a number of former diplomats at the ready to respond to criticisms of Hillary Clinton's State Department tenure, which are going to come as this book comes out.

There's also a messaging operation, and one of the people really helping with this is a former Obama administration aide who was the national security spokesman who was there during Benghazi, so is really well-versed in this. And also there's a surrogate operation very coordinated that is touching base with Democrats and trying to get them all on the same page. But, really, I think it's pretty interesting how very much they're defending Hillary Clinton's State Department record. You look at the polls, voters think it's a good thing, and that's one of the reasons why Republicans are really going after it. And that's one of the reasons why I think, as Elise has been talking about, she's kind of playing this on sort of the political court in a way, that if Republicans -- and I think we can all look at what is going on with some of the investigations, the fund-raising, see the political element of it.

It's sort of unsavory, and I think she's really trying to make that obvious.

BLITZER: She's going to go on the offensive in this new book.

KEILAR: Yes.

BLITZER: Brianna, thanks very much.

Elise, Maggie, good work all around.

Up next, we have more breaking news. There are new revelations about the VA health care crisis blamed for the deaths of dozens of veterans. The VA secretary has now resigned, but could someone be facing criminal charges?

Plus, a new terror threat, a chilling warning to the United States, as President Obama tries to step up America's counterterror operations. So why are critics questioning whether the president's new plan can work?

(COMMERCIAL BREAK)

BLITZER: Going to get right to Brian Todd. He's got some new information on Donald Sterling and this threatened lawsuit against the NBA.

Brian, what's the latest?

TODD: Wolf, we just heard from Maxwell Blecher, the attorney for Donald Sterling.

He confirmed to me just moments ago that a lawsuit has been filed on behalf of Donald Sterling against the NBA, various news reports saying this was in excess of $1 billion for damages. We're trying to get some more detail.

But Maxwell Blecher, Donald Sterling's attorney, who you spoke with at length yesterday, just telling me moments ago a lawsuit has been filed by Donald Sterling against the NBA, various news reports saying this is in excess of $1 billion for damages, and we're trying to get more details.

BLITZER: But they haven't -- they haven't released the actual text, the actual document, have they? TODD: Not at this time that we can tell. We have people at the courthouse. We're searching other outlets and we're trying to get some more information from his office right now.

Just a lot more detail that we want to get on the damages they're seeking, what they're claiming in the lawsuit -- we're also trying to get response from the NBA. We're been trying that for a while. We still have not heard back from them.

BLITZER: Let's get quick -- quick reaction from Don Lemon and L.Z. Granderson.

Don, what do you think?

LEMON: Obviously, he's not going to go away quietly. And I didn't think he was going to from the very beginning. I'm not sure what this means for the sale of the team.

I'm not sure what this means between him, he and Shelly Sterling. But, again, he's going after the NBA. He says he wants to be vindicated. I would imagine this is one way that he thinks that he will be vindicated.

BLITZER: What do you think, L.Z.?

GRANDERSON: I agree with Don.

You wonder why commissioner Stern never tried to get him out of there for the past 30 years. I think we're beginning to see why. This is a bulldog with ferocious teeth. And he's planning on making this as ugly as possible, which is terrible. We have the NBA Finals starting June 5. The draft is this month. NBA owners don't want this kind of publicity, but they have got to deal with Donald Sterling. So, they got this publicity.

BLITZER: All right, we will wait to see the actual document.

L.Z., Don, thanks very much.

Other breaking news we're following, heads rolling in the scandal over the deadly wait for care at VA hospitals across the country, and now learning new details of how vast and deep this crisis really is.

It's now forced the veterans affairs secretary, General Eric Shinseki, to resign today. But the VA's problems remain deeply ingrained. There have been only eight VA secretaries. Five of them, including Shinseki, now have been forced to resign because of other various scandals and other problems.

Chris Frates of CNN Investigations, they are working this story for us, with the very latest.

So, what's the latest on this crisis that's rocking the Veterans Affairs?

CHRIS FRATES, CNN CORRESPONDENT: Well, Wolf, I will tell you, it may have been the end of the road for Eric Shinseki today, but the audit he left with the president shows the work is just beginning.

(BEGIN VIDEOTAPE)

FRATES (voice-over): In a damning audit released Friday, the Veterans Affairs Department outlined concerns of -- quote -- "questionable scheduling practices that signaled a systemic lack of integrity."

