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CNN Newsnight Aaron Brown
Bush Speaks to Wall Street; Museum Makes Valuable Discovery; AIDS Conference Greets U.S. Contingent With Protests
Aired July 09, 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: Good evening again, everyone.
We were taken to task today for a discussion we had on last night's program about President Bush's days on the board of an oil company called Harken. We don't need to go through all the details here again. One sentence should do it. There was a late filing of reports to the government on the sale of company stock, and over time, there's been a couple of different explanations as to why. In any case, our note writer was quite angry. "How could you dredge this all up" he asked. "This is yet another case of media bias," he asserted.
In my response, I asked a simple question and I'll put it out there tonight. What if the man in question was named Clinton? Would the reaction to this decade-old story have been the same? Would it still be bias? Would the writers still say "drop this silliness?" Consistency counts and my gut says if the president were Clinton, this decade-old story would be hyped to death all over the radio, through at least half the Congress, probably around more than a few water coolers, and maybe, just maybe the Justice Department.
While I'm sure some will take this otherwise, this is in no way meant as an attack on the president or a defense of Mr. Clinton. Regular viewers know that we've taken a shot or two at the former president's conduct over the months. But just consider the question for a moment, and decide if there's a point here. Would the same people who now urge reporters to drop the Harken story have said the same thing three years ago, a different president from a different party, different times? Does consistency count more than politics?
On to the whip we go. The president was on Wall Street delivering a lecture and a plan on corporate responsibility. White House Correspondent Suzanne Malveaux is on duty tonight, Suzanne a headline from you please.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Well, the president brought his message of corporate responsibility to the heart of corporate America and Wall Street to show that this administration is serious about economic reform, but the president is still dogged by questions about his own role as a director in the Harken Energy Group more than a dozen years ago, of which he was cleared of wrongdoing, and also Democrats' criticism this evening that his proposal does not go far enough. BROWN: Suzanne, back with you shortly. After the president's speech, Wall Street sold off. Allan Chernoff is following the street's reaction tonight, Allan the headline from you.
ALLAN CHERNOFF, CNN FINANCIAL NEWS CORRESPONDENT: Investors were looking to the president for a lift in confidence, and then they quickly looked away. Wall Street sells off in the president's face.
BROWN: And, before we leave you tonight, the story of a rogue executive from a different era. Beth Nissen has that, so Nissen a headline please.
BETH NISSEN, CNN CORRESPONDENT: A story tonight on accounting fraud on a grand scale, cooked books, million dollars losses, a bankruptcy that shook market and investor confidence, headline news in the early 1930s. It's a story of Eval Krieger, the match king.
BROWN: Nis, thank you, back with all of you shortly. Also ahead on the program, there are some stories where you're afraid you sound too alarmist, and then there is AIDS, where you often feel you can't sound alarmist enough. We'll talk with a pioneer in the fight against AIDS about the march of the disease across the globe, Dr. Anthony Fauci from the Barcelona AIDS Conference this evening.
Also, an amazing discovery, we talked about this with Larry a moment ago, in a box in a closet at the Cooper-Hewitt Museum here in New York, the sketch by Michelangelo. We'll talk to the proud director of the museum, how they found it, how they verified it, and what comes next.
And you might think it impossible to get in trouble for participating in a memorial service for those who died on the 11th of September. Tonight the story of a Lutheran minister who is being punished, it seems, for exactly that.
And, we've been doing a lot of remembering on the program in recent days, and there's one more tonight, the loss of another great talent, Rod Steiger, an actor so versatile he could play Rudolph Hess one year and a holocaust survivor the next. It is a very full hour.
We start off with the president on Wall Street. The president was delivering his speech from the street, but the audience was clearly much wider. The president today tried to put companies and CEOs on notice, tried to reassure investors, tried to get ahead of an issue the Democrats would dearly like to own in the November elections. It was an awful lot to accomplish. His first grades came from the stock market which, perhaps, had more on its collective mind than just a speech.
We'll get to that in a moment, but first the speech itself, and CNN's Suzanne Malveaux.
(BEGIN VIDEOTAPE)
MALVEAUX (voice over): In the heart of the symbol of corporate America, Wall Street, President Bush calling for a domestic war on corporate corruption.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: America's greatest economic need is higher ethical standards, standards enforced by strict laws, and upheld by responsible business leaders.
MALVEAUX: It's the administration's goal to win American support and confidence.
BUSH: The business pages of American newspapers should not read like a scandal sheet.
MALVEAUX: The worry, recent revelations of mega corporate scandal, leading to a loss in confidence in the market and a possible slowdown in the economy; Mr. Bush's aim to hold companies to higher ethical standards and give the government greater power to regulate and enforce them.
The president's guidelines include: an Executive Order to establish a financial crime SWAT team through the Justice Department to investigate corporate fraud; a doubling of prison time for CEOs guilty of abuse from five to ten years; greater powers for the Securities and Exchange Commission or SEC, including freezing CEOs assets while under investigation; more money from Congress for the SEC, a $20 million increase this year to hire 100 new investigators, $100 million the next year; a ban on corrupt CEOs forbidding them to serve in any future leadership capacity; tougher laws that would criminalize document shredding and other forms of obstruction of justice; the creation of a new independent regulatory board to police the accounting industry; and stricter requirements for companies to inform small investors and 401(k) holders about their stocks, critical to the president's plan bipartisan support.
