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CNN Newsnight Aaron Brown

Enron Executives Plead the Fifth; Olympic Torch Arrives in Salt Lake

Aired February 07, 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, CNN ANCHOR: Good evening again everyone. Of course, Enron was the big story of the day, those hearings, the former Enron executives.

And our Page 2 reflects the best moments. Here it goes. Are you ready? On the advice of my assistant Molly, I respectfully invoke my rights granted under the Constitution to remain silent. The Fifth Amendment is important, but it's boring.

And so, on we go with the whip tonight and, of course, the reporters covering all the major stories. We start in Utah. I hear there's a big event out there coming up. Rusty Dornin is in Salt Lake City. Rusty, for the first time, the headline please.

RUSTY DORNIN, CNN CORRESPONDENT: Well, the games have yet to begin, Aaron, but here in Salt Lake City it didn't stop tens of thousands of people from gathering a few blocks from here to welcome something they've been waiting for, for nearly 30 years. The Olympic Torch arrives in Salt Lake City.

BROWN: Rusty, thank you.

DORNIN: We'll have more in just a few minutes.

BROWN: You got it, back with you shortly. On to Guantanamo Bay, an arrival there too, detainees. Bob Franken on station. Bob, a headline please.

BOB FRANKEN, CNN CORRESPONDENT: Twenty-eight of them arrived today, 22 of them walked off the plane, six were carried in stretchers. We witnessed tonight there being processed. We'll show you tape of that, and we also talked to the officials here about the President's Order, which calls for them to differentiate between the detainees that are Taliban and those that are al Qaeda, asking what it would mean. I'll give you a little hint, they hadn't the slightest idea.

BROWN: That's a little hint. Bob, thank you very much. I love your zingers. There actually was a lot of Enron things happening today beyond the Fifth Amendment. Jonathan Karl was sorting it all out. Jon, a headline from you please.

JONATHAN KARL, CNN CORRESPONDENT: Well, Aaron, it certainly was a big day for the Fifth Amendment on Capitol Hill, but one key Enron figure defiantly and confidently faced that Congressional inquisition and insisted he's done nothing wrong.

BROWN: Jon, thank you very much, back with you and all the rest in just a moment, a lot to do tonight. We have a teacher on the program, except she's out of the classroom now because of a most intriguing dispute about plagiarism and how parents and her bosses reacted to it. This is a wonderful story. Well perhaps wonderful isn't exactly the right word. You'll decide.

And, the torch has arrived. Tonight, we'll take an in-depth look at who brought the torch there. More tax dollars, your dollars, spent on these Olympic Games than any in history, and this is not a story about security.

And, a half a million meals served down at Ground Zero, remembering a restaurant that came into its own on the 11th of September. We'll also look at a ruling that came out late today out of California that struck down a part of the three-strikes-and-you're- out law in that state. It affects lots of criminals in prison there now.

All of that in the hour ahead, but we begin with Enron, the hearing, the executives who talked and those who didn't. Jeffrey Skilling, Enron's former CEO chose to talk, but it's tough to imagine his testimony today before the House Committee won him or his former company any friends, or much sympathy. Once again, CNN's Jonathan Karl.

(BEGIN VIDEOTAPE)

KARL (voice over): Jeffrey Skilling said he isn't afraid to talk because his hands are clean.

JEFFREY SKILLING, FORMER CEO, ENRON: During my time at Enron, I was immensely proud of what we accomplished.

KARL: One by one, Skilling tried to shoot down the allegations against him, including the charge he dumped stock because he knew the company was collapsing.

SKILLING: In fact, I left Enron holding about the same number of shares that I held at the beginning of 2001.

KARL: The Committee wasn't buying any of it.

REP. JIM GREENWOOD (R) PENNSYLVANIA: Mr. Skilling, a massive earthquake struck Enron right after your departure, and people in far inferior positions to you, could see cracks in the walls, feel the tremors, feel the windows rattling, and you want us to believe that you sat there in your office and didn't - and had no clue that this place was about to collapse?

SKILLING: On the day I left, on August 14, 2001, I believed the company was in strong financial condition. REP. BART STUPAK (D) MICHIGAN: From what I've heard from your testimony today, you don't know what went on. Everything was fine when you left.

SKILLING: Congressman, Enron Corporation was an enormous corporation. Could I have known everything going on everywhere in the company?

