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U.S. Embassy Hazing & Humiliation; Taming the Firestorm; California Considers Releasing 27,000 Inmates

Aired September 02, 2009 - 12:00   ET

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

TONY HARRIS, CNN ANCHOR: Shocking allegations about conditions at the U.S. embassy in Afghanistan. Evidence emerging of hazing and humiliation, understaffing and sleep deprivation and an all-out crisis in discipline. The charges are against a private security firm hired to protect the embassy.

And our foreign affairs correspondent, Jill Dougherty, reports.

(BEGIN VIDEOTAPE)

JILL DOUGHERTY, CNN FOREIGN AFFAIRS CORRESPONDENT (voice-over): The American embassy in Kabul, Afghanistan. In August, the target of rocket attacks and suicide bombings. Now, allegations that the contractor hired by the State Department to protect that embassy for years has created conditions that threaten its security.

The report by the Independent Project on Government Oversight, or POGO, cites complaints from nearly 10 percent of the guards working for the ArmorGroup North America, now owned by Wackenhut Services Inc. The most explosive, charges of what POGO calls "deviant hazing and humiliation."

POGO says it obtained these photos showing superiors and other guards off duty hazing some new recruits, including images of half- naked men in compromising sexual positions with what appears to be alcohol, all highly offensive in a Muslim country. Guards who objected, they say, were ridiculed, demoted, and even fired.

CNN communicated with one guard who confirmed the authenticity of the photos.

DANIELLE BRIAN, EXECUTIVE DIRECTOR, PROJECT ON GOVERNMENT OVERSIGHT: The impact for the job, though, is a total breakdown in the chain of command, a total lack of respect on the part of the guard force for the supervisors because of this kind of behavior.

DOUGHERTY: POGO also says other problems undermined morale, including hiring an insufficient number of guards. The ones on duty were sleep-deprived, lacked proper training and adequate armored vehicles. There was constant personnel turnover. Nearly two-thirds of the guards, they say, couldn't adequately speak English. And it charges Afghan nationals for the embassy were mistreated.

It's just the latest in a long history of complaints against the company that started under the Bush administration. IAN KELLY, STATE DEPARTMENT SPOKESPERSON: The secretary and the department have made it clear that we will have zero tolerance of type of conduct that is alleged in these documents.

DOUGHERTY: For the past two years, the State Department repeatedly criticized the company for its poor performance. In this letter from June 2007, it warned, "The security of U.S. Embassy Kabul is in jeopardy."

Yet, in July, the Obama administration renewed the contract for another year, with the option to extend until 2012.

BRIAN: They said, you know, we are now convinced everything's fine. And then they reissued the contract for another year. So, I think the State Department is an equal partner in the problem here.

DOUGHERTY: A Senate subcommittee criticized the State Department for publicly defending the company, calling the Department's handling of the contractor "... a case study of how mismanagement and lack of oversight can result in poor performance." "At times, the security of the U.S. Embassy in Kabul may have been placed at risk."

(END VIDEO TAPE)

HARRIS: Our Foreign Affairs Correspondent Jill Dougherty joining me live now from the State Department. We're also joined by CNN Pentagon Correspondent Chris Lawrence.

And Jill, let me start with you.

What does Wackenhut have to say about this story?

DOUGHERTY: Well, Tony, they're not saying anything at this point. We have contacted them since we got wind of this story yesterday in the morning and have made numerous calls. They do say that perhaps they will have something to say, but so far nothing directly from them.

I can tell you, Tony, that there was a statement coming out of the embassy in Afghanistan, and they are saying they have taken immediate steps to review all local guard policies and procedures, and have taken all possible measures to assure our security is sound. But you have to ask, if some of this has been going on for now on about two years...

HARRIS: Yes.

DOUGHERTY: ... why isn't it stopping?

HARRIS: That's a great question.

And Chris, why are private contractors providing security at the embassy? Where are the Marines?

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, there are Marines there at the Kabul embassy. In fact, there are a small number of Marines, Tony, at almost every U.S. embassy around the world.

I was told by several people here at the Pentagon, though, that, think of them as sort of a last line of defense. They are providing internal security, whereas the contractors are providing perimeter security.

The Marines would be in charge of the personnel there at the embassy, any classified material. But the only time they would be outside the perimeter, I'm told, would be in a crisis situation, if there was, say, an attack on an embassy.

The reason for that is primarily jurisdictional. It's worked out with the country, between the country and the State Department. And it's an idea of not having U.S. Marines, U.S. military operating on the perimeter, or just outside the perimeter, because on the grounds you're still on U.S. soil. Outside, you're in the host country.

HARRIS: That's interesting.

Chris Lawrence at the Pentagon for us.

