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Sony Caught off Guard by Hacking; Plans to Bring Information to North Koreans; Alan Gross Released for Humanitarian Reasons; Defiant Press-Conference from Vladimir Putin

Aired December 18, 2014 - 10:00   ET

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

CAROL COSTELLO, CNN ANCHOR: Of course, it's good to hear that, but it seems like nothing's ever that easy.

EVAN PEREZ, CNN JUSTICE REPORTER: Nothing's ever that easy, and especially because this is such a reclusive country. They don't travel outside the country. One of the ways that you sometimes can sanction is to say their military leaders or anybody from Bureau 121, anybody who has a ties to this, whenever they go on vacation somewhere, well, we're going to grab them. Well, that doesn't happen here. This is a country that doesn't really let its citizens go anywhere. So, it's very limited what we can do.

COSTELLO: All right, Evan Perez, thanks so much. I appreciate it. As Sony's financial losses pile up, potentially reaching hundreds of millions of dollars, there's a jaw-dropping reality to consider. Sony has been through this nightmare before. In 2011 hackers launched a disastrous cyber-attack on Sony's play station network. At the time it was one of the biggest security breaches in history with tens of millions of customers exposed. Sony settled a lawsuit with gamers. So, why did Sony seemingly not learn from this very expensive lesson? Let's head to Tokyo and ask CNN's Will Ripley. Good morning, Will.

WILL RIPLEY, CNN CORRESPONDENT: Hey, Carol, yes. It was quite an alarming situation for Sony back in 2011. It was in April when it was announced that some 77 million play station users had their accounts compromised. They had to shut down the entire play station network for nearly a month. And then that same year there was also a hacking incident involving Sony pictures where another 150,000 people had their user names and passwords leaked out.

But even after those debacles, Sony was still caught off guard, taken by complete surprise when this group, Guardians of Peace, was able to infiltrate their computer system earlier this year, steal an incredible amount of data. You're talking about e-mails, movie scripts, unfinished movies and movies that hadn't been released yet, that they posted on file sharing sites. They did all of this and they took control of Sony's computers. People showed up to work one day and found red skulls flashing on their computers with a list of all the things that have been stolen off those devices and then deleted.

I went to a tech lab here in Tokyo today and asked did Sony do something wrong here? And what they told me is that this attack was so unprecedented in the United States that it would have been very difficult for almost any corporation to fully prepare. But they say what Sony could have done better, Carol, is monitor the leak as it was happening and perhaps stopped it before so much data was stolen.

COSTELLO: Can you tell us a little more, too, about this Bureau 121, these cyber workers working within North Korea?

RIPLEY: So we know that these are people who are handpicked from the technical universities in Pyongyang, the smartest of the smart in a country that, by the way, from going there myself a few months ago, is full of a large number of very smart people who oftentimes aren't able to fulfill their potential within the system because every person's job is assigned to them. And it's remarkable the level of access that these 1800 people have, that they are allowed to not only surf the Internet, which is unheard of for most North Koreans who even - haven't even heard of social media, never mind websites or the Internet, but these people, they're trained on how to conduct these cyber-attacks.

And what North Korea, if they are, indeed, the ones behind this catastrophic hack, as the United States government believes, what they're finding is, is that this is a relatively inexpensive way to inflict a great amount of damage and fear on other countries. South Korea, they've attacked banks, they've attacked broadcasters. Now you see a major American corporation brought to its knees, pulling the release of a movie. This is unprecedented. And it could be, unfortunately, a sign of more trouble to come if there isn't some way to penalize this type of behavior.

COSTELLO: All right, Will Ripley reporting live from Tokyo. Many thanks to you.

Kim Jong-Un and his oppressed population may be forced to watch "The Interview" after all. The Human Rights Foundation plans to drop DVDs of the movie over North Korea using hydrogen balloons. The goal here to get North Koreans to see what's happening in the outside world. Sadly, though, watching such movies can mean death for North Koreans. So, let's talk about this. Thor Halvorssen is the president of the Human Rights Foundation. Welcome back. I'm glad you're here.