KARL: Skilling compared the collapse of Enron to a run on a bank, a crisis caused more by a lack of public confidence than any problems within the company. He took no responsibility, but he said he was apologetic for what Enron had come to represent.

SKILLING: We believed fiercely in what we were doing. But today, after thousands of people have lost jobs, thousands of people have lost money, and most tragically my best friend has taken his own life, it all looks very different.

KARL: That friend was Clifford Baxter, the former Enron Vice Chairman who took his life late last month.

SKILLING: He was heartbroken by what had happened. He believed that his reputation, my reputation, the reputation of the board of directors, the reputation of Ken Lay, people that we had worked with for a long time, and his own personal reputation were ruined by what had happened to the company.

ANDREW FASTOW, FORMER CFO, ENRON: I respectfully decline to answer the questions.

KARL: The committee got to see but not hear much from former Chief Financial Officer Andrew Fastow, who investigators say was directly responsible for creating the accounting schemes that led to Enron's collapse. He took the Fifth. So did his associate, Michael Cooper, and Enron's current Chief Accounting Officer, Richard Causey, and Chief Risk Officer Richard Buy.

Next up in the hot seat will be Skilling's former mentor and former boss, Kenneth Lay. He will appear now under subpoena on Tuesday before a Senate committee and on Thursday before a House committee. That means that if he decides to take the Fifth, he's going to have to do it twice. Aaron.

BROWN: Jon, thank you very much. Jonathan Karl who's been trying to keep track of Enron as it plays out on Capitol Hill.

Other news tonight, the question of the detainees, what to call them, what their legal status ought to be. There is, in fact, nothing simple here. Some of the detainees are Taliban soldiers and the Taliban was the government in place in Afghanistan. Others are al Qaeda terrorists, with no country and no army.

The administration wants information from all of them and the international rules of war, and doesn't that sound silly sometimes, makes that hard to do. Today, a solution of sorts. Here's CNN's Andrea Koppel. (BEGIN VIDEOTAPE)

ANDREA KOPPEL, CNN CORRESPONDENT (voice over): For the Bush Administration and other signatories of the Geneva Conventions, it was uncharted territory. What legal status do prisoners from Afghanistan, a failed state deserve?

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: The President determined that the Taliban members are covered under the treaty, because Afghanistan is a party to the convention.

KOPPEL: At the same time, the White House warns, the Taliban would never become prisoners of war, an important distinction because under the Geneva Conventions, POWs are entitled to legal protection and a variety of privileges limiting the type of information the POW would have to provide to U.S. interrogators. A surname, first names, rank, date of birth, and insuring the POW is repatriated when the war is over.

The Bush Administration says the detainees won't ever be considered POWs, because they don't meet convention criteria of wearing an easily identifiable insignia, carrying arms or weapons openly, operating within a command hierarchy, and abiding by the laws of war.

SEAN MURPHY, GENEVA CONVENTIONS EXPERT: I think the Bush Administration needs to be very careful about declaring en masse that individuals are not entitled to prisoner of war protections because it could come back to haunt us with respect to our own troops in future situations.

KOPPEL: It's already haunted U.S. Representative Sam Johnson of Texas, a former fighter pilot in the Vietnam War. Johnson was shot down by enemy fire in 1966 and spent seven years as a POW in North Vietnam.

REP. SAM JOHNSON (R), TEXAS: You know, I was in leg stocks for 72 days and in leg irons with ten other guys for two and a half years, because they accused us of threatening to overthrow the Vietnamese Government. Well my goodness, that's what the Taliban and al Qaeda are doing.

KOPPEL (on camera): But the Bush Administration insists its prisoners will continue to be well treated in Guantanamo, Cuba and elsewhere even without POW status. The question is, will the international community buy it?

You see in the end, Geneva Conventions or not, nothing's really changed as far as the prisoners' lives are concerned. For the U.S. the diplomatic equivalent of having your cake and eating it too. Andrea Koppel, CNN, at the State Department.

(END VIDEOTAPE)

BROWN: Well, whatever you call them, whatever they do, more arrived today at Camp X-Ray, so we go back to Guantanamo and CNN's Bob Franken. Bob.

FRANKEN: And whatever you call them here, Aaron, they all wear orange suits, and that could be the problem, because now the people who are operating on the ground here will have to decide how do they differentiate as the President is suggesting, between Taliban and al Qaeda?

Well, they were very much involved in processing the new arrivals today, 28 of them, so busy that when I asked the man who runs Camp X- Ray what he could tell me about what they're going to do about the President's Order, he said "to tell you the truth, I only found out about it 20 minutes ago."

