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Australia PM Says He Won't Contest Leadership Vote; Trump Defends 2016 Hush Money Payments; Wall Street Marks Longest Bull Run in History; New Message Purportedly From Abu Bakr Al-Baghdadi; Tearful Goodbyes As Koreans Depart Family Reunions; NASA Plans For Manned Missions To The Moon And Mars. Aired 2-3a ET

Aired August 23, 2018 - 02:00   ET

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

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ROSEMARY CHURCH, CNN ANCHOR (voice-over): Malcolm Turnbull's gamble. Australia's embattled prime minister is digging in for a fight amid a revolt within his own party.

Donald Trump's attempt to damage control. He defends hush money paid to women ahead of the election, insisting there is nothing wrong with it.

And later, the emotional stories of Korean family members forced to say goodbye after a rare reunion.

Hello and welcome to our viewers joining us from all around the world. I'm Rosemary Church and this is CNN NEWSROOM.

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CHURCH: Australia's ruling party is in political chaos right now. Prime minister Malcolm Turnbull says his party will hold a vote Friday if he's shown a petition calling for him to go. Now if that happens, Turnbull says he will step down.

That announcement came after days of drama and upheaval. Mr. Turnbull survived a challenge Tuesday from Peter Dutton, the home affairs minister, who resigned after that vote, who now claims he has enough support to take over.

But the prime minister says Dutton may not even be eligible to sit in parliament. Party members who supported Mr. Turnbull earlier in the week explained why they changed their minds.

(BEGIN VIDEO CLIP)

MICHAELIA CASH, AUSTRALIAN MINISTER FOR JOBS: I, too, supported the prime minister in the ballot on Tuesday. I became aware yesterday that it was very clear that the prime minister no longer, in my opinion, had the confidence of the party.

MITCH FIFIELD, AUSTRALIAN COMMUNICATIONS MINISTER: It has become apparent that a majority of party room colleagues believe that there should be a transition.

MATHIAS CORMANN, AUSTRALIAN FINANCE MINISTER: The reason that we came to that view is because of the number of colleagues that came forward who supported Malcolm in the leadership ballot on Tuesday who indicated to us that they had changed their position.

(END VIDEO CLIP)

CHURCH: Meanwhile, the prime minister has his own explanation for what's going on.

(BEGIN VIDEO CLIP)

MALCOLM TURNBULL, PRIME MINISTER OF AUSTRALIA: What began as a minority has by a process of intimidation, you know, persuaded people that the only way to stop the insurgency is to give into it.

Now I do not believe in that, I have never done that, I've never given into bullies, but you can imagine the pressure it has put people under.

(END VIDEO CLIP)

CHURCH: And here to help sort through all of this, Rachel Baxendale, a federal politics reporter with "The Australian" newspaper.

Thank you so much for joining us.

RACHEL BAXENDALE, "THE AUSTRALIAN": Lovely to be here, Rosemary.

CHURCH: So if this leadership vote goes ahead, the winner will be the sixth prime minister for the country in a decade.

What is going on in Australian politics that no prime minister has been able to serve out a full term in the last 10 years?

BAXENDALE: Indeed. Look, we really are seeing quite chaotic scenes in Canberra today. We have gotten used to changing leaders rather quickly. I'm 31. I've never voted for a prime minister who has gone full-term. That's the situation that Australia currently finds itself in.

And things are moving very fast. We've actually just learned in the last half-hour or so that Julie Bishop, the deputy Liberal leader and foreign minister, is putting her name in the ring. So tomorrow's contest is looking like it will between Peter Dutton, the former home affairs minister, who challenged Malcolm Turnbull unsuccessfully on Tuesday; Scott Morrison, his treasurer and Julie Bishop.

It's really anyone's guess how that will go. I suppose Peter Dutton's people will hope that the moderates or Turnbull's supporters will have their votes switched, now that Julie Bishop's but her hat in the ring.

But it could be either she or Scott Morrison becomes to be seen as the more stable middle of the road candidate amongst their party room colleagues. It really is anyone's guess. You also mentioned that petition that has been circulated and that

Prime Minister Malcolm Turnbull has said will need to get 43 signatures, so a majority of the Liberal Party room, before that party room meeting can be held midday.

We just heard in the last few minutes that Dutton's supporters are now saying that now that it's a three-way contest, they reject that proposal that it has to be 43 signatures. And they've actually asked the chief government whip, Nola Marino, to convene the meeting anyway.

So it will be interesting to see. The government whips are normally nonpartisan players in these things and she's been asked to make this decision. So it will be very interesting to see how that pans out.

CHURCH: It is fascinating. Julie Bishop, of course, standing by Malcolm Turnbull's side up to --

[02:05:00]

CHURCH: -- this point. She'll go up against Scott Morrison, the treasurer, and Peter Dutton. Interesting about Peter Dutton is that Malcolm Turnbull says he wants proof that his challenger, Dutton, is eligible to sit in parliament. He's referring to his personal business affairs.

