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30 Cents on the Dollar; Claimants "Must Get Paid"; China's Money Move Rallies Stocks

Aired June 21, 2010 - 13:00   ET

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

RICHARD LUI, CNN ANCHOR: All right, thanks a lot, Tony.

I am Richard Lui, in for Ali Velshi on this Monday for you, with your for the next two hours. Here's what's on the rundown for you.

First off, the oil disaster. Day 63 and the man in charge of BP's $20 billion compensation fund pushes for fast payouts, as CNN gears up for tonight's big telethon. It is your chance to help make a difference in the gulf.

And then we've got a huge wild fire. It is raging out of control in Arizona, in the west.>

And murder suspect, Joran Van Der Sloot signs a confession, but then says, oh, no, I want to retract that.

OK. First off, we're going to look at the top story this hour, and that is, of course, what is happening a mile underneath the Gulf Coast surface in the gulf. We look at the latest right now.

We have some information, of course, the latest numbers we've been tracking. First off for you, what we understand is 278,000 barrels have been siphoned to date, using the two systems that have been in placed so far.

Of course, we first of all have the LMAR pea cap that is down there helping to pull the oil off the top of that live picture has been screened for many weeks right now, and there is also that reverse top kill, that is also happening at the same time.

But in addition to that, we've got costs to add up, $2 billion is what we're hearing as of late, including $105 million in claim payouts. Much more on claims in a little bit for that for you.

First, we will now look at who is responsible. Is it BP alone or are there more parts to this? Well, the question is, who owns this well? Well, BP owns 65 percent of it, as you can see behind me. Also, in addition to that, 32,000 - 25 percent, rather, for an Adarko Petroleum, and 10 percent for Mitsui.

All of them own a part of this well. Now, there are joint operating agreement -- when you look at the details, we have done that, it breaks it down more. And the issue comes down to the words "gross negligence." or wrongdoing.

So if either one of the parties does exemplify that, then we have a new round of talks that could come of that. So as of now, we do see the three different partners at the moment going at each other. An Adarko for instance, quote, saying, "BP's behavior and actions likely represent gross negligence or willful misconduct and thus effect the obligations of the parties under this operating agreement."

That's the CEO, Jim Hackett, saying that. In addition to that, BP responding. They're saying other parties may be responsible for costs and liabilities, arising from the oil spill and we expect those parties to live up to their obligations.

OK, so as you can see, just from these two responses from the respective executives of those two parties of the three total ownership parties of that well, we will, most surely, wind up in court on this one. But in federal court, in New Orleans today, is the Obama administration's call for a moratorium of offshore drilling?

Now, as a part of that, oil services committee will be looking into this. They will be suing to overturn that call for a moratorium, claiming huge economic disaster or effect and harm to the area of the Gulf Coast. The Administration and Environmental saying drilling is just way too valuable to the economy and to the people and all the jobs that exist in the Gulf Coast area.

All right. Now, let's hear from Aaron Viles, Gulf Restoration Network, a representative there, and see what he has to say about that.

(BEGIN VIDEO CLIP)

AARON VILES, GULF RESTORATION NETWORK: How can you look at this ecological nightmare that's happening right now and say, let's keep going? We have got to get answers. There shouldn't be a gun to the head of the commission saying, look, every week you take means 25,000 more jobs or something like that.

(END VIDEO CLIP)

LUI: Twenty five thousand jobs. You could get a sense of the magnitude of where this could go. Let's go to Chris Lawrence, who had the opportunity to speak with one of those who lost his job because of this gulf oil spill. Let's listen to him right now.

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Well, Richard, to be fair, BP has cut more than 30,000 checks and handed out over $100 million already. But that still leaves houses of people who are still waiting to get paid or wondering how BP decided how much their claim was worth.

(BEGIN VIDEOTAPE)

LAWRENCE (voice-over): It took (42) years to build his business, running charter fishing boats for tourists in the gulf. Now it's all falling apart. Between the oil spill that shut down business and haggling with BP over his claim. STUART SCHEER, CHARTER BOAT CAPTAIN: Excuse me. You wonder how a guy my age, 260 pounds, could be emotional. Sorry, but, you know, it's like I told you. Saltwater runs through my veins. It's all I've done. All I've ever wanted to do is fish.

LAWRENCE: Stu walked into the local claims office, but BP classified him large loss and moved his claim 90 miles away. He only speaks with his adjuster by phone.