He was involved in bringing into the camp those who had arrived. They had come by plane earlier in the day. We were, of course, not able to see that. But from a discreet distance, we can watch as some of them are processed in.

What happens is they get medicals. They go through a question and answer period, pretty close to what are the requirements of the Geneva Convention by the way. In effect, they gave name, rank, serial number or whatever they want to tell about themselves, members of their family, et cetera.

Then, they are taken to a shower. That's why you will see them sometimes paraded around in a towel. They are given a shower. They are given their new uniforms. They are taken to their cells, the infamous cells, and they take up their new life under the very bright lights. There's never anything but bright light at Camp X-Ray, but a dreary life.

And also medical treatment, the administration, the officials here have pointed proudly to the medical treatment that the detainees are getting. Eight have already had surgery, the latest came today, after he consented according to officials. He had his leg amputated, left leg amputated below the left knee. It was inevitable they said. He had been badly mangled in combat.

So the medical treatment, they say, is an example of what they're doing properly. But, of course, the controversy continues and the dreary life of the inmates, the detainees, the POWs, whatever anybody wants to call them, continues at Camp X-Ray. Aaron.

BROWN: Bob, thank you. Any idea, just quickly, if more are coming when more are coming?

FRANKEN: The answer is yes more are coming. There are 320 cells. They expect to fill them fairly quickly. As to when, they don't tell us that but it's probably going to be in the next couple of days.

BROWN: Bob, thank you. Bob Franken in Cuba at Guantanamo tonight. We want to take a different take now on all of this from two other colleagues who visited Camp X-Ray. If you were with us last night, you got a glimpse of them in Bob Franken's piece from Guantanamo. They report for Arabic language networks, and they were given a tour of the camp yesterday. The facts are here that the government hopes that seeing firsthand the conditions the detainee is actually living under will dispel the criticism that those conditions are inhumane.

The reporters would then file their stories, saying exactly that, and the Arab world, an important audience right now, would cease to be quite so critical as it has been in some of the publications. In any case, from Guantanamo tonight, Abdulla Safin of Abu Dhabi TV and Hacene Zitouni of Middle East Broadcasting Center. Welcome to both of you.

ABDULLA SAFIN, ABU DHABI TV: Thank you.

BROWN: Hacene, let me start with you. What have you filed? Have you filed yet? What have you told your audience?

HACENE ZITOUNI, MID EAST BROADCASTING CENTER: Yes, I have done a few reports today, a few live shows with NBC Television in London. I have told them what I have seen sir. I try to be as objective as a journalist can be. And, what I have seen there has been a great improvement, considerable and noticeable improvement in the health situation of those detainees.

I have seen the first pictures when they first arrived, 26, 27 days ago, and I compared those pictures to what I have seen with my eyes here in Guantanamo in the last few days. And I can say that there has been a good improvement.

Even the health officers have confirmed to me that most of the detainees have responded very well, positively to the medical treatment that they have receiving since they arrived here. That's a positive sign.

BROWN: And, Abdullah similarly have you filed already in Abu Dhabi, and just briefly how have you characterized the conditions those detainees are living under?

SAFIN: Aaron, we are storytellers. We are saying what we have seen, what we were allowed to see, and what I can say is the detention is detention and it's by definition a type of punishment and punishment is painful, be it physical or psychological.

But given the tremendous crime, the size of the crime, those detainees some of them or their leadership or their organizations they belong to committed against this country, I found they are being treated fairly humanely.

BROWN: Tell me if you think your viewers, your audience in Abu Dhabi will believe that. Go ahead.

SAFIN: My view was, of course, the Middle East will believe what I'm telling them because they are - what they know about the Guantanamo Bay area and the detention center in it, the newly-created detention center is truly limited, is very little, and there are some kind of misconception concerning the whole issue of the war that started in Afghanistan.

They do not believe, first of all, not 100 percent it's a just war. For instance, they believe that America started by accusing Osama bin Laden and his organization and then they tended to widen the scope of this war to include other people like Mullah Omar and the Taliban regime.

And then, after the State of the Union Speech by President Bush, they included, I mean the American politicians included other countries like Iraq, Iran and Northern Korea in the war against terrorism.

So, they really think America is interested in war rather than fighting against terrorism, or simply are acting or retaliating to what happened on September 11th.