The audit found that schedulers were pressured to use improper practices that made waiting times look shorter. What's more, the audit found that the benchmark the VA created to get veterans quicker care backfired. The goal of having a veteran wait no more than 14 days for an appointment was -- quote -- "simply not attainable."

Putting the target in place without needed resources represented a leadership failure, the audit said. Veterans Affairs Secretary Eric Shinseki presented the interim report to President Obama before resigning Friday.

When he announced Shinseki's resignation, the president asked a question left unanswered by the audit.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: How is it that, in a number of these facilities, if in fact you had veterans who are waiting too long for an appointment, that that information didn't surface sooner so that we could go ahead and fix it?

FRATES: CNN has been reporting on delays in care since November and the Office of General Inspector issued numerous reports over the past few years.

In what was to be his last public appearance as secretary, Shinseki apologized to veterans, lawmakers and the public.

GEN. ERIC SHINSEKI, SECRETARY OF VETERANS AFFAIRS: That breach of integrity is irresponsible. It is indefensible and unacceptable to me. I said when this situation began weeks to months ago that I thought the problem was limited and isolated, because I believed that. I no longer believe it. It is systemic.

FRATES: A fact underlined by Congressman Mike Doyle's findings that some of the nearly 700 veterans on a waiting list at the Pittsburgh VA have been waiting for appointments since 2012.

REP. MIKE DOYLE (D), PENNSYLVANIA: We're not finished by a long shot. We still have a long ways to go. If this is a systemic problem, which many fear it is, then we need a review from top to bottom and people need to be held accountable. We need to make sure our veterans get the health care they have earned.

(END VIDEOTAPE)

FRATES: The audit found the biggest barrier to getting care was a lack of doctor availability. A close second was trying to shoehorn vets into that 14-day appointment window.

So, the two combined really made it difficult for vets to get the care they needed, Wolf.

BLITZER: This audit is just a preview of what's going on, I assume, at other VA facilities around the country.

FRATES: Right. This is just an interim audit. They took four days in May to take a survey. And what they found was not the intent, not that people were intentionally hiding it. These were all just flagging problems.

So, they need to go in and really take a look. This is a harbinger to lots more bad news, lots more headlines. But what it did do was really show that the reporting CNN has done and our colleague Drew Griffin here has done is, in fact, a problem and does exist.

BLITZER: All right, stand by. Don't go too far away.

I want to bring in our CNN senior investigative correspondent, Drew Griffin. He's been reporting all of this. He first exposed the VA scandal for all of America to see. Also joining us, Alex Nicholson. He's legislative director of the group Iraq and Afghanistan Veterans of America.

So let's get your immediate reaction, Alex. What do you think? These latest reports show this may simply be the tip of the iceberg.

ALEX NICHOLSON, LEGISLATIVE DIRECTOR, IRAQ AND AFGHANISTAN VETERANS OF AMERICA: Yes. I mean, I think we all were disgusted by what the I.G. found, what the audit found, and Secretary Shinseki shared those sentiments. You know, unfortunately it went deeper than him. We certainly do believe that this is the tip of the iceberg, but, you know, we think the person they need to bring in is going to get to the bottom of it. We have faith they will. We just need to see action.

BLITZER: You agree that the president did the right thing in accepting his resignation?

NICHOLSON: We think he did.

BLITZER: Did you call for his resignation earlier?

NICHOLSON: We didn't. We were holding off. Wanted to see more results come in. But ultimately, I think the president made the right decision.

BLITZER: What do you make of these audits that are now coming in all over the country, Drew? You know a lot about what's going on. Veterans out there who want good, solid health care. How worried should they be?

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: The families should be very worried, especially the real tragedy is the people who go to the V.A., the veterans who go to the V.A. -- and I think you'll attest this -- they have nowhere to go. Because a lot of the veterans who have other kind of health care know to go there instead of the V.A. That's just the plain truth. So you have a lot of these patients who can't be advocates for themselves. These are the ones who are stuck on these waiting lists. And you have to go out there, get a real deliberate outreach to find them and bring them in and get them some treatment.

BLITZER: But Alex, in fairness to the V.A., yes, there's enormous problems and tragedies occur, but a lot of veterans do get good health care at these V.A. facilities.

NICHOLSON: They to. That is true. The V.A. does provide world- class health care. We need it to be better. We need reforms in management and administrative practices. But there's no doubt. And, you know, we certainly encourage vets to continue to go to the V.A., especially if they're in crisis.