SCHEER: They wanted 2007, 2008, 2009 returns. They wanted my log books. They wanted my bank statements. They wanted all my licenses, P & L statement.

LAWRENCE (on camera): So you laid out everything. All this paperwork.

SCHEER: Everything.

LAWRENCE: To the number.

SCHEER: To the penny, virtually. This is what I calculated from May 9th through the end of December that I had on the books, actual books, not projections, not people still calling me.

LAWRENCE: And when you itemize these costs for BP, you even accounted for -- that you wouldn't be using fuel.

SCHEER: That's right. So that my boat didn't leave the dock, I would have rods, reels, contract, labor. My gross was 162.8, less expenses, daily boat expenses, came out to 179.82. My bookings for this year amounted to a gross note of $107,000, and they basically offered me $33,000.

LAWRENCE (voice-over): He turned down that offer and is now haggling to make up the difference. Are you anymore confident in the government running the claims process as you were --

SCHEER: Well, yes, like I said, there is always an area of optimism. You know, the fact that the Obama administration has gotten BP to put the $20 billion in escrow, and supposedly a new regime is going to come in and handle the claims, yeah, there's optimism. I hope it works out, but I'm suspicious.

(END VIDEOTAPE)

LAWRENCE: We did put in a call to BP. They don't comment on individual claims, but Stuart says they basically told him they won't pay for work he hasn't done.

In other words, he's already got cancellations in July, August, September, but may have to wait until those months pass and then refile additional claims. Chris Lawrence, CNN, New Orleans.

LUI: So that was a great piece from Chris Lawrence about Captain Scheer. But unfortunately, there's not just one Captain Scheer, there are thousands and you heard Captain Scheer talk about a new regime that could possibly help all those claims, all those captains out there.

After a break, we'll hear from the guy in charge of that regime. He's promising to get the money out the door, and fast.

(COMMERCIAL BREAK)

LUI: We left you before the break, talking about Captain Scheer, a Gulf Coast captain, who is only offered 30 cents on a dollar based on his normal annual revenue. He was concerned about that.

Well, John Roberts from "American Morning" had an interview with Kenneth Feinberg, the administrator of the $20 billion BP claims fund and what the hope might mean for Captain Scheer.

(BEGIN VIDEO CLIP)

KENNETH FEINBERG, ADMINISTRATOR, $20B CLAIMS FUND: We've got to get them out with more transparency, so that claimants understand what the status is of their claim, and we've got to ease the burden on these folks in the gulf. I was there last week, I'll be there tomorrow. We've got to accelerate process, just as the president instructed me to do.

JOHN ROBERTS, HOST, AMERICAN MORNING: So you've got to accelerate the process. You've got thousands upon thousands of claims that you have to process. How do you make sure that you get that money out there quickly, but then at the same time, avoid fraud? Because there are always people who try to take advantage of a situation like this.

FEINBERG: It's a delicate balance. On the emergency payments that have been going out that you mentioned, and I give BP credit. I give them credit. They have set up this program, they have already accelerated a process and paid out over $100 million in claims.

But with the emergency payments, John, you've got to allow those payments to go out with less corroboration than you would if you are giving a lump sum payment that is the total compensation. For the emergency payments, we've got to err on the side of the claimant.

ROBERTS: All right, so how do you quantity my who gets what? For example, we talked to Missy and Robert Bennett who were the owners of the Edge Waters in Bull Luxury, Mississippi last week. They say that they've got a claim though there's been no oil on their beach, they've lost business because of the perception that the gulf waters are fouled around where they are.

And then we also talked, I don't know if you heard it this morning to Stuart Scheer. He's a fisherman, who painstakingly went through his last three years of income tax returns, said to BP, I'm going lose $107,000 worth of business this year, because of the oil spill. And they said, we'll give you $33,000.

FEINBERG: I can't speak for BP. I'm running an independent facility, but just as you point out, I'll take a look at historical or the recent past economics of these claims, and we will quantify and calculate an award or an amount.

And sit, if necessary, with the individual claimant, come up with an acceptable amount that will compensate fully. The president made it clear, he wants full compensation. The $20 billion might not be enough, maybe it will. Whatever it takes, these individuals must -- and businesses must get paid.

(END VIDEO CLIP)

LUI: You may not want to wait for that fund, if you're a part of this story, want to help the folks that are involved. You have seen the devastation. You've heard the complaints. You now have a chance to help.