Currently the administration is at odds with the broader legislation being pushed by the Democratic-controlled Senate. Democrats say the president's proposal does not go far enough.
REP. RICHARD GEPHARDT (D) MINORITY LEADER: Words alone will only raise the expectations of reform and dash the hopes of millions of people who are seeking real effective action.
(END VIDEOTAPE)
MALVEAUX (on camera): Now, Aaron, while the SEC dropped its investigation, officials from the SEC making very clear that they have not exonerated the president. The president knows that he has to take a strong stand against this type of economic rather corruption, but then again, he is saying that despite the fact that the details of this legislation that may come across his desk may not be to his liking.
His aides say that it is likely that he is going to go ahead and sign it anyway. The pressure being that great on Congress, as well as the administration, much like the case for campaign finance reform, to do something quickly to do it right away -- Aaron.
BROWN: In the case of campaign finance reform, that's an interesting analogy, the president and the president's team, certainly, did not go out and sell campaign finance reform. They kind of held their nose and signed it. Do you expect the president or the president's cabinet, the treasury secretary for one, to be out there trying to sell this?
MALVEAUX: Well, they've already, they're already started selling it. As a matter of fact, the secretary of the treasury, as well as many others who will be making road trips, to actually bring this to the American people, this of course really is quite a turnaround from January when they weren't even allowing any additional funds for the SEC.
Of course, they've made a turnaround because the pressure is that great on the administration. There is a lot of fear that it's going to be a political liability, especially when you realize that midterm elections just months away. They do not want the Republican Party, while it's linked to big business, to be linked to big scandal.
BROWN: Suzanne, thank you, Suzanne Malveaux at the White House tonight. There was a thunderous response on Wall Street to the president's speech today. It was surely not the response the White House wanted. You could think of the thunder as the sound of investors stampeding for the exits. Stocks plunged across the board, wiping out more than a half a billion dollars a minute in market value. That's one of those statistics that is impossible, for me at least, to get my brain around.
One money manager put it this way. We have a financial reporting system that resembles some sort of banana republic, adding that it will take a lot of time and more than one speech to undo all the damage that's been done to restore any sense of confidence; once again, from the street, CNN Financial News Correspondent Allan Chernoff.
(BEGIN VIDEOTAPE)
BUSH: Thank you very much for that warm welcome.
CHERNOFF (voice over): Two blocks from where the president was speaking, investors were voting with their money. When Mr. Bush began his address, the Dow Industrial Average was in the green, up 22 points. By the time he finished, the market was slipping. Minutes later, the Dow was in the red, and it kept sliding, closing down 179 points, nearly two percent. Any hope the nation's chief executive could revive investor confidence with one speech quickly vanished.
RICHARD CUPPS, LEGG MASON CAPITAL MARKETS: There wasn't a spark in it. I think it was pretty much, let's say, as expected. It didn't capture anyone's imagination.
CHERNOFF: Wall Street traders said the president was not angry enough, not tough enough, and not specific enough.
MIKE PALOZZI, SG COWEN: It wasn't what the people had hoped for. People were hoping for something to set the guidelines and something to fall back on, and it certainly didn't do that for the marketplace. CHERNOFF: Also troubling some investors, the president's own credibility. Although never charged with wrongdoing, questions keep coming up about Mr. Bush's sale of Harken Energy stock, while he was on the company's board of directors.
BUSH: This is recycled stuff.
CHERNOFF: Other key players on the issue, like SEC Chair Harvey Pitt, also have an image problem on Wall Street.
BOB MCCOOEY, GRISWOLD CO.: Unfortunately, all the criticism over Harvey Pitt has neutralized him and what he's trying to do there and Congress can't get along and they can't get their act together quickly enough to make Americans happy.
(END VIDEOTAPE)
CHERNOFF (on camera): It may have been unreasonable for investors to expect that the president could magically revive confidence. Wall Street, after all, cares most about the bottom line, profits, and market veterans say the best way to bring back confidence is for companies to once again start reporting good, clean profits -- Aaron.
BROWN: That's precisely the problem, because we are suspicious now of every earnings report that comes out and clearly today's reaction is just going to take some time.
CHERNOFF: Right, and the president alone can't just clean up those profits.
BROWN: I wonder if the street was in some sense conflicted here. They are free marketers. They are the ultimate free marketers, stock traders are. So, on the one hand they want the market to function as it functions. On the other hand, they clearly wanted something from the president that said the shenanigans that have gone on will stop. They didn't get it, or at least they didn't think they got it.
CHERNOFF: And can the president really deliver that, if we think about it? Wall Street, you're right, Wall Street never likes to see a lot of regulation, but this may be one period where perhaps they will applaud an increase in regulation. I think Wall Street does want to see Congress pass one of those bills, get some action done.
BROWN: It's one thing to regulate auditors. It's another thing to regulate everyone else. Allan, thank you very much, Allan Chernoff. You've had a long day here too today.
A bit more now on the politics of all this, and you can't separate out the politics of it, where it leads the president, where it leads its party, how it plays in Peoria, or Durham, North Carolina, which happens to be David Gergen's hometown, though he joins us tonight from Boston.
