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CNN Newsnight Aaron Brown

Congress Prepares for Enron Investigations

Aired January 11, 2002 - 22:00   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
AARON BROWN, NEWSNIGHT ANCHOR: And good evening again, everyone. We're going to keep this place pretty short tonight. We have an awful lot to do. There are two great fears in the news business. One is not having a good lead story, and the other is having too many good leads, and our problem is the latter tonight.

We've decided to lead with Enron. This is certainly not a political scandal yet. It may or may not become one. There's an awful long way to go. But it is a huge story. It has enormous political implications, potential criminal indictments, and more.

We could have just as easily led with the war. There are plenty of developments there, and this is after all the 11th, four months since the attack. Nevertheless, we'll lead with Enron, but we want to take you briefly back to Ground Zero, because it's been four months to the day and four months, no matter how it feels, is not a very long time at all.

Thousands, of course, are still missing. They'll probably never be found. And while the city expects to have the site cleaned up, maybe as early as next summer, we know that this story, not rink rage, not even Enron, this story is with us today and for a very, very long time to come.

It is why al Qaeda and Taliban prisoners tonight are in Guantanamo Bay in Cuba, after their very long journey from Afghanistan. It is why Green Beret, Nathan Chapman, was in Afghanistan, why he was shot and killed, the first killed by enemy fire, and he was buried today at Tacoma National Cemetery in Washington State.

So we begin on this Friday night the way we do every other night. We whip quickly around the world and talk to the reporters covering it. We begin first on Capitol Hill, where the Enron story pretty much dominated the day. Jonathan Karl is there for us tonight. Jonathan, a headline please.

JONATHAN KARL, CNN CORRESPONDENT: Well, Washington seems to be catching a little bit of scandal fever, as one Senate Subcommittee fired out 51 subpoenas, and Aaron, a total of eight congressional committees are preparing the way for Enron investigations.

BROWN: Jon, back to you pretty quickly here. We got to New York next, a post mortem on what Enron down. CNN Financial News Correspondent, Allan Chernoff in New York. Alan, a headline.

ALLAN CHERNOFF, CNN CORRESPONDENT: Aaron, well Enron built itself up through salesmanship. Today it was on the other side of the table, the former crown jewels of the company auctioned off.

BROWN: Allan, back to you too shortly. And now, Guantanamo Bay, Cuba the first group of al Qaeda prisoners arrived about 2:00 Eastern time today. Bob Franken joins us on the videophone. Bob, the headline please.

BOB FRANKEN, CNN CORRESPONDENT: The United States had its reasons, Aaron, particularly reasons of international law, but it's really too bad because this was one of those occasions when we would have to say it's too bad you couldn't see this.

A very chilling scene about an hour and a half, as 20 of the most dangerous al Qaeda and Taliban forces, by the accounts of the U.S. military, were taken off the plane after their round-the-world flight from Afghanistan to Guantanamo Bay, and brought under heavy security to their new home, an 8 X 6 cubicle, which is really described as a cage, where there will be even heavier security. We'll report on that in just a moment. Aaron.

BROWN: Bob, thank you. Back with all of you shortly. Also tonight on NEWSNIGHT, we'll have more of our conversation with General Tommy Franks. I don't want to be accused of hyping this too much, and at the same time I like tonight's segment a lot. It starts in Vietnam, 1967, and he's terrific. That's coming up in a little bit.

We'll also take a look at a story that is simply upsetting, questions of plagiarism and Steven Ambrose, his work as a historian so widely read that any question about his integrity has to be looked at, and so we will.

Oh yes, one other thing, the guy with the accordion is back, Segment 7 of course, and it's Friday and I haven't slept for two days, and I need a smile, and the accordion man will supply that. That's the program as we begin it now.

We begin it with Enron. The word scandal, special counsel, flying around quite a lot over the last couple of days. There's not even a Clinton in the White House.

We learned more today about the efforts by Enron executives and even a former Treasury Secretary to get help from the Bush Administration as the company was going under. The White House keeps saying Enron didn't get any help, and there is no evidence now that we have seen yet that suggests otherwise. Now, of course, is an important word. Things do change. CNN's Jonathan Karl has been working the story for us and Jonathan joins us again. Jonathan, good evening.

KARL: Good evening, Aaron. Few companies were better than Enron at the power, money, and influence game here in Washington. But as Harry Truman used to say "in Washington, if you want a friend, buy a dog." When scandal hits power and influence only buy you so much. (BEGIN VIDEOTAPE)

KARL (voice over): Enron will be the focus of at least eight separate congressional investigations in the coming months. In the opening salvo, a Senate Subcommittee fired out 51 subpoenas, all aimed at Enron and its accounting firm, not at administration officials with close ties to the company.

SENATOR SUSAN COLLINS (R) MAINE: There's not a scintilla of evidence at this point that there's been any wrongdoing on the part of anyone in the administration.

KARL: Collins is one of the few who never got any money from Enron, but the company doled out campaign cash to 71 of her Senate colleagues, including donations totaling in the tens of thousands to Republicans like Kay Bailey Hutchison and Democrats including Chuck Schumer.