THOR HALVORSSEN, PRESIDENT, HUMAN RIGHTS FOUNDATION: Thank you. Thank you for having me.

COSTELLO: First of all, I'd like to get your reaction to Sony's decision to pull the movie, "The Interview."

HALVORSSEN: I believe, as someone who lives in a free society, that that is - it's their right to do so. But it just shows the gutless cowardice. If the North Korean government now said we'd like you to turn over Seth Rogan, would they do that? If they'd said, we'd like you to change your programs. We want the following shows change. I mean it's blackmail. And it's really sad that Sony did not have the sense and the leadership to say, no, we're not going to do that. We live in a free country and we're not going to do that. There are terrorist attacks on the United States. There are people that say we don't like the way you live your life. We don't like the way you allow women to drive, we don't like the way that you allow gays and lesbians to have the lives that they do. Are we going to give up our freedoms because a bunch of people in a far-away land run by a crazy dictator say you shouldn't live this way? I think what Sony did is shameful actually, really shameful.

COSTELLO: How do you think Kim Jong-Un is reacting this morning?

HALVORSSEN: Well, I think Jong-Un, what you have to see is, and what a lot of people missed is the reason why the North Korean government hates this film so much is not because it insults their dear leader. Their dear leader gets insulted all the time in the West and gets made fun of. What they're deathly afraid of is that the film is going to make it into the country. Because in the last ten years, there's been a significant development in the black market routes into the country. In the last ten years, North Korea has consumed and has enormous thirst for cultural artifacts like films and like TV shows. People inside North Korea, they know the risks they run. They know that they could get executed. They know that they can end up being arrested or tortured for watching these films, for watching TV shows, for having forbidden material. But they nonetheless are willing to run that risk and willing to take that material. And that is very, very scary for the Kims.

COSTELLO: OK, so that brings us to your operation, that the dropping of DVD over North Korea using these hydrogen balloons. First of all, I'd like to show our viewers a picture of the balloons we're talking about. So, explain how this works. How and where do they launch?

HALVORSSEN: Well, we launch from the border, the Southern border with North Korea, and right by the river. The balloons are filled with hydrogen, and attached to the balloons are these enormous plastic bags. Inside the bags there are, for instance, hundreds of thousands of leaflets. These leaflets are made of plastic and they are quite durable and waterproof. The leaflets basically say you're being lied to, there's another life, there's another world outside. And they have all sorts of educational material in them. In addition, DVDs and thumb drives. We put thumb drives that have entire copies of Wikipedia, with thanks to Jimmy Wales we were able to raise the technology level here so that they can insert a thumb drive into a computer, and even though there's no Internet in North Korea -- because there is no Internet there. It's why it's known as the hermit kingdom. It's completely closed off. These thumb drives contain a full copy of Wikipedia. So, that's - we put these in plastic bags. There's a timer on the bag. And the bag -- the fastener to the bag detonates and the bags open and they spill the contents.

COSTELLO: So, people who help you with this operation have escaped North Korea. How did they tell you that this helps?

HALVORSSEN: Well, it's interesting, because obviously like in any defector situation, whether it's Cuban exiles in Miami or defectors from North Korea, people have different opinions about what works and what doesn't work. We take the approach that we should go on all levels trying to use smuggling routes, trying to use radio and at the same time trying to use balloons. Many of the people you actually see in those photographs received a brochure, received a leaflet and realized that they had been lied to or started questioning what their lives were like. And that's really -- the effectiveness of the balloons can be measured by anecdotal evidence for certain. COSTELLO: And I must ask you this, because we know that if a North

Korean is caught watching an American movie, a western film, they might face prison, they might face death. Is it worth it?

HALVORSSEN: Well, consider the following: there are 25 million North Koreans. Of those, a good 10 million of them have access to something from the outside, whether it's a transistor radio, a DVD player, a cell phone. So they do have a thirst for this. The government, of course, knows that they can't control everyone. So they engage in these very public ways of executing people or saying that people who allow this into their country are besmirching the culture of North Korea.