BLITZER: You know, Chris, what's shocking to me, it seems the president of the United States, the secretary of veterans affairs, they were shocked to learn about all of these problems. That they really didn't know what was going on. The lower level officials weren't telling them the truth. That's pretty shocking in and of itself.

FRATES: It is. And you had the president today say, well, how did this happen? And at his speech earlier this morning, his last speech as secretary, Eric Shinseki said, you know, "I was lied to." You have to ask yourself if they were lied to, why didn't they go to the I.G. reports, the independent investigative general? Why didn't they look at that? Years of reports showing the wait times were a problem?

They didn't answer congressional questions about this when Congress was trying to raise questions. They haven't answered any of Drew's questions about this and his reporting.

It's not as if this hasn't been flagged for years, so this idea that somehow the president and Shinseki were shocked and taken aback by this really, it raises questions about if they're tuned in to what's happening in their own administration.

BLITZER: But Drew, for months if not years, you've been reporting all this information. I didn't hear it coming from congressional oversight committees. I didn't hear it coming from within the Department of Veterans Affairs. I heard you reporting it.

What was the reaction over these many months you were getting from the Department of Veterans Affairs when you broke these stories?

GRIFFIN: This is what I think the real scandal is. To Shinseki, himself. It is absolutely no response we got from the V.A. They would not talk to us. They would not answer our questions. We would tell them when our reports were airing. We would ask them after those reports aired, what do you guys think, do you have any response? They were deliberately not paying attention or watching our reports and ignoring them.

BLITZER: I think they were just hoping -- correct me if I'm wrong, Alex -- that this would simply go away and really didn't take it seriously.

NICHOLSON: That's definitely a possibility. I mean, Congress had some of the same problems that you're describing in terms of getting information out of the V.A.

The House Veterans Affairs Committee, for example, has conducted over 70 hearings. Over 40 of them have been oversight hearings. They have a backlog more than a yearlong of information requests out of the V.A. for simple facts. Things that the V.A. can turn over to them in a matter of hours. But they just won't -- would not respond to requests for information.

BLITZER: The war veterans from Iraq and Afghanistan, what's the single biggest problem they face now? They come home. They do two, three, four tours. They come home. What's the single biggest problem many of them are facing right now?

NICHOLSON: I think one of the biggest problems, they certainly face many problems. One of the biggest is going to be stigma and stepping forward to get help.

BLITZER: What does stigma mean?

NICHOLSON: For mental health issues. There's a lot of mental injuries, invisible wounds that are characteristic of the wars in Iraq and Afghanistan, and getting folks to seek help is one of the biggest issues.

BLITZER: If they want the help, and they go to a V.A. hospital to get psychiatric help, psychological help, will they get the appropriate help?

NICHOLSON: They will get it at the V.A. if they actually make it into the V.A. The biggest issue has been access. But there's more the V.A. needs to do. We proposed a stay back in the House and the Senate to try to get the V.A. more tools to deal with the psychological wounds of war.

BLITZER: You want a full-scale Justice Department criminal investigation to investigate to see if crimes were committed?

NICHOLSON: We definitely want to see criminal investigation if that is merited. Absolutely.

BLITZER: Alex Nicholson, thanks very much for coming in.

Chris Frates, thanks for you.

I think it's fair to say, Drew, that without your reporting, what we saw today would not have occurred. Thanks to you. Thanks to CNN for breaking these stories over many months and more to come. Thanks very much.

The V.A. scandal raises new questions about President Obama's attachment to big government and his willingness to impose accountability. Here's CNN's chief political analyst Gloria Borger. (BEGIN VIDEOTAPE)

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Barack Obama came to office as somebody promising that the government could actually work for you and be your best friend. The question now is whether the president still believes that.

GEN. ERIC SHINSEKI, OUTGOING SECRETARY OF VETERANS AFFAIRS: We now know that V.A. has a systemic totally unacceptable lack of integrity.

BORGER: The scandal at the Department of Veterans Affairs is only one of a lot of bureaucratic messes that have really dogged this presidency. You have to consider the disastrous rollout of health- care reform, which is the president's signature legislative achievement. There was controversy at the Internal Revenue Service. Controversy on national security surveillance.

All of these taken together raise the question of whether this is a government problem or whether it's a problem of management for the Obama administration and in particular the president, himself. Has the bureaucracy actually beaten the boss?

