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Interview With John Carreyrou On His Investigation Into Theranos; The Toll Of Syria's War. Aired 2-2:30p ET

Aired July 06, 2018 - 14:00   ET

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CHRISTIANE AMANPOUR, CNN HOST, AMANPOUR: Ahead, he exposed one of the biggest startups scams in Silicon Valley history. Investigative journalist

John Carreyrou on the multi-billion dollar blood business that was just too good to be true.

Plus, the toll of Syria's forgotten war. Middle East expert, Salman Shaikh, on how the West has failed the people of that country amid talk of

a Trump-Putin bargain to keep Assad in power.

Welcome to the program, everyone. I'm Christiane Amanpour in London.

As Silicon Valley faces increasing scrutiny over its lack of transparency, we begin with a tale reminding us to be wary of the next startup's

outlandish promises.

Elizabeth Holmes was once the startup darling. Her company, Theranos, promised to do away with painful sharp needle blood tests, replacing them

with just one simple prick of the finger.

Blonde-haired and blue-eyed, she had the look and the drive to become the youngest female billionaire. Revered by entrepreneurs and politicians and

puffed up by a mostly fawning media, she attracted big-name investors.

At one point, Henry Kissinger, George Shultz, and even Jim Mattis were on her board. There was just one problem. It was all a fraud.

"The Wall Street Journal's" John Carreyrou brought down this house of cards. And his new book, "Bad Blood" lays out his dogged investigation

into the scandal. He explained what first tipped him off and his painstaking pursuit of the clues when he joined me this week from New York.

John Carreyrou, welcome to the program.

JOHN CARREYROU, AUTHOR, "BAD BLOOD": Thank you for having me.

AMANPOUR: So, look, we've announced your book, "Bad Blood", but the subtitle is so interesting - "Secrets and Lies in a Silicon Valley

Startup".

What got your attention? What made you delve into this story?

CARREYROU: Well, I had covered healthcare at "The Wall Street Journal" for the better part of 10 years and I read a profile of Elizabeth Holmes, the

founder of Theranos in "The New Yorker Magazine" and in late 2014. And she had rocketed to fame about a year earlier.

But that story is the one that put her on my radar. And I thought that there were some strange things in that story. The thing that struck me as

the most odd was this notion that a Stanford dropout with no formal training in medicine or in laboratory science could just drop out and

invent new science, new medical science that would completely revolutionize the industry. I found that hard to believe.

But to be fair, I probably wouldn't have done anything with that hunch if I hadn't gotten the tip a few weeks later, and that tip came from a

practicing pathologist in the Midwest who had also read "The New Yorker" profile and had also been very dubious of the claims.

And the central claim was that Theranos could run the full range of lab tests from just a drop of blood pricked from the finger, and he knew from

experience that that was actually a very difficult scientific nut to crack.

So, he wrote a skeptical blog item and then was contacted by people who were skeptical of Elizabeth Holmes and Theranos and that sort of started

the ball rolling.

AMANPOUR: So, let's just be absolutely clear. She claimed, and she got a lot of investors and a lot of publicity and she sort of rode the wave of

sort of Silicon Valley startups. And she was a woman. Maybe that played into it.

But tell us exactly what the claim was, what the promise of revolutionary medicine and science?

CARREYROU: Right. She claimed that she had invented a device that could run the full range of lab tests, which, if you speak to experts, means

anywhere from several hundred to several thousand blood tests, off a tiny pinprick of blood obtained from the fingertip.

And that's actually very difficult to do. No one had practiced - people had been trying in academia and industry for decades. And she claimed to

have done it. And it would've had very interesting applications. It would've made blood testing much more user-friendly and less painful. A

lot of people don't like the big syringe being stuck in her arm, and this would've obviated the need for that.

And as Elizabeth Holmes told it, at the height of her fame, people would get their blood tests more often and, therefore, diseases would get

diagnosed earlier and people would have to say goodbye to loved ones less often.

AMANPOUR: I mean, it really was a dramatic claim. And for a long time, as we all know, people were really excited about it. Even the Vice President

Joe Biden visited and there are all these pictures of him and Elizabeth Holmes.

[14:05:06] And then, it turns out, in your book, that the lab - the "lab" - that he visited was a total fake. It was a Potemkin village just staged

for that visit.

I mean, how did she get away with it for so long?

CARREYROU: I think it speaks a lot to this ethos in Silicon Valley of you- fake-it-until-you-make-it. And she really modeled herself after Steve Jobs.