BROWN: I wish we had more time. If you guys come back through New York, why don't you come by and visit us and we'll talk about this some more, how this is all playing out in your part of the world. Thanks for joining us, very much.

SAFIN: Thank you very much.

BROWN: The look at Guantanamo and the detainees as seen from an Arab perspective, Arab journalists tonight.

OK, this is such a huge switch of gears here. The Olympic Torch is in Salt Lake City now, 13,000 miles, 46 states. Our preference, to be honest, as much as we love the games, is to ignore the Olympics altogether in hopes that you will do that too.

But we can't and in truth, given the circumstances of the last months, we expect these Olympic Games will be quite special, and of course, our ratings will reflect that. Such is life. We go back to Salt Lake and CNN's Rusty Dornin. Rusty.

DORNIN: Well you know, Aaron, we've been remarking here, a lot of the journalists, how quiet it seems here in Salt Lake the last few days and most of today. It doesn't seem like there's going to be world event here.

Well that all sort of changed tonight when he Olympic Torch finally arrived. They started trying to get the Olympics here about 30 years ago. So there were tens of thousands of people braving the freezing temperatures, welcoming the torch on it's final journey here to Salt Lake.

A few of the Mormon Church leaders were final people to carry that torch. Of course, it won't - the Olympic Torch will be lit at the opening ceremony tomorrow, but the person who does light that is being kept a secret until tomorrow.

Now of course, the big story underlying the games all along has been security, and visitors coming here really see it before they even get here. On the plane, the pilot informed us that passengers were to remain seated the last 30 minutes of the flight. No one was to get out of their seat going into Salt Lake City. The FAA said if any passengers do, the plane is in danger of being diverted.

Of course, when people get here, you do see a lot of military on the streets. There's more military troops here in Salt Lake than there are in Afghanistan, 10,000 security personnel checking every vehicle that comes into downtown Salt Lake. Olympic visitors can expect, of course, to pass through metal detectors and be watched by surveillance cameras. Most will never get their cars anywhere near any of the venues of course.

So, security very tight here, $345 million worth of security. It's pretty safe to say that for the next two weeks, this will be probably the most heavily guarded city on the face on the planet. Aaron.

BROWN: Seems like it, Rusty, thank you very much. Tough duty to cover an Olympic Games. Thank you very much. It never happened to me.

In a moment, actually we have more on the Olympics later in the program, a very different look at that. In a moment, striking down a piece of the law that says, three strikes and you're out. Some controversy as NEWSNIGHT continues.

(COMMERCIAL BREAK)

BROWN: In the '90s, state after state passed so-called Three Strikes laws. They're all a little bit different, but the gist is the same. After three convictions, you go to jail for life or something approaching life.

Because one of life's most basic rules is that nothing is as simple as it seems, the Three Strikes laws from the start have raised questions and today the 9th Circuit Court of Appeals, the most liberal appeals court in the country, ruled that a part of the California law amounted to cruel and unusual punishment.

The issue centers around the third crime and how serious it must be to warrant life. To help us sort out the legality of this, Linda Klee, the Chief of the Criminal Division in the San Francisco, California District Attorney's Office. Ms. Klee, it's nice to see you. Thank you.

LINDA KLEE, CHIEF, CRIMINAL DIVISION, SAN FRANCISCO D.A.'S OFFICE: You're welcome.

BROWN: Let's just run down as briefly I guess as you can, the circumstances of the cases that the court ruled on. What was the crime, the third crime?

KLEE: We haven't seen the opinion yet. We've just seen a recap of it and it appears to have been a Petty Theft, that is a shoplifting of some value of items less than $400.

BROWN: And so a prosecutor took that into court and used that Petty Theft as a third strike and the judge sentenced accordingly?

KLEE: The prosecutor would have had to have had a prior Theft crime to make it into a Felony, and then two strikes to make it, or two prior strike crimes to make it a three strikes, giving the 25 to life sentence.

BROWN: And what the court said is basically, the crime itself, the Petty Theft, does not warrant that harsh a sentence, fair?

KLEE: That's a fair estimate. They clearly said that you aren't going to throw out the baby with the water. They're basically saying we're referencing only the application, not the law itself. In other words, they found the application to be cruel and unusual, giving 25 to life, not the law itself as it is currently written.

BROWN: And do you have any idea how many people are in prisons in California tonight who may get out because of this ruling?

KLEE: I would suspect that based just on the Petty Theft issue alone, it would not be a large number. Somebody had stated that it was close to 300, maybe 350. I don't know though if that's referencing non-serious, non-violent, or if that's referencing just Petty Theft crimes.