The reality is that the regime has suffered so much in terms of its waste and corruption that it's only a matter of time before more and more ideas cause the downfall of the regime. The North Korean regime will not fall because of missiles or tanks. The North Korean regime will fall because of the power of ideas. And we're just trying in a very small way to assist and to accelerate the education of North Korean people. They want it. They're willing to pay for these things in the black market. So we're certainly not going to stop regardless of their threats. They've threatened us on multiple occasions with theft, with bombing, with slitting our throats. We're certainly not going to stop.

COSTELLO: Thor Halvorssen, thank you. I appreciate you being here this morning.

HALVORSSEN: Thank you. Thank you for having me.

COSTELLO: More breaking news out of Wall Street. Opening bell rang 30 minutes ago, and yes, the Dow continues to skyrocket. Let's bring in CNN money correspondent Cristina Alesci to tell us more.

CRISTINA ALESCI, CNN CORRESPONDENT: Now, we have got a confluence of factors that's just driving stocks - first and foremost, it's the Fed. Yesterday it says it's going to keep these easy money going for a longer than a lot of investors anticipated. Wall Street loves that. Than you have a bevy of economic data coming out saying that looking like the economy is actually getting better. Jobless claims were lower than expected. Consumer confidence was higher. So, of course, that's going to be positive. Then you have oil coming back just a little bit. And that's helping some of the energy producers get a boost here. And then we can't discount the Santa Rally. December is a pretty strong month historically for stocks. So, you've got all of these factors going on, really boosting the stock markets really around the world today.

COSTELLO: We are up like, 261 points.

ALESCI: Yes.

COSTELLO: I know you'll keep an eye on it for us. Thank you.

ALESCI: It will keep going.

(LAUGHTER)

ALESCI: I hope so. Cristina, thanks so much.

Still to come in the "NEWSROOM," secret diplomacy and back room deals, it all led to the emotional homecoming of Alan Gross. Now we get a sneak peek inside the closed door meetings of the United States and Cuba, moving in a different direction.

(COMMERCIAL BREAK)

COSTELLO: For the first time in five years Alan Gross wakes up a free man, he's back home in the United States. Public pleas and secret meetings led to his release from a Cuban prison. And now we're learning more about the diplomacy and the deal making done behind closed doors that led to Gross's freedom and a monumental shift in U.S. policy. Our chief national security correspondent Jim Sciutto has more for you.

JIM SCIUTTO, CNN CORRESPONDENT: Carol, this is a truly remarkable piece of diplomacy conducted in secret over more than a year and a half in multiple countries, principally Canada and the Vatican and somehow kept secret until yesterday. And it had everything, even a cold war spy swap before that moment when Alan Gross stepped foot back on American soil.

(BEGIN VIDEO CLIP)

ALAN GROSS: I guess so far it's the best Hanukah that I'll be celebrating for a long time.

SCIUTTO: Alan Gross's emotional return to the U.S. became a reality only after more than 18 months of secret contacts and shuttled diplomacy.

GROSS: To President Obama and the NSE staff, thank you.

SCIUTTO: The president first authorized high-level contacts in the spring of last year, first meeting between U.S. and Cuban officials then followed in June in Canada, which would host the majority of meetings between the two sides to follow. Also playing a key role, the Vatican.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I want to thank his holiness Pope Francis.

SCIUTTO: Pope Francis, the first head of the Catholic Church from Latin America ...

POPE FRANCIS: (SPEAKING IN A FOREIGN LANGUAGE)

SCIUTTO: ... pressed Obama in a face-to-face meeting in March to renew talks with Cuba and raised the issue again in a letter this fall. And it was at the Vatican in October this year where details of Gross's release and the new U.S. trade policy with Cuba were hashed out between the U.S. and Cuban delegations. Culmination coming on Tuesday, and President Obama spoke to Cuban president Raul Castro in a call that lasted about an hour, the first communication at the presidential level since the Cuban revolution more than 50 years ago. On Wednesday, a year and a half after negotiations first began, Gross was able to embrace his wife Judy who flew to Havana to take him home. Judy Gross was joined by a team of congressmen.

REP. CHRIS VAN HOLLEN (D) MARYLAND: On the airplane back, as we finally crossed into U.S. airspace, you saw him give a big hoorah.