How likely is it that that could change his eligibility?

BAXENDALE: Well, very interesting. I mean, this plays in -- international observers of Australian politics may be familiar with the fact that we have had rather a number of issues with some of our MPs being found to be ineligible under Section 44 of our constitution, due to them having found to be dual citizens.

This issue also relates to that section of the constitution but to a different clause, which has to do with people -- people owning businesses which may profit from the commonwealth.

Now it was revealed earlier this week, I think this had actually been exposed 12 months ago in a senate estimates hearing. But it has resurfaced conveniently this week that Peter Dutton actually has a family trust with his wife and children, that own shares in two childcare centers in Brisbane.

Those childcare centers receive money from the commonwealth, which they then pass on to parents at those childcare centers of subsidies. Several constitutional experts this week have expressed the opinion that they believe that may see him contravene the constitution and be ineligible to sit in parliament.

He has cited legal advice, saying that he doesn't believe this to be the case. Labor has cited legal advice. Of course, Labor being our opposition party, saying that they believe he does have a problem and the -- and Malcolm Turnbull has now referred that to the solicitor general, who is the independent government solicitor.

And he is due to give his opinion tomorrow. Obviously, he's under some pressure to give a view that won't then be overturned by the high court, should it go to the high court, which will ultimately decide.

CHURCH: It's never easy. It's always complicated when it comes to Australian politics. Rachel Baxendale, thank you so much for joining us. We appreciate it.

BAXENDALE: Thanks for having me.

CHURCH: Well, Donald Trump is bending over backwards to explain away allegations that he directed his former lawyer to pay hush money during the height of his 2016 campaign.

On Wednesday, the U.S. president made the contradictory claims that the money came from him but he says he didn't find out about the payments until later on. CNN's Abby Phillip reports.

(BEGIN VIDEOTAPE)

ABBY PHILLIP, CNN CORRESPONDENT (voice-over): The White House in all- out damage control mode after two of President Trump's former aides become felons. Press secretary Sarah Sanders repeating the same message.

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: As the president has said, we've stated many times, he did nothing wrong. He did nothing wrong. The president in this matter has done nothing wrong.

PHILLIP (voice-over): Trump's former fixer Michael Cohen pled guilty to campaign finance violations and tax fraud charges, adding he broke the law in coordination with and at the direction of Trump.

TRUMP: They didn't come out of the campaign and that's fake. But they weren't -- that's not a -- it's not even a campaign violation.

PHILLIP (voice-over): The president rushing to defend his former campaign manager Paul Manafort, who was found guilty of eight counts of financial crimes, tweeting, "I feel very badly for Paul Manafort and his wonderful family," Trump praising Manafort for refusing to break, prompting speculation he might consider a pardon a possibility Trump's attorney Rudy Giuliani addressed last month.

RUDY GIULIANI, TRUMP ATTORNEY: If, in fact, the president and his advisers, not me, come to the conclusion that you've been treated unfairly. These pardons happen in these political investigations.

UNIDENTIFIED MALE: Is Mr. Manafort a simple candidate for a presidential pardon?

SANDERS: Once again, that's not something that has been up for discussion.

PHILLIP (voice-over): The president also claiming today that Cohen's campaign finance violations are, quote, "not a crime" and falsely claiming that President Obama's campaign had similar issues.

TRUMP: If you look at President Obama, he had a massive campaign violation but he had a different attorney general and they viewed it a lot differently.

PHILLIP (voice-over): Obama's campaign paid a $375,000 fine from the Federal Election Commission for reporting errors but never faced accusations that aides intentionally sought to conceal campaign contribution that violated the law.

Cohen, reaching a deal with prosecutors on charges related to his hush money payments to two women who claimed to have had affairs with Trump.

MICHAEL AVENATTI, STORMY DANIELS' ATTORNEY: That's what Donald Trump is, he's an unindicted co-conspirator, make no mistake about it, based on this plea agreement.

PHILLIP (voice-over): The court document's explicit references to Trump blindsided the president --

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PHILLIP (voice-over): White House sources told CNN. As Trump's legal risk magnifies, the president plans to aggressively try to discredit his former aide as a liar, who should not be believed as a witness, according to sources.

Republicans on Capitol Hill also ducking the issue, with just two months until the midterm elections.

CHUCK GRASSLEY: All we know about it is that he's pled guilty and everything else that you ask me is speculation.

UNIDENTIFIED MALE: I don't think we know -- I don't think we know all the facts.

UNIDENTIFIED MALE: Excuse me.

PHILLIP: And one of the many things that Sarah Sanders did not say definitively in that press conference today is that President Trump would not pardon Paul Manafort. She said that's not under discussion at the moment.

