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Trump Contradicts National Security Advisers on North Kora Policy; North Korean Officials Read "Fire and Fury" to Understand Trump; Whistleblower Tells Why He Leaked Cohen Financial Documents; . Aired 2:30-3p ET

Aired May 17, 2018 - 14:30   ET

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

[14:30:00] BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, what are you going to do? Are you going to go back to last year's "fire and fury?" The White House keeps talking about maximum pressure, a combination of economic sanctions, diplomacy and the threat, the genuine threat of military action.

Here at the Pentagon, Defense Secretary Mattis, the chairman of the Joint Chiefs, General Dunford, all have not changed their view, which is that military action always remains ready and possible awaiting the president's order. So that's one of the reasons right now you see military drills and exercises with the South Koreans and you see the U.S. engaging in a regular round of testing its own missiles, trying not to do anything too provocative, but making sure it continues send the message that U.S. military forces are ready, and they aren't going anywhere.

The question may be whether there's some final sweetener that the White House wants to give on the military front, pulling back on exercises, pulling back on U.S. troop presence in South Korea to make the North feel better about all of this but right now that is something that every military commander we've spoken to said they don't want to see. They want to keep going on with the program, the military program that they have.

BRIANNA KEILAR, CNN HOST: Barbara Starr and David Chalian, if you can stand by? We have another interesting development.

A former British official who recently visited North Korea just told CNN the regime is currently reading "Fire and Fury" to understand the president. Stand by for that.

(COMMERCIAL BREAK)

[14:35:59] KEILAR: We're following breaking news on North Korea. The president just spoke about it from the Oval Office where he seems to be blaming China for North Korea's apparent change of heart in being steadfast on talks with South Korea and the U.S. And also throwing his national security under the bus for talking about a Libyan model as a model for North Korea's nuclear program. The president said that wasn't the case.

But also another interesting twist in the story. Listen to what a former British negotiator just told CNN's Christiane Amanpour about his recent trip to North Korea.

(BEGIN VIDEO CLIP)

JONATHAN POWELL, FORMER BRITISH NEGOTIATOR: When I was there in December, they were reading "Art of the Deal." They wanted to discuss the book and what it showed about the president. When I went back they were reading "Fire and Fury" on PDF, the book itself, and trying to discuss what that told them about Trump, too. So they planned this very carefully. Since last November and December, they had a clear strategy. So far, it's all about reaction to their side in the West to their initiative.

(END VIDEO CLIP)

KEILAR: Let's bring in David Chalian.

That's pretty interesting. I guess you would expect this. They were reading "art of the deal" and now reading "Fire and Fury."

(CROSSTALK)

DAVID CHALIAN, CNN POLITICS DIRECTOR: I imagine foreign governments all over the globe are doing this to gain some insight. You were saying on the break, we do it, too, to get some insight. That's why we read these books and see what reporting exists to get an insight into how the president operates, how he makes decisions. This isn't just true of President Trump, right? These kinds of books of how the west wing works have been for presidents past and foreign government have read them, too, to gain insight.

KEILAR: But the Trump administration, which panned the book, really did not like how this book reflected on President Trump and so many members of the administration. I imagine their response would be, well, if you want to understand us, that's not the book that you should be reading, which is questionable in accuracy.

CHALIAN: They clearly were no fans of the book. The book helped sever an end of the relationship between Steve Bannon, the former chief strategist, and the president. There's no doubt about that. But many, many people who are familiar with this White House, even if details, every specific in the book was not an accurate report, the overall sensibility of chaos, confusion inside the West Wing in the early days of the administration was deemed to be a portrayal that many people who interacted with this White House recognized.

KEILAR: And the book's author got tremendous access. It did give that you sense of being a fly on the wall that's so important.

CHALIAN: The question is, what do you do if you are North Korea once you read it? How does that make your next move? How do you respond to what you learn after reading "Fire and Fury"? That I don't know.

KEILAR: David Chalian, thank you so much for that.

CHALIAN: Thank you. KEILAR: There are some new questions involving President Trump's personal attorney, Michael Cohen. A whistleblower now revealing why he leaked Cohen bank records. Key financial docs involving Michael Cohen are missing.