Steve Jobs was her idol. Apple was her idol. And she modeled herself after the computer industry. That's what Silicon Valley is, is the

microprocessor industry at first that gave way to the personal computer revolution and today the Internet and smartphone apps.

And during these 40 years of - 40, 50 years of Silicon Valley, people have faked it until they make it. So, she followed that roadmap.

AMANPOUR: So, she didn't talk to you for this book, did she? I mean, she definitely didn't cooperate. But you do portray a really fascinating

profile of this woman.

I mean, just one of the sentences. "She had the presence of someone much older than she was, the way she trained her big blue eyes on you without

blinking made you feel like the center of the world. It was almost hypnotic."

CARREYROU: Right. Well, one thing I'll say is that I don't think she dropped out of Stanford at 19 years old in 2003 with the notion that she

was going to execute this long con and defraud investors and put patients in harm's way.

That was not her motivation originally. Her motivation was to create a great company and to walk in the footsteps of Steve Jobs and to become a

very successful Silicon Valley entrepreneur.

The problem is that, as the years went by, and she encountered difficulties and setbacks, she refused to acknowledge them and go back to the drawing

board. She had papered them over and she continued to overpromise and to fail to deliver and to lie about the fact that she was failing to deliver.

So, this is someone, as the years went by, who used her intelligence and her charisma to basically hide her lies. And her salesmanship became one

giant lie.

AMANPOUR: And she fired doubters. Even - I mean, I was fascinated to read that even though - maybe through nepotism - the grandson of George Shultz

got a job and he, of course, was the former secretary of state, and he reported back to grandpa that something was rotten at the heart of Denmark

and nobody believed him.

So, even people who were telling the investors, who should have known better, they weren't buying it.

CARREYROU: That's right. Tyler Shultz graduated from Stanford in 2013. And couple of months later, went to work for Theranos full-time and ended

up spending eight months at the company.

And over the course of that stint, became convinced that the company was behaving unethically, that it was cutting corners and that essentially the

whole thing was a scam and went to his grandfather, George Shultz, who's in his mid-90s and lives right off the Stanford campus and was on the board of

Theranos and tried to convince his grandfather that it was all a fraud.

And his grandfather wouldn't believe him and sided with Elizabeth Holmes. So, he had to keep all that bottled up after he left the company for about

a year until I came along and I reached out to him and we made contact and he became a corroborating source for my investigation in "The Wall Street

Journal".

AMANPOUR: I mean, it is again - it's absolutely stunning to think that something so big - I mean, hundreds of millions of dollars of investment

and there's umpteen covers of magazines that extol her great success - "Forbes Magazine" - and yet, you've quoted somebody as saying that the

whole project looked like an eighth grade science project.

Let me just ask you the actual bottom line. Did people's lives get put in danger? Were there tests that could have been life-threatening?

CARREYROU: Absolutely. There's no question. The company itself has avoided or corrected almost 1 million blood tests in California and

Arizona.

And the last lab director, who was working at Theranos until a few weeks ago, was lobbying Elizabeth Holmes to void every single blood test the

company ever returned. And if she had followed his advice, we're talking about 8 million blood tests being voided or corrected.

Some of these tests are tests like a test called a prothrombin time, which is a test that measures the speed at which blood coagulates, and it's a

really important test for doctors who are on blood thinners to prevent strokes. Doctors use that test to determine the dosage of the blood

thinner. And if the dosage is wrong, the patient can either bleed out or his or her blood can clot and he can have a stroke.

So, these are tests that people rely on for super-important medical decisions. There's no question that the behavior of the company and of its

founder put patients in harm's way.

[14:10:03] AMANPOUR: But I'm still staggered. Is there - I don't know - an FDA process? Isn't there some kind of peer-review process that forbids

these kinds of claims getting on to the market before a thorough testing?

CARREYROU: Right. That's another thing that Elizabeth Holmes was very expert at doing, which was navigating a loophole between two federal health

regulators, one being the FDA which reviews and approves the diagnostic equipment that companies make and sell to laboratories to do their testing,

and then on the other hand, the CMS, The Centers for Medicare and Medicaid Services, which is the main overseer of laboratories in the United States.

And there's this gray area between these two regulators known as laboratory-developed tests, which are tests that are fashioned by labs with

their own methods, which means that they're not made with - they're not performed with the diagnostic equipment makers that the FDA reviews and

those LDTs, as they're known, are not closely overseen by CMS either.