BROWN: So depending on the literal application of the ruling, it may be as many as 300 or 350 people. Are prosecutors going to be upset by this?

KLEE: Well, you're talking to a San Francisco prosecutor.

BROWN: I know.

KLEE: In our office, Terrence Hallahan has never enforced on non-serious, non-violent crimes, the Three Strikes rule as to 25 to life. So, clearly our office is not going to be upset. I think many of the Bay Area counties also judiciously have applied the Three Strikes law. But some of our more conservative counties I have a feeling will be significantly more upset than the Bay Area counties.

BROWN: And do you expect that this will then be carried on to the U.S. Supreme Court?

KLEE: You know, that's a decision by the Attorney General's Office, but in my mind, we've got a thing that says bad facts make bad law, and when you're talking about probably the least egregious crime, it's not the best one to take to the Supreme Court of the United States.

BROWN: How many people in the state, do you have any idea, have been incarcerated under the Three Strikes law, given life sentences?

KLEE: I can't give you statistically, but I know it's in the thousands.

BROWN: So there are thousands of people, and we're talking about a relatively small number of people who may be freed because of this ruling today?

KLEE: Well, it's wrong to say they'll be freed. What is means is that they will get lesser sentences. They'll be sent back to be re-sentenced to something less than 25 to life. It doesn't mean that they'll be free.

BROWN: Got it, thank you for the clarification, Linda Klee, who's the Chief of the Criminal Division in San Francisco, on the ruling out of the 9th Circuit Court of Appeals today. Thank you.

Back to Washington now, a meeting today between the President and the Israeli Prime Minister Ariel Sharon. President Bush once again putting pressure on the Palestinian Leader Yasser Arafat. The President saying, "Arafat must do everything in his power to fight terror."

Prime Minister Sharon described Arafat as an obstacle to peace, and suggested the United States cut ties to Mr. Arafat. The President gave no hint that he was ready to do that.

Every now and then we see something that is so rich and unusual, we just decide to run it without narration, just the sound. And what you're about to hear is one of those moments.

It was a world-class dust-up between Senator Robert Byrd and the Treasury Secretary Paul O'Neill. The Senator it seemed took some offense at a speech the Secretary gave, a speech the Senator believed cast aspersions on the Senate's sometimes cumbersome rules, specifically the Byrd Rule.

Now Senator Byrd is a master of the rules and a true believer. So an otherwise ordinary committee hearing began with the Senator dressing down the Treasury Secretary, over his disregard for rules. And what follows is a confrontation so tense that a single camera covering it often has trouble keeping up.

(BEGIN VIDEOTAPE)

PAUL O'NEILL, TREASURY SECRETARY: Where we have rules made by men, that restrict the realization of human potential, that should be changed. We had rules that said, "Colored Don't Enter Here." That was a manmade rule, and there are lots of those same kind of rules that limit the realization of human potential, and I dedicated my life to doing what I can to getting rid of rules that so limit human potential, and I'm not going to stop.

SEN. ROBERT BYRD (D), WEST VIRGINIA: Mr. Secretary, I've been around a long time. I try to live with the rules. You are specifically talking about the Byrd Rule.

O'NEILL: I was talking about all rules that limit human potential and the realization of human potential. And inferring something different is fine if you wish to do so. But I'd also like to say, because there was an inference in your remarks, that somehow I was born on home plate and thought I hit a homerun.

Senator, I started my life in a house without water or electricity, so I don't feed to you the high moral ground of not knowing what life is like in the ditch. BYRD: Well, Mr. Secretary, I lived in a house without electricity too, no running water, no telephone, a little wooden outhouse.

O'NEILL: I had the same.

BYRD: I started out in life without any rungs in the bottom of the ladder. Now, I'm talking with you about your comments concerning the Byrd Rule and the people who wrote these rules. I'm not talking about putting any halter or brake on anybody's self-incentive, anybody's initiative.

I've had that experience and I can stand toe-to-toe with you. I haven't walked in any corporate boardrooms. I haven't had to turn in any millions of dollars into trust accounts. I wish I had those millions. I grew up in a coal miner's home. I married a coal miner's daughter.

So I hope you don't want to start down this road, talking about our backgrounds and how far back we came from.

(END VIDEOTAPE)

BROWN: Bill Nelson, the Senator from Florida, sitting there looking like he had a ringside seat in Washington today. Ahead on NEWSNIGHT, a different trail to follow in the Winter Olympic Games, the money trail, coming up next.

