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CNN Newsnight Aaron Brown
Optimist About Daniel Pearl; Lindh Indicted with More Charges; Andersen CEO on Capitol Hill
Aired February 05, 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: I get excited when I hear you say it that way. Thank you, Mr. King, and good evening again everyone. Someone asked me on an airplane yesterday what I do when I report that someone who is dead turns out to be alive. I answered honestly, I don't know.
Thank goodness it's never happened to me, but I do know that mistakes get made and obviously one was made by news organizations that reported that Daniel Pearl had been found dead over the weekend. I know one of those organizations and how it works, ABC News. I worked there for a decade, and I'm certain they were careful and believed they had it right. No one wants to be wrong, ever, and calling someone dead who isn't is just about the worst kind of wrong you can be.
I know less about FOX News, but I'm sure they were sickened by their mistake as well. I can't imagine otherwise, and I'm sure they would be equally generous with me.
There are more twists in the Pearl story today, more worries, some hope. Whatever happens, we will always marvel at the strength of his wife. You'll hear from her tonight. The rest of us can only hope that if we were faced with such an awful reality or anything like it, we'd be half as courageous and half as strong.
And with that, we begin our whip around the country; in this case our whip around Washington and the correspondents covering it, and the Danny Pearl case tops that. Andrea Koppel at the State Department, Andrea a headline please.
ANDREA KOPPEL, CNN CORRESPONDENT: Good evening, Aaron. Well after days of uncertainty surrounding the fate of Wall Street Journal reporter Daniel Pearl tonight, officials here in Washington and in Pakistan are expressing what just last week would have been unimaginable, optimism.
One senior State Department official telling me with confidence, "we are very optimistic. We believe he's still alive." Aaron.
BROWN: Andrea, thank you, back with you shortly. Now the latest on John Walker Lindh, and while we haven't counted it just may be that Susan Candiotti has heard this line more than anyone else in the company. Susan, a headline please. SUSAN CANDIOTTI, CNN CORRESPONDENT: Aaron, good evening. The Californian who allegedly took up arms against his country, indicted today with even more charges than before; and now this, for the first time, the defense offering a reason why John Walker Lindh talked to the FBI without a lawyer present. Aaron.
BROWN: Susan, thank you. On to Capitol Hill and the maze of Enron hearings to contend with keeps Kate Snow busy. She's there tonight, Kate, a headline please.
KATE SNOW, CNN CORRESPONDENT: Aaron the message today, Congress isn't going to go easy on anyone involved with the Enron scandal. On one side of Capitol Hill today, they had the CEO of Andersen. That's the firm that used to cover Enron's books.
On the other side of Capitol Hill, they talked to people about Enron's 401 (k) plan, specifically the managers of that plan. And by the way, they found Kenneth Lay, the former CEO of Enron. He's been subpoenaed.
BROWN: Kate, thank you, back with all of you shortly. Also ahead tonight on NEWSNIGHT, Enron and the stock market, has the collapse made investors wonder if their companies, the ones they own stocks in, are cooking the numbers as well.
We'll also look at the selling of 9/11 and that fine line between patriotism and bad taste. And an intriguing story tonight about the death penalty, Catholicism, and the law, and one very outspoken Supreme Court Justice, all that coming up in the hour ahead.
We begin with the fate of the kidnapped Wall Street Journal reporter, Daniel Pearl. In so many ways, this is a hard story to report. Sources, even honest ones, can get it wrong. Sometimes they're just mistaken. Sometimes they're being less than honest for reasons of their own, and its not always easy to know which or why.
As we said, we'll hear again from Pearl's wife in a few moments, but first the developments of the day, CNN's Andrea Koppel at the State Department. Andrea, good evening to you.
KOPPEL: Good evening, Aaron. Well investigators haven't yet located Daniel Pearl, but they believe they are very close to locating him. One source close to the investigation told me they believe that it could break at any time.
U.S. and Pakistani officials believe they've identified a couple of key suspects in this case who are still at large tonight in Pakistan, but they believe that these individuals could lead them to Daniel Pearl.
Now officials have identified one of these individuals, the ringleader of the kidnapping plot alleged to be someone by the name of Sheikh Omar Sayid (ph). He's a young Pakistani militant with a British passport and a checkered past.
Sayid was one of three men who was freed from an Indian prison back in December of 1999. He was freed in exchange for the release of passengers from an Indian Airline jet that was hijacked. Sayid's alleged involvement in Pearl's kidnapping opens the possibility, say officials, that two militant Pakistani groups are also involved.
One of them Harkat-ul Mujahideen, and the more radical Jaish-e- Mohammed. The U.S. says both groups are notorious for carrying out acts of terrorism in Kashmir, but despite the fact that there have been no new e-mails and more importantly no knew e-mails with new photographs of Daniel Pearl to authenticate it, officials say that they believe that they are very close to tracking down Pearl.
Sayid and another unidentified Pakistani militant were fingered as key suspects today and the reason, the big break came from the arrest the Pakistani officials made, Pakistani police made of three individuals. They got information, Aaron, from them which now leads them, they believe, down the road to what they hope will be the imminent release and the imminent finding of Daniel Pearl.