But it's clear also that Michael Cohen could remain a huge problem for President Trump. The New York State Tax Department has issued a subpoena to Cohen in their probe of the Trump Foundation, an indication that the legal problems for President Trump could be ongoing -- Abby Phillip, CNN, the White House.

(END VIDEOTAPE)

(BEGIN VIDEOTAPE)

CHURCH: CNN political analyst Brian Karem joins me now.

Thank you so much for being with us.

BRIAN KAREM, CNN POLITICAL ANALYST: Thank you, Rosemary. CHURCH: So President Trump is changing his story on the payments made to two women, now saying he learned about them later on. But we've heard him on tape talking about how to make those payments and his own former lawyer, Michael Cohen, admitted Tuesday to making those illegal payments at the direction of Mr. Trump.

So is anyone going to buy Mr. Trump's effort to change his story?

KAREM: His base will. His base will believe anything he says, if he could say I'm turning right, he'll turn left and then they will believe him.

But the rest of the world is now, I think becoming aware of the fact that he often doesn't tell the truth. He lies. And he is lying about this and he continues to lie about it and he is beginning to face the ramifications of it.

He was at a rally Tuesday night in Charleston, West Virginia, which was a little more lackluster than some of the previous rallies and where he had to come out on stage after kind of a one-two wallop with Manafort being found guilty eight times and then of course, Michael Cohen, his attorney pleading guilty.

And so it's really, it's unprecedented in the United States. Not since Watergate have we seen anything like this. This is even worse than that.

I mean, you are looking at a national security advisor and his personal attorney and you're also looking at another member this campaign chairman who will all or are now convicted felons and we are just a year and a half into his presidency. So, it's rather scary from this.

CHURCH: Right and when President Trump talked to FOX, he also said those payments to the two women were not taken out of campaign funds, he says the payments came from him.

But that doesn't make it legal, does it?

KAREM: No.

CHURCH: So he is still in legal jeopardy.

So what happens next?

KAREM: Well, that's a good question. The silence from the Republicans are, that's deafening. It portends nothing is going to happen until the midterm elections.

And what he did Tuesday night in Charleston, West Virginia, was lay the groundwork for trying to make sure that the Republicans stay in charge, because if they don't, if they don't control the Congress, then he's going to face some heavy, heavy reckoning from the Democrats and that's one thing he doesn't want to do.

So his whole effort from now and he spelled out what he's going, he's going to be on the road 40 days between now and the midterm elections trying to shore up the Republicans and making sure they stay in control of Congress.

CHURCH: Now Michael Cohen's lawyer, Lanny Davis, says Cohen has decided to tell the truth about Donald Trump.

(CROSSTALK)

KAREM: How comforting.

CHURCH: And he says -- yes. And he says Cohen has information for special counsel Robert Mueller and he also added that he is not interested in any pardon that Mr. Trump might offer, I'm sure he wouldn't at this point anyhow, but what do you make of all of that?

KAREM: Well, there is a circus around Donald Trump and this guy is another guy in the circus. I mean, if he's wanting to tell the truth, he could call a press conference, right? He could come out right now and just say here's the truth.

But there is always a sleight-of-hand and twist of fate with these people and there's another card that he's waiting to play and there's also a hidden agenda that hasn't come forward yet. We don't know what it is. But it's really simple, if you want to tell the truth, you could do it, just do it.

CHURCH: So why isn't he coming out and having a press conference?

(CROSSTALK)

KAREM: Good question. That's a great question and I don't know the answer to that. I don't know if he's trying to strike a deal.

Obviously, a deal with the Donald is off the table, but if he is trying to strike a deal with someone else, does he have a book deal going?

I mean, there is a reason why he hasn't done it, we just don't know, we're waiting for the other shoe to drop to find out why and we may never find that out.

CHURCH: In time, we seem to find everything out.

But White House press secretary Sarah Sanders says there are no charges against President Trump and keeps repeating he did nothing wrong. While the Democrats say any talk of impeachment --

[02:15:00]

CHURCH: -- is premature at this stage. But they do want to stop any vote on Mr. Trump's Supreme Court pick until after the midterms.

Could that happen?

KAREM: Well, probably not. The Republicans control that and that is actually what those who are observing what's going on in Washington figure out are saying, that what the GOP is trying to do is to get through this second Supreme Court nominee.

And then whatever happens to Donald Trump happens to Donald Trump. But they want to be able to control the Supreme Court for the next 20- 30 years and believe that this nominee is the guy that will give them the key to do it.

So they're putting their efforts into trying to make sure that he does get confirmed. And the Democrats have very -- there's a very small, narrow window through which they could squeeze to stop it. And I don't think they're going to be able to do that.

I think that vote will come down before the midterm elections and then after the midterms, God only knows what will happen.

CHURCH: Indeed. We will watch to see what happens just in the next 24 hours.

(LAUGHTER)

CHURCH: Brian Karem, thank you so much for joining us. Appreciate it.