Tonight, join Larry King for an all-star relief effort benefiting the National Wildlife Federation, the Nature Conservancy, and the United Way and this special two-hour "Larry King Live" event starts at 8:00 p.m. Eastern right here on CNN. You can get plugged in to helping folks in the gulf.

China is making a major change in its currency policy. That should have a big impact on you and the U.S. economy. How and markets already reacting. Stick around.

(COMMERCIAL BREAK)

LUI: So the United States needs to borrow a lot of money to support its national debt, and China comes into the picture when we talk about that, because it's a major lender.

So China has decided now to let its currency appreciate. But what does that mean? Let's join Christine Romans, who is in New York with more on that.

Christine, a lot of debate over the years as to when and how they would do this, why should we care?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And is this really the first step towards that. Let's be honest, the Chinese over the weekend said they would allow for flexibility with their currency. They didn't give any targets or any kind of timelines for when they're going to do that.

The big timeline is this is one week before a G-20 meeting where you can expect that the Chinese are going pressured pretty heavily by many of their allies there at the G20 to let their currency be a little more -- be a little more loose.

Why does that matter? Because, look, if the Chinese keep their currency tied up with the United States' dollar, when the dollar goes up and down, it doesn't -- it doesn't matter for U.S. exporters. It's still made in China, is cheaper than made in the USA.

And that hurts American exporters, American manufacturers, and American jobs. So what do we think is going to happen here? Well, the Chinese have pledged more flexibility that means the Chinese currency could move slightly higher. How much higher?

Well, you know, by most accounts, it's either 25 percent or 40 percent undervalued compared with the dollar. Some economists are telling me they expect maybe if the Chinese follow through, 3 or 4 or 5 percent appreciation each year. So you still have pretty far to go.

When it's pegged -- well, when they allowed the currency to go up a little bit, that means made in China becomes more expensive, and that can help some of the relief for U.S. manufacturing and manufacturing jobs. It could mean, though, higher prices for what we pay, for imported Chinese goods, at Walmart and at the discount retailers that provide.

You know, the bulk of our apparel and our tennis shoes and these sorts of things, all different kinds of things, including technology and electronics. But it could also mean maybe, Richard, down the road, higher interest rates. But down the road is the key here. The Chinese have just promised flexibility, but we have to see follow- through, and this is just the very beginning, many say, of a very long road.

LUI: At least they're using the language, some optimists might say, but on the other side, you say, hey, be cautious. When might we see as normal everyday consumers that affecting that Walmart purchasing decision that we may be making?

ROMANS: Well, that's an interesting question, because it depends on how much the currency appreciates, and how quickly. That's really the bottom line here. And one of the reasons why the markets and why stocks are up today, and a lot of different kinds of commodities are up today, I'll tell you why.

It's because they think the Chinese wouldn't do this if they didn't have confidence in a recovery in the global economy. The Chinese have really held tight on their currency for the past couple years during that crisis.

Now that they say that they would allow it to move up a little bit, that's making people feel a little bit better about the overall economy, because they don't think the Chinese would do this if they thought it would be too detrimental to their own growth right now.

LUI: So you've got to help me out here. It seems like the United States would gain a lot from this. What does China get out of this, and why are they doing it now?

ROMANS: Well, China knows it has to rebalance its economy. Its economy is completely driven toward export growth, meaning it needs us to buy -- and Europe, quite frankly, to buy its stuff. And it knows, and -- and many people, the Europeans, a lot of different Latin American countries, the United States, the Canadians, we've been for several years actually been using diplomacy to say we need a better balance in the global recovery.

We can't have China being the export engine of the rest of the world. China's domestic economy needs to become a consumer, too, and so some people are hoping this might be the first step in China's recognition that it needs to be a consumer, too, not just the factory floor to the world.

LUI: It's been five years since I lived in Asia, but you have been covering the markets far longer even though you're a very young- looking person. Are you surprised about this at all in terms of the move by China?

ROMANS: You know, it's been pretty clear that the U.S. has been doing some pretty heavy-duty behind the scenes diplomatic dancing over the past year or so over this. Timothy Geithner, the treasury secretary, has been working on this before he was secretary treasury.

I will say, we have seen Chinese -- Chinese progress along this line before and only to slip back. The financial crisis is a perfect example. Before the financial crisis, the Chinese promised flexibility and you started to see it a little bit. And then the financial crisis took hold, and that progress stopped.