BROWN: Well, obviously we hope they're right. Let me -- I'm not sure I understand Andrea how the absence of e-mails and the absence of any new pictures leads to optimism, because it to me is almost counter-intuitive.
KOPPEL: Absolutely. What I meant to say was that despite the fact that there had been no new e-mails, and more importantly no new e-mails with recent photographs to authenticate the fact that Daniel Pearl was still alive, thanks to the detention of these three Pakistani suspects, they were able to get information which they believe has cracked the code and has led them to at least finger two key suspects, who are now being searched out by police in Pakistan, and they believe that these two individuals can lead them to Danny Pearl.
BROWN: Got it, thank you. I hope they're right. Some day you have a feeling that if this ends well, it's going to be a great story how this investigation was done. Thank you, Andrea Koppel at the State Department.
Now Danny Pearl's wife Marianne, reminder she's six months pregnant and her husband pictured in chains, a gun to his head, then reported dead, then reported to be alive. Tonight, there's hope. She has offered to change places with her husband. It is just one of the things she said to an interviewer from the BBC.
(BEGIN VIDEOTAPE)
MARIANNE PEARL: Even though I'm like really suffering, I do not give up on the idea that, you know, making innocent people suffer would not help in any way. It was like, it would be like me saying, oh the Pakistani are holding my husband prisoner, you know, if I was making a general statement. And it's the opposite, you know.
Since I've been in Pakistan, I've learned so much about the people. I've learned so much about Islam, you know, their religion. Even my own opinion has, you know, like broadened and you know, so I have a lot of respect for these people. So I wouldn't be afraid to talk to them, you know.
On the contrary, like there's so many issues. The first thing I would tell them is like don't harm an innocent man, you know, because you're just going to like, okay create one more misery, you know use Danny as a symbol, and all of this is completely wrong, completely wrong, you know. But I could argue that, you know, so that's the first thing.
There's so many issues that we could talk about, but like the main thing is don't break, you know this dialogue still can go on and we can't like give up on that. That's what I would say mainly.
(END VIDEOTAPE)
BROWN: The wife of Danny Pearl. Now on to the John Walker Lindh story and today's indictment, and our first look at a key to the government's case. Attorney General John Ashcroft calls it a time line of terror, evidence he says that John Walker Lindh, 20 years old, knew exactly what al Qaeda was all about and understood precisely what he was getting into. Once again, CNN's Susan Candiotti.
(BEGIN VIDEOTAPE)
CANDIOTTI (voice over): The ten counts include the use of hand grenades and automatic weapons. It also recaps a meeting in which Osama bin Laden allegedly thanks John Walker Lindh for his help.
JOHN ASHCROFT, ATTORNEY GENERAL: It is extraordinary for the United States to have to charge one of its own citizens with aiding and conspiring with international terrorist groups whose agenda is to kill Americans.
CANDIOTTI: Through the Freedom of Information Act, CNN obtained this new photo of Walker Lindh, taken after his arrival at a suburban Washington jail last month. On the eve of his pretrial detention hearing, Walker Lindh's defense team argued he won't try to escape and he's not dangerous.
In a 15-page motion, Walker Lindh's lawyers paint an intense picture of the conditions in which their client was kept for at least two days, before he made a statement to the FBI. His clothes cut off, his hands and feet shackled, bound with duct tape to a stretcher.
"Still blindfolded, completely naked, he was then placed in a metal shipping container." His attorneys argue, no wonder he talked to the FBI without a lawyer. In their words, "the only way to escape the torture of his circumstance was to do whatever the agent wanted."
Walker Lindh's attorneys insist that makes his statements unreliable and inadmissible. The motions show how the public relations war is barreling ahead.
CHRISTOPHER TRITICO, FORMER McVEIGH DEFENSE ATTORNEY: In the beginning, it's a huge public relations battle.
CANDIOTTI: Christopher Tritico helped defend Oklahoma City bomber, Timothy McVeigh. His lawyers had to deal with this image.
TRITICO: We never overcame it in the McVeigh case.
CANDIOTTI: These images could mean similar problems for Walker Lindh.
TRITICO: What it does is, it implants immediately in the mind of this jury, this person is a demon. He's against what every American believes in.
CANDIOTTI: In a CNN interview, Walker Lindh appeared to have no regrets about going to fight for the Taliban.
UNIDENTIFIED CORRESPONDENT: Was this the right cause or the right place?
JOHN WALKER LINDH: It is exactly what I thought it would be.
CANDIOTTI: A former Federal prosecutor says that interview, if admitted in court, could be devastating.
KENDALL DOFFEY, FORMER U.S. ATTORNEY: If you look at the context of those comments, they don't show somebody who's babbling, barely with his wits intact. They show somebody who was specific, who knew just what he was talking about.
(END VIDEOTAPE)
CANDIOTTI (on camera): And when it comes to public perception, even the California law firm hired by Walker Lindh's family apparently has reason to worry. Reportedly because of client complaints and employee concerns, the legal team is now representing Walker Lindh privately. Aaron.
BROWN: Just a quick one here, I think. Has the government responded to the motion or the allegation dealing with the conditions under which John Walker Lindh was held prior to talking to the FBI naked, strapped to the stretcher and the container and the rest?