And from the State Department, our foreign affairs correspondent, Jill Dougherty.

Thank you both. Appreciate it.

And later this hour, I will take a closer look at private contractors in the war zone. These disturbing pictures prompting new questions about who calls the shots for hired guns. I'll talk to a CNN executive producer who wrote the book on contractors in Iraq.

Almost two dozen people were killed in Afghanistan today, including a top intelligence official. The blast happened in Laghman Province, just east of Kabul. Authorities say a suicide bomber detonated just as the intelligence official and others were leaving a mosque. Analysts say the high-profile assassination underscores security weaknesses and points to Taliban expansion.

More and more of you want out of Afghanistan. Opposition to the war now at an all-time high.

A new CNN/Opinion Research Poll shows 42 percent of people still support the war, 57 percent now oppose it. Looking back now over several months, the opposition has risen from 54 percent in July. In May, it was 48 percent, 46 percent in April. So, you can see, the opposition number climbing steadily.

When asked if the U.S. is winning in Afghanistan, 35 percent say yes, 62 percent, no. The survey has a sampling error of plus or minus three points.

Hurricane Jimena is crashing into the central part of Mexico's Baja Peninsula today. Jimena brushed past resorts on the tip of the peninsula earlier.

Hotels appeared to escape major damage, just some power outages. The hurricane sustained winds clocking in at 100 miles an hour, down from 155 miles an hour. It's starting to break up just a bit. Jimena's forward motion is slowing as well.

Crews are finally getting some help from the weather in the southern California firefight. A week after the Station Fire started, containment is now up to 22 percent, and some evacuation orders have been lifted.

CNN's Reynolds Wolf is tracking developments in northern Los Angeles County.

And Reynolds, what's the outlook for today's fight against this fire that is so close to Los Angeles?

REYNOLDS WOLF, CNN METEOROLOGIST: Absolutely, Tony.

The latest we got is it's about 22 percent contained. And we had Governor Schwarzenegger here just a short while ago, kind of giving the firefighters a big pat on the back.

I mean, these guys are working valiantly, it's a very difficult endeavor for them. You know, the hilly terrain.

We've been showing people the video of just how tough things are out here. It's not a flat surface. It's a mountainous region we have in this area. They're battling it on foot, they're battling it from high above.

And to give us a better idea of what's going on, we've got a fire information officer with us. His name is Paul Lowenthal. Paul has been working like crazy over the last couple of days like all the other men and women here fighting the fire.

His blood type is high caffeine right now. The guy's on zero sleep and working very hard.

How is, would you say, the spirit of the firefighters right now?

PAUL LOWENTHAL, FIRE INFORMATION OFFICER: Things are going pretty good. We've got guys that come back, crews that come back tired. They're getting a lot of good rest, eating. Just trying to keep them going.

WOLF: Well, Paul, out of all the spots that we're seeing, I mean, there's so much out there to work with. We're talking about an immense fire.

Is there one particular area of concern that you guys are really trying to pinpoint right now?

LOWENTHAL: There's actually three. Right now, we've got -- well, our top priority right now is obviously to keep the fire out of the San Gabriel -- I'm sorry, out of the corridor, the foothill corridor of the communities that border along the 210 Freeway.

We're also really trying to keep it away obviously from obviously Mount Wilson. And then our other issue right now is keeping it out of the canyon on what would be the west side of the fire. So, it's about four areas we're looking at right now, but our top priorities right now are the homes and Mount Wilson.

WOLF: Any updated guesstimate as to when you think there might be better containment of this fire, when they might have turned the corner a bit?

LOWENTHAL: Yes. The IC kind of said that he could sort of start seeing that corner right now, but doesn't want to be -- you know, we haven't hit it yet. We're just still trying to chug away at it and do what we can.

WOLF: Absolutely. Absolutely. I mean, it's nature and it's California.

Paul, great job. Thanks for all your help, and get some rest, man.

LOWENTHAL: All right.

WOLF: See, that's what they've been dealing with. They've been dealing with just these incredible conditions.

And I've got to tell you, the weather, of course, has not been helping for the most part, although it did get pretty humid last night. We had a few stray raindrops yesterday morning, but today -- well, meteorologist Chad Myers is with us.

(WEATHER REPORT)

(COMMERCIAL BREAK)

HARRIS: The attorney for the woman charged along with her husband in the kidnapping of Jaycee Dugard says media coverage may hurt his client's ability to get a fair trial. Nancy Garrido and her husband Phillip have pled not guilty. Mrs. Garrido's attorney says he is still formulating her defense and working to get his client to confide in him.

Jaycee Dugard was kidnapped when she was 11 years old. She gave birth to two daughters with Phillip Garrido during her 18 years in captivity, growing up in a backyard compound.