KAREM: Thank you.

(END VIDEOTAPE)

CHURCH: We'll take a short break here.

Still to come, the U.S. and China are at it again as they try to work through their trade differences in Washington. Both have now hit each other with a new round of tariffs.

Plus, it was a down day on Wall Street but investors saw a silver lining and they made history. We'll explain after this short break.

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CHURCH: Well, new U.S. tariffs against China just went into effect a couple of hours ago. It is the latest salvo in the tit-for-tat trade war President Trump started in March; $50 billion worth of goods on each side are now affected.

In this latest round, 279 Chinese products will face 25 percent tariffs, including chemicals, thermometers, motorcycles, bicycles, food equipment, antennas, aluminum, cables, irrigation equipment and iron.

China is retaliating with tariffs on 333 U.S. products, including fuels, steel, automobiles, medical equipment, coal, grease, Vaseline, asphalt, plastics and recyclables.

CHURCH: CNN's Steven Jiang is standing by in Beijing. Good to see you, Steven. So the Trump administration's latest tariffs on --

[02:20:00]

CHURCH: -- Chinese goods took effect just a short time ago.

What has been the reaction so far?

STEVEN JIANG, CNN SENIOR PRODUCER, BEIJING BUREAU: Well, Rosemary, the Chinese countertariffs took affect and the Chinese commerce ministry came out with a statement reiterating its long-held position that the U.S. action violated World Trade Organization rules and China is forced to strike back to not only defend its own interests but also to defend free trade and a multilateral system.

So there's really nothing new in what they say. But we've already started to see some impact on the economy here, at least in specific cases. I was talking to an American executive in charge of buying Chinese products for his U.S. clients. He told me even though his products are not on these lists, he's already suffering because the fast rising shipping costs, as many Chinese manufacturers and their U.S. clients are trying to rush products out before the latest round of tariffs, the shippers have jacked up prices and containers are full.

So he has become a victim, each though his products are not directly hit. So we are starting to hear stories more and more like this kind of stories and as we start to see this war really dragging on with no end in sight -- Rosemary.

CHURCH: We know that officials from China and the U.S. are talking in Washington. Let's hope they can come up with some sort of solution. Steven Jiang, standing by there live in Beijing with that report. Many thanks.

CHURCH: Well, the U.S. Federal Reserve is warning the trade wars like the one with China pose a major threat to the U.S. economy. It says any major escalation could speed up inflation, cause businesses to pull back on investment and force Americans to reduce their spending.

Wall Street is celebrating a milestone, the longest running bull market in U.S. history. Economists pin the start as March 9th, 2009. The U.S. financial markets have been chugging upward ever since. For the record, that's 3,453 days. We get more now from CNN's Clare Sebastian.

(BEGIN VIDEOTAPE)

CLARE SEBASTIAN, CNN CORRESPONDENT: It was Monday, March 9th, 2009. Bernie Madoff was under house arrest, the greatest Ponzi scheme in history.

Famed investor Warren Buffett issued a dire warning on the state of the economy...

UNIDENTIFIED MALE: We're talking about it being an economic Pearl Harbor, it's sort of on a cliff.

SEBASTIAN: And Larry Kudlow, then a TV pundit, railed against efforts to rescue world economies.

UNIDENTIFIED MALE: They are doing the wrong kind of stimulus. They are spending their tuchuses off.

SEBASTIAN: On Wall Street, still reeling from the collapse of 2008, it was just another down day. The Dow falling over 1 percent to 12- year lows. Most people unaware this was as low as it would go. The bottom of one of the worst bear markets in history.

On March 10th, stocks rallied, the Dow soaring almost 6 percent. Soon there was talk of economic rebirth.

UNIDENTIFIED MALE: Do you green shoots?

UNIDENTIFIED MALE: I do. I do see green shoots.

SEBASTIAN: By the end of the year, the Dow was back above 10,000 again. Over the years, the bull run had been tested in August 2011 by the U.S. credit rating downgrade.

UNIDENTIFIED MALE: The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations.

SEBASTIAN: In early 2016, by plummeting oil prices and a slowing Chinese economy.

UNIDENTIFIED MALE: What is going on in the yuan, the Chinese currency, that sharp devaluation is very bad.

SEBASTIAN: And just this February, as markets spun lower over fears of the end of cheap money.

RICHARD QUEST, CNN HOST: Worries over rising interest rates, concerns about higher inflation.

SEBASTIAN: Indeed, a cyclical downturn that stops the record run ...

UNIDENTIFIED FEMALE: The risk of recession rapidly rises as we look out to the second half of 2019 and into 2020.

SEBASTIAN: ... was something unexpected. One thing is clear, March 9, 2009 was the buying opportunity of a lifetime -- Clare Sebastian, CNNMoney, New York.