Plus, the video is stunning. A man in a New York City restaurant berating employees and customers for speaking Spanish. And then he threatens to call immigration enforcement. Now we're learning more about the man who made these comments.

(COMMERCIAL BREAK)

[14:43:32] KEILAR: We're now getting a clearer picture of why Michael Cohen's bank records were leaked. The unnamed whistleblower claims he was worried important financial documents, which contain suspicious financial information, were being hidden from investigators. For context, banks are required to filed suspicious activity reports, or SARS, if they flag a transaction that may violate federal law.

The source, who is reportedly a career law enforcement official, is now telling the "New Yorker's" and Ronan Farrow he became suspicious when he discovered two suspicious activity reports on Cohen's database were missing. The source is quoted as saying, "This is a permanent record. They should be there and there's nothing there." He added, "This is a terrifying time to be an American."

Joining us is David Murray, a treasury official who has looked at illicit finance in the past. Very familiar with that topic.

As someone who worked in this world, you can speak about this. You're quoted in the "New Yorker" piece. You talk about how Michael Cohen's transactions really created a lot of red flags. The bank that he used, First Republic, to set up essential consultants LLP, the company used for the hush money to pay Stormy Daniels, among other things. He had to explain what it was going to be used for. That is was going to be about his real estate acumen on a consultation basis. Why was it such a red flag when the payments didn't really seem to have to do with that?

[14:45:06] DAVID MURRAY, FORMER TREASURY OFFICIAL: That's right. When the bank allows a loan to a customer, any customers, you, me, a business, the bank is required to establish a profile for that customer. What kinds of transactions Is it going to be foreign transactions or domestic transactions? How many transactions? What kinds of customers? If it's a business, what kinds of customers does that business have? In the case of this account, what the bank had in its files was it was a real estate business, it was going to serve high net worth individual and receive wires in the amount of $1,000 to $10,000 and might receive up to $20,000 a month.

KEILAR: That was in there?

MURRAY: That was in there.

KEILAR: Michael Cohen would have had to put that in there? MURRAY: The bank would have put that in there. But the bank would

have --

KEILAR: Based on consultation with him?

MURRAY: That's right. They would have collected the information from the person who opened the account. They would establish a band for that account to operate in. When the account goes out of that band, when the activity is outside of what the bank expects to see, an alert is generated within a bank and an analyst, an investigator will look at that alert and it will escalate through the bank and the bank will ultimately decide is this suspicious. Do I have reason to suspect this is unlawful? Is this outside of what I would expect to see from the customer? Is there a lawful explanation for these transactions? And if it is outside, they have to file a suspicion, it's required to file a suspicious activity report?

KEILAR: Once they do that, they determine initially there's something suspicious about that, do they keep monitoring it?

MURRAY: That's right. They are required to file on a periodic basis if they decide to retain the customer. A lot of banks, if they file a suspicious activity report, they'll get rid of the customers because they don't want the continuous overhead of continuing to monitor that account. Frankly, banks don't want illicit activity in their institutions. They really want to run clean institutions. If they have a customer where they're so suspicious that they're filing reports with the government, it causes the bank to wonder, is this really the customer we want to have.

KEILAR: Not just a bank but many banks when it came to Michael Cohen. One of the fascinating things about this piece by Ronan Farrow, there were a number of suspicious activity reports coming from multiple financial institutions. You had First Republic, the bank. You had Morgan Stanley, which where Michael Cohen had investments. It was his investment account. He's putting some of the payments from Essential Consultants was going to his Morgan Stanley account.

Then, there was a payment to Cohen from another client that's unrelated to work he did with President Trump, a client, if you can call him that, who was paying off, it says in the story, a "Playboy" model that that client had impregnated. Is it unusual and can we assume that these are all independently operating financial institutions that are flagging Michael Cohen's financial transactions?

MURRAY: It's most likely that they're operating independently. There's a provision in the Bank Secrecy Act that allows institutions to share information. These were institutions in different lines of business. I don't know whether they share information or not. That's something that's closely held. So it's possible they were operating in concert but it's more likely they were operating independently.

