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Whelan Found with Flash Drive; Trade Negotiations with China; Supreme Court on Military Ban; Mystery Company Asks for Appeal; L.A. Teachers Strike; Supreme Court on DACA. Aired 9:30-10a ET

Aired January 22, 2019 - 09:30   ET

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

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[09:31:00] POPPY HARLOW, CNN ANCHOR: All right, new this morning, a Russian state appointed attorney for the U.S. citizen accused of spying in Russia says his client had classified information when he was arrested. There he is, Paul Whelan. His lawyer, again appointed by Russia, told CNN just before a pre-trial hearing this morning where Whelan was denied bail this, he claims that Whelan was found with a flash drive containing Russian state secrets when the American was detained last month in Moscow.

JIM SCIUTTO, CNN ANCHOR: Here's the rub, and it sounds borrowed from a spy novel because Whelan's attorney says that his client was unaware of the classified information. That he believed the drive contained vacation photos instead. Was this a plant?

Joining us now live from Moscow is Frederik Pleitgen. He's CNN's senior international correspondent.

So this is quite a story here, Fred, as to what's behind this. I mean is his lawyer, in effect, claiming that this was planted on Whelan to justify his being arrested?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think the lawyer so far isn't going that far. I think that he did sort of insinuate that perhaps Paul Whelan was misled by whichever individual gave him this flash drive. It's quite interesting because it was given to him inside his hotel here in Moscow. And we asked the attorney who this person was who gave it to him and he simply wouldn't elaborate on that. Whether this was an acquaintance, whether this was someone else. He did seem to say that this was not a member of any sort of service in Russia.

Now, another interesting facet to this case. I actually asked the lawyer as well whether or not Paul Whelan was going to have a fair trial in Russia. And the lawyer said that so far that he believed everything was being done professionally. But then he did also admit that so far the defense has only been able to see about 5 percent of the material in this case. That includes evidence and any sort of other things that's related to this case.

This was, of course, guys, the first time that we were able to see Paul Whelan since his arrest in late December. He was standing behind bullet-proof glass in sort of a cell inside the courtroom. I tried to ask him how he was being treated inside Russian detention. He wasn't able to answer that question. He wasn't allowed to answer that question. It was quite a high security court there.

It was interesting because the judge came in. He read his decision, saying that there would be no bail granted to Paul Whelan. There was no explanation. We weren't even allowed to film the judge as he was -- as he was saying this.

So, Paul Whelan, obviously, this is a set-back for him. It wasn't necessarily one that was unexpected. His lawyer was saying that in cases like this, especially involving espionage, they usually force people to stay in jail rather than grant them bail, guys.

SCIUTTO: Goodness. You do not want to be in a Moscow court accused of spying.

HARLOW: No.

SCIUTTO: With a court-appointed lawyer -- lawyer there.

Fred Pleitgen, thanks very much.

Did President Trump just signal that trade talks with China are not going well? In a tweet he points to China's slowing growth and tells the country to, quote, stop playing around and make a real deal.

HARLOW: Yes, and it's a really critical time as both sides have now reached the halfway point of that 90-day extension to make a deal. If there is no deal by then, China will be slapped with hundreds and hundreds of millions of additional tariffs on -- from the United States.

Our business reporter, Hadas Gold, is live in stunning Davos, Switzerland.

You are at the World Economic Forum, which is really important because that is where, you know, all of the key business leaders are gathered right now. What is the sense there? I mean do they believe -- because all their corporations rely on the U.S. and China striking a deal. Do they believe one is close or are they worried?

HADAS GOLD, CNN BUSINESS REPORTER: Yes, Poppy, last year at Davos there was a bigger sense of optimism. This is when Donald Trump was here. The markets were doing great. This year, I have to say, the mood here is a little bit darker. There's a bit more hand wringing. And a lot of that has to do with China.