(COMMERCIAL BREAK)

BROWN: Back to the Olympic Games. There was a time when the games were pretty simple and relatively cheap. Those times are long gone. Today's games are highly commercial, very expensive, and from our point of view still wonderful to watch.

But there is a question tonight about who should pay. And trust me, if you are an American taxpayer, you are paying more for these Olympic Games than any in history. And it's not just security, no one argues about the security costs. It is about tax dollars that have enriched the state of Utah, the city of Salt Lake, and the resorts that dot the mountainside, and the people who own them.

(BEGIN VIDEOTAPE)

BROWN (voice-over): They have been arriving for a week now, the thousands of people coming to Salt Lake for the Winter Games. On the slopes, recreational skiers have taken their last runs. For 14 days, the world will watch the best in the world setting record after record. But even before they begin, one record has already been broken. American taxpayers have spent more on these Olympic Games, far more than any other Olympics in history.

DONALD BARTLETT, EDITOR-AT-LARGE, "TIME," INC.: The figure we ultimately settled on is about $1.5 billion in federal taxpayer dollars, funneled into Utah in support of the Olympics. Some of that is going into directly funding parts of the games, but most of it is for projects that were sold in the basis. They were wrapped in the Olympic flag, basically, to get that money.

BROWN: Investigative reporters Donald Bartlett and James Steele say this is a prime case in point, Utah's Winter Sports Park, home to several events, ski jumping and bobsled among others. Writing in "Sports Illustrated," they document how that 400 acres of land, the land for the park was donated to the state a decade ago, donated by the developer of this adjacent resort community, a community called Sun Peak.

And what did he get? With your tax dollars, he got this access road, which will play a large part in the private developments' financial success.

STEPHEN PACE, UTAHANS FOR RESPONSIBLE SPENDING: In exchange for his generosity, he got a road put in at public expense to catalyze the development of million-dollar range houses. Without that public gift to Mr. Myers, the development would probably be nothing.

BROWN: Developer C.C. Myers brought the land for Sun Peak for about $2.5 million. He concedes the road has made it far more valuable. Not a crime, certainly, just another trip to the Olympic money trough.

C.C. MYERS, CEO, C.C. MYERS, INC.: Sure, it's worth $48 million, or maybe even more. But all we did is sell lots for -- I think we started out selling our lots at 80,000, something like that a piece, you know. But I'm hurt that someone would take to tie me to doing something wrong or gaining from the tax situation. It's just so totally untrue, it's unbelievable.

BROWN: Sun Peak is a small example. Many others dot the state. And we're not talking about hundreds of millions dollars spent on security, no one questions that. But Utah officials and members of its congressional delegation, and state leaders too, have wrapped dozens of projects in the Olympic flag -- $500 million worth of interstate highway improvements paid for, including $13 million for this interchange, complete with an Olympic mural.

And then, there are parking lots, some of which are only temporary, costing $30 million. Take a little item like fencing, which will be torn down after the games -- $3 million tax dollars.

BARTLETT: By and large, this money has flown into projects that benefit private business interest. And this is something that is totally different in the Olympic movement. Never before in history have so many private business interests stood to gain from the inflow of federal dollars as it is the case in Utah.

BROWN: State official sensitive to these charges say many of the projects would have been built with or without the Olympics, though in the battle over federal dollars the Olympics put Utah at the head of a very long line. And they also say the total "Sports Illustrated" came up with, the $1.5 billion, is off the mark as well.

LANE BEATTY, CHIEF OLYMPIC OFFICER, STATE OF UTAH: It's disheartening at times, because when people hear them -- and especially from a magazine like "Sports Illustrated" -- they want to believe that that's accurate. The reality is, they just missed the mark on this terribly.

BROWN: The amount of federal money directly linked to the Olympics may be in dispute. But consider this: Not quite 20 years ago during the Summer Olympic Games in Los Angeles, federal spending per athlete amounted to only $11,000. When the games open on Friday in Salt Lake, federal dollars for each of the 2,400 athletes will average $625,000. If you're into percentages, more than a 5,500 percent increase.

PACE: The Olympics is a public/private partnership. Now, that means it's public when it needs some money, and it's private when it has got something to hide. And that's been the story of the games here since day one.

(END VIDEOTAPE)

BROWN: We'll have more on the money flow into Salt Lake with investigative reporter James Steele when NEWSNIGHT continues from New York.