(END VIDEOTAPE)

CHURCH: Well, major weather systems are threatening millions of people in several parts of the world at this hour. Hurricane Lane is now a category 4 storm with sustained winds of 230 kilometers an hour. The outer bands are already being felt on the big island of Hawaii.

Japan is expecting a hit from Typhoon Cimaron Thursday evening and Typhoon Soulik is approaching the Korean Peninsula. (WEATHER REPORT)

[02:25:00]

CHURCH: We'll take a short break here.

Donald Trump changing his story yet again on hush money payments to cover up his alleged affairs. We will take you through the evolution of Mr. Trump's truth. That is next.

And ISIS claims there is a new recording from its leader with a message to the terror group's followers. We're back in just a moment with that and more.

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[02:30:22] ROSEMARY CHURCH, CNN INTERNATIONAL ANCHOR: Welcome back, everyone. I'm Rosemary Church. I want to update you now on the main stories we've been following this hour. Australian Prime Minister Malcolm Turnbull says he will face a leadership vote Friday if he's shown enough signatures calling for him to go. If the vote goes ahead, Turnbull says he won't stand and will step down. And there are reports Foreign Affairs Minister Julie Bishop is now joining the race to replace Turnbull.

The U.S. and China have imposed new tariffs on one another in the tit- for-tat trade war that's gone on since March. U.S. and Chinese officials have been meeting in Washington to try to resolve their differences. The tariffs now affect $50 billion worth of goods on both sides. Donald Trump is dismissing claims from his former lawyer that he directed payments to keep two alleged affairs quiet during the 2016 presidential campaign.

Mr. Trump says the payments were not illegal because the money came from him. He also says he didn't know about the payments until later. Well, the president's comments are just the latest in a string of conflicting and contradictory statements about the hush money payments. CNN's Wolf Blitzer is keeping track.

(BEGIN VIDEOTAPE)

WOLF BLITZER, CNN ANCHOR: January 12th, 2018, The Wall Street Journal reports Michael Cohen arranged a $130,000 payment to adult film star Stormy Daniels just one month before the 2016 election to keep her from going public about an alleged affair with Mr. Trump. In a statement, Cohen called the allegation about the affair outlandish. Then on February 13th, Cohen told The New York Times he used his own personal funds to pay off Daniels saying neither the Trump organization nor the Trump campaign was a party to the transaction and neither reimbursed me for the payment.

On March 5th, The Wall Street Journal reported Cohen wired the money to Daniels' lawyer just 12 days before the election. Cohen responded with a two-word e-mail statement, fake news. Two days later, the White House weighed in.

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: Yes. I've had conversations with the president about this. There was no knowledge of any payments from the president. And he's denied all of these allegations.

BLITZER: On April 5th, President Trump broke his silence on the Stormy Daniels payments denying involvement.

UNIDENTIFIED FEMALE: Did you know about the $130,000 payment to Stormy Daniels?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No. No.

UNIDENTIFIED FEMALE: Why did -- why did Michael Cohen made that that there was no truth to her allegations?

TRUMP: Well, you have to ask Michael Cohen. Michael's my attorney and you'll have to ask Michael Cohen.

BLITZER: But a few days later, he acknowledged Cohen did represent him in the deal with Daniels.

TRUMP: He represents me like with this crazy Stormy Daniels deal. He represented me. And, you know, from what I see, he did absolutely nothing wrong. There were no campaign funds going into this.

UNIDENTIFIED FEMALE: Then why is he pleading the Fifth?

BLITZER: On May 2nd, Mr. Trump's current lawyer, Rudy Giuliani, took it one step further.

RUDY GIULIANI, LEGAL COUNSEL TO DONALD TRUMP: No campaign finance violation.

UNIDENTIFIED MALE: So they funneled it through a law firm?

GIULIANI: Funneled it through the law firm and the president repaid it. But he did know about the general arrangement that Michael would take care of things like this.

BLITZER: The following morning in a series of tweets, Mr. Trump added that Cohen received a monthly retainer. Then, on July 24th, Cohen's lawyer released a secret recording between Cohen and Mr. Trump discussing the logistics of another payment. This time to former Playboy model Karen McDougal.

MICHAEL COHEN, AMERICAN LAWYER: When it comes time for the financing which will be --

TRUMP: Listen, what financing?

COHRNM: We'll have to pay --

(CROSSTALK)

COHEN: No, no, no, no, no.

BLITZER: On August 21st, Cohen officially flipped on his former boss and pleaded guilty to campaign finance charges stemming from those payments to Stormy Daniels and Karen McDougal. He also told a followed judge the McDougal payment was for the principal purpose of influencing the election.

(END VIDEOTAPE)

CHURCH: CNN's Wolf Blitzer reporting there from Washington. Well, the White House is coming to the president's defense in the Michael Cohen case. His former lawyer implicated the president Tuesday in hush money payments to two women who claimed they had affairs with the future president. Spokeswoman Sarah Sanders said seven times on Wednesday the president did nothing wrong but reporters pushed back.