Nearly every panel I've been to, a lot of the interviews we're seeing with a lot of business leaders and government leaders and academics, they're talking about China. Not only the fear of a trade war, but also this new data that just came out yesterday on a slowing economic growth for China. This is something that Trump mentioned in that tweet. It's the slowest growth they've seen since 1990.

But there is also a sense almost a little bit of relief that it could have been worse. Maybe it's not going to be so bad. You do hear some optimism from business leaders who say that they do think that a trade deal will be struck. We have seen some reports that there might be some progress on that. Cristina Alesci, our own CNN correspondent, has reported that there are going to be some senior meetings with the trade delegation probably even next week and perhaps we'll see some news out of that.

[09:35:24] There is a large Chinese delegation here. This is something that the president of the WEF even mentioned in his opening remarks and you feel their presence here. They're on a lot of panels.

I was in a panel earlier today where one Chinese executive said that right now the Chinese are very confused about what's going on with the trade war. They warn that there's going to be less investment abroad. And actually a recent survey of Chinese CEOs by PricewaterhouseCoopers showed that in just one year, last year, Chinese CEOs said the United States -- 60 percent of them said the U.S. was a very important foreign market to them. This year they said that's only 17 percent of Chinese CEOs say that the U.S. is an important foreign market to them. That just shows you how much is changing, how much this trade deal matters to the people here.

HARLOW: Yes.

SCIUTTO: Of course the U.S. delegation not there. That trip canceled after the president cancelled Nancy Pelosi's trip to Afghanistan.

HARLOW: Exactly.

SCIUTTO: Hadas Gold, thanks very much.

HARLOW: Thanks.

SCIUTTO: Coming up this hour, a CNN exclusive report. An internal memo at Uber shows that the company is handling some very serious allegations of misconduct. Hundreds of claims per week, in fact, including sexual assaults and even deaths.

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[09:40:49] HARLOW: All right, so we do have breaking news this morning out of the Supreme Court. This is very significant.

The Supreme Court this morning is weighing in on the president's order on banning transgender individuals from serving in the military. Remember, he announced this by tweet back in July of 2017.

Jessica Schneider joins us now with more.

Highly controversial, blocked by the lower courts, but now the high court has weighed in.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: That's right.

So they're not weighing in on the merits of this transgender ban.

HARLOW: Right.

SCHNEIDER: But they are saying that the transgender ban can go into effect while essentially the challenges weave their way through the lower courts. So, of course, you'll remember taking you all the way back to July 2017, that's when the president via Twitter announced this transgender ban. It bans transgender individuals from serving in the military with limited exceptions. After that, then Defense Secretary James Mattis, he put into place a more -- a more detailed policy here banning transgender members from the military.

But this ban was put on hold by lower courts who said we're going to stop this from going into effect while these legal challenges weave their way through the courts. And then the Trump administration went right to the Supreme Court asking the Supreme Court, no, let this transgender ban take effect. This is a matter of national security and military policy. We want this ban to go into effect while the challenges move forward.

So that's exactly what happened today, the Supreme Court saying this transgender ban can go into effect. It's notable here that all four of the liberal justices, they would not have allowed this transgender ban to go into effect while these appeals move forward. It was the five conservative justices. Of course, the newest justice, Justice Brett Kavanaugh, also voting to let this ban move forward, to take effect.

SCIUTTO: Yes.

SCHNEIDER: But that's possibly not the end of the story. This could continue to work its way through the courts. But for now, it will be in effect, guys.

SCIUTTO: Yes, another 5-4 decision along party lines in effect there. We should note that when this announcement was made via Twitter, it was a surprise to the Pentagon. And there were many inside the Pentagon who did not want this and did not see a national security justification for this.

Jessica Schneider, if I could ask you a question, how long does this then wend its way through the courts? Is it weeks? Is it months?

HARLOW: Yes.

SCIUTTO: Could it be longer? Because you have transgender volunteers for U.S. military service who, in effect, are being kicked out after volunteering for military service. How long does this take for a final answer?