Enron cash also went out to nearly 200 members of the House, including major dollars to Democrats, such as Sheila Jackson Lee and Republicans including Tom Delay.

But the especially close ties between Enron's Chief Kenneth Lay and the Bush Administration has some Democrats whispering, the Enron collapse is another Whitewater, referring to the marathon scandal that dogged the Clinton White House for years.

But a Democratic veteran of those battles warns his party not to overplay its hand.

LANNY DAVIS, FORMER CLINTON SPECIAL COUNSEL: I do have a warning for my fellow Democrats that we not jump ahead of the facts, and that we not use innuendo as a surrogate for facts the way that I believe the Republicans did during Whitewater and the Campaign Finance investigations.

KARL: The first subpoenas were issued by the Democratically- controlled Senate Subcommittee on Investigations.

SENATOR CARL LEVIN (D) MICHIGAN: I issued 51 subpoenas today to the Enron officers, board members past and present for the last two years, and also to the auditors, Arthur Andersen Company.

KARL: One of the subpoenas went to Wendy Graham, an Enron board member and the wife of Republican Senator Phil Graham. But Republicans are eager to keep the focus on the company, not politics.

COLLINS: Well, Enron is the biggest bankruptcy in our nation's history and there are critical questions about what the company's executives knew and when did they know it.

KARL: But Democrat Henry Waxman wants to pose that question to the White House. As the ranking Democrat on the Government Reform Committee, he has written Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans, demanding details on Enron White House contacts, writing: "The public deserves to know what administration officials knew and when they knew it."

(END VIDEOTAPE)

KARL (on camera): And there's another wrinkle in the story tonight. The Treasury Department says the Democratic economics guru, Robert Ruben, Bill Clinton's Treasury Secretary, also called the Treasury Department back on November 8th on Enron's behalf, pleading - asking the Treasury Department to intervene on behalf of Enron with its creditors. Aaron, back to you.

BROWN: OK. One quick point on former Secretary Ruben, and that is that, that he was former Secretary Ruben. He was acting as a private citizen, and perhaps it was, in fact, his business to make these phone calls. Fair?

KARL: But another prominent Democrat coming into the game here, as Democrats are hoping to see this as a Republican scandal, and clearly Enron gave most of its money, over 70 percent of it to Republicans, but they also had some very strong Democratic allies up here on Capitol Hill and throughout Washington.

BROWN: And Jon, as a practical matter, big companies and perhaps big labor too, but big companies certainly spread money around both parties. They are in some ways placing bets on who wins, who has power, and who can be helpful.

KARL: Yes, they do hedge their bets, but of course Enron gave hundreds of thousands of dollars to the Republicans in the last Presidential cycle, including over $100,000 to the Bush Campaign, and about $11,000 to the Clinton-Gore Campaign. So yes, they did hedge their bets, but in this case, about three-quarters of their money tended to go towards Republicans.

BROWN: So they weren't hedging them all that much. Jon, thank you. For all of us and you especially, I think it's going to be a busy weekend learning more about all of this.

In some ways, I have a sense we're approaching this backwards. The political uproar has sort of overtaken what actually happened to Enron. It's not even easy to describe what the company did, what its business was. It's certainly a business story. A lot of business stories are complicated. They can get a little dull, even the big ones, and this one's certainly complicated though. We think it's got lots of drama.

Here to walk us through what happened, not necessarily a task we envy tonight, CNN Financial News Correspondent Allan Chernoff. Allan, nice to have you with us.

CHERNOFF: Thank you, Aaron. Well, investors in Enron, they've certainly been walking through a mine field, and it seems that at every turn, there has been a very unpleasant surprise. That's led to a collapse of the confidence that had made Enron so powerful.

(BEGIN VIDEOTAPE) CHERNOFF (voice over): Confidence is everything in the world of business and finance. A year ago, Enron had it, a dominant force in the energy markets. But in a few short weeks, it was all lost, the simple reason that the #7 company on Fortune's 500 list now sits in ruins in New York Bankruptcy Court.

Today, control of Enron's former crown jewel, its energy trading operation, was auctioned off to investment firm UBS Warburg, the price to be revealed next week.

Enron had built investor confidence by using complex financial structures that hid millions of dollars in debt. When a few investment analysts questioned the partnerships, former President Jeff Skilling, exuded confidence.

JEFF SKILLING, FORMER PRESIDENT, ENRON: Well, if you cut it down to the core, what we sell is, we sell reliable delivery and predictable prices.

CHERNOFF: Skilling resigned in August, citing personal reasons. Chief Executive Ken Lay claimed Enron would be just fine, back on October 16th, when the company restated its finances, revealing huge losses.

KENNETH LAY, CHAIRMAN AND CEO OF ENRON: We find that we can continue to perform at very strong rates, even in this somewhat slower economy that we experience right now.