California is considering an early release for thousands of prisoners. It is a cost-cutting measure for a desperate, cash- strapped state.

As CNN's Randi Kaye reports, among those possible releases, sexual offenders like Phillip Garrido.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): April 17, 1982, the last time Collene Campbell hugged her only son.

COLLENE CAMPBELL, MOTHER OF SCOTT: I gave him a hug, and that was the last time I ever saw him.

KAYE: Hours later, Scott Campbell was dead, killed by this man, Donald Dimasio, who was out on parole. Campbell was mixed up in drugs with Laurence Cowell (ph), who hired Dimasio, the parolee, to strangle Scott.

Then, the unthinkable. They beat him bloody so the sharks would eat him, then tossed his body from an airplane into the Pacific Ocean. He was never found.

CAMPBELL: It's worth death itself, hunting for a person.

KAYE: Dimasio was sentenced to life with no chance of parole. He died in prison in 2007. Cowell (ph) is serving 25 to life.

CAMPBELL: My greatest fear is that other people will suffer the same losses that we have because prisoners were let out early.

KAYE: Because of her son's horrific murder, Collene Campbell is speaking out against the possible release of as many as 27,000 California prison inmates. The governor says it could save the cash- strapped state more than $500 million. But supporters of the plan say Campbell's fear is unwarranted.

UNIDENTIFIED MALE: All of the proposals involved non-serious, nonviolent, non-sex offenders.

KAYE: But what about the case of Jaycee Dugard? Phillip Garrido, the sex offender out on parole, charged with kidnapping and raping her served only 11 years for an earlier rape. He'd been sentenced to half a century.

UNIDENTIFIED MALE: He would not be near one of the offenders that would be addressed in the governor's proposals.

KAYE (on camera): In fact, the Department of Corrections says Garrido may have been watched more closely since the plan is to provide better resources to more closely monitor dangerous parolees.

Still, critics of the early release plan see it as a literal get- out-of-jail-free card and worry nonviolent offenders could turn violent.

(voice-over): Take the case of Lilly Burke (ph), the 17-year-old killed in July in downtown Los Angeles, her throat slashed. Charles Samuel, a parolee, now charged with her murder, says he didn't do it. He had not been considered violent before.

Seventy percent of prisoners released in California go on to commit other crimes.

CAMPBELL: If you're letting out 27,000 prisoners, and 70 percent of them are going to re-offend in California, that's scary.

KAYE: Regardless of money the state might save, Colleen Campbell knows the cost of a human life can never be repaid. Randi Kaye, CNN, Los Angeles.

(END VIDEOTAPE)

HARRIS: If President Obama wants health care reform to pass, is it try for him to try something different?

We will get the latest on what the administration is at least considering.

(COMMERCIAL BREAK)

HARRIS: Let's get to our top stories now. Firefighters in Los Angeles County are making slow progress today. The inferno in the Angeles National Forest is now 22 percent contained. The humidity is up and the temperatures down. That's a great combination for firefighters.

One hundred forty-thousand acres and around 60 homes have burned.

Hurricane Jimena is slamming into Mexico's central Baja Peninsula today. The storm's top sustained winds are down to 100 miles an hour. The hurricane sideswiped resorts at the peninsula's tip overnight. Little damage, other than power outages.

And Diane Sawyer is stepping up to the anchor chair at ABC come January. Charles Gibson is retiring after three years in the seat for world news.

Another check of our top stories coming for you in 20 minutes.

President Obama tries to regroup and regain momentum in his push for health care reform. His policies have come under fire, as you know, and he may be considering a shift in strategy.

Joining us now with more on that, our Elaine Quijano at the White House, and the executive editor of Politico, Jim VandeHei.

Elaine, let's start with you.

Jim, good to see you.

Elaine, what is the White House considering here?

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, White House senior adviser, Tony, David Axelrod tells CNN that President Obama is now considering giving a major address on health care reform, one that would include specifics on what exactly he'd like to see in a health care reform bill.

Now, this is significant. Why? Because the president, up until this point, really has only talked about broad principles, only outlining these broad principles and leaving details up to lawmakers in Congress, who are trying to craft this legislation.

Well, what's different now? Now, they say, here at the White House, the dynamic is very different.

An administration official says that recent actions by two key Republican senators, Senator Charles Grassley and Senator Mike Enzi, have led them here at the White House to believe that these two senators are essentially walking away from the table. So, now senior adviser David Axelrod saying they are entering a new season. They want to go ahead and try and tie together some of the various proposals that are out there right now, and in his words, get health care reform done.

But no decisions made just yet -- Tony.

HARRIS: Yes. Senators Grassley and Enzi.