There seems to be a management issue, and as far as I can tell, the White House has a couple of ways of managing things. First of all, there's the micromanaging part of the White House as they do with foreign policy, which seems to me to be directly operated out of the West Wing. And at the other extreme, this is a White House that delegates an awful lot, as in veterans affairs.

Where's that middle ground? When you run for office promising to make government work for the American people, you have to make sure that it does.

(END VIDEOTAPE)

BLITZER: To read Gloria's full column, go to CNN.com. I think you will learn something from that article.

Just ahead, a new threat after militants take credit for shooting down a Ukrainian military helicopter. And in another troubling development, more international observers have gone missing. I'll speak to the U.S. ambassador. We'll get an update.

We're also following a new terror threat against the United States.

(COMMERCIAL BREAK)

BLITZER: Ukraine's president-elect today promised to punish the militants who shot down a military helicopter. The militants claim a dozen troops, including a top Ukrainian general, died in the crash.

We're also watching new trouble elsewhere in Ukraine. Four international observers haven't been in contact since armed men stopped them yesterday evening. The team is from the Organization for Security and Cooperation in Europe.

Daniel Baer is the U.S. ambassador to that organization. He's joining us now live from Vienna.

What do we know, Mr. Ambassador, about those four observers?

DANIEL BAER, U.S. AMBASSADOR TO OSCE: Well, actually, Wolf, this team of four, with their Ukrainian translator, is the second team to go missing this week or to be missing this week. There's another team that was picked up on Monday outside of Donetsk and has been missing for five days. Then there were 11 who were picked up on Wednesday and later released that evening and another four plus their translator last night.

This is obviously unacceptable and outrageous that these international observers, who are there for -- to provide an impartial view of what's happening on the ground to help facilitate de- escalation of conflict, who aren't taking sides in any way, that these international observers are being detained is really outrageous.

BLITZER: So basically what I hear you saying, there are eight OSCE observers plus one translator who are now being held in captivity? Is that right?

BAER: Yes. In two separate groups. That's right.

BLITZER: And are any of them Americans?

BAER: None of this -- none of those two groups is American.

BLITZER: Who -- who took them, do you know?

BAER: You know, the OSCE is working very hard on the ground, obviously. The deputy head of the monitoring mission has traveled out to the east. They are working incredibly hard to try to contact those who are holding these people and try to facilitate their release.

Obviously, we've been calling for their unconditional release and calling on all participating states to do everything that they can to help facilitate that release; to reach out.

Certainly, these people, there's a lot of suspicious folks who have been crossing the border in recent weeks, and it's not clear who's holding them. It's just clear that they ought to be released.

BLITZER: The others, I think you mentioned 11 who were released. How did you get them out? Did you have to pay someone to get their freedom?

BAER: No. They were -- they were picked up driving on a road about 30 kilometers outside of Donetsk. They were taken back into town. We lost contact -- the OSCE lost contact with them for several hours. They were later released and allowed to return to their hotel.

So there was this contact and discussion to facilitate that release. Obviously, you'll remember that a couple months ago, or six weeks ago or so, there were these Vienna document military observers who were held for over seven -- over a week in Slaviansk. They were eventually released and we hope the two groups who remain in captivity are released, too. There's no excuse for taking impartial and international monitors hostage.

BLITZER: The assumption being that pro-Russian separatists were involved in abduction of these international monitors. Is there any evidence at all that Russia, itself, is involved in these kidnappings?

BAER: Like I said, the mission on the ground is working very hard to figure out who exactly is holding them and where exactly they are. At this point, we don't know. What we do know is that there have been a large number of reports in recent days in particular of a new influx of foreign fighters crossing the border, of arms crossing the border. You know, all of this underscores the fact that the people of Donetsk, in Luhansk, like the people of Crimea, and the people of the rest of Ukraine have a future to build together.

Last weekend's election underscore the unity of Ukraine. For the first time ever, the person who came first in the east also came first in the west. These people have a future to build together and those who are sabotaging it, whether they come from inside of Ukraine or outside Ukraine, need to get out of the way.

BLITZER: Daniel Baer is the U.S. ambassador to the OSCE, the Organization for Security and Cooperation in Europe -- Mr. Ambassador, good luck. We'll stay in close touch with you.

Coming up, a very, very different kind of story. We have some new information about the newest power players right here in Washington, D.C.