CANDIOTTI: Only in the most general sense, that they stand by the conditions under which he was held and under which his statement was taken. Other than that, the Justice Department has said it will do its talking in court tomorrow morning.
BROWN: It doesn't specifically deny that in other words?
CANDIOTTI: That's correct, and they really won't go far beyond what the indictment says, and says you'll hear from them in court.
BROWN: And I assume the bail hearing, other than they'll oppose bail, we don't know much more about that?
CANDIOTTI: That's right.
BROWN: Thank you. Susan Candiotti with us again tonight from Washington. Just ahead tonight on NEWSNIGHT, damning evidence against Enron, more, this time coming from the company itself again. NEWSNIGHT for Tuesday back home in New York City.
(COMMERCIAL BREAK)
BROWN: Call me a cynic, but perhaps there's a relationship to the amount of money a successful company spends on political contributions and the number of investigations launched by Congress when that company fails.
Where Enron is concerned, we count eight Congressional investigations underway. Now you may be sitting there asking yourself, why not consolidate them? Let's say one for the House and one for the Senate. Wouldn't that be more efficient? Fewer politicians, fewer words, same result.
That's why you're not in Congress. Two of those committees have subpoenaed Enron's former CEO Ken Lay, who backed out of a voluntary appearance set for yesterday. When he does show up, he's expected to say nothing. Again, CNN's Kate Snow on Capitol Hill.
(BEGIN VIDEOTAPE)
SNOW (voice over): Kenneth Lay's attorneys say he will show next week before a Senate panel Tuesday, a House committee Thursday. Members of that same house committee spent a frustrating day trying to get answers out of another executive, CEO Joseph Berardino with Enron's former accounting firm, Arthur Andersen.
REPRESENTATIVE GARY ACKERMAN (D) NEW YORK: How do you let this happen Captain? I mean your ship is going to go down and you're going to be lashed to the mast unless you start talking to us about what happened.
JOSEPH BERARDINO, CEO, ARTHUR ANDERSEN: We are still getting facts. You want me to give you conclusions without all the facts.
SNOW: Others asked if Berardino would be willing to contribute to a fund for Enron employees who lost their savings?
BERARDINO: We feel deeply for the people who have been impacted.
ACKERMAN: They express the sympathy. They'd like the cash.
SNOW: Across the capitol, one former employee told Senators she'll have a hard time paying for her daughter's wedding in September.
DEBORAH PERROTTA, FORMER ENRON EMPLOYEE: As a mother, this is always I always dreamt of doing for my daughter. Today that burden has fallen on her shoulders.
SNOW: Next up, the women in charge of retirement plans for Perrotta and everyone at Enron, Cindy Olson testified that Sherron Watkins, the woman who warned of problems at Enron last August, told Olson about her fears day before going public.
CINDY OLSON, ENRON HUMAN RESOURCES: She told me that the allegations in her memo, she didn't know if they were technically or legally correct. She was very concerned about the perception.
(END VIDEOTAPE)
SNOW (on camera): But the perception that Senators seized on today was that Olson knew that Enron was going down, that things were going badly, and yet she did nothing to tell employees that maybe they ought to look at their 401 (k) plan, Aaron. Maybe they ought to diversify, back to you.
BROWN: And do we know much about how Enron employees or what Enron employees did with their 401 (k) money? Did it all go into Enron stock or most of it?
SNOW: Well we know that a lot of it did, and one interesting fact that my colleague Brooks Jackson was able to get today, they did a study of just how much warning it would have taken to get Enron employees to react and to diversify. A lot of them have said that they were blacked out during that two-week period in October. There was a blackout and that's why they feel they lost so much money, because the stock price was really low during that blackout.
But what my colleague found was actually that a lot of people, a lot of employees working for Enron were actually buying Enron stock, even up until that blackout period and even when they knew that there was this new announcement that their earnings were down, that Enron -- they had announced that billion dollar quarterly loss. Even at that point, Enron employees, many of them, were simply buying up more Enron stock thinking it was a good deal. Aaron.
BROWN: And, Kate, where do the hearings go from here?
SNOW: Tomorrow there are three more hearings. They're mostly academic. One of them will feature Elaine Chow (ph) the Labor Secretary. She'll be talking more about this theme about 401 (k) plans, and then on Thursday Aaron's really probably the biggest next hearing.
That will feature Jeffrey Skilling. He's the former CEO of Enron. He's the one who took over for Ken Lay and then Ken Lay took over for him later when he left last year. It will be interesting to hear from him, because we haven't heard from him publicly just yet, and we hear he's going to testify and not take the Fifth.
BROWN: We look forward to it. Kate Snow on Capitol Hill tonight, thank you. Even if everyone connected with Enron were to stand up and take the Fifth about all of this, there is still plenty of damning evidence out there, even if the shredding goes on.
Some of it comes from inside the company itself, from a report commissioned by Enron's board, which has a few questions of its own to answer. In any case, this report was released over the weekend, and tonight a chapter from it focusing on Enron's former Chief Financial Officer and the deals he made. Here's CNN Financial Correspondent, Allan Dodds Frank.