It's always nice to see David, who as I think most of you know by now, has served any number of presidents in both parties. David, welcome again. What was your take on the speech?
DAVID GERGEN, FORMER WHITE HOUSE COUNSEL: Well, I give the president credit for stepping up to the plate and talking about it, but I think when you dig beneath it and look for the specifics it, from my perspective, it was a disappointment. I thought, you know, people had been talking about Teddy Roosevelt. This would be a return to Teddy Roosevelt, walk softly and carry a big stick. This was a speech which walked pretty loudly, but he was carrying a tiny stick.
BROWN: You've participated in the drafting of speeches like this. What were the conflicting pressures on the speech writers here in what they were trying to accomplish, and what they wanted to avoid?
GERGEN: I think the president is walking a fine line. He does, and I think wisely so, want to avoid an overreaction, which puts real clamps on the economy, which over regulates the economy. But clearly, the speech writers and clearly the economic team wanted to restore investor confidence with this, because they wanted to calm a jittery market, and if you're sitting in the White House as a speech writer and put a speech out there that you hope is going to do that, and then you see the market tank, you have to shudder.
Now, to be fair, we have to see what the market does in the next few days. One day's market is not enough to tell the story, but if this day's an example of what's to come, then the president is going to get outflanked on this politically very quickly, and he's going to wind up signing a bill that's going to be tougher than what he proposed. It's going to make him look as if he's been outflanked, and as if he's following, not leading.
BROWN: And, the political ramifications of that for the president and, perhaps more importantly now, because the election is 120 or so days away, for congressional Republicans?
GERGEN: Well, look this president is still enormously popular with most Americans. He still enjoys, you know, two-thirds of the country still support him as president. I think his danger is this area and it's the same one that faced his father, and that is after acting so decisively against the Taliban and al Qaeda, and showing the country that when he really cares, he can be extremely tough, if he now seems or appears to have been less than tough on business corruption, people are going to say, well he doesn't really care, and therefore you know he's giving business people a pass, and that's very, very damaging to him.
That's what happened to his father, you know. His father was seen as a so-so president until Saddam invaded Kuwait. Then his father acted marvelously, kicking Saddam out of Kuwait, but people changed their minds about him. They thought, you know, this guy can be really terrific if he cares. And so, when the recession came along and Bush 1 did not respond the same way, you know, he went from being George Patton to being Rhett Butler, you know, "frankly my dear, I don't give a damn."
BROWN: Yes. GERGEN: You know that was the perception and he lost the election over it. I don't think George Bush, this George Bush is anywhere close to that yet, but that's the danger that he faces.
BROWN: I don't want to do history, but was it that the perception was that Bush 1 didn't care or that Bush 1 was out of touch with the reality of what was going on in the country?
GERGEN: That's a good question. I think those two actually merged in people's minds because the famous incident, you know, when he went through a grocery line.
BROWN: Yes.
GERGEN: You know I don't blame the poor guy. He didn't know quite what was happening in a grocery line, but people sensed well he's out of touch. He was looking at his watch during the debate, and they interpreted that as, not only is he out of touch. He doesn't care about me.
You know he cares about foreign affairs. He's deeply immersed in that and, you know, frankly if there had been a domestic Desert Storm that followed the Desert Storm against Saddam Hussein, he would have been reelected in 1992.
And George W. Bush has to be aware of that history, and I'm sure Carl Rove has read it, you know, in those 154 boxes of books he brought to Washington. I'm sure at least four or five boxes were about Bush Senior. So they know that, and that's what I think they were - that's the dilemma they face here because they don't want to go too far, but they do care about the politics of this. I think the first day's notices will be discouraging, but again let's wait and see how the next days come out.
BROWN: I think that's important. I mean I think it is fair to say that the notices that came out today were not great. Someone around the White House suggested that, and this White House hasn't made a lot of mistakes like this, that one of the things they might have done wrong here is that they leaked almost all of it out there beforehand.
There were no surprises. You knew almost exactly what he was going to say, and it was left to how he was going to say it, and that that took some of the punch out of what he was trying to do.
GERGEN: That's a really good point, Aaron, and not only did they leak it in a way that a lot of the content was out there, but they built the speech up as being a very significant speech. I thought what was most telling about the speech is, if you're in there in the White House speech writing and you've got some really sexy proposals to put out there, you put them right in the speech and you make every one of them sing for you. In this case, the proposals were all on the fact sheets.
BROWN: Yes. GERGEN: They weren't in the speech, and I thought that was quite telling about, you know, what the White House itself thought, how dazzling or you know impressive these proposals would be.
BROWN: Two quick things. Do you think Harken has legs, that story?
GERGEN: Hard to tell. You know the president has been cleared on this once. I don't think so, but then again we never thought Whitewater had the legs it did.
BROWN: Yes, and more broadly, does this whole corporate corruption question have legs three months from now, four months from now? Is it going to be an important issue come election time?
GERGEN: Yes. This is. I think we have not seen the end of this. I think we're likely to see more corrections and more books and we're going to have more surprises along the way, and I just think it's likely to be with us. It's going to dampen market psychology.
Clearly what's happening now is that for the first time since the 1920s, we have an economy that's growing, much stronger rebounding, and a stock market that's heading south. Something's going on with the psychology of the markets, which has to be changed, and it's very much in the president's interest to see that psychology change before this election.