SCHNEIDER: Right. And that's exactly the practical effect here. It's -- this is a real loss for those advocacy groups, for the LGBT community. Those transgender individuals will not be able to serve in the military. There are limited exceptions to this policy. But, overall, it is a big loss for them.

And as we know, you know, this has been ongoing, even this decision, for almost two years now. So as this winds its way through the courts, it's not even a matter of months. This could be a matter of years, this transgender ban will be in effect as the merits of it really get decided. So the Supreme Court taking a pretty extreme step here with all five conservative justices voting to let this ban take effect immediately. And, yes, it will have consequences within the military, guys.

SCIUTTO: And these are volunteers for the military.

HARLOW: Yes.

SCIUTTO: Jessica Schneider, thanks very much.

HARLOW: Thank you.

SCIUTTO: We're going to stay on top of this story.

And we'll be right back.

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[09:48:39] SCIUTTO: There is more breaking news from the Supreme Court this morning. The Supreme Court says that a mystery company fighting a subpoena from Special Counsel Robert Mueller's office can ask the justices to take up their appeal.

Kara, help us through this because it's a little bit -- it requires explanation here. One, it says they can ask the courts to take up the appeal, but they also have to release some redacted documents in the process. Where does this leave us?

KARA SCANNELL, CNN REPORTER: That's right.

So, Jim, this is the foreign government owned company that had been appealing a grand jury subpoena from Robert Mueller's investigation. And they had lost their previous battle where they had asked the court to stay a lower court ruling which required -- which basically held them in contempt and fined them $50,000 a day for not complying with the subpoena.

Now the court is saying, if they want to appeal, they can, the merits of this decision. They can appeal it to the Supreme Court but it will -- and they can do it under seal, but they will have to file some kind of redacted copies with the public so the public can learn more about what this case is about. I mean it's all shrouded in mystery. We just know it's a foreign-owned company that is appealing a subpoena issued by Special Counsel Robert Mueller.

HARLOW: And this is a company that really doesn't want to testify before Mueller's grand jury and is paying $50,000 a day every day that it does not appear. And as I understand it, that continues.

And what's also unique is that the Supreme Court allowing them to do this under seal, that would be a first, right, where basically the public doesn't know the full identity of the parties arguing here before the high court.

[09:50:08] SCANNELL: That's right, Poppy. I'm not aware of another instance where the Supreme Court has handled an appeal to it under seal. But, you know, this is really the first step here, the court saying they can file this paperwork under seal.

HARLOW: Yes.

SCANNELL: And that they will have to also make some of it public. So we're going to be staying tuned to see if more information dribbles out today that, you know, sort of help identifies why this is, you know, being requested under seal and sort of what more of their fighting arguments or legal arguments are in this.

But, you know, if it proceeds further, if the court were to decide to take this up, then the question is going to be, does it remain under seal or at this point is it of, you know, such importance for the Supreme Court to take it up that they then force some more sunlight onto the topic. But at this point we're just at the stage of them saying they can file their appeal under seal, their requests under seal, and then make some of this available for the public so we can see and hopefully learn a little bit more about what some of the legal issues are here, Poppy.

SCIUTTO: So, bottom line, just for folks at home, does this make us more likely to figure out who this -- who this company is and what country it's from than we were before this ruling?

SCANNELL: Well, we hope so, Jim. I mean it remains to be seen exactly how much they allow them to redact in this. But, you know, we hopefully will learn a little bit more because otherwise what would be, you know, the point of putting some of this out there. So hopefully we'll see who this company is or if there's some references to the country or their specific laws, their regulations that they were using to try to block compliance with the subpoena. So we might learn a little bit more through what they have to reveal in this redacted form when it comes out hopefully later today.

HARLOW: All right.

SCIUTTO: Central to the investigation.

Kara Scannell, thanks very much.

Just hours from now, the Senate starts its push to end the one-month- old government shutdown. But is this vote dead on arrival? We'll go to The Hill.