Let's talk about that with Jim VandeHei. Elaine, if you would, stand by.

You know, what do you think of this, Jim? Senators Grassley and Enzi, do you believe they're walking away from the negotiations?

JIM VANDEHEI, EXECUTIVE EDITOR, POLITICO: Well, I don't think they've walked away totally. They're still involved in negotiations with Democrats trying to figure out if there's a compromise...

(CROSSTALK)

HARRIS: In a meaningful way or just for show?

VANDEHEI: It depends on how you interpret "meaningful" or define "meaningful," because they basically want to be able to get a big chunk of Republicans on board for a final compromise. And that's going to be real hard, because most Republicans have made it abundantly clear that they don't really want a deal, or they certainly don't want a deal that I think Obama would be willing to tolerate or accept.

HARRIS: Yes.

VANDEHEI: So, it's going to be very hard to get a bipartisan deal.

The truth is for Obama, he has no choice but to come back and give a big speech. He's lost control of the health care debate over the last six weeks. The town halls, the opposition, they have defined the debate. His poll numbers have sunk, and he's got to figure out a way to get his mojo back.

And the only way you can to do that is using the bully pulpit to try to set the debate on your terms and try to figure out a way if you can give specifics to push the debate in a way that gets to a compromise so he can sign some kind of bill at the end of the year and declare victory. And that's what he will do if he can get a bill through Congress.

And I don't think he, at the end of the day, will care much if he can get Republicans. I think he would prefer Republicans, but right now they're saying, you know what? If they won't compromise, then to hell with them, we're going to get our own bill and we're going to get something signed into law.

HARRIS: Got you.

VANDEHEI: That's tough though.

HARRIS: Jim -- and maybe, Elaine, if you've got some thoughts on this, chime in.

But Jim, look, you just can't -- you know, every big speech can't be a big speech.

VANDEHEI: Right.

HARRIS: You see what I'm saying? And at some point, you know, the verbiage has to change so it's not just the speech, it's what you're saying.

So, what do you believe the president is going to say when he comes back on the stage to talk about health care reform?

VANDEHEI: I don't know. And I think that's the problem for them.

I think they've been saying for some time that they have principles. You know what the principles are of what they want. They want everyone to be covered. They want people not to be penalized for having a pre-existing condition. And they want to make sure that there's a way to push down insurance rates.

Are they going to come out and specifically say what legislation should state? I don't think they will, because they basically turned over control of the health care debate early on to Congress and said, we're going to let them write the details.

If suddenly, well, you have five or six committees fooling around with bills in Congress that say, no, this exactly what the final bill is going to look like, he's going to then have problems with Congress. So he's in a little bit of a pickle.

HARRIS: He absolutely will.

VANDEHEI: And I think he'll give more specificity than we've seen in the past, but he's not going to go as far as giving specific legislative language.

HARRIS: And Elaine, is the guidance you're getting -- I know the senior adviser, David Axelrod, has talked about had in a conference call -- is the guidance you're getting that the president will come forward at some point next week and give remarks where he absolutely begins to more forcefully lay out his strategy, what he wants?

QUIJANO: Well, let's be very clear here, Tony. What we're hearing is the that this is just one option that the president is considering right now, delivering this major address. Now, interesting to ask the question, what form could this take? Could it be an Oval Office address?

HARRIS: Yes.

QUIJANO: Could it be an address before a joint session of Congress? We don't know. We don't even know if he's decided to go ahead and give an address.

What we do know is that there is this movement or thought within the White House that, in fact, the president is going to take a different approach here, perhaps be a little bit more active. They are looking at the calendar, obviously, and calculating...

HARRIS: Very good point.

QUIJANO: ... that this is a time for the president to come out and really push hard on health care reform.

And you were talking about what exactly we might hear. I think one thing that's going to be very interesting, Tony, is what the president has to say or doesn't say about a public option.

HARRIS: Yes.

QUIJANO: Because as you know, that is an issue that really has angered and outraged members of the president's liberal base. So, that is going to be something to watch for, if and when the president does decide to make an address.

HARRIS: Hey, Jim, one more quick one.

What's the time window here? How much time does the president have to get something done? I know we're talking about the end of the year, but what's the real -- crunch that time frame down for us.

VANDEHEI: I mean, anytime this year. I mean, Congress can stick around into December if they had to get a health care bill.

What we hear on the Hill is they'd like to get it done in the next eight to 10 weeks. That's probably realistic if you're going to get a compromise, because you still have a lot of action that has to take place in Senate committees. You have to go through a conference committee. It's a complicated process, a complicated bill.

I think, getting back to the public option, what we're hearing from White House officials, he's not going to demand a public option. So, I think that's going to probably give him more leverage in trying to woo moderate Democrats. But once you say you're not going to have a public option, you're going to have a big outcry from liberals.