BROWN: And by percentage, a lot more people are in the market now than were in the market back in the '20s. David it's nice to see you.
GERGEN: Absolutely. Thank you.
BROWN: As always, thank you for your time tonight, David Gergen from Boston. Still ahead on the program, we'll look at the modern era's first accounting scandal and the man behind it all, the match king. That's a fair amount later. Up next, we'll talk to one of the trailblazers in the battle against AIDS. This is NEWSNIGHT on CNN.
(COMMERCIAL BREAK)
BROWN: We began the week with the rare chance to use the word "hope" and "AIDS" in the same sentence. The headline last night from the International AIDS Conference in Barcelona was about new drugs and the possibility, at least, of a new vaccine.
Today, though, a different tone centering on the hard fact that fighting AIDS may have precious little to do with cutting-edge drugs. Experts say reigning in the epidemic comes down to educating people, and reforming third world governments, building better public health systems, and spending a lot of money, knotty problems all of them, especially the money, especially American money. Today in Barcelona, the president's health secretary got an earful about that.
(BEGIN VIDEO CLIP) BROWN (voice over): Between the booing and the shouting, Secretary Tommy Thompson defended the administrations spending, calling it a significant effort, but many experts, including some Americans say; it is no where near enough.
(END VIDEO CLIP)
BROWN (on camera): And even if it were, the disease is on a tear through developing countries. The death toll could go up enormously. There was very little to feel good about in our conversation today with one of the true pioneers in the battle against AIDS, Dr. Anthony Fauci.
(BEGIN VIDEOTAPE)
BROWN (voice over): I was looking, sir, at some of the reports coming out of the conference, and it sounds like despite the fact we've learned a lot, there are a lot of treatments available, the headline still is the exploding number of cases of HIV, particularly in developing countries.
DR. ANTHONY FAUCI, NATIONAL INSTITUTES OF HEALTH: That is absolutely correct. There is a lot of very good science that has been discussed at the conference, but the prevailing theme has been the absolutely astounding numbers that we see now coming out of particularly the developing nations, Sub-Saharan Africa, Asia, particularly India, China, and very impressively in Eastern Europe, particularly the Russian Federation.
The numbers are astounding. They're astounding in what they are, but particularly in countries like India and China, where you might have maybe one percent of the population infected, and they're on a trajectory. Even if they double in a year, going from one to two percent, when you have a population of a billion people, you're talking not about tens of thousands or new cases, but tens of millions of new cases potentially.
BROWN: And so, do we have a sense now, let's say five years out, the number of AIDS cases or HIV cases there are going to be?
FAUCI: Yes, we do. It's based on mathematical models, which are not always correct, but certainly they've been correct up until this point, and the projection is, unless there's some dramatic change in how things are going now and the patterns of the epidemic, within the next ten years, there could be as many as 48 million or more new infections with HIV, and the projections of the number of deaths over 20 years are frightening.
There could be as many as 75 to 80 million additional deaths over 20 years. But the numbers for the ten-year new infections are approaching a potential 50 million new infections if some significant interruptions of transmission by prevention methods or what have you are not executed. So, it really is quite frightening.
BROWN: I don't want to manufacture good news where none exists, but is there good news on the horizon at all? FAUCI: Well, yes the good news is obviously we have good therapies, and there were some papers that were presented about new classes of drugs. For the last, oh since 1986, most of the drugs, if not all of the drugs, have been directed against two particular targets of the virus.
We've had very good results with that, but over time, you develop resistance to particular drugs. You have toxicities. There have been some presentations about drugs that are aimed at different targets in the virus. That is good news.
My pessimism about - Aaron, nations are going to fall. The numbers are so impressive that they become numbing. There's going to be such a degree of economic and political instability among nations, not only Sub-Sahara and African nations, but Eastern European nations, and potentially even India and China.
As Secretary Powell and Secretary O'Neill and Secretary Thompson has said, this is going to have to be a major foreign policy issue, because we're going to have countries that are a strategic interest to the United States. Those countries are going to get into such economic and political instability because of the health problems there that those health problems are going to have to be addressed.
So, this is something that's a challenge to the entire world, particularly the developed world because of our resources, but also the developing world because they're going to have to partner with us. This is not something that can be imposed by the developed world upon the developing world, because if you don't have leadership and commitment from the leaders of the developing nations, then nothing is going to happen.
The other thing that we've seen, I think, that's really important is a strong involvement of the NGOs, the Non Government Organizations, organizations like the Bill and the Linda Gates Foundation, the Elizabeth Glaser Foundation. Those foundations have led to a partnership between the public and the private sector, the likes of which we have not seen.
So, when you ask me that question, what about some of these things, I'm making the optimistic. On the one hand, there's the dread and the horror of the numbers, but what I see, being in this field now for over 21 years, is a kind of commitment evolving and a synergy and a solidarity that I hope gets a boost from this meeting, and if it does, which I hope it will, then maybe we'll start seeing some of the things that we're talking about.
BROWN: The conference has another few days to go. I hope before it ends, we can talk again. There is so much here still left unsaid. It's always good to talk to you, sir. Thank you for your time.
FAUCI: OK, my pleasure.