(BEGIN VIDEOTAPE) ALLAN DODDS FRANK, CNN CORRESPONDENT (voice over): Southampton, the fancy Houston neighborhood for Enron executives, including former Chief Financial Officer Andrew Fastow, and the apparent inspiration for Southampton Place, one of Enron's most unusual partnerships.
This partnership, says William Powers, Chairman of Enron's Special Investigating Committee, provided absolutely appalling enrichment for a small number of Enron employees. These employees under Fastow's direction, helped keep massive amounts of Enron's debt off its books and they were richly rewarded.
Here's how one deal worked. To try to maximize Enron's investment in Internet company Rhythms NetConnections, and to borrow money against Enron stock, whose sale was restricted for four years, Enron linked both stocks to a series of partnerships in 1999.
Then when Enron wanted to sell its stake in Rhythms NetConnections before that Internet stock declined, it had to unwind those partnerships. And to do that, it had to pay off the Fastow associates who secretly controlled Southampton Partners.
RICHARD SPEEDEN, FORMER SEC CHAIRMAN: This was an investment in an entity whose business was trading with their own company, an it would make money if it was able to buy assets below, at a lower rather than a higher price or at a good deal against the parent company itself.
FRANK: One official, Michael Copper, invested $125,000 in a partnership and got back $10 million. Two others, a lawyer and a treasurer, put in $5,800 each and got back more than $1 million apiece. Fastow's partnerships collected $30 million.
Some of Fastow's conflicts surfaced in some limited partnership documents seen by a few privileged investors, including CALPERS, the California Public Employees Retirement System. But CALPERS and other investors said nothing publicly.
PATRICIA MACHT, PUBLIC AFFAIRS CHIEF, CALPERS: We didn't know that there was fraud, deception and the extent to which executives at Enron would deceive everyone.
(END VIDEOTAPE)
FRANK (on camera): Although CALPERS made its reputation as the biggest corporation gadfly, opposing corporate abuse and taunting good management, it defends its silence in this case. As the spokeswoman put it, "we're not Ralph Nader or Robert Hood. We're here to protect the interest of our shareholders, and we did that." Aaron.
BROWN: Well, OK. In and of themselves, are these partnerships illegal? I mean the word fraud gets thrown around.
FRANK: Well, here's what they did. They were designed to do things that Enron could not otherwise do legally.
BROWN: Enron couldn't do it. FRANK: Enron could not do it.
BROWN: But was it illegal to set up -- I want to be careful I don't use a legal term -
FRANK: If it creates -
BROWN: -- in a non-legal way. But a shell company to do what it could not do?
FRANK: If you're part of a conspiracy, it can easily become illegal, and if the point of the conspiracy is to commit fraud, that would make it a crime. So that's the short answer.
What these partnerships were designed to do was, in the case of the one we talked about in the piece for instance, one aspect of it was to get a loan for Enron against Enron stock without showing that debt on the main books, and it did that by taking the partnerships off shore.
BROWN: Off shore, literally out of the country?
FRANK: Out of the country. Now, Part Two of it, you are not allowed to value your stock at what you suppose it will be worth four years from now. The other part of this partnership was that Enron stock would be valued, what it would be worth four years from now, and the Rhythms NetConnections stock would be valued at what it would be worth three or four years from now as well. And those were balanced off to make it look as though it was an even investment, when in fact, none of that behavior would have been allowed, had it been in the open.
BROWN: Thank you, Allan. I know I should have gone to business school. My father always told me I should go to business school. I should have listened.
FRANK: Well, you're not in jail, are you?
BROWN: Not yet.
FRANK: Or before Congress.
BROWN: Not yet, thank you. That could happen some day though. We'll be careful. Thank you. Later in the program, there's a fascinating thing happening on the market, whether investors are looking at Enron's fall and seeing the companies they own. We'll take a look at that. Also up next, controversial death penalty views of Justice Scalia. This is NEWSNIGHT from New York.
(COMMERCIAL BREAK)
BROWN: President Bush today was out on the road again selling the budget the White House released yesterday. Today, the President was in Pittsburgh with Homeland Security Director and former Pennsylvania Governor Tom Ridge, trying to rally support for his spending increase to fight bioterrorism. (BEGIN VIDEOTAPE)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: All in all, my budget will commit almost $6 billion to defend ourselves against bioterrorism, as Tom mentioned an increase of over 300 percent. It's money that we got to spend. It's money that will have a good impact on the country. It's money that will enable me to say that we're doing everything we can to protect America at home.
(END VIDEOTAPE)
BROWN: Most of the spending increases in the President's budget can be found in homeland security or in defense. The military would get it's biggest increase in a generation under the White House budget plan.
But the big fights will not come so much over who gets what or more. It will come over who gets less. It always does. Someone once said that a gentleman never discusses politics or religion in polite company. We're going to take our chances and talk about both, or at least about the intersection between the two.
We do because of a story that is compelling and fundamental. It concerns the Catholic Church, the death penalty and the courts. Judge Anton Scalia recently spoke on these issues. He says he differs with the church's teachings that the death penalty is wrong, but any Catholic judge who follows the church on this one, in Justice Scalia's opinion at least, doesn't belong on the court.