(COMMERCIAL BREAK)

BROWN: More now on the Olympics, taxpayer dollars with investigative reporter James Steele. He wrote the in-depth look at the Utah money trail with Donald Bartlett, his partner. Together, they have a rich history of producing first-class, award-winning journalism. The piece in question, as we showed you, appeared in "Sport Illustrated" titled, "Snow Job." Nice to see you.

JAMES STEELE, EDITOR-AT-LARGE, TIME INC.: Nice to be here.

BROWN: Let's talk about the total, $1.5 billion. The Utah people say you're way off the mark.

STEELE: We're probably way off the mark. It's probably much higher than that. We tend to be very conservative when it comes to dollars. What we did to reach that figure, we took every project, where the Olympic Flag had sort of been waived by somebody, state highway officials, other people in state government, folks with the Olympic Committee, anything where the Olympics were brought into play, we used that number. And fact of the matter is those numbers were still coming in when the story ran.

I mean, we used a figure of $240 million for security. And I noticed earlier tonight on one of your earlier programs here on CNN that that figure is up to $345 million. So probably if anything, the $1.5 billion is going to be higher, ultimately.

BROWN: The security question aside, because a lot of things changed in terms how to do security in Salt Lake, if you accept the idea that something got out of hand here, OK -- some people may not -- but if you do, how did that happen?

STEELE: It happened very quietly. I mean, it's an astonishing story in some ways. It's this five-person Utah congressional delegation. It's one of the smallest delegations in Congress, but slowly, systematically, they wrote things into one piece of legislation after another. It was a million dollars here, $2 million dollars there, $4 million here, a couple hundred million there. Ultimately, down the line, this added up to the $1.5 billion. There were virtually no controls on that. And this is one the points we make in the article.

I think everybody agrees that the federal government should probably support an Olympics game that are in this country, some part of it, especially security. But beyond that, it's a very vague and foggy picture. And what you see in these Games is security. That component is actually very small in terms of the dollar amount compared to the total package.

BROWN: We have got about a minute or so here. Individuals, private businesses benefiting from these tax dollars. We showed an example. Lots of them?

STEELE: Lots of them. And many are just as dramatic as Myers to the north of Salt Lake. Outside of Ogden, you have the Snow Basin Resort, where $15 million in taxpayer money has gone to built one road to serve one property owner. That's going to be used for six days during the Olympics, and then it will be used by that resort in perpetuity. That's never happened before in the history of the Olympics and that's just one example of what we found.

BROWN: And the question, I think, ultimately for people is is that the right way to spend tax dollars, and that's something people have to decide.

STEELE: Exactly.

BROWN: Nice to see you. Nice to meet you finally.

STEELE: Nice to be here.

BROWN: Long time reading your work. Thank you, James Steele.

Up ahead, it's a terrific story coming up. One teacher's struggle against plagiarism. You might everyone would stand with her. Then you wouldn't be on the program, would you? We'll be right back.

(COMMERCIAL BREAK)

BROWN: At first, you might think this is a story about education. But it's also very much about integrity. And the two have a fair amount to do with one another. The story goes about like this: A high school teacher in Kansas discovers that dozens of her students have plagiarized. And they all signed contracts warning them that cheating will lead to a zero. And the plagiarized report represented half their grade in biology. The kids were unhappy. So were some parents. The parents went to the school board and the school board had to choose. Do you support the teacher and the rules or not?

The teacher in this story is Christine Pelton. She resigned from Piper High School in Kansas City after the school board and parents thought her punishment for plagiarism was far too harsh. Miss Pelton, nice to see you.

CHRISTINE PELTON, FORMER TEACHER, PIPER HIGH SCHOOL: Thanks.

BROWN: A couple of things on the facts here first. How did you catch the kids?

PELTON: What I did was -- well, first of all, when I started giving their oral presentations, I noticed that some people were saying the exact same thing, word for word. And so, when I went and looked at the reports, I noticed that the wording, it was a little bit far beyond what they could write.

And so I went to some resources on the Internet and some books and used some places where teachers can check for plagiarism. And it showed up that the kids did plagiarize on their projects.

BROWN: And when you called them on this, did they acknowledge that they had copied this material?

PELTON: They first wanted to know how I found out. And, second of all, when I showed them that they did copy and where I found it out from, the kids were -- said that they didn't know that copying word for word was wrong.