So, this is a complicated issue both politically and substantively. So, it's not a slam-dunk that he can get it done no matter how forceful he's going to be.

HARRIS: Jim Vandehei, appreciate it.

VANDEHEI: Take care. HARRIS: Jim's with Politico.

And Elaine Quijano, terrific as always.

Thank you both.

A top congressional Democrat reaffirms his support for a government insurance opposition, but he stopped short of calling it a make-or-break issue. Representative Steny Hoyer faced tough questions about health care during a packed town hall meeting.

Details from our congressional correspondent, Brianna Keilar.

(BEGIN VIDEOTAPE)

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The line for House Majority Leader Steny Hoyer's health care town hall meeting wrapped around much of the high school where it was held, opinions covering the spectrum.

UNIDENTIFIED MALE: If I'm in debt, I cut back. They're trying to pick up more, and we don't have the money for it.

UNIDENTIFIED FEMALE: I think it should pass. I think everybody should have affordable health care.

UNIDENTIFIED MALE: I don't know all the ins and outs, and I'm afraid I might lose what I have.

KEILAR: Once inside, some made desperate pleas for a government- run insurance plan.

UNIDENTIFIED FEMALE: Can't afford health care. I believe that health care is a right and not a privilege.

UNIDENTIFIED MALE: My son pays $800 a month and has a $5,000 deductible. This is unacceptable. We need a public option.

REP. STENY HOYER (D), MAJORITY LEADER: I support a public option. In my opinion, it would bring down premiums for all of us, private or public.

KEILAR: But in this conservative district, many people were concerned the Democratic plan to overhaul health care will drive the country further into debt.

UNIDENTIFIED MALE: I don't see how the government can provide all these things and still say they're going to save money. It just -- it doesn't make ordinary common sense.

KEILAR: Despite assurances from Hoyer...

HOYER: If it's not paid for, I'm not going to vote for it.

KEILAR: ... critics remain skeptical. Convinced the health care system is broken, but just as certain a government-run insurance plan is not the fix.

UNIDENTIFIED MALE: I am for health care reform, but I'm not for government-run health care reform.

KEILAR: Speaking to CNN after the meeting, Hoyer reaffirmed his support for the so-called public option but stopped short of saying House Democrats will vote down a bill if it doesn't include one.

HOYER: I also believe that there are many other aspects of this bill that are very good and will make a real difference in terms of a cost to individuals and families, access to affordable, quality health care. All of those are very important as well.

(END VIDEOTAPE)

HARRIS: Brianna Keilar joining us live from Washington. Brianna, this is -- ooh, this is going to heat up next week. So there is all of this uproar at these town hall meetings over the so-called public option. But, really, what is the reality here of it actually being included in a final bill that would actually end up on the president's desk for a signature?

KEILAR: Well, Tony, here's the reality. While this government- run public option, this so-called public option.

HARRIS: Yes.

KEILAR: It is in all three versions of the House health care reform bill. It's also in one Senate bill that's passed out of committee. But in the Senate, centrist Democrats, they've expressed enough opposition to this public plan that its passage in the Senate seems extremely unlikely.

Now, that said, Tony, Speaker Pelosi, she insists the House will pass a version with a public option. And she's actually going to be speaking to the Chamber of Commerce in San Francisco here in the next hour, and we're expecting that she will reiterate that same pledge.

HARRIS: Wow, all right, our congressional correspondent, Brianna Keilar, for us, Brianna, appreciate it. Thank you.

And if you'd like to find more of what you've been seeing here on CNN, check out CNN.com/healthcare. You can find out where the -- for example, where the closest town hall meeting is to you.

The key players of the debate, the different plans, and, of course, the controversial sticking points to the plans. CNN.com/healthcare.

(COMMERCIAL BREAK)

HARRIS: A couple of developments on the Lockerbie bomber story to tell you about. But first, the bomber, Abdel Baset al-Megrahi has been taken to the intensive care unit of a hospital, we believe, in Libya. We have confirmed that here at CNN. And the Scottish justice secretary, trying again to explain the release of al-Megrahi, and the firestorm that that release touched off, particularly at these scenes of how he was received when he landed in Tripoli.

The Scottish parliament has had its say. Our Phil Black is joining us with more on that story.

Phil, what can you tell us?

PHIL BLACK, CNN CORRESPONDENT: Hello, Tony. Yes, well, yesterday, the Scottish justice minister, Kenny MacAskill, took the unusual step of releasing all the documentation that he said was relevant to that decision to let al-Megrahi go free on compassionate grounds.

Today, the Scottish parliament had the chance to debate this once again. Kenny MacAskill put forward a motion that suggested or that said that his decision was in the best principles of Scottish justice.