"In my view" said the justice "the choice for the judge who believes the death penalty to be immoral is resignation rather than simply ignoring duly enacted Constitutional laws and sabotaging the death penalty."
Joining us to talk about this, Robert P. George, Professor of Jurisprudence at Princeton University. It's nice to see you. Thanks for joining us.
ROBERT P. GEORGE, PRINCETON UNIVERSITY: Thank you, Aaron for having me on.
BROWN: Just a quick one to start. It is pretty rare, at least it seems to be, justices don't go out and give interviews on controversial subjects. So are you surprised? This wasn't an interview. It was a panel. Are you surprised that Justice Scalia talked about it at all and in such a direct way?
GEORGE: No, I'm not at all surprised because Justice Scalia has been an unusually outspoken justice over many years that he served on the bench, and he's been willing to discuss a range of controversial topics, including the role of religion in public life and now the death penalty. So, no it's not a surprise to court watchers.
BROWN: And I need to understand, I think, a little bit better his view that the church is wrong. As a non-Catholic, I thought the Pope is always right.
GEORGE: Well, there's the Doctrine of Papal Infallibility and I think that's what you have in mind.
BROWN: Yes.
GEORGE: But that is not a doctrine that means that the Pope is always right. It means that under certain conditions, teaching on certain subject matters, the Pope has a certain gift, what Catholics call a careism of infallibility, where the conditions are fulfilled and where he, himself proposes to be teaching a particular doctrine of faith and morals infallibly.
Now, very rarely have those conditions been met, very rarely have popes to teach infallibly. And certainly here on the death penalty, no one would claim that the pope is putting forward an infallible teaching. Now, that doesn't mean that Catholics aren't bound to believe it, but it does mean that it's not infallibly proposed.
BROWN: And on this one, the Justice Scalia says the church basically has changed historical position, or the pope has changed historical position, and he simply doesn't accept that.
GEORGE: Well, the justice is right that the position that the pope has taken in his great encyclical, "Evangelium Vitae," in 1995, and which has now been incorporated into the catechism of the Catholic Church, is different from the traditional position, because the traditional position historically did allow for the death penalty as a retributive punishment in certain very high and -- heinous -- cases of heinous crimes.
Now the pope is teaching that only under the rarest circumstances, indeed, circumstances which he says, with the advent of modern penology, are practically nonexistent in the modern world, can the death penalty be justly imposed.
So what you have here is what, in the Catholic tradition, is called a development of doctrine. The church has refined its position, it's rendered the position less permissive than it once was. The church is now teaching that the death penalty as immoral as imposed as a retributive punishment and can only be imposed, as I said, in very rare cases where there's no alternative, because if the death penalty is not imposed, the murderer himself will definitely murder again.
BROWN: And do we know of any case -- do you know of any case, you're the law professor here, where a judge has said, you know, I don't really care what the law is, I happen to believe the Catholic Church's teaching or the pope's teaching on the death penalty, and that's the direction I'm going? Or is the justice making a theoretical observation here?
GEORGE: Well, it's neither of those. I think what Justice -- just to answer your question first, I can't imagine that a judge would admit to sabotaging the legal system...
BROWN: Yes, right.
GEORGE: ... by claiming that he's doing something contrary to the law. I suspect what a judge would do if he felt that way and believed he shouldn't sabotage the legal system would be to do what Justice Scalia suggests, which is to resign, or perhaps, less dramatically, to recuse himself from death penalty cases.
I think what Justice Scalia's concerned about is judges claiming to be staying within the bounds of the law, claiming not to be sabotaging the law, but in fact are sabotaging, sabotaging the law by refusing to impose the death sentence where the death sentence is required by law.
BROWN: But does that, in fact, happen? Don't juries make these judgments in most cases anyway?
GEORGE: Well, not always. I mean, there are circumstances where it's going to be within the authority of the judge to impose the death sentence. Different states differ, of course, as to the degree of discretion that's in the hands of the jury and in the hands of the judge. But it can certainly be relevant to the judge, Justice Scalia's right about that.
BROWN: Professor, thank you, it's really interesting to me, and I assume to Catholics and non-Catholics as well. Thanks for your time.
GEORGE: Thank you very much.
BROWN: Thank you, sir.
Ahead on NEWSNIGHT -- this is a change of gear, isn't it? Struggle at advertising in the world after September 11. Red, white, and blue and a lot of gray. We'll be right back.
(COMMERCIAL BREAK)
BROWN: Well, back down at ground zero, there was a series of messages stenciled into some of the barricades trying to get people into a certain bar. "Wash off the dust at the closest bar to ground zero," it read. "Infidels welcome here."
It did not take long for some angry responses to appear. "Why are you trying to profit from our pain?" said one we can repeat.
Clearly, the pitch wasn't very sensitive.
The Super Bowl the other night was replete with messages that married the tragedy of September 11 or the heroism of that day or the fears that followed with one pitch or another.