So there is a lot of caution from people who are hopeful that this is going to last. But there's still pretty healthy dose of caution, because they have seen it stall before, and they would like to hear more. They would like to make sure this isn't an announcement a week before the G20 to take the heat off China in the G20.

LUI: Good point, yes, they're very good strategists when it comes to PR. Christine Romans, thank you so much in New York with the latest on China's move to appreciate its own currency.

Of course, be sure to watch "Your Money" with Christine and Ali Velshi this weekend, Saturday 1:00 p.m. Eastern and Sunday at 3:00.

All right. Our top stories right now begin with an update on the gulf oil disaster. President Obama's six-month moratorium on deep water drilling is under scrutiny today. A federal judge is hearing arguments from drilling companies want the ban lifted.

Louisiana Governor Bobby Jindal has filed a friend of the court brief, supporting the drilling companies.

Also for you, the Supreme Court has upheld a controversial provision of the Patriot Act enacted after the 9/11 attacks by a 6-3 margin, the justice has said the government does have the power to criminalize material support of terrorist organizations. Opponents argued that the provision violates free speech rights.

And the man accused of trying to bomb at Times Square last month is scheduled to appear in federal court in New York later today. We're watching that as if Fasal Shahzad is to be arraigned on charged that include conspiracy to use a weapon of mass destruction. He could face life in prison if he is convicted.

All right. A tornado rips the roof right off a sports arena. The severe weather outlook, there's a lot of that. Next with Chad Myers. (COMMERCIAL BREAK)

LUI: All right. It was a very busy weekend. Chad Myers was looking at the weather across the country. Montana and the tornado.

CHAD MYERS, AMS METEOROLOGIST: Did you see the video?

LUI: It was amazing. I don't think of Montana when I think of tornadoes.

MYERS: No, but it happens everywhere. Every state in the union gets them and typically, once a year, at least, in some states, in Oklahoma, Kansas, Nebraska, Texas, a lot more.

But there is an upslope flow. When the air goes up the hill like in Montana, lots of mountains there, it's just like a cold front getting in the way, pushing that air up. Here are some of the pictures.

And we tell you, go inside. We don't tell you go inside because we want you to watch TV and turn on CNN. We want you to get away from that. That will hurt you. OK? This is why you don't go out there and film it, if you're not far enough away from it.

You are not going to -- this isn't like Kansas and you get picked up in the Wizard of Oz and it drops you down on Thursday. No, this hurts you, because you get hit by a shingle at 100 miles per hour, it's going to hurt no matter what, no matter what part of your body it hits.

This is Billings, Montana, big entertainment complex got damaged. Luckily, not many people around and not a lot of damage to the people around it, no injuries, really and it could have been a lot worse. The guy finally said, I'm getting out of here.

LUI: When you're looking at this, you're looking for I guess some sort of circular motion, not straight line, right?

MYERS: Of course.

LUI: And obviously, circling, is what I'm saying.

MYERS: That's debris going in the air and falling down other places.

LUI: Along with that, you've got a lot of red on the map here. Big red.

MYERS: Big red. That's Nebraska now. Part of the big 12 or 14 or 16 or whatever that are going to get --

LUI: That's right. The big 25 or whatever it is.

MYERS: Vegas, Phoenix at 105 today and here's a graphic of Arizona and snow bowl, right there. Phoenix, Arizona here, flagstaff up here, big-time fires going on and 8,800 acres now going on of (inaudible).

Here are some pictures from that. Just smoke everywhere, 8,800 acres divide that by 640 acres per square mile, now talking about 15 or so square miles of fire on fire 0% containment and winds at 30 miles per hour tomorrow, no containment in the near future.

LUI: And they have been hot. Talking about college ball, the pac-10 going to be like the pac-20, as well so we're getting ready for the season, a couple months away. Chad Myers, talking about across the country.

Let's talk about the gulf oil disaster worse every day, and we'll talk with an environmentalist, Cousteau about that tragedy, about what you can do to help out on that.

(COMMERCIAL BREAK)

LUI: OK. Our top story today, of course, looking at what's happening in the gulf a mile underneath the sea surface. We have been watching live pictures as we see as many as 60,000 barrels of oil coming out from the top of the blowout preventer, still at this moment. Of course, we've got the cap on the top of that, as well as the Q4000, which they are currently employing to pull more oil from that leak.