(END VIDEOTAPE)
BROWN (on camera): Dr. Anthony Fauci, not the kind of stuff that puts you to bed easily tonight. I don't suppose this will either. There's new word tonight, we don't know exactly what to make of it, that Osama bin Laden is alive and al Qaeda is regrouping. This comes off a tape from a man who claims to be an al Qaeda spokesman. He says al Qaeda now plans to expand its war on the West to include assassinations, of whom the tape does not say.
And a couple of other items quickly before we go to break. At home, a national study of hormone replacement therapy in older women has been stopped early. This is a major development, researchers finding that the drugs increase the risk of certain forms of cancer and heart disease, millions of American women on hormonal therapy.
Look carefully now at these pictures. That's Quebec City behind all the smoke. The smoke comes from the wildfires that are still burning in the northern part of Quebec Province. We got a taste of this actually here in New York, and so have people as far south of us as North Carolina.
And, if fire aboard a ship isn't bad enough, try fire on board a ship during a tropical storm. Taiwanese choppers did just that, attempting a rescue, pulling about 80 Chinese fishermen off their boat. In those seas, that is something, nicely done. Still ahead on NEWSNIGHT, the story of a Lutheran minister in hot water for participating in a memorial service after September 11. This is NEWSNIGHT on CNN.
(COMMERCIAL BREAK)
BROWN: Well, religion's always a sensitive subject to talk about, so we tread lightly here. But sometimes you come across a story that makes you think, Am I missing something here?
It has to do with a service held at Yankee Stadium two Sundays after the attack on September 11. It involves a Lutheran leader in the area, the Reverend David Benke, who played a role in that event, an extraordinarily moving event, and something New York and New Yorkers dearly needed in those days after the attack.
Reverend Benke has been haunted by the appearance ever since, punished by his leadership because there were other religious leaders there, Muslims and Catholics, Jews, Hindus, among others.
We're pleased to say we have someone who can explain the religious transgression with us, a supporter of Reverend Benke, Reverend Charles Froelich, a pastor at St. Luke Lutheran Church in Dix Hills, New York.
It's nice to see you. Thanks for coming in.
REV. CHARLES FROELICH, PASTOR, ST. LUKE LUTHERAN CHURCH, DIX HILLS, NEW YORK: Thank you.
BROWN: All right, explain the, in quotes, the "crime" here that the reverend committed.
FROELICH: Apparently the crime that he's committed is, he prayed in the presence of non-Christians and other Christians, which, according to the people that are unhappy with him, is against our church's policies and doctrines.
And as a result of that, he's been suspended from being the president of our district and chairman of the Board of Regents of one of our colleges.
BROWN: Now just make sure I get it. And he is being suspended simply because he joined with these others who were there in prayer.
FROELICH: Yes.
BROWN: And why is that troubling to anyone?
FROELICH: Well, that's troubling to all -- all -- it's troubling to us that he was suspended, but it's troubling to those who have accused him of it...
BROWN: Right.
FROELICH: ... because they feel that in being in that particular place at that particular time, he would be compromising his Christian faith and belief, which is something he did not do because he prayed very, very much and very strongly in the name of our Lord and Savior, Jesus Christ, which is what we are supposed to do.
He did it with the full approval of his ecclesiastical supervisors as well, which makes this even more confusing to all of us.
BROWN: He asked permission to do this.
FROELICH: Yes, he did.
BROWN: And permission was granted.
FROELICH: Yes, it was.
BROWN: And nevertheless, when he stood up and joined these others, something changed. What changed?
FROELICH: Oh, I don't think anything necessarily changed, but...
BROWN: But if he had approval, how then did it become something else?
FROELICH: Right. What happened was, he had approval from the president of our synod, he had approval from the president of the congregation which he serves in Brooklyn, he had the approval of the board of directors, the leaders of this local district of our church body.
However, there were a number of people outside of this area who felt he was in violation of our synodical agreements, and therefore brought charges against him for being in the public...
BROWN: Is there some broader fight going on here that this is a small chapter in?
FROELICH: I believe that's true. I believe it's been something that's been going on in our church body for a long time. I think there's motivations behind the charges against President Benke at this time. And I believe that in so many ways, he becomes a lightning rod for things like this in our church body.
BROWN: I know I'm going to regret what I'm about to say. There is...
FROELICH: Maybe I won't answer you, then.
BROWN: Well, fair enough. As an outsider, it -- this -- there's an arrogance in the position that the detractors have taken, that to simply join with these people is to somehow damage your set of beliefs.
FROELICH: I think we have to understand that in our church body, there are those who have a far more conservative approach to things than others of us. And the document that was quoted for supporting President Benke being there was approved by our synod and convention and year ago by a vast majority.
And in approving that document, it said there are cases of discretion which the local pastors can use. And it was the basis of that document from our Commission on Theology and Church Relations that allowed President Benke to be there, although others would interpret it that he still should not have been there.
BROWN: Yes. We got about a minute left. I want to ask a couple quick questions. Does this happen often, these sorts of suspensions and disciplines?
FROELICH: Rarely. Rarely. It has not happened in, oh, a long, long time. There were some suspensions about 28 years ago, but between then and now, in certain circumstances under church discipline, there would be suspensions, but rarely happens for anything like this.
BROWN: Got 20 seconds. Is an appeal possible here?