(BEGIN VIDEOTAPE)

KAITLAN COLLINS, CNN INTERNATIONAL CORRESPONDENT: In his interview today, the president said he found out about those payments that Michael Cohen made later on but he's on tape discussing how to make one of the payments with Michael Cohen so before the payment was made. So how do you explain that?

[02:35:04] SANDERS: Once again, I've commented on this pretty extensively. What I can tell you about this is that the president did nothing wrong. There are no charges against him. There is no collusion for anything beyond that. I would refer you to the president's outside counsel.

COLLINS: Rudy Giuliani is not a taxpayer-funded spokesperson for the president, you are. So how can you not explain something the president said today on the ground at the White House that seems to contradict an audio that has been confirmed that it is of the president saying that.

SANDERS: Once again, I have addressed this a number of times. Just because you continue to ask the same questions over and over I'm not going to give you a different answer. The president has done nothing wrong. There are no charges against him. There is no collusion. Next, John.

UNIDENTIFIED FEMALE: Today you say the president has never lied to the American people because so many people now look back at that tape of him on Air Force One saying he knew nothing about these payments when, in fact, we now know he knew everything about these payments. So has he lied?

SANDERS: Look, again, I think that's a ridiculous accusation. The president in this matter has done nothing wrong and there are no charges against him.

(END VIDEOTAPE) CHURCH: Sanders also said she was not aware of any discussions about

a pardon for former Trump campaign manager Paul Manafort convicted Tuesday of financial crimes. Earlier, a Fox News reporter said Mr. Trump told her he would consider a pardon. So let's return to our major news. The political crisis in Australia and a government in chaos. Prime Minister Malcolm Turnbull is facing a leadership challenge and he could be out of office as early as Friday.

More and more members of his cabinet are turning their backs on him and there are those willing to take over. Brett Mason from SBS Australia is with us now. Good to have you here. So there are now three challengers willing to replace Malcolm Turnbull with Foreign Affairs Minister Julie Bishop adding her name to the list. It's not looking good for Turnbull right now, is it? How is this expected to play out?

BRETT MASON, SBS AUSTRALIA: Well, this really has descended into a full-blown political crisis for Malcolm Turnbull's conservative government here in Australia. Malcolm Turnbull stared down Peter Dutton, his Home Affairs Minister just 36 hours ago defeating him in a party room ballot. Well, this morning, Peter Dutton came knocking on the prime minister's door and said that he believed to Malcolm Turnbull no longer had support of his cabinet.

Twelve colleagues resigned in quick succession and so caught unaware was Malcolm Turnbull that the House of Representatives was actually shut down here this morning. The politicians sent home so that the government could try and shore up their prime minister's numbers. But one after the other, the highest profile members of his cabinet resigned leaving him exposed. He gave a press conference effectively staring down these rebels saying, bring me a petition signed by a majority of liberal party members and I will hold a second ballot.

If I call for a spill and that supported and my leadership is challenged, I will take that as a vote of no confidence, I will resign and I will quit politics. The interesting thing about that is that the government here only has a one-seat majority in the House of Representatives. So if he were to be toppled and then quit the parliament, his successor would not be able to govern. There would need to be a general election. That has huge constitutional implications and right now in Canberra nobody really knows what will happen.

So far that petition of the necessary 43 signatures hasn't been produce. So Malcolm Turnbull is effectively saying to members of his own party, you need to put your name to my political execution, and understandably with the prospect of a general election almost imminently after that. There are many here who are now getting cold feet and perhaps saying, well, that could be difficult for me to go back to my constituents and argue.

Malcolm Turnbull says this is all about trying to pull his party further to the right. Very similar to what we've seen in Europe, in the United Kingdom, and also in the United States.

CHURCH: And interesting too, Malcolm Turnbull says he wants proof one of his challengers, Peter Dutton, is eligible to sit in parliament. And this, of course, is due to his personal business affairs. What is going to be the likely outcome of that inquiry?

MASON: Yes. Well, Australia giving the United States a good run for its money when it comes to political uncertainty. This 45th Australian Parliament has been plagued by a little known piece of the constitution. It's called Section 44. And an array of members from virtually every party, even independents have been thrown out of the Senate and the House of Representatives because it turns out they were actually dual-citizens without knowing it. They had citizenship of other countries due to the birth nation of their mother or father, and in some cases grandparents, and under the constitution that is not allowed. So they were thrown out of the parliament.

[02:40:09] Also, in Section 44, is a rule that means that means that ministers of the crown can't benefit from finances delivered by the crown. They can't be involved in those decisions. And it turns out that Mr. Dutton's family owns a series of childcare centers. It has received some government benefit. Mr. Dutton says that his legal advice is that he won't be caught up under Section 44 of the constitution. But the very interesting thing about Malcolm Turnbull's press conference today was he said that the case surrounding Peter Dutton has been referred to the solicitor general for advice.