CHERNOFF: Today, Lay said the sale is a "key milestone for restructuring Enron and emerging from Chapter 11." Clearly that is a long was off, as Enron's lead bankruptcy attorney admitted in court, telling the judge he was selling something that was dead, that we've tried to bring back to life.

MARTIN BIENENSTOCK, ATTORNEY FOR ENRON: It means that the trading business will be restored. There will, hopefully, be lots of revenues and value to give back to creditors.

(END VIDEOTAPE)

CHERNOFF (on camera): At the peak of investor confidence, Enron stock traded at $90 a share, with a market value of about $67 billion. Today, the New York Stock Exchange halted trading, pending details of the auction. The exchange is now considering delisting Enron because the stock no longer meets the minimum criteria, the last trade, 67 cents a share. Aaron.

BROWN: Well, you would have thought it was a dot.com. One other element of this and that's a major accounting firm, at first blush at least, has a major problem.

CHERNOFF: Major problem, no question about it. Yesterday we found out that documents had been deleted. Andersen had been the auditor for Enron and they had approved Enron's financial statements, and there are certainly many questions about those statements. BROWN: OK and we talked about documents being shredded or deleted. I think technically we're talking about things that were kept on computers and hard disks. Are we talking about 10 documents, 100 documents, thousands of documents?

CHERNOFF: According to investigators at the House Energy and Commerce Committee, and they're the ones who first found out about this, it was thousands.

BROWN: And were those documents, as far as we know, under subpoena?

CHERNOFF: They hadn't yet, at that point, been subpoenaed. But, as we noted in our package, October 16th was when Enron restated its financials, and these documents were being deleted in September, October, and November. Clearly there was going to be some very big interest in any documents related to Enron.

BROWN: And just one more time, the name of the accounting firm, or the auditing firm here that was responsible for verifying the numbers, that's what they do right, was.

CHERNOFF: It's now called Andersen. Previously, it had been known as Arthur Andersen.

BROWN: And that's one of the big players in that game?

CHERNOFF: One of the big five.

BROWN: OK. Allan, good to have you with us. I expect we'll be seeing you some more. Earlier today, my esteemed producer and dear friend, David Borman, described the Enron story this way. He called it a freeze-dried scandal. All the elements seem to be there, just add water, or in this case, add politics. He may turn out to be right. WE try never to argue with David.

We're joined tonight by two Washington veterans. You saw Lanny Davis a little bit earlier in Jon Karl's piece. He weathered his share of storms in the Clinton Administration. He's a partner in the Washington law firm of Patton Boggs. He serves in the firm's crisis management team. I'll bet he does. He's also written a book on the subject, "Truth to Tell. Tell it Early. Tell it All and Tell it Yourself."

Also with us tonight, former Republican Congresswoman from New York, Susan Molinari. She's now President and CEO of the Washington Group, a lobbying firm. It's nice to see both of you.

SUSAN MOLINARI, PRESIDENT AND CEO, WASHINGTON GROUP: Thank you.

DAVIS: Thank you, Aaron.

BROWN: Susan, let me start with you since Lanny's already had a word here. Everybody's saying, all the Republicans are saying and I have no reason to quarrel with it, there's no evidence yet that the administration has a real political problem. MOLINARI: Right.

BROWN: But, all these investigations have a way of draining the life out of administrations, don't they?

MOLINARI: Well, I think it depends if there's any it there. I mean if what we know today is what continues to be the truth in the future, and that is that Enron contributed to the Bush Administration as it did to many Democrats throughout this nation, that they in fact contacted the Bush Administration, and in some reports asked for help. In other, just wanted - in other reports, just wanted to let them know that there was a failure.

That right now, it seems that despite this, no action was taken on behalf of Enron in any way, shape or form, and obviously the liquidation of the company seems to prove that, then there is no "there" there.

And so, I think this will be a long investigation with regard to Enron, a long investigation with regard to the role of auditors and Arthur Andersen in particular, but one that does not have an awful lot of life with regard to politics, Capitol Hill, and in particular the Bush Administration.

BROWN: How about if it might affect the way people view the power of money in politics to, at the very minimum, to get access?

MOLINARI: Well but the access did them no good whatsoever, so if anything it may potentially show some people who might think they could buy access on Capitol Hill to say it accomplished nothing.

I mean here again, we have a company that tried to have access. They tried to do something that looked for some government intervention, and it didn't occur. So, I think that if there's a story to tell, it's that in fact, the system this time looks like it may have worked. With regard to the influence of money on politics, there appears to be none.

BROWN: OK, move to Lanny. Lanny, you made a couple of intriguing points in this. I think one is that, and I think in some respects it was directed to us as much as it was to Democrats, is that maybe the story isn't the politics of this. Maybe there is something else that really matters here, and that's this company's and perhaps other too ability to hide what it is they actually made or what they actually owed and bilked investors along the way.

DAVIS: Well yes, Aaron. I think there is an emblematic problem here and it's not worth pointing the finger at Enron, or even Arthur Andersen, unless you look at the whole culture of the '90s. You mentioned dot.coms where we were focused on revenues rather than earnings, where we were focused on expectations of analysts projecting quarterly results with the pressure immense on managers. If they couldn't make those results in the real marketplace, they would use the accounting department.