(BEGIN VIDEOTAPE)
(voice-over): Some ads are easy and even comforting. This one, about strength of character, from the New York Stock Exchange, for example. (BEGIN VIDEO CLIP, MONSTER.COM AD)
RUDOLPH GIULIANI, FORMER NEW YORK CITY MAYOR: On September 11, we as Americans were attacked because of our beliefs.
(END VIDEO CLIP)
BROWN: Or this one, which ran on Super Bowl Sunday, Rudolph Giuliani thanking the country for supporting New York. It was paid for by Monster.com.
It gets trickier when you try to sell things, but Budweiser during the Super Bowl showed that it can successfully navigate the gap -- and it's a large one -- between September 11 and beer.
Trickier still are the ads from designer Kenneth Cole. Cole has been running edgy and political ads for years, ads often dealing with AIDS. Sunday the company ran this newspaper insert, "Things That Have Changed Since September 11," from family to drivers to fear.
Are such ads offensive? Do they sell anything? Are they really supposed to?
(END VIDEOTAPE)
BROWN: Pleased to have with us Jerry Della Femina, who's chairman of ad agency, been with us before, talked about some of the -- It's nice to you see you.
JERRY DELLA FEMINA, CHAIRMAN, DELLA FEMINA ROTHSCHILD JEARY ADVERTISING: Good to see you.
BROWN: Do clients come in and say, You know, that September 11 thing, that was a big thing, we should try and do some spots around that?
DELLA FEMINA: No. I think that everyone -- everyone wants to do something, and in advertising -- frankly, I don't know anyone who's trying to take advantage of it. I mean, I saw the Kenneth Cole ad and I was thrown by it. But the fact is that Kenny Cole has always tried to do...
BROWN: Yes.
DELLA FEMINA: ... edgy things and tried to -- he had -- he's always had causes, the homeless, ads for a lot of different causes. This -- you know, it's unfortunate that he ran this ad. But I don't think he set out to sell anything, I think he just was trying to do it his way.
BROWN: Why do you say it was unfortunate? Do you think it came across as tacky?
DELLA FEMINA: Yes, I think that...
BROWN: Yes. DELLA FEMINA: ... when you see the prices of the shoes and things like that in the ad...
BROWN: Yes.
DELLA FEMINA: ... suddenly it's commercial. And I don't think he meant it, I don't think that -- you know, somebody had to say, Stop, wait a second, let's get these prices out of here.
BROWN: Do those ads run nationally, or is that something in New York -- we only see in New York?
DELLA FEMINA: Well, it runs in New York. It ran in the "Times" magazine, so I...
BROWN: Yes, I guess it is seen around the country.
DELLA FEMINA: Yes.
BROWN: Because I drive -- when I -- on my way home, there's a billboard up on the West Side Highway that -- and it's one of his ads, and they're always edgy, and they're always actually quite interesting. You may or may not be comfortable with them, but they're interesting.
DELLA FEMINA: They're good, they're good.
BROWN: Yes.
DELLA FEMINA: I mean, you know, they work. But, you know, (UNINTELLIGIBLE), advertising people are just so desperate to do something. Like everyone else, they feel that about -- A quick story. I was waiting for my wife outside, and it was a firehouse where there were a lot of -- you know, there were pictures of firemen who had been lost on September 11, about 14 pictures, and there were some flowers outside.
And this very little old lady came by, and it was a cold night, and she walked by, and she stopped for a second, and she went back and she picked up a plant and she put it up right, and she pushed it closer. And she stepped back again, she looked -- she moved it closer to the pictures.
And I remember thinking to myself, Everybody does what they can. And what she did was just as -- And that's the way advertising people are doing. Sometimes we really miss. And I think Kenny Cole missed this time, but that doesn't mean he wasn't trying to do something.
BROWN: On balance, do you think the ads -- there were an awful lot of them on Sunday's football game dealing with 9/11. Did you think the ads worked?
DELLA FEMINA: Oh, I think the Budweiser ad with the Clydesdales was just wonderful, and a classic, and just a beautiful ad. And things that had to be said. I think any time you try to get people to remember, this is like -- this really is like a wound that just doesn't heal.
BROWN: Do they sell any more beer because of it, or do they just -- do they just get to say something nice, do something nice, and people will or will not remember that it was Busch beer?
DELLA FEMINA: I don't think anyone -- I mean, there was no attempt to sell anything in these ads. I would hate to think that anyone even thought that they could sell one single extra bottle of beer.
I really would like to think that they really wanted to do it, because they're part of America and the Super Bowl is part of America.
BROWN: By and large, I thought the ads were terrific in that.
DELLA FEMINA: They were good.
BROWN: Yes.
DELLA FEMINA: They were really good.
BROWN: Nice to see you. You were good too.
DELLA FEMINA: Good to be back.
BROWN: Come back again, almost any time. Thank you, sir.
Quick update on a story we spent a good deal of time on last week, but that's probably because we were in Minnesota and I'm from Minnesota, the proposed contraction in major league baseball, which is to say they're going to eliminate a couple teams.
Today the commissioner, Bud Selig, announced that baseball would delay eliminating two teams at least until next season. That's good news for my beloved Minnesota Twins, apparently one of the teams that would have gotten the axe.