KEILAR: David Murray, thank you so much

MURRAY: Thank you. KEILAR: -- for explaining this very interesting world of suspicious activity when it comes to banking operations. We appreciate you're a former treasury official who has examined illicit finance. Thank you very.

MURRAY: Thank you.

KEILAR: Let's listen in. We have some new video of the president.

(BEGIN VIDEOTAPE)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Thank you very much.

Today, I'm honored to welcome Secretary-General Stoltenberg back to the White House as we prepare for the upcoming NATO summit in July. That will be both interesting and exciting. I've had the great pleasure of getting to know Secretary-General Stoltenberg over the last year. We've worked very closely together and improved very much with respect to everybody the burden sharing, and we've really strengthened NATO and the NATO alliance, the strong working partnership we forged to produce significant increases in member state contributions.

We've worked very hard on that. And the secretary-general has been working on that for a long time before I got there. But I think more progress I can say with surety, more progress has been made in the last year and a half than has been made in many, many years. We're delighted to report that last year as a result of our joint efforts, we witnessed the single largest increase in defense spending among European member states and Canada in a quarter of a century. That really is quite a spectacular achievement.

So I congratulate you. And I congratulate you very much.

[14:50:02] We really have worked in many respects, but that was I think a big one. We had countries that were not paying what they were supposed to be paying. Now most countries are. Not all and I think you'll be able to handle the ones that aren't, right? I have confidence. This afternoon I want to thank the seven NATO nations in addition to the United States who will meet there, 2 percent NATO defense spending.

Unfortunately, we pay much more than 2 percent, which is probably unfair and unfair to the taxpayers of the United States. But the 2 percent number that's met is Poland, Romania, Estonia, Latvia, Lithuania, Greece and the United Kingdom and they're right up to snuff. They pay, they were on time, they paid the number that they're supposed to be paying. We have some that don't, and they'll be dealt with.

As a result of these contributions, NATO is much stronger. Taking in billions and billions more money than they ever have before. But as the secretary-general and I have discussed, more work needs to be done. We're still waiting on 20 member states to meet their NATO commitments and spend at least 2 percent on defense. And 2 percent is a very low number. The number really should be 4 percent. And 2 percent is a very low number.

In particular, Germany must demonstrate leadership in the alliance by addressing its longstanding shortfall in defense contributions. Germany has not contributed what it should be contributing. And it's a very big beneficiary. Far bigger than the United States, frankly. In addition to that, as you know, they're buying massive amounts of gas from Russia and paying billions and billions of dollars. So I think that's something we'll be discussing later. And we'll be discussing that at our meeting and probably long before the meeting.

We're going to successfully confront the full range of threats and we're going to need every member state to honor its obligation. So as we've just said, some do and some don't.

Today, the United States reaffirms our commitment to Article V and the Mutual Defense Pact. We renew our call on nations to demonstrate their commitment to the alliance through their actions, including by increasing their defense contributions under Article III requirement for preparedness and military capacity. You have to be prepared. You never know what's going to happen.

I've also called on NATO to improve its counterterrorism capabilities. Since the founding of the alliance, terrorism has claimed more lives in NATO countries than any other security threat. Think of that. This was something that years ago wasn't even a subject. I would talk about it all the time on the campaign, and in all fairness to Secretary-General Stoltenberg, he listened to me and they have a great counterterrorism operation. We appreciate that.

I was, therefore, glad to see last May, NATO adopted an action plan recommending the alliance to the fight and to fight against terrorism, which is now becoming the right all over the world, no matter where you go. Places that 10 and 20 years ago, you wouldn't have even thought about it.

I also discussed with Secretary-General Stoltenberg our commitment to stopping nuclear proliferation, including the denuclearization of the Korean peninsula. We want a future of safety, security, peace for all Koreans and for the entire world. My administration is committed to working with our allies to halt Iran's nuclear ambitions and their destabilizing activities all across the Middle East. No matter where you go, where there's a problem, there's Iran right behind it. We're not going to have that any longer.

I've said before, our nations must be strong from within to defend ourselves from threats outside. The strength of the NATO alliance doesn't not depend on military might alone but also the deep ties of history, culture and tradition that have long united our civilization. Now we must renew these ties and rededicate ourselves to our shared heritage. And we want a heritage of peace. Strength but peace. Strength but peace.