SEN. PATRICK LEAHY (D) VERMONT: We were flying there and watching some of the news on the airplane, and I said, you know, Alan, you're free. And he got up and he threw his arms around me, and hugged me.

SCIUTTO: Then a phone call from the president to congratulate him on his freedom.

OBAMA: I spoke to him on his flight. He said he was willing to interrupt his corned beef sandwich to talk to me.

(LAUGHTER)

OBAMA: Needless to say, he was thrilled.

(END VIDEOTAPE)

SCIUTTO: U.S. officials say that this will move fairly quickly. They want to open - reopen we should say the embassy in Cuba as quickly as possible. And some trade will be allowed right away, things that deal with the telecommunications, for instance, opening the Internet there which has largely been blocked from. And I'll tell you, I went on one of the early exchange visits under the Obama administration in 2011 to Cuba, and at the time, some trade in food was allowed. And I went to an exposition in Havana. American food companies there, they were chumping at the bit to come in. Carol, you can imagine a similar influx when some of those trade restrictions are lifted now.

COSTELLO: All right, Jim Sciutto reporting, thanks so much.

While the Gross family is thanking the Obama administration this morning, other families are outraged. The Cuban five, that Cuban spy ring was convicted of murder. In 1996 they shot down two Cessna planes flown by a group called brothers to the rescue. That group had been dropping antigovernment leaflets over Havana. Now, news of the Cuban five's release sparked outrage from some of the families of the men who were killed when that plane went down. Two of them talked with CNN yesterday. They shared a harsh message for President Obama.

(BEGIN VIDEO CLIP)

MIRIAM DE LA PENA, SON KILLED BY CUBAN GOVERNMENT: This is a slap on our faces. It is very sad that an innocent man like Alan Gross is going to be exchanged for a criminal, somebody that wanted to do so much harm to the United States of America like Gerardo Hernandez because he's not only tied to the shoot-down and the murder of my son, Marlene's dad, and two other Americans. He's tied to espionage and wanting to do harm to the United States of America.

MARLENE ALEJANDRO TRIANA: He has completely disrespected and dishonored my father who was a Vietnam veteran, a voluntary Vietnam veteran in this country. And when he was 18 years old he went to fight for this country against communism. And the only thing that we have as a form of justice for her son, my father and the two other men was this one man that he just gave up.

(END VIDEO CLIP)

COSTELLO: Michael Itzkoff is the chief investigative correspondent for Yahoo! News. He talked with Gerardo Hernandez, the Cuban Five's ringleader while he was in prison.

Welcome, Michael.

MICHAEL ITZKOFF, YAHOO! CORRESPONDENT: Good to be with you, Carol.

COSTELLO: Nice to have you here. I can't wait to hear your insight. President Obama said the deal with Cuba was a spy-for-spy swap. Michael Gross was sort of an awesome bonus. How should Americans look at this?

ITZKOFF: Well, what the U.S. and Cuban officials are both saying is the release of Alan Gross was done on humanitarian grounds. The spy- for-spy swap was the release of the last three remaining members of the Cuban five for the U.S. espionage agent who has been held in a Cuban prison for nearly 20 years now. That was the spy-for-spy swap. Because the U.S. has never acknowledged and there's no evidence that Alan Gross was a spy. He was working - he was an American contractor working for AID. But look, this was - there's no question that in the eyes of U.S. officials the Cubans were holding Alan Gross hostage to get the release of the Cuban Five. This was a national cause in Cuba. They are national heroes. The Cuban sponsor conferences, publish books, their pictures are all over billboards, all aimed at getting those last three remaining members of the Cuban five released. So the Raul Castro government did win a big victory here by getting those three members released.

COSTELLO: You talked to Mr. Hernandez while he was in prison. What was he doing in the United States?