Commissioner's decision to hold off contraction was not necessarily voluntary, it was forced by a Minnesota Supreme Court ruling that said that at least for now, the Twins have to honor their commitment to play in the stadium, the Metrodome in Minneapolis. Commissioner says contraction will go through next year. In the meantime, it's 12 days until pitchers and catchers report.
Spring may be coming.
On deck -- what a segue, that -- Enron, and whether the rest of the market's a safe place to invest.
This is NEWSNIGHT.
(COMMERCIAL BREAK)
BROWN: Well, Segment Seven tonight.
One of the basic theories of the stock market -- and believe me, if I really understood this, I'd be rich today -- is called the efficient market theory. It's simple. Everything that needs to be known about a company is known by anyone and everyone who cares. The theory depends on the information being accurate, of course.
Enter Enron. Bad information, bad decisions. But what if Enron isn't alone? What if other companies are cooking the books, legally or otherwise, with other auditors looking the other way, ethically or not? What if the market isn't really efficient after all? Or even if investors begin to doubt its efficiency?
In a moment, we'll ask a pretty sharp market watcher some of these questions, if we can find one, but first some background from CNN's Garrick Utley.
(BEGIN VIDEOTAPE)
GARRICK UTLEY, CNN CORRESPONDENT (voice-over): Let's recall, for a little perspective, those yesteryears when the bulls ran through the canyons of Wall Street, the high-tech bubble knew no limits or humility, online investing became a new American pastime, and the latest fad was something called day trading.
Remember that? It was an era waiting for a name.
(BEGIN VIDEO CLIP, DECEMBER 6, 1996)
ALAN GREENSPAN, CHAIRMAN, FEDERAL RESERVE: How do we know when irrational exuberance has unduly escalated asset values?
UTLEY (on camera): But that was then, and now is now. So what are we to call this new time of burst bubbles, stagnant growth, and Enron hangover? Rational pessimism?
Well, that may be too pessimistic.
How about rational skepticism?
(voice-over): Which is the rational conclusion investors have come to as they follow the Enron saga.
TONY CRESCENZI, CHIEF STRATEGIST, MILLER TABAK COMPANY: Markets right now are, in a sense, undergoing a witch hunt, looking for companies that might have problems similar to Enron's.
UTLEY: The investors' fear is that tighter accounting standards may show that other big companies are not making as much money as they have claimed, sending their share prices into an Enron-style free fall. One target of market suspicion is Tyco International, the huge conglomerate, whose stock value has dropped by about 50 percent since the first of the year.
And corporate concern has even reached GE, that icon of a well- managed company.
JEFFREY IMMELT, CHAIRMAN, GENERAL ELECTRIC: If this was about fraud, that's not GE. It doesn't have anything to do with GE. It doesn't resemble GE. It has no comparison within in GE. It's not who we are.
UTLEY: Why is GE's chairman saying this company is no Enron?
JACK COFFEY, PROFESSOR, COLUMBIA UNIVERSITY: Their financial statements are not truly transparent. GE Capital is very complicated, and GE makes a number of acquisitions, and therefore there's some fear that if Tyco gets in trouble because of its 800 acquisitions, GE, which plays in a similar league in terms of acquisitions, may also have a problem.
UTLEY (on camera): Even in the best of times, when an investor buys shares in a company, it's a leap of faith, faith that the value will go up, of course, but also faith that the information, the accounting, the auditing of the company are all accurate.
When they're not, then everyone's in trouble.
(voice-over): Yes, it is hard to hear an Arthur Andersen auditor taking the Fifth.
UNIDENTIFIED MAN: So I respectfully decline to answer the question...
UTLEY: Or watch Enron's former chairman stiff Congress.
Still, there is the good that should come out of this.
CRESCENZI: But the Enron debacle for Americans generally and for investors could actually be a good thing, because it shows investors that Americans simply won't allow for companies like Enron to exist.
UTLEY: Call it the power of the market, or simply the power of the people who are called investors.
Garrick Utley, CNN, New York.
(END VIDEOTAPE)
BROWN: Well, an inspiring way to end a piece, that. But do all of us investors really live up to it, or are we just stampeding once again from greed to fear and back again? Among the things we'll talk with Andy Serwer about. He writes the Street Life column for "Fortune" magazine and "CNN MONEY."
Nice to see you.
ANDY SERWER, EDITOR AT LARGE: Good to see you, Aaron.
BROWN: So is GE in trouble?
SERWER: Well, I don't think GE is in trouble, I mean...
BROWN: Well, that's like the all-time company, right?
SERWER: Right, right. But GE, I agree with Professor Coffey, its financial statements are not transparent. And they like to say, We manage companies that we don't manage our earnings. Managing earnings means making a smooth earnings stream. Wall Street loves nothing better, Aaron, than earnings that climb smoothly. And GE is the master of that.
BROWN: Right.
SERWER: And if you talk to Warren Buffett, he will tell you that it is impossible for a company that size to grow earnings smoothly at 15 percent. It violates the laws of physics.
BROWN: When you say transparent, does that -- that means it's not easy to see what it is they're doing (UNINTELLIGIBLE)?