I think Senator Lieberman has it right, that we shouldn't turn this into the political circus that I think was the case with the Whitewater matter and with other matters that were there when I was in the Clinton White House. I think we ought to focus on doing something to understand what happened at Enron and try to make the correction so that we can change this culture that really where appearances are more important than economic reality.

BROWN: As someone who's played this very complicated game for a while, do you think the administration was, at the very least, slow to bring these various contacts out?

DAVIS: Well, I think to give them credit, I'm still a good Democrat as Susan knows, I think Karen Hughes, Ari Fleischer, and the White House Group, and believe me they have my condolences as to what they're going through, I've been there, I think they've tried their best to get out in front of the story by releasing the contacts, by acknowledging them, by trying to get the facts out.

BROWN: Lanny, they did that yesterday.

DAVIS: Well, I don't know when they first learned about this issue as a problem. It's always easy to say we should have done it a week ago or two weeks ago. But if they're doing it now and if they're absolutely insistent on getting all the contacts out, even if it didn't lead to anything, I would for example suggest that although Vice President Cheney must have had very valid reasons, as did Mrs. Clinton, for not revealing all the contacts that occurred on his taskforce, that was pre-Enron.

Now I would strongly urge the White House to put out all the contacts that occurred. I don't think there's anything there. I tend to agree with Susan. There's no evidence of any wrongdoing in the Bush White House, quite the contrary. But I do like what they're doing now, Aaron. Maybe it's a little late, but they are trying to get out in front of the story, which is what they have to do.

BROWN: Lanny, nice to see you. Susan, always nice to see you as well.

MOLINARI: Thank you.

BROWN: Thank you both for giving us a bit on time on Friday night. Thank you. Coming up next on NEWSNIGHT, four months to the day. The first al Qaeda prisoners arrive at Guantanamo in Cuba. We'll have that story. Much more, Friday night, this is NEWSNIGHT.

(COMMERCIAL BREAK)

BROWN: Funny, Afghan war detainees are settling in for their first night in Cuba, if you can call lying on a mat on a concrete floor settling in. They arrived this afternoon at the U.S. base in Guantanamo Bay. They have come a very long way, not just in miles. Not long ago, these men had the run of a country the size of the State of Texas. Now their entire world is a 6 X 8 foot cage.

In Guantanamo for us tonight, CNN's Bob Franken. FRANKEN: Twenty of what are regarded as the most fierce, most dangerous Taliban and al Qaeda fighters who have been removed from Afghanistan, are tonight in their new quarters. Their new quarters part of a prison camp with intensely, you'll have to forgive this redundancy, intensely maximum security prison camp.

They are constantly being watched as they take over their new quarters, an 8 X 6 cell that is really nothing more than a cage, as it's been described. They are being fingerprinted. They are being photographed, and they face interrogation. We've had the chance to talk to some of the investigators. They plan to spend long weeks interrogating people who are considered some of the "most bad," to quote one of the officials here.

The landing this evening from the other side of the world in Afghanistan, was a very, very heavy exercise in security. The whole thing took about an hour and a half to get just from the airplane off of the airport. The prisoners came out of the plane about an hour after the plane actually landed.

Each was wearing a fluorescent orange jumpsuit and a matching ski camp. Each seemed to have a face mask on. Reporters were kept away, no pictures of course, but we observed what looked to be a face mask, a surgical type mask, turquoise, and they seemed to have goggles. Each was manacled. Several resisted. Each would be knocked to his knees if he resisted and pulled up.

Shouting was heard, but from the distance we were watching, we could not tell if the shouting came from the U.S. security people or from the detainees, as the officials prefer to call them. Security was heavy. About 40 who were wearing face masks, kelvar vests, and apparently had shields, were in trucks and were very close by just in case there was a problem.

In addition to which, several Humvee vehicles, which had machine guns or grenade launchers were surrounding the plane, pointing outward, a perimeter defense. That is what we could see. Perhaps there was more. Finally, all 20 were put on school buses, that's the way you describe them, two of them with blackout windows, taken about a mile away to a ferry boat, the buses driven onto the boat, the trip across the cove to the side of the island where the new quarters will be.

It's called Camp X-ray. We've been describing it in the last few days. Their existence is going to be one where they're constantly watched, where they're always under light, and where there is just as heavy security, if not more. Bob Franken, at Guantanamo Bay, Cuba.

BROWN: Well it would be interesting to see. We assume that the military did take some pictures and perhaps, perhaps over the next couple of days we'll get to see some of what Bob so ably just described.

A couple other notes from the war now, there was more bombing again today, more heavy air strikes on the training camps in the eastern mountains of Afghanistan. The aim there is to prevent the enemy from regrouping. U.S. Special Forces spent the day at Spin Boldak, helping to disarm a number of factions there. In Kabul meantime, warriors had until the weekend to lay down their weapons.