The majority of his parliamentary colleagues have disagreed with him. They have put forward amendments which are carried and have resulted in a motion that is heavily critical of Kenny MacAskill 's decision to let al-Megrahi go free.

That final motion says that it has damaged Scotland's international reputation, that this whole thing has been mishandled, and that ultimately it showed a lack of compassion for the victim to the families of the victims of the Pan Am bombing.

It carries no real legal weight but it's a pretty heavy rebuke against Kenny MacAskill in Scotland and the decision he made, Tony.

HARRIS: OK. Phil Black, with the latest for us from London. Phil, appreciate it. Thank you.

You bailed out their banks, now it looks like those banks' CEOs are stuffing their pockets again. What's going on here?

(COMMERCIAL BREAK)

HARRIS: All right. Let's get to our "Top Stories" now. In Washington, the white supremacist charged with killing a security guard at the Holocaust Memorial Museum spoke out in federal court last hour. 89-year-old James Von Brunn told the court, "Your Constitution guarantees me a speedy and fair trial."

He was denied bond. The guard shot him in the face during the incident. He's been hospitalized ever since.

Firefighters in Los Angeles County are making slow progress today. The inferno in the Angeles National Forest is now 22 percent contained. The humidity is up, temperatures down. A good combination there. 140,000 acres and around 60 homes have burned.

Changes at ABC's flagship newscast. Diane Sawyer will take the anchor seat from Charles Gibson in January. Gibson is retiring from "World News" after three years.

Billions and billions of taxpayer dollars poured into U.S. banks, but executive compensation remains off the charts. Let's check in with our Christine Romans.

Off the charts here. Christine, who looked at the salary figures and put this report together?

CHRISTINE ROMANS, CNN CORRESPONDENT: This is a group that since 1994 has gone through all of the proxy statements and all of these documents for CEO pay and has said, you know, what they think -- every year their report is called excess -- "Executive Excess," so you can see that their bent...

HARRIS: Yes. Yes.

ROMANS: ... from the very beginning is they think that there's a bubble here in employee -- in employer -- sorry, in CEO pay. And they say that bubble has not popped. I mean I think -- let's just look at the numbers here for a second.

HARRIS: Mm-hmm.

ROMANS: And this is -- all this data is right there in these companies' statements. The top 20 bailout banks. They looked at the top 20 banks...

HARRIS: Yes.

ROMANS: ... that received bailout funds. Last year the average CEO of those banks took home $13.8 million. Tony, that's 37 percent higher than the S&P 500 CEO pay.

HARRIS: Wow.

ROMANS: So the very part of the economy that is blamed, the part of the system that's blamed for taking the global economy to the brink...

HARRIS: Right.

ROMANS: ... that's where the CEOs are paid the most. So -- now, how does that compare with the people who are supposed to be the watchdogs? So how does that compare with the people who are trying to align pay with performance, not pay for failure as this group says?

HARRIS: Right.

ROMANS: The president makes $400,000 a year. Treasury secretary, the Fed chair, you know, Ben Bernanke, Timothy Geithner, they made just under $197,000. The regulatory agencies, you run a regulatory -- a regulator for one of these banks, you make $162,000. And then compare that again with the top 20...

HARRIS: That's good money. Yes, that's good money. I mean, honestly... ROMANS: Oh, yes!

HARRIS: That's good money. But when you compare it to the -- wow. And, look, Christine, this is going to be, we've got the G-20 coming up in just a couple of weeks.

ROMANS: Yes.

HARRIS: And it's going to be a big topic of discussion there. The president has his man, what is it, the special master on pay, Kenneth Feinberg, looking at this, so this is going to be a big issue moving forward, correct?

ROMANS: But this group, in its report called "Executive Excess in 2009," America's bailout barons, they find fault with the administration and with Congress. They say after noise earlier in the year...

HARRIS: Yes.

ROMANS: ... about trying to align pay for performance, they say that -- they don't think that enough has been done, or anything that's been done, and they point out the fact that they think the CEOs are poised for even bigger gains.

Again, these are CEOs of companies that your taxpayer dollars...

HARRIS: Yes.

ROMANS: ... had to be funded into. Look, we live in America. We like people to make a lot of money when they do something right, right?

HARRIS: Yes.

ROMANS: But this isn't doing something right. And this group says they're poised for even bigger gains this year because of the stock market rallies for some of these banks. So they have these options and they'll be aligned -- you know, they'll be aligned to the success of the stock of the company and that they're poised for even bigger numbers.

Probably some eye-popping numbers they say next year. They say, look, the big news here is that nothing has changed. Everything in the world has changed, but nothing has changed. This pay bubble, they say, is still here. And they say the pay bubble is why there was risk taking that led us down this horrible path we went down.