SERWER: Exactly. It's not easy to understand, it's not easy for people like ourselves, and it's not easy for people on Wall Street either. Very, very complicated company.
BROWN: Well, that -- actually, that's I think the logical next question, because it's not just like a bunch of dummies got taken by Enron, because it's also the people who run Fidelity, and theoretically they're pretty smart, and all these other big mutual fund companies.
So is the best thing to do right now sell it all and go hide in the basement?
SERWER: And put the money in the mattress first?
BROWN: Right.
SERWER: I would say no. I think the market is a dangerous place in the short term, and it's a great place in the long term, and that may sound flip, but it really is true. You know...
BROWN: No, that sounds true -- you could say that any time, any place in history.
SERWER: Right. But you do have to be careful, because the people at Enron, for instance, were buying stock as it was going down the drain at the very last minute. Look at the -- over the 200,000 people who worked at K-Mart. They probably believed to the very end that their stock was going to come back. At some point you do have to pull the plug on a stock that is going down.
A lot of people who own Tyco right now, that giant conglomerate that's in trouble, are wondering the same thing. You have to ask yourself, Is this it? Should I cut my losses and run? And at a certain point, you have to.
BROWN: It's the hardest thing, I think, for investors to do, actually, is to say, Look, that money's gone. It's gone.
SERWER: Yes, it is. Because you always think it's going to get bounced back. And people say once you double up...
BROWN: Right. SERWER: ... you know, you're down 50 percent, you could double up. At some point you do have to cut your losses, though.
And, you know, in a situation like Tyco -- Tyco is different from Enron, let's get -- let's be very clear about that. They make stuff.
BROWN: Yes.
SERWER: Enron didn't make -- You know what Enron did? Enron borrowed money, speculated in derivatives, lost money, and tried to hide it. That's all Enron did. Now, Tyco makes stuff, GE makes stuff, GE makes a lot of cash. So these companies are not going down the drain. But their stocks are getting marked down in this environment.
BROWN: GE makes good things come to life, I think.
SERWER: They make light bulbs, though, right.
BROWN: (UNINTELLIGIBLE). Is the market just, as markets do, then, just -- I don't mean panic in the grand sense, but just a little nuts right now?
SERWER: I think it is a little nuts. But I think it's a good thing. I mean, it's maybe the final -- capitulation is the word they use on Wall Street, the final gasp, the final air being let out of the balloon.
BROWN: That happened last year.
SERWER: Yes, that's what I thought too.
BROWN: Yes.
SERWER: Well, that's what's so interesting, that we thought the dot-com thing unwound, but we didn't really see this as the real dregs. You know, all the accounting that was glossed over in the late 1990s just doesn't cut it any more.
BROWN: Got it.
Nice to see you, Andy, come back again.
SERWER: Thanks, Aaron.
BROWN: I never thought I'd learn so much about accountants in my life.
SERWER: I hear you.
BROWN: The World Trade Center revisited, and remembered, when we come back.
(COMMERCIAL BREAK)
BROWN: Finally from us tonight, there's a reason that life is bracketed, in a way, date of birth, date of death. To appreciate anybody, you have to understand how they came to be and how they left the world.
A lot of the healing is in the understanding, and that often doesn't come until someone dies. It may be true for the World Trade Center as well.
And the New-York Historical Society right now has a chronicle of both, the birth and the death. The exhibit opened today.
(BEGIN VIDEOTAPE)
CAROL WILLIS, DIRECTOR, SKYSCRAPER MUSEUM: The World Trade Center exhibition tries to look in depth at the creation of the buildings and with the distance at their destruction, because of course it was the tragedy of their collapse which instigated the exhibition.
There are really two centerpiece models in the exhibition. And one of them is this overview of lower Manhattan in the 1960s that shows the city with all of its buildings in place.
And then, of course, there's the presentation model from Yamasaki's office, which is really -- the real, literal centerpiece of the exhibition, and the only surviving architectural model. It's a colossal model. We don't usually build architectural models that big. Each one -- the -- of the towers is seven feet tall.
I hope that when people come to this exhibition, they'll see many different things.
The photographs of the collapse of the towers are really meant to try to reproduce as much as possible the experience of the eyewitness. These are really extraordinary photographs by Grant Petersen (ph) that were taken with a four-by-five-inch camera with negatives that were so large and then printed in some of the largest photographs that have ever been printed with that clarity.
They reproduce in detail what the eye could see. So there's the kind of clarity in the brick across the street in the Soho loft as there is in the fire in the windows in the burning towers.
And that kind of clarity gives you a sense of immediacy, like the eyewitness to events.
I would hope that museums in general offer people many things, and one of them is solace.
I think what people will see in the exhibition are not so much literal ideas, but I think it's really the spirit of planning and reinventing and also of ambition and aspiration that we need to bring to the site and that we can take as the lesson of the time that created those towers.
(END VIDEOTAPE)
BROWN: Down to ground zero just briefly here before we leave you tonight, show you how it looks today. We haven't seen it in a while.
Another anniversary today, 21 weeks. Won't be long before it's six months, and we will remember it all again.
That's how it looks now. The work goes on.
We'll see you tomorrow at 10:00. Good night for NEWSNIGHT.
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