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[09:56:06] SCIUTTO: Teachers on strike in Los Angeles are getting some help on the picket lines. Right now more than 1,000 firefighters marching with the teachers who are rallying for the sixth day.

HARLOW: They say they want better pay, smaller class size, more nurses, librarians, mental health counselors.

Let's go to Stephanie Elam. She's on the ground with the teachers. And Steph, you've been covering this for more than a week now and I understand that their union, they were negotiating last night with the L.A. Unified School District. Are they any closer to a deal?

STEPHANIE ELAM, CNN CORRESPONDENT: There are signs that point to perhaps they are. But what I can tell you, Poppy and Jim, is that as you can see right now that this rally is happening here behind me.

Now, we've just seen these firefighters arrive here along with some of the teachers outside of this high school near downtown Los Angeles. And what we do know from Los Angeles Mayor Eric Garcetti's office, after 21 hours of negotiating at city hall, just at 6:30 this morning, so that's about a half an hour ago, they wrapped up and they're going to come back to continue negotiating at 9:15 a.m. Pacific Time.

So what we do know is that they are trying to take more time to focus on their negotiating process. It does seem like they've made ground on some areas, but they're deciding not to leak anything out to everybody and still focus on staying at that table and getting this done.

This is the sixth day of strikes since -- of the strike since yesterday was a holiday. But what there are concerns about as far as the school district is concerned is that there is a full week of strike activities that are already planned here. But what they're hoping is that they're able to come to some sort of agreement and then get that agreement out to the teachers so that they can vote and ratify it and hopefully get the students back in school because it's been now six days. This will be the sixth day that there are real teachers, the real professionals who have been in the class, have not been in there working with these students.

Jim and Poppy.

SCIUTTO: Thousands of students affected.

Stephanie Elam, thanks very much.

HARLOW: All right, so in this week's episode of "Boss Files," a story of redemption and a 180-degree life turn around. Scott Harrison, founder and CEO of one of the biggest non-profits now in the entire country, Charity Water, has funded more than 30,000 clean water projects, giving nearly 10 million people access to clean water. But a little over a decade ago, he was a New York City club promoter who drank excessively, did all sorts of illegal drugs, until he had an epiphany, moved to Africa and then did this. Watch.

(BEGIN VIDEO CLIP)

SCOTT HARRISON, FOUNDER AND CEO, CHARITY WATER: There are 663 million people today living without clean water, effectively drinking disgusting, dirty water that risks their lives and the lives of their children. And it's one in ten people alive. And we think that number should be zero.

HARLOW: One in ten people alive.

HARRISON: Drinking dirty water today because of where they've been born.

HARLOW: And it is killing some of them.

HARRISON: It's killing thousands of kids every single day. It's the women that are often walking five or six hours a day, you know, breaking their backs with dirty water. It's the girls that are dropping out of school because their school --

HARLOW: It contributes to a lot of gender inequality.

HARRISON: Absolutely.

HARLOW: This issue.

HARRISON: Absolutely. And I've been to 69 countries now. I've just never seen men get water. You know, culturally --

HARLOW: You've never seen men get water.

HARRISON: It's the role of the women and the girls, whether it's in Africa or Central and South America or India or Southeast Asia. It's the women and the girls --

HARLOW: Right.

HARRISON: That are the ones that are struggling to provide water for their families. And it puts them in the most undignified and at risk situations.

(END VIDEO CLIP)

HARLOW: It's a pretty remarkable story. It's all in his new book "Thirst." And you can hear that full conversation on my podcast "Boss Files." Download it wherever you get your podcasts.

ANNOUNCER: This is CNN breaking news.

SCIUTTO: More breaking news this morning from the Supreme Court. This regards the DACA decision, the dreamers, those are children brought into this country as children. Their legal status.

Jessica Schneider's been following this story.

[10:00:00] Jessica, tell us what you -- what the court found here.

SCHNEIDER: Jim and Poppy, this is something that we've been waiting on. Every time the Supreme Court has met in conference, we've sort of been waiting on pins