But the CEOs are still paid -- I should say, the boards of these companies still pay the CEOs very handsomely.

HARRIS: Nothing has changed for the top people at the top rung of these companies. Think about that for a second.

ROMANS: Another point -- another point, these 20 CEOs accounted for companies that cut -- they cut 160,000 jobs. HARRIS: Uh-huh.

ROMANS: So that's one thing. And another thing, the pay gap between those 20 banks' CEOs and the average, typical American worker, is 436.

HARRIS: You know, the populist rant on this is too easy. I won't even go there. Christine, appreciate it. Thank you.

ROMANS: Yep.

HARRIS: It's right there for everyone.

The world's largest drugmaker will pay the largest criminal penalty in U.S. history. The Justice Department announced the $2.3 billion settlement with Pfizer today. Why the penalty? Pfizer marketed four prescriptions for medical conditions that the drugs weren't approved to treat. $1 billion of the fine will go to reimburse Medicare and Medicaid. Some of that will be shared with the states.

New reports of bad behavior by private contractors in war zones. Who is keeping an eye on them?

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HARRIS: Shocking allegations against the private security firm hired to protect the U.S. embassy in Afghanistan. Graphic pictures and video show hazing and humiliation allegedly by supervisors.

The watchdog group Project on Government Oversight or POGO has sent a letter to secretary of state, Hillary Clinton. It documents widespread mistreatment, sexual activity and intimidation among embassy guards.

The guards are employed by Armorgroup North America, POGO says the conduct of the hired guns could put American lives at risk.

CNN executive producer Suzanne Simons has been investigating military contractor abuses including the Blackwater case in Iraq. She is also the author of "Master of War." Take a look at the book.

Suzanne, first of all, how do we get a story like this? This is -- this is beyond embarrassing.

SUZANNE SIMONS, CNN EXECUTIVE PRODUCER: Yes.

HARRIS: Is there any oversight to speak of here?

SIMONS: Well, let me just first say, this company is a company that...

HARRIS: Armorgroup.

SIMONS: It's a UK based company. Armorgroup, right. And they have a North American division, because there's so much business and so much money to be made over there.

HARRIS: Yes.

SIMONS: That they have started a group here. It's extremely embarrassing.

HARRIS: Yes.

SIMONS: I think, you know, you have to look at the issue that you're always going to get somebody in the crowd who does something that they're not supposed to do. But what happens then? And that's the real sticking point.

And that's where we should be holding the feet to the fire of the U.S. State Department. They're the ones who hire these people. They're the ones who should be providing some sort of oversight and accountability.

If this stuff happens and you're breaking rules and you're violating the process of your contract, you're gone. And it hasn't happened so far.

HARRIS: So, to what extent -- do we have an idea of how many contractors are actually working, not just in Afghanistan, but in Iraq?

SIMONS: Well, more than U.S. troops. How's that for a number?

HARRIS: More than U.S. troops.

SIMONS: In Afghanistan and Iraq combined.

HARRIS: Yes.

SIMONS: So at no point in the history of the country have we had the ratio of more troops overseas than -- or more contractors overseas than troops.

HARRIS: Than troops.

SIMONS: So, I kind of thought all this would change when, you know, the administration changed, because it was largely under the Bush administration that this grew...

HARRIS: That's interesting.

SIMONS: ... to the point that it did. However, once President Obama took office, he started dealing wish issues like the economy and health care.

HARRIS: Yes.

SIMONS: And the two wars overseas, you know, in terms of how we're overseeing contractors has not been in the forefront. But maybe it should be.

HARRIS: To the extent that, look, there have been, what, a couple of years of complaints about Armorgroup, correct?

SIMONS: Yes, yes, yes.

HARRIS: And yet the Obama administration, what, signed another deal, another contract with Armorgroup?

SIMONS: Yes.

HARRIS: Do we understand why?

SIMONS: No.

HARRIS: Given all the documentation. All the testimony about problems with Armorgroup?

SIMONS: Yes. No, well, it's crazy. I mean, they had somebody testify, the State Department did, in June that these problems had been taken care of, that everything was OK now.

Well, clearly, you know, here we are a couple of months later and we have pictures of naked people doing things in a Muslim country...

HARRIS: Yes.

SIMONS: ... that is, you know, insulting and clearly putting the military mission into some sort of not necessarily jeopardy, but it definitely makes it harder.

HARRIS: And I'm not trying to give the administration a pass in any way, so let me just ask the question. Have the president and Secretary Clinton -- have they had enough time to fix the problem?