FROELICH: Yes. He's in the process of appealing right now, through our dispute resolution process in our synod, and he would, depending on the outcome of that, he would still have another appeal.
BROWN: You have a much more way -- a gentle way of expressing your displeasure than I think I would have under the same circumstances...
FROELICH: We are outraged by this.
BROWN: ... it comes with the territory. Thank you.
FROELICH: Yes.
BROWN: Thank you for the explanation, for coming in tonight. FROELICH: Thank you.
BROWN: Thank you.
Quickly, a couple of items, a follow-up to a story we brought you last night tops our national roundup. The Senate today approved finally a plan to spend -- to send, rather, 40,000 tons of nuclear waste to a permanent resting place at Yucca Mountain, Nevada. State has long fought the move, and today Senator Harry Reed of Nevada refused to concede defeat, saying he would oppose funding and would help the state in pressing its case, which appears to be now headed for the courts.
Memories of the Summer of Sam today in New York City. Serial killer David Berkowitz, better known as Son of Sam, denied parole. It was the first time he was eligible for parole. Berkowitz went on a murder spree that caused panic in New York back in 1977. He is currently serving a 365-year prison term for killing six people.
And Minnesota Governor Jesse Ventura hospitalized today with chest pains. He's being re -- treated for a recurring blood clot in his lungs, same problem that ended his pro wrestling career more than a decade ago. Stable condition, and a spokesman says he's in good spirits in Minnesota.
Still to come on NEWSNIGHT, the story of the Match King and the modern era's first major accounting scandal.
And up next, a story that might make you think twice, even three times, before throwing out that box in the attic.
This is NEWSNIGHT from New York.
(COMMERCIAL BREAK)
BROWN: This is a great story. If you ever wondered maybe as a kid what it'd be like to find some buried treasure, we think we can give you some idea tonight.
A box of sketches of unknown artists is sitting around on the fourth floor of a museum in some obscure room, and one of the drawings catches the eye of a visiting scholar. Seems he had quite a good eye. It happened to be a Michelangelo drawing that could be worth as much as $12 million. It's thought to be the first discovery of a Michelangelo in this country since 1976.
Sarah Lawrence, a Renaissance specialist at the museum where the sketch was discovered, the Cooper-Hewitt National Design Museum, joins us tonight.
That's part of the Smithsonian, right?
SARAH LAWRENCE, COOPER-HEWITT MUSEUM: Yes, it is.
BROWN: This is just a great story. Tell -- well, first of all, welcome. LAWRENCE: Thank you very much, thank you for having me.
BROWN: Literally, somebody was looking through old boxes, right?
LAWRENCE: That is correct. We had Sir Timothy Clifford, who's the director of the National Galleries of Scotland, visiting us for a month, and it was a real delight to have him joining the Drawings and Prints Department.
And he spent that month working extremely diligently, going through every box of our Italian drawings. And about halfway through, he came across this particular drawing in a box of lighting fittings from the 18th and 19th century, and mixed in with that box was this drawing.
BROWN: And it is this drawing that we're looking at.
LAWRENCE: Yes, that's it, that's the lower part of it.
BROWN: Yes. Can you give em a sense of how big it is?
LAWRENCE: The actual drawing?
BROWN: Yes.
LAWRENCE: It's about 17 inches high and 10 inches across. And it is a design for a candelabrum that was probably intended to be perhaps as large as six to nine feet tall.
BROWN: Now, when he looked at it, did he go -- whatever artists and scholars say that's the equivalent of, Wow?
LAWRENCE: I think that he did. I think he did it very quietly. I was not actually in the room. But the moment has certainly been described several times. And I think he took a look at it, wanted to be careful, went back to it, really knew that it required very careful examination. But I think there's no question that quite quickly he really knew what it was.
BROWN: It's not signed, right?
LAWRENCE: It is not signed. And it came in with a prior attribution to Perino del Laga (ph), who is someone in the circle of Michelangelo, who often worked for Michelangelo's designs.
BROWN: And so how do we know it is not some assistant's or somebody else, how do we know it's a Michelangelo?
LAWRENCE: It's a good question. We brought the drawing to the British Museum to juxtapose it to the one decorate arts object drawing by Michelangelo that has a signature and a patron and a date, a salt cellar in the British Museum's collection.
And I think the most telling comparison was to look at the method of construction. In the two drawings, both have incised lines with an edged ruler, and that provides the basis for the construction of the drawing. And it's that kind of telltale indication of construction issues that I think really resolved it for everyone.
BROWN: Do you have, like, a lot of stuff in back rooms, seriously, that you don't know what it is?
LAWRENCE: We have a lot of stuff with attributions that are often changing. And this is part of why it's exciting to be an art historian, is that are discoveries that are constantly being made.
And it's often -- it takes a visiting scholar to come in who doesn't have to answer phones and doesn't have to deal with an exhibition at hand, who has an opportunity to really look closely at the collection. And Sir Timothy Clifford is an extraordinary connoisseur.
BROWN: Any idea how long it'd been sitting there?
LAWRENCE: Well, the drawing was acquired in 1942, so...
BROWN: And what did the museum, or whoever, pay for it when it was acquired?
LAWRENCE: Well, it was a group of five drawings and a larger selection of prints, and the total bill came to $60.
BROWN: Well, I could have bought a bunch of them.