The latest for in terms of the number 272,800 barrels siphoned to date. Now we look at the cost in addition to all of that . You see it broken down here. 65,000 claims submitted, 32,000 claims so far paid. The costs, according to BP, the latest number we have, $2 billion, when you put that all together, $105 million by the way just for the claims made by citizens and residents of that area.

Meanwhile, aside from all those claims, there's a federal judge that is hearing arguments today from drilling companies that want President Obama's moratorium on deep water drilling overturned.

Louisiana governor Bobby Jindal has filed a Friend of the Court brief in support of overturning that moratorium.

All right. Now, you probably are asking, how might I be able to help what is happening, help the people? The stories that we've have been telling you of captains of boats, of residents who work in the area, let's get over now to Brooke Baldwin who is going to be talking about a way that you can plug in -- there's a special tonight on CNN. \ Brooke -- and this is with Larry King.

BROOKE BALDWIN, CNN CORRESPONDENT: Right. You know the saying, Richard, go big or go home? I feel like here tonight at CNN we're going really big. We're talking about exactly that. How you can help. We all want to help, but it's like how do I help, where should I help, who should I give money to?

We're making it really easy for you. Voila, this beautiful weapon site, thanks to our impact folks. This is CNN.com/impact. And this is sort of the center Website to then go to these other links. Basically what we're doing for this Website we have chosen three separate charities who we believe deserve the most amount of money really to directly help some of these folks along the Gulf.

First being United Way. Second being national wildlife federation. And third, the nature conservancy. So that said, I want to turn my attention to Philippe Cousteau, who is the CEO of EarthEcho International. He is a friend of CNN, he has been down along the Gulf region, many, many times since this leak,. And he's joining me now on the phone. And Philippe, with you are you with me?

PHILIPPE COUSTEAU, CEO, EARTHECHO INTERNATIONAL: I am indeed, Brooke.

BALDWIN: Awesome, well before we talk about you know specifically your involvement, and I imagine a sort of your personal connection to this story. I want to talk news. Richard just mentioned, let's talk about this moratorium, the governor of Louisiana, governor Bobby Jindal.

He filed today this Friend of the Court brief. He is basically saying, look, we need to nix this moratorium, it's affecting a whole lot of jobs down there. I think I heard the multiplier effect is something like one oil rig job for ten other jobs. What's your reaction to the governor wanting to do away with the moratorium?

COUSTEAU: Well I think that's it's-you know -- it's a difficult situation. We have a lot of people certainly that rely on oil and gas in the Gulf. But there's a lot of jobs that have been lost because of this disaster. And I think what we have to remember is that we must be guided by science, but not allowing science to guide our decisions, is what got us in this mess in the first place.

And I don't think we really have a handle on exactly what caused the Deepwater Horizon blowout to fail, and I think that we need to get an understanding of that to make sure that doesn't happen again.

Because another disaster of this scope would be -- I mean, this is all right enough of a catastrophe. I can't even imagine.

BALDWIN: Right, no. I don't even want to begin to wrap my head around that. But Philippe, I know you've been down there we've gotten some of your pictures, because you've really kind of gotten us up close and personal, with I believe you called it the toxic soup.

You know I've seen the video of you SCUBA diving down there and just walk me through. Before we talk about this telethon, walk me through what you have seen what you've experienced down along the Gulf region.

COUSTEAU: Well, Brooke, I've been down to the Gulf about five or six times now. Both above and beneath the surface. I've seen the scale of the environmental impact, as well as the scale of the human impact. And all the people that realistic affected, not just the fishermen that are down there, but all industry that relies upon them.

The mom and pop, the tourism, the hotels, the restaurants. And, of course, all the animal life and ecosystems are in such peril. It really is a catastrophe beyond measure.

BALDWIN: And Philippe while I have just about less than a minute left, let' just hammer home the point, and I'm sure you would agree with me, the situation is dire. People need help. You mentioned mom and pops. What charities -- we have three charities we're highlighting here at CNN. What charities do you most support?

COUSTEAU: Well, there is a huge need right now, Brooke, for help in the short-term. I know that BP has pledged money in the long run for claims, but there is need from an environmental perspective and a local human perspective, so I encourage the country to realize this is a national tragedy.

And get behind these people, and the environment in the gulf that affects all of us. I'm a big fan of another organization, the Water Keeper Alliance. SaveourGulf.org is another great Website that helps support people on the ground. Every day. Fighting these -- this catastrophe. And, of course, tune into the telethon tonight for other great organizations that we're working to support.