This is another one of those stories that might have led the program tonight. It's also one of those events that General Franks referred to in our talk yesterday, about the valuable intelligence gained so far in the War on Terror. This intelligence is coming from papers, from computer hard drives, and from videotapes found in the rubble.

And among them, among those tapes, one that was especially chilling. At first blush, it looks like a bit of a vacation travel log, until you listen to the narration. Here's CNN's Pentagon Correspondent Jamie McIntyre.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, CNN CORRESPONDENT (voice over): On this videotape, found by U.S. troops in Afghanistan, a terrorist suspect is heard describing a potential target, a shuttle bus used regularly by U.S. military personnel to get to a Singapore Subway stop.

UNIDENTIFIED MALE: And this is one of the buses, one of the regular buses that carry the military personnel from Somalia to (UNINTELLIGIBLE).

MCINTYRE: The tape is a chilling insight into how terrorists stalk their prey. Here, a man identified as Hashim bin Abbas, notes that boxes commonly carried on bicycles in Singapore, could conceal deadly explosives.

HASHIM BIN ABBAS: (UNINTELLIGIBLE) some of the boxes placed on the motorcycles. These are the same type of boxes we intend to use.

MCINTYRE: The videotape was just one piece of intelligence that led Singapore authorities to round up more than a dozen men with clear ties to Osama bin Laden's terrorist network. At the Pentagon, officials said the break underscores the importance of the intelligence-gathering mission of U.S. troops.

DONALD RUMSFELD, DEFENSE SECRETARY: Almost every arrest leads to additional pieces of information. It may be scraps of information in their pockets. It may be things they say. It may be other connections that occur.

MCINTYRE: A Singapore government statement alleges that eight of 13 suspects now in custody trained at al Qaeda camps in Afghanistan by sneaking in through Pakistan. In fact, it says al Qaeda leaders showed interest in the attack plans, which were described as developed and ready for action, but for reasons not known, it was never carried out.

A second plan called for an attack on U.S. Navy ships in the waters of Singapore, with a kill zone designated on a confiscated Defense Ministry map. Since the attack by al Qaeda terrorists on the USS Cole in 2000, the Pentagon has been carefully tracking the threat, and was already on high alert in Singapore.

GENERAL RICHARD MYERS, JOINT CHIEFS CHAIRMAN: The videotape that the Singapore government says they got from Afghanistan was not the first indication that we had threats against our forces.

(END VIDEOTAPE)

MCINTYRE (on camera): The 13 men now being held in Singapore are all said to be members of a terrorist organization known as the Islamic Group, with cells in Indonesia and some leaders in Malaysia. In fact, the head of the group is still at large, being sought by Indonesian and Malaysian police. Jamie McIntyre, CNN, the Pentagon.

BROWN: One other intriguing development to note. An Egyptian man was in court today, Abdallah Higazzi (ph), charged with lying to the FBI about an aviation radio found in his hotel room. He was staying at a hotel across the street from the World Trade Center when the planes hit. He was evacuated, along with everyone else, leaving his passport and the radio behind. Investigators say having a radio where they can listen in on pilots isn't that unusual. But lying about that did get their attention.

Even joking about terror can get a person in trouble, a lot of trouble, particularly if the person is a policeman. Today in Washington, Capitol Police Officer James Pickett was charged in connection with a hoax. Prosecutors say he left white powder at a security post with a note saying "please inhale." The conviction carries with it six years in prison.

And if this didn't already feel like Court TV, here's another one, a verdict in the Massachusetts hockey dad trial today. We followed that this week. The jury has found Thomas Junta guilty of Involuntary Manslaughter. That was the lightest possible charge he faced. In essence, it means Junta should have known that his beating of Michael Costin could have been deadly, and it was. Junta faces as much as 20 years in prison. He won't get that. He's expected to get as little as three, and he'll be sentenced on the 25th of the month.

Just ahead, more of our interview with General Tommy Franks, that's a little bit later. Up next, al Qaeda and how far it reaches. We just gave you an indication, more coming up on NEWSNIGHT on Friday.

(COMMERCIAL BREAK)

BROWN: You've probably heard it said a few dozen times -- there are nights I hear it in my sleep -- that this is far from over, this war on terror, even if bin Laden is captured, even if those cells in Cuba fill up. Fighting terrorism is a bit like squeezing a balloon. Tighten your grip on one end and another end bulges out. Focus on Afghanistan, discover plans for Singapore or Indonesia. Chances are we'll all be boning up on our geography again in the days ahead.

Thought a visit with Michael Elliott is in order. He's "TIME" magazine's editor-at-large and he is welcome here anytime he wants to come by. Nice see is you.

MICHAEL ELLIOTT, EDITOR-AT-LARGE, "TIME" MAGAZINE: Good to see you.

BROWN: You weren't surprised, were you really, by the Singapore story that came out today, maybe the details, but certainly not the rest of it?

ELLIOTT: I was not surprised by the details. I wasn't surprised that were going to find as we went through all the stuff in Afghanistan that there were cells and operations in place anywhere else. I was a little surprised it was Singapore. I thought that was quite revealing. I mean, Singapore, after all, is not one of the lawless places.