LAWRENCE: You sure could.
BROWN: And just to show you how crass we can be if we have to, what do you think it's worth now?
LAWRENCE: It has been given an estimate as high as $12 million.
BROWN: Any interest in selling it, or are you going to put it on display?
LAWRENCE: No, absolutely not. We're looking forward to putting it on display and keeping it as one of the treasures of the Smithsonian.
BROWN: Does it change -- a discovery like this, change the museum in a -- in any way? Does it make the museum more important? Does it change the way the people who work at the museum think about what they do? It's such an extraordinary and serendipitous moment.
LAWRENCE: I don't think it changes anything. I think people are -- see it as indicative of the kind of treasures that the museum has. The Drawings and Prints Collection has really extraordinary riches, and this is clearly one of the pinnacles of that collection.
But it's very exciting to have it discovered.
BROWN: And it was found last April...
LAWRENCE: It was found in April.
BROWN: In April, in April.
LAWRENCE: Correct.
BROWN: And the time between April and now has been spent authenticating it and figuring out how to...
LAWRENCE: Exactly. The desire...
BROWN: ... deal with it.
LAWRENCE: ... was to show it to a number of specialists of Michelangelo drawings, and particularly Michael Hearst (ph) and Paul Joanides (ph). And we were hoping for at least one of them to be very positive about the drawing, and what was quite extraordinary was that we've really gotten a unanimous vote, not just from Michael Hearst (ph) and Paul Joanides (ph), but every other scholar we've shown it to.
And having been in this business long enough, it's very unusual to get that kind of unanimity in their response.
BROWN: And you paid $60 for it. Give you $120.
LAWRENCE: Sorry.
BROWN: No. If you don't try, you never get anywhere in life.
Thank you, Sarah Lawrence from the Cooper-Hewitt Museum. It is a great story. Thank you. Nice to meet you.
Ahead on NEWSNIGHT, we go back to 1929 and the modern era's first accounting scandal, courtesy of a man known as the Match King. That's later. Coming up,we'll take a look at the career of Rod Steiger, still a ways to go. This is NEWSNIGHT on CNN.
(COMMERCIAL BREAK)
BROWN: It's been said that to read a list of Rod Steiger's acting roles is to read an index from an encyclopedia. Few actors could make an utterly convincing go at Rasputin or Ulysses S. Grant, not to mention Mussolini.
It's hard to think of an actor these days who could make themselves into that kind of blank canvas that you really need to draw a truly memorable character, or perhaps even an actor who would want to these days.
Rod Steiger was not a celebrity, at least not in the way we think of celebrities these days. He was an actor's actor, and he died today, and his rare and subtle talent shall be missed.
(BEGIN VIDEOTAPE)
(BEGIN VIDEO CLIP, 1989)
ROD STEIGER, ACTOR: You know, one of the worst things that can happen to a human being is to have a moment of good luck arrive, an opportunity arrive, and not be prepared for it, because they don't arrive very often.
When I walk on the set, people know it.
(END VIDEO CLIP)
BROWN (voice-over): When actor Rod Steiger appeared on the screen, big or small, we all knew it. He was an uncommonly fine actor. For more than 50 years, more than 100 movies and TV credits, often larger than life.
(BEGIN VIDEO CLIP, "THE PAWNBROKER")
UNIDENTIFIED ACTOR: It's gold!
STEIGER: One dollar.
UNIDENTIFIED ACTOR: A dollar?
(END VIDEO CLIP)
BROWN: It was his versatility, from a Hasidic rabbi to a vicious gangster to a French dictator. And while not every film was a hit, most every performance was in one way or another memorable.
(BEGIN VIDEO CLIP, "WATERLOO")
STEIGER: The throne is an overdecorated piece of furniture. It's what's behind the throne that counts.
(END VIDEO CLIP)
BROWN: He was an only child, his parents entertainers. When he was born, they lived in West Hampton, New York. But then the couple divorced and his mother remarried, and they moved to Newark, New Jersey, which was never home to Rod Steiger.
(BEGIN VIDEO CLIP, 1989)
STEIGER: My family wasn't that well respected in the neighborhood because of alcoholic problems one of my parents had. Somewhere inside of me, I must have said, the son of a bitch, they will never laugh at the name of Steiger again.
(END VIDEO CLIP)
BROWN: So at 15 he left, lied about his age, and a year later enlisted in the U.S. Navy, serving in the South Pacific.
When he returned, Steiger joined the New York Actors Studio with other young, budding stars like Marlon Brando and Eva Marie Saint and Karl Malden.
And then his big break came, 1954, co-starring with Brando in "On the Waterfront." And in this famous scene, Brando blames Steiger for forcing him to throw a boxing match.
(BEGIN VIDEO CLIP, "ON THE WATERFRONT")
MARLON BRANDO, ACTOR: You don't understand, I coulda had class. I coulda been a contender.
(END VIDEO CLIP)
BROWN: The film grabbed Steiger his first of three Oscar nominations.
(BEGIN VIDEO CLIP, "AL CAPONE")
STEIGER: I'm going to tell you something. With booze and gambling and broads, a guy can die happy in a place like this.
(END VIDEO CLIP)
BROWN: After other big-screen notables, including "Al Capone" and "Dr. Zhivago," in 1967 Steiger landed the role of Bill Gillespie in the movie "In the Heat of the Night."