(COMMERCIAL BREAK)

BLITZER: The official White House photographer Pete Souza just tweeted this picture from earlier today. You see the president with his arm around Eric Shinseki. They took a walk around the White House south lawn of the White House when the president basically accepted the resignation of Shinseki as secretary of veterans affairs. A picture that sort of captures that moment.

Still ahead, the secret behind a new boy band's initial success that isn't just the music. They have friends and parents in high places.

First, though, we want you to meet a golfing champion whose success is giving others a better life. CNN's Chris Cuomo has today's "Impact Your World" report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED BOY: Thank you.

KATE ROSE, WIFE OF JUSTIN ROSE: You're welcome, sweetie. CHRIS CUOMO, CNN CORRESPONDENT (voice-over): For these kids, blessings come in the form of apples, corn, even tuna.

K. ROSE: That's a nice smile you have there.

CUOMO: Thanks to Blessings in a Backpack, elementary students on a federally-funded school meal program can take home a bag of food for the weekend.

UNIDENTIFIED BOY: It helps me, because sometimes we don't have enough money to buy food.

K. ROSE: We can't expect children to turn up on Monday morning at school and expect them to learn, and be in a good state for learning when they just simply haven't had enough food unfortunately over the weekend.

(APPLAUSE)

CUOMO: Kate Rose and her golf pro husband Justin helped feed 1,600 kids in five Orlando area schools. The 2013 U.S. Open champ raises money through his Birdies for Blessings campaign.

JUSTIN ROSE: How are we doing?

For every birdie I make, I give $100, which is the amount to feed a child for the school year. One of my sponsors, Zurich, matched me birdie for birdie. So, every birdie I make, that feeds two children for the whole entire school year. That gives me a lot of incentive to be out there on the golf course working hard to improve my game.

(APPLAUSE)

CUOMO: Another incentive is believing that Blessings in a Backpack is feeding the future of America. Like six-year-old Tatyana.

UNIDENTIFIED GIRL: I would like to be a healthy singer, a dancer, I'd like to be an artist. I'd like to be everything when I grow up.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: There's a new boy band in town, this town, Washington. And what sets them apart from the competition is they have friends, actually parents in high places, namely the White House.

CNN's Erin McPike has the details.

(BEGIN VIDEOTAPE)

(MUSIC)

ERIN MCPIKE, CNN CORRESPONDENT (voice-over): Hear that? It isn't One Direction or the Jonas Brothers. But it could be departing White House Press Secretary Jay Carney's newest project.

JAY CARNEY, DEPARTING WHITE HOUSE PRESS SECRETARY: I might manage my son's band, which is on the verge of taking off.

MCPIKE: Make that Hugo Carney's band, Twenty20, an indie rocking quartet of 12-year-olds who by day are students of the elite Sidwell Friends School in Washington with (AUDIO GAP)

(MUSIC)

MCPIKE: Elite, like their well-to-do parents. This is Lucas Donovan, son of HUD secretary and soon to be OMB director, Sean Donovan. Ben Froman, who calls U.S. trade representative Mike Froman dad, and Joey Doyle, whose mother's claim to fame was running Hillary Clinton's 2008 presidential campaign.

No true words have been sung, especially for the elder Carney, who's had a lot to weather recently and will finally get to enjoy the sun outside the briefing room, maybe take in a few more music shows with the extra time on his hands, like this one.

That was Jay on his birthday introducing his favorite band Guided by Voices. He took it all in with his son Hugo. Jay Carney himself used to rock out in the garage. But his son and band mates opted for the streets of D.C., making stops at Union Station and even grabbing a Slurpee at 7-Eleven for their video debut.

PAUL THORNLEY, MUSIC PRODUCER: It got worse when we got Slurpees. But it was pretty fun. It was fly by the seat of our parents and trying to keep up with them the whole time.

(END VIDEOTAPE)

MCPIKE: Now, those kids formed the band in 2011 when they were just 9 and 10. But this is their first single. And as it turns out, Wolf, they wrote the whole thing themselves. And I want to say the press release announcing it says it was a catchy power pop tune. Well, our editor Michael, in the process of doing that piece, he said it was catchy. He was singing the thing back to me today.

BLITZER: Very good. These are talented young, young men. Excellent work. Thanks very much. Good luck to the new pop group.

That's it for me. Thanks for watching.

"ERIN BURNETT OUTFRONT" starts right now.