BROWN: They did not know that copying word for word was wrong? And they're how old?

PELTON: Oh, they're 10th graders, so they're about 15-, 16-year- olds.

BROWN: OK. So, your principal supports you. You give them zeros. And your principal supports you. And the parents go to the school board, or some parents go to the school boards.

PELTON: Right.

BROWN: And then, as best you know it, what happens?

PELTON: What happened, the school board went into executive session, and that's where they make their decision but they don't have to justify their decision to me. And the superintendent, the next day, came up to me and told me that I've been directed to lower the punishment.

BROWN: And so, it was no longer half their grade, is that right?

PELTON: No, it came to 30 percent of their grade. And instead of zero on the project, which is stated in our handbook, it's now zero on the part that they plagiarized.

BROWN: OK. Now, what was the reaction by the kids?

PELTON: The kids were really excited, some of them, the ones that plagiarized, of course. And they said they no longer have to listen to me, that they run the school and I don't.

BROWN: That must have been comforting to hear. Now, I want to talk a little about opinion here. What do you think the effect of this is on kids who played by the rules?

PELTON: They, I think, see it as they don't really need to do that, that the people who don't play the rules actually benefit from it. And...

BROWN: And -- I'm sorry, go ahead.

PELTON: And it's really sad because a lot of kids that did play by the rules, actually their grades lowered because of it.

BROWN: What do you think happened here, Christine?

PELTON: I think what we have is a district that really listens to the parents, and it's parent-run district. And I knew that going in. And I just didn't know how much it was affected by parents. And, in effect, they're going to lose a lot of teachers and, unfortunately, you know, a lot of good teachers.

BROWN: And you resigned.

PELTON: I did resign.

BROWN: And will school districts come looking for you as a good teacher or are you tarnished by this?

PELTON: I have been getting calls from different school districts wanting me to work in their district, so I think it came out positive for me, I think, for me, but I just hope the kids learned a lesson in the long run. That's all I want.

BROWN: I sorry. I hope they do to. Congratulations for taking a stand. Whatever people may think taking a stand matters, and good for you.

PELTON: Thanks.

BROWN: Christine Pelton in Kansas City tonight.

Coming up, next on NEWSNIGHT, Segment 7: Dinner time at ground zero. We go to Nino's when we come back.

(COMMERCIAL BREAK)

BROWN: Finally from us tonight, goodbye to Nino's. We know that September 11 transformed so many people and so many things. And this is a story about one of those smaller transformation. A restaurant in a town filled with restaurants, in this case located for decades in an area not really known for good food, lower Manhattan.

But in that moment, on that Tuesday, Nino's transformed from a low-profile spot to a 24-hour-a-day haven for recovery workers, workers who needed food and needed a break. But charity like this doesn't come cheap. And now Nino's is closing down. And so tonight we seemed like a good night to remember.

(BEGIN VIDEOTAPE)

NINO VENDOME, OWNER, NINO'S: It became a place where we fed the souls and the spirit of all that were devastated by the tragedy. And we can be very proud of what happened here. And now that we're closing, it may be a sad fact, but it's not.

We have been able to sustain and be able to supply the demand, which was enormous, from feeding 100 people a day to 7,000 people a day. And having the spirit of the American people hard at work here shows the fact that genuinely, a miracle happened here.

TODD ANDREWS, EMERGENCY MEDICAL TECHNICIAN: It's kind of like a safe haven, you could leave everything outside. When you come in, you could just relax. You could leave the chaos, come in here, get a good meal. They feed you very well and everyone is very nice.

VENDOME: There are people who care for them. And this has become America's kitchen.

We need to carry this on and we need to preserve this. And hopefully by what's been done here, it can touch other communities.

ARLENE MARTIN, VOLUNTEER: We're very sad it's closing. These guys really found a home here. And, you know, in the beginning, when they came into this place, you could smell ground zero. You know? It was all around us. Everyone here had lost somebody. Unfortunately it's still true. Most of the people here have lost somebody. But we played music. We had live music. We had fun.

UNIDENTIFIED MALE: Come in here, there's music playing. Really lively. Breaks the monotony. It's nice. I'm going to miss it.

VENDOME: The dining room is closing. What we'll do is keep the kitchen open, and what we are not going to work on preserving and memorializing this. But this will not open as a restaurant again. I think that would be an injustice to America and to mankind.

It's become something else.

(END VIDEOTAPE)

BROWN: We'll see you tomorrow at 10:00. Good night.

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