(BEGIN VIDEO CLIP, "IN THE HEAT OF THE NIGHT")
SIDNEY POITIER: You're holding the wrong man.
STEIGER: What do you mean, I'm holding the wrong man? I got the motive, which is money, and the body, which is dead.
(END VIDEO CLIP)
BROWN: His performance as a Southern sheriff gave the 42-year- old actor an Academy Award, best actor of the year.
(BEGIN VIDEO CLIP, "TRUTH OR CONSEQUENCES")
STEIGER: You think I'm going to pay you for something that's already mine?
(END VIDEO CLIP)
BROWN: In the '70s, health problems began to settle in for Steiger. The good roles began to fade somewhat as well.
(BEGIN VIDEO CLIP, 1997)
STEIGER: Thank you very much.
(END VIDEO CLIP)
BROWN: But in 1997, later than it should have been, Rod Steiger received his own star on Hollywood's Walk of Fame.
(BEGIN VIDEO CLIP, 1997)
STEIGER: The thing I like the best about it, I got a 4-year-old boy, and someday he can point at that and say, That was my -- that's my dad, you know, and that pleases me more than anything.
(END VIDEO CLIP)
BROWN: Rod Steiger was an actor, each role fresh, each character convincing. A man who saw his work and his life as a wonderful, if not always easy, adventure.
(END VIDEOTAPE)
Rod Steiger was 77.
Next on NEWSNIGHT, the story of the Match King and the accounting scandal of the 20th century.
(COMMERCIAL BREAK)
BROWN: We'll close things out tonight right where we began, though not exactly when. You'll recognize all the players, burned investors, angry lawmakers, a president accused of being too cozy with big business, and at the center of it all, a tycoon who made Bernie Ebbers and Ken Lay look like minor leaguers.
He wasn't just a captain of industry, he was the king of his, and he built his empire on fraud and forgery -- and match heads. Right, match heads, as in kitchen matches.
Beth Nissen tonight on the rise and fall of the Match King.
(BEGIN VIDEOTAPE)
BETH NISSEN, CNN CORRESPONDENT (voice-over): His name was Ivar Kreuger, a Swedish financier who emigrated to the U.S. at the turn of the last century and became one of the first global titans of business. He did that by cornering two-thirds of the world's market in kitchen matches. He was known worldwide as the Match King.
JOSEPH WELLS, CHAIRMAN, ASSOCIATION OF CERTIFIED FRAUD EXAMINERS: His whole theory was that it didn't matter what you made as long as you controlled the entire market.
NISSEN: The elegant Ivar Kreuger was one of the first corporate celebrities. He met with presidents, dined with prime ministers, partied with movie stars, including Greta Garbo. He was famous for his wealth and power.
He even helped inspire Orson Welles in "Citizen Kane." Welles said his recipe for creating the character of Charles Foster Kane included one gallon of William Randolph Hearst, two quarts of Welles himself, and half a cup of Ivar Kreuger.
Kreuger was popular in smaller circles too, especially among what was in the mid-'20s a new population of small investors in the stock market. Kreuger's stock was very popular, mostly because it paid annual dividends up to 20 percent.
Even after the stock market crash of 1929, Kreuger's company continued to report good financial results.
But the Match King's empire was about to go up in smoke. In 1931, Kreuger was trying to strike a major deal with International Telephone and Telegraph. They wanted to see his ledgers, which turned out to be full of legerdemain, accounting fiction.
In news that may sound familiar to anyone reading recent headlines, Kreuger had created phony assets, had hidden losses, had personally fabricated financial statements.
WELLS: He overstated his financials to show exactly the profits that he wanted to show at the time, and he intimidated his auditors into accepting these phony profits as being the truth without any sort of independent verification.
NISSEN: Those high dividends, Kreuger had paid them with money borrowed from other investors, moved from subsidiary company to subsidiary company.
WELLS: It was really a big shell game, which is a lot of what these financial statement frauds are. They're just big shell games.
NISSEN: On March 12, 1932, Ivar Kreuger's body was found in his rooms in Paris. There was general agreement that he had committed suicide, although there were dark rumors of foul play.
Prices for Kreuger's stock plunged from $5 share to 5 cents a share within days of Kreuger's death. His international conglomerate went bankrupt, the largest bankruptcy in U.S. history at that point.
Auditors spent months sorting out the financials of Kreuger's 400 interlinked subsidiaries, many of the phony holding companies. Congressional committees, then as today, held hearings. Their findings, the Match King had burned tens of thousands of investors.
U.S. investors lost about $250 million, a staggering loss at the time. Losses worldwide were half a billion dollars.
Kreuger's fraud helped spur passage of the U.S. Securities Act, the founding of the SEC, and establishment of accounting regulations.
But fraud examiners say no rules can safeguard investors against the Ivar Kreugers of the world.
WELLS: I have a saying about all these people. On the surface, they seem pretty nice, but when you're around them, you need to take your wallet into the shower with you.
NISSEN: And beware of the investment equivalent of playing with matches.
Beth Nissen, CNN, New York.
(END VIDEOTAPE)
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One way or another, we'll see you tomorrow at 10:00. We hope you'll join us. Good night for all of us.
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