And Elizabeth Holmes argued that her fingerstick blood tests were done on proprietary technology and, therefore, fell in this gray zone, this no

man's land, and she exploited that expertly, drove a truck through that loophole.

AMANPOUR: And, of course, what we said, to a large extent, a very fawning press helped to build her up. But, of course, when you started to pick

holes in it and write the first big expose, she was pretty angry.

And this is what she said. We'll play a little bit of what she said about your reporting.

(BEGIN VIDEO CLIP)

ELIZABETH HOMES, FORMER CEO OF THERANOS: My dad was a reporter with "The San Francisco Chronicle". I told you this before we were going on stage.

And he said to me that the job of a reporter is to tell truth to the readers.

And we've seen two articles that were published that were false. And then, immediately, everybody picks it up and reprints it as if it's true.

(END VIDEO CLIP)

AMANPOUR: I mean, I wonder what you think of that. I mean, she's really adept at putting her own side of the story across.

CARREYROU: Right. I actually watched that interview that took place in California. And it was streamed live to "Wall Street Journal" subscribers

and I watched it from the newsroom in New York.

And during those 30 minutes, she told one lie after another. It was quite incredible. This was about 10 days after my first investigation had been

published. And I expected her to come out swinging, but I didn't expect her to lie - to bald-faced lie the way she did in public. And it was quite

amazing to see. And it drove home the lengths to which she was willing to go to uphold the myth that she had built around herself.

AMANPOUR: And, of course, Rupert Murdoch owns "The Wall Street Journal", which you were writing for, one of her biggest investors. And she did try

to get him to spike the stories and he didn't.

CARREYROU: I learned that she had gone to him several times, including just two weeks before my first story was published. She went to be the

News Corp. tower in midtown Manhattan and met with him in his 8th floor office and tried to get him to spike the story. And I was down on the 5th

floor working on the story and I had no idea she was on the premises.

AMANPOUR: So, what is becoming of Elizabeth Holmes? What is her fate?

CARREYROU: Well, she has been indicted. She was indicted about 10 days ago on wire fraud charges. Not just Elizabeth Holmes, but also her ex-

boyfriend, who was the number two of the company, Sunny Balwani.

And so, unless they reach a plea deal, we're looking at a federal trial and prosecutors will look to prove those fraud charges and she will try to

convince a jury that she didn't do anything wrong, that all she was trying to do was build a company and that unfortunately the company failed, but

that doesn't mean it was criminal.

AMANPOUR: What would have happened if you hadn't caught her out?

CARREYROU: That's an interesting question. When I started digging into the company, Theranos and Walgreens were on the cusp of taking their

partnership national, which means that the blood testing services that they offered in Walgreens stores in Northern California and Arizona would've

been rolled out to the more than 8,000 Walgreens drugstores throughout the country.

And I think had that happened, the chances that patients would've died from either misdiagnoses or wrong diagnoses that would've caused them to get

unnecessary medical procedures would've risen exponentially.

I think, at that point, I don't know how long it would have taken, but she would have been unmasked. There would've been patient complaints, doctor

complaints. I think employees would've come out of the woodwork, current and former, and either another journalist or a regulator would've looked

into it. And I think it was a matter of time.

AMANPOUR: Really amazing. I mean, it's almost like a whodunit. John Carreyrou, author of "Bad Blood", thanks so much for joining us.

CARREYROU: Thanks very much for having me.

[14:15:02] AMANPOUR: It is a riveting and cautionary tale.

Now, it is hard to imagine that we would get to such a state of war fatigue that Syria could now be called the forgotten war. After seven brutal

years, images of the conflict have faded from the front pages, but the tragedy is still as alive as ever.

In the past couple of weeks alone, the United Nations says that almost 300,000 Syrians have been displaced by Assad's push southwest.

As President Trump prepares to meet Russia's President Putin, there is speculation that he will tell Putin that Assad can stay, in exchange for

Moscow ousting Iran from the battlefield, even though Russia has already said that a complete pullout by Iran is unrealistic.

To break down all these complexities, I spoke with Salman Shaikh, who's gone from the United Nations to Brookings, to founding his own political

consultancy that focuses on the Middle East and North Africa.

He spent his career analyzing the region and he joined me here this week as he was en route to Washington, seeking support from the administration for

a new political solution.

Salman Shaikh, welcome to the program.

So, I wonder what you make and whether you think it's cynical that, as we speak, President Assad is calling on Syrians abroad, Syrians who fled, to

come back to their homeland, they've liberated certain areas. What do you make of that?