ITZKOFF: Well, he actually -- it's interesting. He totally acknowledged he had come here as a spy, that he broke U.S. laws. When I asked him if he had any regrets, he said I regret that I got caught. He smiled when he said that. But with a caveat. He didn't acknowledge he was spying against the U.S. government. He said he was spying against anti-Castro exile groups that had been linked to bombings and terrorist acts in Cuba. In fact, there was a horrific 1976 Cubana airliner flight that was bombed, killed members of the - teenage members of the Cuban fencing teams. There was a string of bombings in Havana, all of which the Cubans believed had been inspired and instigated by these anti-Castro exile groups. So, from Hernandez's viewpoint, he was a terrorist fighter. He said, look, you Americans have drones to go and kill the terrorists who are attacking your country. We don't have drones in Cuba, so they sent me. That's the perspective that the Cubans had on this. And it was one very deeply held inside Cuba.

COSTELLO: Did Mr. -- I know he was - I mean he - he had what, two life terms that was his sentence. Did he ever think he would get out?

ITZKOFF: Right, you know, it looked - when I interviewed him two years ago, it looked very bleak that he'd ever have a chance of getting out because of those double life sentences. And that was, in fact, linked to the Brothers to the Rescue shootdown in 1996. Those were very powerful statements you had from members - from family members yesterday. But the evidence that linked Hernandez to that shootdown was very much in dispute. In fact, one federal judge who reviewed it -- one of the appellate court judges didn't think the evidence was there and voted to overturn Hernandez's conviction on that count. She was overruled. Senator Leahy issued a strong statement yesterday saying an objective view of the evidence doesn't hold up that Hernandez was directly implicated in that shootdown. People will debate the evidence on this, but there's no question that that was the complication, that conspiracy murder charge.

And frankly I, and I think a lot of other people, were surprised that President Obama took this step given that count against him. We'll see what the political blowback is. I wouldn't be surprised if Senator Rubio and others who are opposed to what he did, want to revisit that, maybe bring the FBI agents who work the case, the federal prosecutors who worked the case to see were they were consulted on this. But the bottom line is Gerardo Hernandez is now free and he's in Cuba.

COSTELLO: That is true indeed. Michael Itzkoff, thanks for your insight. I appreciate it.

ITZKOFF: Thank you.

COSTELLO: Still to come in the "NEWSROOM," we're not warmongers. Vladimir Putin points his finger at the United States. CNN's Matthew Chance in Moscow this morning.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN CORRESPONDENT: If you're looking for Vladimir Putin to soften his tone and back down in the face of economic hardship, you're going to be very badly disappointed with his latest annual press conference. I have all the details on that after the break.

(COMMERCIAL BREAK)

COSTELLO: President Vladimir Putin pulled no punches. The United States, he says, has reignited the Cold War. Mr. Putin said this in a marathon news conference in Moscow.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): Russia's only made contribution where it's supporting its national interests in a harsher and harsher way. We're not attacking anyone. We're not warmongers. We are only defending our interests and the dissatisfaction of our Western partners are huge because of this.

(END VIDEO CLIP)

COSTELLO: In other words, the United States is a war monger. Of course, Mr. Putin may be deflecting blame because Russia's economy is tanking because of U.S.-led sanctions and falling oil prices. He tried to make the best of it in this news conference. The moderator asked reporters at the beginning to keep their questions short so we could all hear more from President Putin. The presser also featured a question from the Paris Hilton of Russia who is actually running for office herself. There she is in pink with the dark glasses. CNN's Matthew Chance is in Moscow with more. Hi, Matthew.

CHANCE: Hi, Carol. That's right. It was a pretty defiant performance from Vladimir Putin as we've come to expect. As I mentioned before the break, if you're expecting him to back down in the face of this economic chaos that is gripping his country, you'd be very disappointed because he didn't do that at all. There was no U- turn on Crimea, no softening of its tone when it comes to Russia's confrontation which has been growing with the West and with the United States in particular. Just more of the same hard line rhetoric. You mentioned his criticism of the United States as an aggressor saying that Russia only spends $50 billion a year only on defense. The United States spending more than ten times that figure. So, he was very much trying to make that comparison with the United States defense expenditure. He was also asked some quite tough questions. One of them, look, isn't this economic crisis in Russia at the moment that has seen the ruble plunge in value against the dollar all to do with Crimea. You may remember Russia annexed Crimea, part of Ukraine back in March. It's a thing that provoked international sanctions from the United States and from the European Union.