BROWN: Certainly not. In fact, it's one of the most rigid societies.

ELLIOTT: It makes Brunsfield (ph) New York, where I live, look dangerously funky. I mean, so it's not Yemen. It's not Somalia. It's not the Philippines, not Indonesia. And I thought if al Qaeda feel they can do an operation in Singapore, you know, where the police and the security apparatus are incredibly pervasive, then they have got a lot of chutzpah and they really feel that they have what it takes.

BROWN: These are guys that took down the Twin Towers.

ELLIOTT: Absolutely.

BROWN: You don't have to convince me they have chutzpah.

ELLIOTT: I thought that was very revealing. Of course, I think the second point that is not surprising is that as we go through all the safe houses in Afghanistan and we dredge through all the papers and the hard disks and the videos that you and Jamie were talking about earlier, we're going to find, I think, a lot more leads to operations like this.

BROWN: Is the organization, is al Qaeda top heavy in the sense that if you cut off the head of bin Laden and al-Zawahiri and these names we've come to know, does it still function? Does someone give orders to the cells operating independently? What do we know?

ELLIOTT: Well, you put two very interesting questions in there. And I think they have different answers. The cells do operate. One of the things that I think we've learned about al Qaeda is that it's an umbrella group and it has operating units, operating groups, some of them with very different names, like the Islamic Army of Algeria, for example.

But one of the questions that I don't think we know the answer to is whether we have broken the command structure. In other words, by taking out the very top layer, have we actually degraded the ability for them to kind of really pull off spectacular stunts. We don't have the answer to that yet. Frankly, the evidence of this investigation in Singapore would suggest to me that there is an enormous amount of capacity to do a lot of trouble still out there. BROWN: There's has been a lot of talk, it seems to me, in the last 24-48 hours at least about Indonesia as the next great bad place where these guys will end up and find safe haven.

ELLIOTT: Well, I think, in a way, naturally so because Indonesia is a arcupellago (ph), what it is, 2,000 miles from one to the other with literally thousands of islands. It's very easy to get lost. It's very easy to find places where security forces are going to find it difficult to track you down.

And obviously it is going to be places like that if they want to find somewhere where they can kind of really regroup and build up a coherent command center. You would expect them to look for places like that or islands in the southern Philippines. Now they will never find another state that they can take over like they did with Afghanistan. I genuinely think that won't happen again. But it doesn't mean that they can't hide and regroup.

BROWN: Let me ask -- we've got about 15 seconds -- let me ask you something completely off the wall. Are you surprised, four months later, that there has not been another attack against American interest since the 11th.

ELLIOTT: I am. I am surprised.

BROWN: (UNINTELLIGIBLE) yesterday answered the question the same way.

ELLIOTT: I am surprised. I don't know whether we have been lucky. I don't know whether we've been effective in our security apparatus. I don't know what it is, but I am surprised.

BROWN: Michael, thank you. It's always good to see you. Come back soon.

Coming up next, a troubling admission from one of America's best known historians, the Stephen Ambrose story. This is NEWSNIGHT for a Friday.

BROWN: Now, you've got to listen carefully here to what we're about to do. For most of his career, the historian Stephen E. Ambrose was best known for his exhaustive multi-volume biographies of Dwight D. Eisenhower and Richard M. Nixon. He was respected in his field, but seldom read by the general public until 1994, when he published "D-Day", a sentimental tale about rank-and-file soldiers. "D-Day" became a best seller and it changed Mr. Ambrose's life. He became the most prolific, the most commercially successful and the most academically accomplished of the new group of blockbuster historians.

Lately, however, some historians have begun to wonder about the toll of his prodigious pace. On Saturday, he acknowledged that his current best seller, "The Wild Blue", inappropriately borrowed the words and phrases of three passages from a book by the historian Thomas Childers, "The Wings of Morning."

You might have noticed by my name the little asterisk. There's a reason. Everything I just said about Stephen Ambrose was lifted from today's edition of the "New York Times". The credit goes to reporter and writer David Kirkpatrick. A gimmick? Absolutely. We hope it got your attention. Here's a story about Ambrose, his work and the questions about his integrity reported by Garrick Utley. And I guarantee you, Garrick wrote every single word himself.

(BEGIN VIDEOTAPE)

GARRICK UTLEY, CNN CORRESPONDENT (voice-over): It is World War II. American bomber crews fly into the hell of enemy fire. Stephen Ambrose tells a story.

STEPHEN AMBROSE, AUTHOR: Absolute terror. The men are looking out and they are counting the parachutes -- one, two, three, sometimes it got up to as high as five. Sometimes there were no parachutes at all.

UTLEY: Gripping stuff. But now we learn that Stephen Ambrose, with his million dollar book deals, enriched his current best seller about those bomber crews by copying sentences and whole passages from other writers.

So what are we to make of this popular author now? He has apologized for what he calls his "omissions."