SHAIKH: Well, they're not going back anytime soon. In fact, in the last four, five months, we've had the largest internal displacement of Syrians,

nearly a million people. And so, people are voting with their feet.

And what's now going on in the southwest of the country, on the border with Jordan, it's further testimony to the fact that this crisis is not over.

People are still on the move and they're still heading out of the country.

AMANPOUR: And yet, people might think it's over because it's fallen off the radar in terms of news coverage. And we're hearing that maybe

President Trump, backed by Bibi Netanyahu and the Saudi Crown Prince, is going to try to make some grand bargain when he meets Vladimir Putin, sort

of allow Assad to stay and try to get the Russians to take Iran out of Syria.

What do you make of that?

SHAIKH: Well, first of all, Christiane, it's been greatly frustrating for those of us who have focused on Syria for the last eight years.

And we ask ourselves who's trying to make peace in Syria? Why is it that we have an effort going on perhaps by some of the fighting forces on the

ground, particularly the Russians and the Iranians, and yet the Western alliance - Europe, the United States - has pretty much backed out when it

comes to peacemaking.

Now, we have this talk of a grand bargain. Firstly, it's good. It's good that Russia and the United States are trying to work together. We always

knew that cooperation, especially as this Syrian conflict has become much greater than Syria, needed that kind of big power engagement. Europe too.

But if the grand bargain depends on getting Iran out of Syria, it's a non- starter in my view.

AMANPOUR: Why do you think that?

SHAIKH: Well, because Iran is very much entrenched. For Iran, in my view, this is a strategic and existential choice to be in Syria. They've

invested an awful lot of money, blood and treasure in establishing itself in Syria. And the signs are that, in fact, they still are working on that

particular project.

AMANPOUR: Let me just play you what the National Security Advisor John Bolton said about this and then we'll just talk a little bit more about

this issue. But, clearly, it's an idea that somebody thinks it's a really clever one. Let's just play this.

SHAIKH: Sure.

(BEGIN VIDEO CLIP)

JOHN BOLTON, NATIONAL SECURITY ADVISOR: There are possibilities for doing a larger negotiation on helping to get Iranian forces out of Syria and back

into Iran, which would be a significant step forward.

UNIDENTIFIED FEMALE: Use for us to do so?

BOLTON: To have an agreement with Russia if that's possible.

(END VIDEO CLIP)

AMANPOUR: So, I mean, you've pretty much just sort of poo-pooed that.

SHAIKH: There are 80,000 Iranian-backed militias in Syria today. IRGC has thousands of advisers. The al-Quds Force right now is supporting and

training militias who are part of the Southwest Daraa offensive. Economically, Iran is using its foundations.

So, to think - and with regards to eastern Syria, they are even making overtures with the regime to the Syrian tribes.

So, to think that it will be easy even for the Russians, who - remember - need these foot soldiers, these Iranian-backed foot soldiers inside Syria

in order to maintain their interests, I think this is a prospect at least in the short term that's not going to come to fruition.

SHAIKH: So, slightly devil's advocate, but if Iran thinks that the United States of America and Russia and all the other major powers are going to

guarantee their client, Bashar al-Assad, to stay in power, why wouldn't they decide to pull back?

[14:20:05] I mean, they're obviously stretched in Syria. They're undergoing some protests at home. There's economic pressure because of the

US pulling out of the nuclear deal.

SHAIKH: Well, again, it's a strategic point, Syria. I heard Iranian officials and Syrians talking about how the Iranians stepped in in 2012 and

were telling Bashar al-Assad, hold on to Damascus with your fingernails, if you have to.

And now, they've established a military presence, in fact, that encircles around Damascus. They've established themselves within the security

apparatus.

So, again, it's not something where they are just at a time when, in fact, they're coming under pressure, a card that they're going to give away.

This is an existential choice, as well as a strategic one.

AMANPOUR: So, before I ask you what you think your solutions are, what do you make then of President Trump who keeps saying I've got tough with Iran,

I'm pulling out of the nuclear deal and, boy, look, Iran's behavior has changed, I've had an impact, it's doing things differently in Syria's, it's

not so aggressive around the Mediterranean. It's, obviously, facing some issues at home.

SHAIKH: Well, let's just go back a little bit. Under the previous US administration, they made a big mistake. The JCPOA should have been linked

with Iran's regional ambitions. It was not. Many of us took to senior US officials at the time, trying to make that linkage.