BADLWIN: Yes.

COUSTEAU: And make a positive difference in this tragedy.

BALDWIN: Yes, thank you for promoting the telethon. Philippe Cousteau, we will look forward to seeing you tonight. Thanks for picking up the phone and calling in from you want to. Philippe Cousteau thank you.

So Richard again. This thing is a star-studded cast, tonight, 8:00 p.m. Every which way you want to learn how you can help this effort in the Gulf starting at 8:00.

LUI: And Brooke, very interesting. Philippe Cousteau as you were saying, the grandson of Jacques Cousteau, 100 years -- he would be that old this month, wondering how he might have reacted to what's happening in the Gulf today. But if you can actually speak with Philippe if you participate tonight, right?

BALDWIN: Isn't it a---absolutely not only speak with him, but I think we're going to have Facebook website up, Twitter, so you can hook up with Philippe cousteau, Justin Bieber, Robert Redford, Keira Phillips, Anderson Cooper, everybody.

LUI: Not bad. All right Brooke Baldwin, thank you.

A drug war raging in Mexico, only ten minutes away from the Texas border. That continues. We'll "Globe Trek to Reynosa, Mexico with the very latest for you.

(COMMERCIAL BREAK)

LUI: Time now for "Globe Trekking", and we're talking about the founder of the Website wiki leaks claiming to have video of a U.S. NATO air strike from May 2009, and says it will soon be released. This could involve not only military, but also civilians. We are hearing the air strike taking place in the Afghan village of Garani. Now our Atika Schubert is following this from London. And Tika what do you have on the latest?

ATIKA SCHUBERT, CNN CORRESPONDENT: Well basically, we don't know exactly when wiki leaks is going to release this video. They have simply put out a Twitter posting saying they'll release it soon.

Now the specific incident happened in May 2009, and allegedly this video shows that U.S. air strike on what -- at the time was thought to be Taliban insurgents.

But now Pentagon investigation reveals a number of civilian casualties resulted from that. There is a dispute as to exactly how many civilian casualties, but an Afghan human rights commission found that about 86 civilians were killed in that.

The Pentagon investigation says that is a balanced and thorough report. Others have put the death toll there at more than 100 civilian casualties. So that's why there is so much interest around this video to see exactly what were the circumstances of this incident.

It was one of the worst incidents to happen so far. So there's been a lot of attention focused on this. It could do a lot of damage, potentially, for the Pentagon.

LUI: So Atika that certainly is going to be on the forefront of this issue u as they discuss it. But there is another sub layer to this and that is the leader of wikileaks, the Pentagon looking for him?

SCHUBERT: That's right. Reportedly officials from the Pentagon have been looking to contact Julian Assange, he's the founder of Wikileaks to try and convince him not to release more of these types of videos, and apparent alleged documents that he's supposed to have.

Wikileaks, of course, released a similar video earlier in the year of an U.S. air strike in Iraq that killed several civilians, including a Reuters cameraman.

Now Julian Assange is the founder of Wikileaks has apparently gone underground, in a sense. He was supposed to show up at a Las Vegas conference a few weeks ago, he did not. He's been making some Twitter postings and e-mails to supporters saying that Wikileaks is under attack and pressure from the Pentagon. Today, he showed up in Brussels for a conference on censorship. He did not, as far as we know, make any statements about that video that Wikileaks says it's going to release on Afghanistan. But of course everyone is waiting to see what he's going to do next.

LUI: All right Atika Schubert, live in London about the story of Wikileaks, as we look at what is happening in Afghanistan. Of course we'll be touching base with her a little bit later when we get more information we take you from Garani Afghanistan and that story to Reynosa, Mexico, where only ten minutes from the Texas/Mexico border, and there is a -- that is a front line, certainly in the Mexico drug war. Our CNN--Karl Penhaul is following that for us.

KARL PENHAUL, CNN VIDEO CORRESPONDNET: I think Richard just to put this in perspective, remember, you can be in Texas quicker than you can be at the cemetery in Reynosa. And that really is how close the drug war is to the United States.

Now, I think -- and there's been a tendency to count the numbers of dead in the drug war. And behind each of those dead, there's a family grieving for a loved one they have lost.

And if you look at a broader picture, I think what it clearly tell us is that the drug war is focused at the moment both by the Mexican authorities and with the help of U.S. funding is simply the not working.