(on camera): Now, of course, this is not the first time that an author has been found out passing off someone else's writing as his own. But as this story unfolds, it turns out that Ambrose's omissions, or plagiarisms -- you choose the word -- have been going on for years.

(voice-over): Ambrose's fame and wealth grew when his book, "Band of Brothers," was turned into a television series. Many others have written of the same events.

Here is Joseph Balkoski and his book about the Normandy landings. "The 175th captured enemy troops of so many different ethnic backgrounds that one GI blurted to his company CO, 'Captain, just who the hell are we fighting anyway?'"

Here is Stephen Ambrose eight years later in his book, "Citizen Soldiers." "The 29th Division captured enemy troops of so many different nationalities that one GI blurted to his company commander, 'Captain, just who the hell are we fighting anyway?'"

Ambrose, whose prominence brought him to the dedication of a D- Day museum with former President Bush, gives credit to other authors in his books, but not the quotation marks, to show that his words are really theirs. The prolific author who churns out a book every couple of years says he will make a full explanation of what he was doing when he also used other writer's words in a book on Richard Nixon, and one on General George Armstrong Custer.

(on camera): Now, as Stephen Ambrose would be the first to acknowledge, his problem makes for a good story. And we journalists, who like to think that we are writing the first draft of history, are not above casting a first stone, to borrow two cliches. But then, this caught our eye.

(voice-over): On Wednesday, an Associated Press reporter wrote: "Many fellow historians believe Ambrose might have so internalized Monohan's text he unconsciously replicated it, or that the problem originates with his team of research assistants."

The next day, a newspaper reporter in New Orleans wrote, without credit or quotation marks: "Many historians say Ambrose might have so internalized his source materials that he unconsciously replicated it, or that the problem originates with his team of research assistants."

(on camera): Of course, in journalism we do not like the word "plagiarism." We prefer to call it recycling. And you can quote me on that.

Garrick Utley, CNN, New York.

(END VIDEOTAPE)

BROWN: Oh, my. General Tommy Franks in a moment. This is NEWSNIGHT on CNN.

(COMMERCIAL BREAK)

BROWN: I've said 1,000 times, I'm sure that a reporter's life is the best life I can imagine. You get a box seat for the great events of history. There are times, and we've had more than a few in the last four months, when a reporter's life and the box seat it provides is pretty grim stuff. And then all of a sudden you'll have a day when, once again, you realize how lucky you are and how great it is to have a front row seat.

Yesterday in Tampa was one of those days. To have an hour with General Tommy Franks, to ask whatever I wanted to ask, to listen and to react to a subject who I thought was working as hard as I was. Tonight's installment covers 30 years of the general's life, and the country's. It starts at a time that was important for both of us, the late '60s, in Vietnam.

(BEGIN VIDEOTAPE)

BROWN (voice-over): With four stars on your collar, it's easy to get people to follow you.

GEN. TOMMY FRANKS, U.S. CENTRAL COMMAND: And hey guys, you all go back to work now. God bless you, and thanks a lot.

BROWN: But getting four stars on your collar means 30 years of tough, sometimes dangerous work. It means learning tactics and strategy. It means learning to lead.

(on camera): When you were 22 years old...

FRANKS: Oh, dear.

BROWN: And you went to Vietnam in 1967? FRANKS: Right.

BROWN: What'd you learn there?

FRANKS: I learned about -- I learned the basic things a young lieutenant learns. I learned the value of trust in people. I learned about the importance of people. I learned about the military chain of command. I learned about sergeants, I learned about what they do. I learned about privates. I learned about dedication. I -- those things, things that I think a young lieutenant should be learning at about that point in time. I didn't have a global view, then, but I sure learned a lot.

BROWN: And when you came home in '69...

FRANKS: '68.

BROWN: ... and at home there was a different war being fought. What did that teach?

FRANKS: At the time, it didn't teach me anything, Aaron. But some years later, I read -- you mentioned "Tsun-Tsu," I read another book by a fellow by the name of Clausewitz. And he talks in there about a remarkable trinity, that being the need to have correct alignment between the state, military capacity and the will of the people, in order to successfully prosecute military operation.

I think if one thinks about Vietnam and asks the question, did we have a decision of the state? Well, yes. Did we have military capabilities? One could argue, but I would posit, yes. Did we have the will of the people? This is a different time.

BROWN: In that regard, and in only that regard, because I'm going to use a word that will make us both a little uncomfortable. Do you consider yourself lucky that you are running this moment, this war with enormous public support behind you?

FRANKS: Without a doubt. As you mentioned, the second war, the war in Vietnam, Operation Enduring Freedom. Compare and contrast. It is indeed an honor to be a part of a war that is righteous in its goals and has the support of the American people.

And it may well be that it has the support of the American people because it is righteous in its goals. And so, there's nothing -- there's nothing pleasant about a war, but if one has to fight one, I think those are the conditions we'd like to see to be able to do it.

BROWN (voice-over): General Franks misses soldiers. That's just the way it is. He is a boss now, a strategist, a long way from the troops. But the decisions me makes may well determine if they live or die. He is a man who understands the complexities of war. And while the weapons have changed, the basics have not.