I want to thank you, Secretary-General, for joining us at the White House. It's a great honor. And for working with us to fortify the NATO alliance, which has proudly stood for seven decades as the bulwark of freedom, security and prosperity. Together, we will make NATO and the NATO alliance stronger. We need fairness. we need to be reciprocal. Countries have to be reciprocal in what we're doing. Unfair that some countries pay and some countries work, and some countries are loyal and terrific and other countries aren't. And we just can't have that. So we're working on that together.

A great honor to be with you. Thank you very much.

[14:55:14] JENS STOLTENBERG, SECRETARY-GENERAL, NATO: Thank you.

Thank you, Mr. President, for hosting me and my delegation here at the White House. It's great to see you again.

And in uncertain times we need a strong NATO, so I would like to thank you for your strong commitment to our alliance.

Last time we met, your main message was that NATO had to do more in the fight against terrorism and more on defense spending. All NATO leaders agreed and now we are delivering. We are stepping up our efforts in the fight against terrorism in Afghanistan where we are increasing the support for the Afghan government, and also in Iraq where we also plan to go on a new training mission at the summit, at the NATO summit in July.

On defense spending, I would say that I agree with you, we have to do more. And I would like to thank you for your leadership.

And it has really impact -- it is impacting allies because all allies are now increasing defense spending. They're adding billions to their budgets so your leadership on defense spending has really helped to make a difference. And that's something I thank you for.

After years of decline, all allies have started to increase defense spending. No allies are cutting their budgets anymore. And more and more allies are at 2 percent of GDP for defense. But I also agree that we have to do more so allies will continue to work on defense spending because we need to invest more in our security when the world is more unpredictable, as it is today.

We also support your efforts to try to find a peaceful and negotiated solution to the crisis on the Korean peninsula. The aim should be to denuclearize the Korean peninsula, make sure there are no nuclear weapons there, and stop not on development of nuclear weapons but also the missile program. Therefore, we support the initiative and the work for having a summit. We think it's important also to make sure that we still have pressure on North Korea. And North Korea has to seize this opportunity, this historical opportunity to solve the crisis on the Korean peninsula.

So once again, thank you so much for your strong commitment to our alliance. I look forward to continuing our discussion and to address these issues and many others.

TRUMP: Thank you very much. Thank you.

UNIDENTIFIED REPORTER: Mr. President, sir, could you clarify the context of your use of the word "animal" yesterday in the -- (CROSSTALK)

TRUMP: Yes. Well, it has nothing to do with this meeting but I'm referring, and you know I'm referring to the M.S.-13 gangs that are coming in. I was talking about the M.S.-13. If you look a little bit further on the tape, you'll see that. So I'm surprised you're asking this question because most people got it right. I'm saying the M.S.- 13, you don't have that where you come from. M.S.-13, these are animals. They're coming into our country, we are getting them out.

They come in again, we're getting them out. We need strong immigration laws. We have the weakest laws in the entire world. We have laws that are laughed at on immigration. So when the M.S.-13 comes in and other gang members come into our country, I refer to them as animals. And guess what? I always will. But we're getting them out by the thousands. But it's a big, dangerous job. They're able, in some cases, to come back in or new groups come in also from the gangs.

Thank you.

UNIDENTIFEID REPORTER: Mr. President -

(CROSSTAK)

TRUMP: Yes?

UNIDENTIFIED REPORTER: Mr. President, do you want NATO to play a bigger role in Syria -- (INAUDIBLE).

TRUMP: Well, I think we help Syria actually by withdrawing from the Iran deal, which was a terrible deal from the United States, I think for the world. I think Syria, hopefully, will start to stabilize. You see what's been happening. It's been a horror show. And I have great respect for Syria and the people of Syria. These are great people. I know people from Syria.

These are great people. It was a great culture before it was so horribly blown apart, a place where people would go, where they had tremendous professional people, doctors and lawyers. Friends of mine from the Middle East that say, we used to go to Syria, that was a place to go. And you look at what's happened. It's so sad. But I'd like to see Syria come back. I think we've gone a long way to helping it with what we did with respect to the Iran deal. And you'll see what I mean by that over time. A lot of things will happen.