So the party room ballot won't take place until that advice is given to Mr. Turnbull and his party colleagues. He believes that they need to have that advice that certainty that Mr. Dutton is actually eligible to sit in the parliament let alone lead his party. He said this is not really about threatening Mr. Dutton or trying to dissuade him from challenging from the leadership, but it's certainly been read that way by some here in Canberra today.

CHURCH: A few conversations being fulfilled before this happens that Malcolm Turnbull could very well hang on. Who knows? We'll be watching it very closely of course. Brett Mason, many thanks to you. Well, it is a test from Allah. That's the message supposedly by from the leader of ISIS to his followers. Details on the new recording. That's still to come. Plus, heart wrenching stories from the families separated for decades by the Korean War. Briefly reunited this week then torn apart yet again. We're back in a moment.

(COMMERCIAL BREAK)

CHURCH: For the first time in nearly a year, ISIS has released what it claims is a message from its leader, Abu Bakr al-Baghdadi. The man on the recording admits ISIS fighters are losing ground calling it a test from Allah and he urges followers to carry out attacks with bombs, knives, or cars. Baghdadi is believed to have been wounded in an airstrike last year and is now thought to be hiding along the Iraqi-Syrian border. Well, CNN's Sam Kiley joins us now from Abu Dhabi with more on this.

Sam, we don't know if this is Abu Bakr al-Baghdadi. But assuming it is, what is the significance of this new message coming out at this time? [02:45:10] SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: I think

really, Rosemary, it's a rallying cry to the Troops. A reminder if you like that whilst, the so-called Caliphate has been destroyed the ideas that underpinned, it still very much exists.

And equally, he made an appeal to his followers around the world whom he called lone wolves, the term we're all too familiar with after terrorist attacks particularly in Europe to continue their operations.

This I think, is a sign largely or to some extent of desperation from within the ranks of what remains of the so-called Islamic State. But also, Rosemary, remember that according to Western intelligence, and Iraqi Intelligence estimates adherents to this death cult still number about 30,000 estimated in Iraq and Syria. And they continue to conduct atrocious operations from time to time in small pockets, particularly, in Iraq.

So, as far as they are concerned, perhaps, phoenix-like they might be able to emerge from the rubble of Raqqa and Mosul which is, of course, the city where the one and only appearance has ever been made by al- Baghdadi when he preached at the mosque. That city now largely reduced to rubble, following the expulsion of the so-called Islamic state from it.

But nonetheless, Rosemary, I think this should really be seen if it is Baghdadi as a way of saying he's still in the game, although, of course, very, very much in hiding, Rosemary.

CHURCH: And so, how long will it be before we know whether it is indeed Baghdadi, and if it isn't him -- you know, people will be then wondering whether something has happened to him.

KILEY: Well, I think that the intelligence community will be subjecting this to a fairly detailed -- highly detailed voice analysis, and they may or may not publicly confirm as to whether or not it is. In many ways, it doesn't terribly matter because the whole point about these sorts of movements.

And we saw this when Osama bin Laden was shot in the end by American commandos. Somebody else can take over, these are Hydra headed organizations. In the case of Baghdadi, though somewhat different to bin Laden, he had established himself as the Caliph of this Caliphate.

And so, there is the aspect of if he were removed from the battlefield as the Americans term it, they would be a certainly a quite literally a decapitation of their structures. But they are very, very resilient of these sorts of organizations like Islamic State.

Of course, remember it began its existence as a terrorist insurgents movement within Iraq itself as calling itself the Iraq -- the Islamic Caliphate of Iraq, back in the day long before they established themselves across the two borders.

So, ultimately, it doesn't terribly matter where the Baghdadi is alive or dead to the survival of the organization. Although, symbolically, if he were removed then it would be seen as, at least, a temporary victory for the coalition and particularly for the Iraqis.

CHURCH: Yes, it's well the symbolism that comes with that, isn't it? Sam Kiley, thank you so much for being with us, bring us up to date on that situation. Appreciate it.

Well, Korean families torn apart for decades, then reunited, and now torn apart once again. This week's reunions, the family members separated by the Korean War ended with tears and heartache. Our Paula Hancocks, reports.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Saying goodbye most likely to the last time. They come to some waves to the son she was separated from when she was four.

A 92-year-old allowed a total of 12 hours with her child in North Korea to catch up on a separation of nearly 70 years. It's now over and they must go back to living on opposite sides of an impenetrable border. This is the brutal legacy of the Korean War. Countless families are torn apart in the 1950s, a fraction reunited for a brief moment in time.

Lee and her then-one-year-old daughter separated from her son and husband while fleeing the fighting. Lee says her favorite time with San Chol was sharing a meal in her hotel room. They shared family photos, images of grandchildren, and great-grandchildren, Lee didn't even know she had.