What we have now is far beyond just a border problem, which often this is characterized at. It is not just a border problem. What we have, the length and breadth of Mexico is small, private armies fighting for territorial control.

But once that kind of aspect is down, we go back to the civilian aspect. And we have whole cities. In the case of Reynosa, just across the border from Macao (ph) , in a city of 500,000. And the drug cartels there have imposed a law of silence. Civilians can't say what they're seeing, and they can't hear what they're hearing. Let's take a look at a woman that I met while I was down there, and see things from her perspective.

(BEGIN VIDEO CLIP)

PENHUAL (voice-over): Maria Jesus Mancha has just buried her son. 27-year-old Miguel Angel Vasquez (ph) was gunned down as he drove home late one night. Another victim of a ruthless battle between drug gangs in the border city of Reynoa.

MARIA JESUS MANCHA, MOTHER OF VICTIM (through translator): Just think how many other people are being left without their children because of these damned people. They took my son, the thing I most loved in this life.

PENHAUL: : Police sources told a local newspaper he was killed in cross fire when a drug gang ambushed police. Vasquez's mother doesn't buy that. She is convinced some of Reynosa's police are siding with one of the cartels.

MANCHA (through translator): I blame the authorities. Our bad government. And the police. You must realize, these people are disguised as police.

PENHAUL: She knows voicing such opinions to be a death sentence.

MANCHA (through translator): If they want to kill me for saying this, then here I am. They killed me when they killed my son. I'm already dead.

(END VIDEO CLIP)

PENHAUL: Now, I don't think we can underestimate what this woman is telling is the gravity of what she is telling is about what she considers as rampant police corruption in Reynosa.

But also, the very fact that she has dared to speak out this publicly could be a virtual death sentence for her. Now, I did ask her very closely, are you sure you want to go on record saying this. And, in fact, she pleaded with me to publish those words.

Because she said, they've killed my son, I'm already dead. I died when my son died. And she said, if I don't speak out, nobody will. And that really is the point. Few Mexicans, especially in official spheres, are speaking out about the level of corruption amongst the security forces. The Mexican government does acknowledge it, but when you get down to those grass roots levels, you see that this is way beyond corruption.

What the cartels have done has infiltrated so totally some of those security forces that some security forces, be it branches of the police, be it branches of the military. And now are operating as armed wings of the cartel.

And this really does give us an idea of the scale of the problem, and also what it does do is alert us to just how difficult it is going to be to combat this problem, Richard.

LUI: Of course, Karl Penhaul there reporting for us. Karl, thank you. Of course doing extensive reporting there on the Mexican drug war that has been happening.

Now our top stories, and we begin with the Gulf oil disaster. President Obama's six month moratorium on deepwater drilling, it is under scrutiny today. There is a federal judge that heard some arguments from drilling companies, that want this ban lifted.

A ruling is expected by Wednesday on it. Louisiana governor Bobby Jindal filing a Friend of the Court brief, supporting the drilling companies.

Then to a fire in Chicago. A subway tunnel there leaving at least 12 people with smoke-related injuries. Five of the injuries are described as serious. Officials think sparks from a passing train set the wooden ties under the track on fire.

And talking about a fire, a very large one, a wild fire near Flagstaff, Arizona has grown to more than 800,000 acres hundreds of properties have been evacuated including tow residential neighborhoods. We'll be following that for you.

All right we've all seen big, clunky solar panels on top of homes, just like that one right over there. Well now one company has developed solar panel windows. We do not jest our "Big I" segment is coming up after the break. You might be surprised. (COMMERCIAL BREAK)

LUI: You know, every day Ali has this segment called the "Big I", one of my favorite segments. Today I get to talk about it, since Ali is on assignment. It's all about bringing you big ideas and innovations that can impact our world.

We've got an exciting one for you today. We've got a couple big ideas to tell you about. First, I want you to imagine using your bicycle to power your cell phone. It is happening.

This bicycle charger is from Nokia, and it can be attached to any bicycle's handle bars. Now according to Cnet.com you can get about a half hour worth of talk time battery life, for every ten minutes that you ride.

That's a lot of talk time. Its priced, only $18. And our other "Big I" today is about windows that can power your home. According to the techie website Engadget, the Chinwa solar window pane can be manufactured more or less haze give depending on how much solar power you want to pull into your home.