This exchange centers around words written more than 2,000 years ago, something he's thought a lot about. The words are of a Chinese philosopher. (on camera): I read a quote a long time ago. A really long time ago, and I think the quote itself is really, really old. I want to read it to you. "Precise knowledge of self, and precise knowledge of..."

FRANKS: "Tsun-Tsu." Twenty-five hundred years ago. I recognize it, Aaron. "Tsun-Tsu," 2,500 years ago.

BROWN: Do you have precise knowledge of self?

FRANKS: I'm not sure.

BROWN: And precise knowledge of the threat?

FRANKS: I'm not sure. I'm not sure that we -- that -- I'm not sure that I would apply the term "precise." I am sure that we have a very good sense of our own capability, the friendly capability, of self. And I believe that we have a working knowledge of the threat, and I believe that the combination of imperfect, but adequate knowledge of self and the same knowledge of the threat at the end of the day, produced the same outcome we're after.

BROWN: So how does this soldier's soldier, smart and in an unassuming way scholarly, how does he measure success -- each day, as he must.

FRANKS: One will measure at the end of the day the success of this operation, whether or not we get the job done. And that's the way it should be. But if we look at it daily, what we're focused on daily is to say what do we know or what do we think, and then to match a plan to what we know or what we think to be sure we have set conditions to either confirm or deny what we thought was going to happen, and do that by our action. That's the way I measure success.

We recognized in this particular operation...

BROWN: Like all of us, General Franks is more than his job. He is husband of 30 years, he is father to a grown daughter, he is grandfather Pooh to his grandchildren. But he is also a soldier, virtually every minute of his life.

I read where your daughter said, that you have had two families in your life, and the first one was the army. Disagree with her?

FRANKS: Had a great friend, a few years ago, someone asked him if you had all this to do again, would you do it the same way. He said, obviously not. I'm a lifelong learner, I would change things. But there are two things that I would do the same. I would marry the same woman and I'd join the United States Army. I think he was right when he was said it, and I think it's pretty instructive today. So I won't say two families, I will say one family wrapped within the context of the United States military. Both of have been good for me, and I'm pretty pleased with both of them.

BROWN: Thank you for your time.

FRANKS: Sure, thanks for your time. And thanks for the great reporting.

BROWN: Thank you, sir.

(END VIDEOTAPE)

Tommy Franks in Tampa, yesterday. In a moment segment seven: Enron set to music. We'll be right back.

(COMMERCIAL BREAK)

BROWN: Finally for us tonight, and for the week: Enron for dummies. We understand that not everyone in the audience gets this big time business story, as well as, well let's say Lou Dobbs. And we also get that not every one of you, if you were being perfectly honest, gets the political implications of this story in the same way our friend Jeff Greenfield does. In fact, we assume most of you are about as lost in it all as, well, I am. And I don't know about you, but when I get lost in something, I want accordion music.

Segment seven tonight is our friend Barry Mitchell. We should probably call this section eight.

BARRY MITCHELL, MUSICIAN (SINGING): I put all my savings once in energy. Enron -- run, run, run. Enron -- run, run, run.

Lost it in the country's biggest bankruptcy. Enron -- run, run, run. Enron -- run, run, run. Biggest bankruptcy. Federal inquiry. Who made me loose my shirt. Enron -- run, run, run.

Company employees argue they were stopped. Enron -- run, run, run. Enron -- run, run, run. From selling off their shares as the value dropped. Enron -- run, run, run. Enron -- run, run, run.

Yes, there's tension now, where's my pension now. And what did Cheney know. Enron -- run, run, run. Enron -- run, run, run.

Everyone sing! Enron -- run, run, run. Enron -- run, run, run. Fat cats only. The only ones to profit were the company brass. Enron -- run, run, run. Enron -- run, run, run.

Something smells funny here and it's not gas. Enron -- run, run, run. Enron -- run, run, run. And the way it looks, did they cook the books? Let's investigate. Enron -- run, run, run. Enron -- run, run, run.

Biggest bankruptcy in our history, pals with the G.O.P. Enron -- run, run, run. Enron -- run, run, run.

BROWN: You got it now, don't you?

A post script tonight: This week, a television program which I had a little something to do with -- called "WORLD NEWS NOW" airs, as they say on another network, celebrates it's 10th anniversary. Our congratulations to them. But that run pales in comparison to the run of another show here in New York, a stage play, "The Fantasticks."

(CAST PERFORMING "TRY TO REMEMBER")

BROWN: "Try to Remember," the opening song from a show that has run for 42 years. And it is closing Sunday after 17,162 performances. By way of comparisons, "Cats" ran only for 18 years. We'll talk with Ephram (ph) Abraham on Monday, one of the number of actors who went on to fame after cutting their teeth on the "Fantasticks."

And we'll have a look at one of its last performances. Also, next week we'll be in L.A. Tuesday through Friday. It will be an interesting week, we hope you'll join us. Have a terrific weekend, and a good night from all of us at NEWSNIGHT.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com