SIMONS: You know, when they were on the campaign trail, they sure talked about it. I mean they said that the contracting thing needed to be brought under control. They've been in office eight months now, but like I said, maybe it's a case that they've bitten off more than that they can chew.

HARRIS: Yes.

SIMONS: I mean, but somebody needs to absolutely -- at the rate that this group of contracted workers is growing. As Americans we should all be angry because it's our taxpayer money, it's our reputation on the line, and our government is not doing what it should be doing when it comes to accountability.

HARRIS: Does Congress have a role to play in the oversight of this?

SIMONS: Of course. Yes. Absolutely. Absolutely. And Senator Kerry, I've got a letter from him right here, and he just sent requesting some answers to questions on Blackwater that have come up in recent weeks.

HARRIS: Yes. SIMONS: I mean, they're putting pressure on and they're finally kind of ramping it up a little bit to where it should be. But, once again, unless you're on it every day...

HARRIS: Yes.

SIMONS: ... unless you're, you know, demanding those answers, nothing is going to happen.

HARRIS: Suzanne, appreciate it. Thank you.

You know expect a big influx. Let's talk about electric cars here in the fast lane. You know we're charged up and off to the races. That is coming up next for you right here in the CNN NEWSROOM.

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HARRIS: Our blog question of the day, a hot one. South Carolina school wants its students' passwords for Facebook and MySpace accounts. The goal? Head off conduct problems and other trouble.

Boy, you have plenty to say about this one. Shane writes, "This is an outrage! I went to a Christian school and let me tell you, the more they try to dig into a child's life, the more they rebel."

This from Joe, "I hate to see any invasion of privacy by an establishment. Training children to get used to it is a good way to prepare them for their privacy to be invaded when they become adults."

Joe continues, "School computers, fine. Home computers should, however, be monitored by parents only." And here's what Brendan writes. "The school should have access, if the student brings it to school. That is, logging on to social networking sites on school computers."

And Alexander puts it succinctly. "Has anybody read the book '1984'?"

You can comment 24/7. Just log on to our blog page at CNN.com/tony. Make sure it's known right here in the CNN NEWSROOM.

You may not think fast when you think of electric cars, but believe it or not, folks are already drag racing them, and sometimes they're beating the gas-powered hot rods.

CNNMoney.com's Poppy Harlow spent the day at the races.

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UNIDENTIFIED MALE: People love their gas cars. All the noise and the smoke and the flames and everything. People love that stuff. So they're not going to go away.

UNIDENTIFIED MALE: Right now, I need the Warrior Pontiacs to lane one. Please. Warrior Pontiacs to lane number one.

DAVE COVER, CONVERTED PORSCHE: I think electrics are here to stay as well.

POPPY HARLOW, CNNMONEY. COM: Instead of putting gas in here, you put a plug in here.

COVER: Plug it right in here. That's right.

HARLOW: But then -- I mean, that used to be the gas tank.

COVER: That used to be the gas tank.

HARLOW: What got you hooked on electric cars?

COVER: The fact that my kids are going to have to inherit the world we live in, and I wanted to make it a better place for them. And so we needed a change. This is the brains and this is the brawn.

HARLOW: We think of Porsche, we think of expensive. All in, what did you buy the car for and how much money did you put into it?

COVER: I paid $2,500 for the car. I put less than $10,000 into the project altogether. And...

HARLOW: Less than $10,000?

COVER: Less than $10,000.

HARLOW: But then there are some pretty impressive new electric cars made be Tesla. The pick-up of this thing is amazing. They're very expensive. They're about $100,000.

TOM JAMISON, TESLA OWNER: Nobody really came out and said, let's do a really high-end sports car and make it electric before the Tesla guys.

HARLOW: And who thought, even a few years ago, you'd be drag- racing here in the middle of Maryland.

JAMISON: Yes.

HARLOW: In an electric car? I mean, we're used to these kind of drag racers right over here. What's about to happen is two electric cars are going to drag race against one another right here. The difference between them and all the other cars here, it's absolutely silent. Take a look.

I'm not kidding when I say you can even hear crickets right now.

(END VIDEOTAPE)

HARLOW: Now, of course, those electric cars are silent. That's why you heard the crickets chirping. And the electric cars didn't manage to beat those muscle cars in this race, but it is happening where electric cars are actually beating traditional drag racing cars.

In fact, those Tesla cars that you saw, they finished a quarter- mile race in less than 12.5 seconds. Go to CNNmoney.com, you can see the complete story there, including an electric car that was built at MIT all the way back in the early 1990s. It's amazing to think how long we've actually had this technology. The full story is on CNNmoney.com.

HARRIS: Poppy, appreciate it. Thank you.

We are pushing forward now with the next hour of CNN NEWSROOM with Kyra Phillips.