So, now President Trump and other regional players, Saudi Arabia, but not just Saudi Arabia, have now made that linkage. So, yes, it is time to get

tough with regards to Iran's behavior in Syria and elsewhere.

But the way to do that is not, in my view, through another military escalation because I don't believe even the United States is willing to do

that, especially in Syria. And even for Israel, it carries major risks.

It's to get ourselves on a path towards a truly inclusive political process that involves Syrians who want change.

AMANPOUR: Do you think that's even possible? Where do you see the solution? You've talked about a proper inclusive political solution, but

this has been the demand of the UN, the demand of umpteen different sort of negotiating tactics over the last many years since this war began.

Really, where do you see that? And you're going to the United States. What do you expect to tell them and to hear from them?

SHAIKH: Well, under the ongoing games of the football World Cup, the Russians haven't stopped. They're, in fact, engaged in a very energetic

effort to get a political process going. It's now in Russia's interests to cap the gains that they have made politically, and that's through a

political process.

The UN Envoy Staffan de Mistura is very active right now. And the focus is on this idea of a constitutional committee, which would set the pathway

towards a new constitution or an amended constitution as the Assad government would want, which would take us to fresh elections.

This is not going to happen overnight. It's going to take perhaps a number of months, even years, but - and this is the big but - if the West does not

show up, if the United States does not take more of an interest in the political process itself, we're not going to be able to achieve the aims

even that the United States has set for itself.

AMANPOUR: But, again, President Assad has never taken seriously any roadmap for any kind of inclusive political solution ever.

SHAIKH: You're absolutely right. And in fact -

AMANPOUR: And now he thinks he's winning.

SHAIKH: Absolutely.

AMANPOUR: And he thinks he's got the president of the United States on his side and even the prime minister of Israel.

SHAIKH: Absolutely right. But we started a discussion talking about how it's still important to have Russian-US cooperation. This is where it

should lie.

The Russians have been able to move President Assad in the direction of politics. And, in fact, President Assad himself has now talked about

moving forward on a political process. Of course, he would like to do it on his terms.

That constitutional committee won't be fair and balanced if it's just left to one party. That is why the United States, European powers, the so-

called small group, which is meeting in ministerial session on the margins of the NATO meeting, as well as later on with Stefan de Mistura, needs to

be able to present new and fresh ideas in order to move that along.

AMANPOUR: I've just spoken to the former Deputy National Security Adviser Ben Rhodes coming out with a new book, but there's still quite a lot of

defensiveness about the idea that they didn't cross their own red line.

He basically said that no one supported it. No ally, no parliament, no Congress. But he also said this about what they might have failed at the

very beginning before it went into a full-blown war. Just listen to this.

(BEGIN VIDEO CLIP)

BEN RHODES, FORMER DEPUTY NATIONAL SECURITY ADVISER: Everybody focuses on the military question, which we've debated, Christiane, many times. There

was also the question of - at the beginning, we probably presumed that Assad was going to go. We had - Mubarak had gone, Ben Ali Saleh. And we

moved pretty quickly to call for him to go. Publicly.

[14:25:00] Obviously, I believe the Syrian people would be better off with him gone. But by doing that, without a clear strategy that we're going to

put means behind to remove him, we kind of closed a diplomatic window in a way.

(END VIDEO CLIP)

AMANPOUR: So, how do you react to that analysis of what they did back then?

SHAIKH: Well, first of all, the Obama administration thought that words and declarations by itself will magically change the equation in Syria.

We all know - those of us who know the government of Bashar al-Assad and the regime of Bashar al-Assad, he wasn't going to go away just like the

others. It required real willpower and it required a real international effort.

Of course, Russia and China and the Security Council thought that regime change should not be on the cards, especially after the experience of

Syria, but after that -

AMANPOUR: With Iraq, you mean.

SHAIKH: With Iraq, that's right. And Libya. But after that, we got into a situation where we just supplemented more words and declarations.

In fact, what was required was more ingenuity on the diplomatic side. We continue to try to bring together the government, the regime and the

opposition, and yet there is a much broader mass of Syrians that needed to be involved in peacemaking, which is now what is happening.

AMANPOUR: That's a big challenge. Salman Shaikh, thank you very much indeed.

And that is it for our program. Remember, you can always listen to our podcast, see us online at Amanpour.com and follow me on Facebook and

Twitter.

Thanks for watching. And goodbye from London.

END