Arriving back in South Korea, Lee tells us she thought she was dreaming when she first saw her son, but when she hugged him it felt real.

On the drive back to Seoul, she's philosophical about being separated from San Chol for a second time.

LEE, SEPARATED TO HER FAMILY, KOREA: (INAUDIBLE)

[02:50:14] HANCOCKS: Lee's daughter, Cho Soon-ok, was too young to remember her brother. San Chol didn't remember he had a sister until they met.

UNIDENTIFIED FEMALE: (INAUDIBLE)

HANCOCKS: Lee, falls asleep. The emotional strain of the past days taking its toll. Chol questions if she will ever be able to sleep well again.

UNIDENTIFIED FEMALE: (INAUDIBLE)

HANCOCKS: One family left with all too brief memories. Photos, hopes that someday they could send each other a letter. Lee does not expect to see her son again. Paula Hancocks, CNN, Sokcho, South Korea.

(END VIDEOTAPE) CHURCH: And tough family stories to tell there. And a heartwarming moment in Australia. Superstar Pink, stop right in the middle of her concert in Brisbane to comfort a grieving fan. 14-year-old Leah Murphy had passed the singer a sign she had been holding that read, "I just lost my beautiful mom, I would love a hug."

Once Pink, read it, she climbed off the stage and then, gave Leah a big warm embrace. Leah's mother had planned to go to one of Pink's concerts in Australia. But passed away before she had the chance. A relative of the girl says, she believes Leah's mom sent her daughter a hug from heaven.

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CHURCH: Welcome back, everyone. Well, NASA's announcement this week that water ice has been found on the moon's surface has put plans for manned space exploration back on the front burner. Our Robyn Curnow, reports on the U.S. Space Agency's other out-of-this-world goals.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: That's one small step for man. One giant leap for mankind.

ROBYN CURNOW, CNN ANCHOR & CORRESPONDENT: Decades since that first moon landing in 1969, scientists thought the moon was dry. But this week, there is more evidence that it's not.

NASA released pictures showing hundreds of patches of ice shown here in blue. The ice is deposited in the moon's coldest polar reaches. The finding has been hailed as a key to NASA plans for future space exploration.

JIM BRIDENSTINE, ADMINISTRATOR TO NATIONAL AERONAUTICS AND SPACE ADMINISTRATION: We learned that there's hundreds of billions of tons of water. Water ice represents life support. It's oxygen to breathe, its water to drink. But it also represents rocket propulsion. You crack water into its component parts, hydrogen and oxygen, you put it into cryogenic form, liquid form, and that's the same propulsion that powered the space shuttles.

CURNOW: NASA's thinking about sustainable and cost-effective space exploration, also fits with plans for a potential fuel source to get to Mars.

BRIDENSTINE: We're going to utilize not just reusable rockets, but we want every piece of the architecture between the Earth and the moon to be reusable. So, we want tugs that go from Earth orbit to lunar orbit to be reusable.

We want a space station around the moon to be there for a very long period of time. And we want Landers that go back and forth between that space station around the moon and the surface of the Moon we want those, those Landers to be reusable.

[02:55:17] CURNOW: The U.S. moon mission is being seen as just the first step in a broader exploration of space.

TRUMP: We will not only plant our flag and leave our footprint. We will establish a foundation for an eventual mission to Mars. And perhaps someday to many worlds beyond.

CURNOW: The next moon landing will serve as a test for a subsequent Mars expedition.

BRIDENSTINE: The reason we go to the moon is to reduce risk, retire risk, prove capabilities and technology and then, take all of that to Mars. This is our quickest path and our most efficient path to Mars.

CURNOW: With private entrepreneurs, increasingly filling roles traditionally performed by NASA, and NASA committing itself to a Mars mission a new era of space exploration seems set to launch. Robyn Curnow, CNN.

(END VIDEOTAPE)

CHURCH: Well, those Crazy Rich Asians raking it in at the box office and smashing cultural barriers are getting a part two.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: These people aren't just rich, they're crazy rich.

(END VIDEO CLIP)

CHURCH: We're told a sequel to the film is an early development of Warner Brothers. Writing deals have yet to be finalized, and speaking of writing, the author of the novel the movies based on well, he's in trouble with the government in Singapore where he was born.

It says Kevin Kwan failed to register for national service. And could face three years in prison if he returns. Kwan was noticeably absent from the movies opening in Singapore this week. His publicist has not answered CNN's request for comment.

And thanks so much for joining us this hour. I'm Rosemary Church. Cash me on Twitter @RosemaryCNN, and I'll be back with another hour of news in just a moment. You're watching CNN. Stick around.

(COMMERCIAL BREAK)

CHURCH: The defiant politician. How Malcolm Turnbull is clinging to power despite a coordinated challenge to his leadership.

Donald Trump attempted damage control. He is defending a hush money payments to women ahead of the election insisting there's nothing wrong with it.