So basically, you'll be able to install the windows where you get the most bang for your buck, you might even be able to see through them, instead of putting them on your ceiling.

You've got them right in front of you and you'll be looking outside through a solar panel. The "Big I" today. Some very interesting energy saving ideas.

All right. Today in "Crime and Consequence, a judge comes calling on Joran van der Sloot. And guess what? The two-time murder suspect's changed his story.

Also for you, graphic new photos of blood-stained evidence? We've got all that.

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LUI: Today, in "Crime and Consequence," a case that has gotten the attention of the world. We are talking about Joran van der Sloot. What's kind of interesting about this today is that we are hearing that there might be an appearance before a Peruvian judge today to make a formal statement that Joran van der Sloot is going to recant his confession to the murder of Stephany Flores. Now, his lawyer claims it was obtained improperly, that Joran should have had counsel with him during the police interrogation. May be a debate about improper versus actual representation being there. But we'll be waiting to see what that argument will be at the time. Police saying, though, it was all above board at the time.

We get some insight into a possible defense from a Dutch newspaper's jailhouse interview with van der Sloot. They quote him saying this, "I was very scared and confused during this interrogation and wanted to get away." That from this newspaper, going on to say, "in my blind panic, I signed everything, but didn't even know what it said. I was tricked. I'll explain later how it all happened." We also heard from some reports that he thought he was going to be able to go back to the Netherlands.

Now, we want to refresh for you more about this story. Everybody's memory on what has happened. Van der Sloot described himself as pathological, as a pathological liar in a 2007 book. And he's made and retracted numerous claims about the night of Natalee Holloway's disappearance in Aruba. That's five years ago.

And then another development today. Evidence, photos coming out in Peruvian media. Here you go right here. We're told they showed the blood-stained shirt of Stephany Flores that she was found in. We're just getting that in. And the some of the stuff she had with her the night she was killed: a cell phone, as you can see, second from left on there. A pen, two lighters and a wallet. Just some of the evidence that the prosecution has at the moment. It seems that with or without a confession at this moment, there is plenty for them to use.

Now, since this story broke, a lot of the focus has been on the accused. But we certainly don't want to forget the victim in this latest case. Stephany Tatiana Flores Ramirez was 21 years old, the only daughter of a well-known Peruvian businessman. She had several brothers who cared for her. They called her the queen of the household.

Some favorite pastimes of hers, playing soccer and playing poker. In fact, she used to put together little soccer tournaments at her house. She was in her third year at the University of Lima studying business administration so she could go on back and help the family business as they were working to increase business. She was already running the merchandising arm of the family entertainment and event promotion business on top of that. And those who loved her say she was all smiles all the time. She would have given you the sky if she knew how to do it.

All right. Changing direction a little bit for you right now. When we come back, live from Jo-burg, as they call it. Johannesburg, our daily dose of World Cup. And Isha Sesay is going to fill us in with some serious drama with one of the top ten teams. You don't want to miss that. These guys practically at each other's throats.

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LUI: When we talk about the World Cup, it's all about the stories that are between the teams and the people. Team France right now, embroiled in what is being called le spat over at the World Cup. And one player got booted. The rest go on strike.

What's going on here at the World Cup? Let's go to Isha Sesay, who's live there in Jo-burg at Soccer City Stadium.

First off, I can tell it's cold. You've got your jacket on. We forget sometimes it's winter there.

ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: It is indeed winter. And it's been very, very cold here in Johannesburg. A point where we've seen temperatures fall below freezing. So we all have the woolies, the big coats, the hats, etc. on. I forgot my gloves for this chat with you, Richard.

But, yes, indeed, the French squad in absolute disarray. As you mentioned, they expelled one of their star strikers. He was sent home after giving the coach a mouthful after a poor performance a couple of days ago. In his being sent home, the rest of the squad going on strike, refusing to train on Sunday. And then to top it all off, the managing director of the French Football Federation walking out in disgust at the team's antics.

A short time ago, Richard, I can tell you, that the French coach, Raymond Domenech, held a media conference in which he described his players as "stupid," and went on to say that the punishment for Nicolas Anelka, the striker who was sent home, was justified, and he refused to deny some of his players don't really feel like playing against South Africa tomorrow.

Now, I have to tell you, that's a big match against South Africa. Their hopes of progressing in this tournament, hanging by a threat. The South Africans taking absolute delight in this off the-the-field drama. Look at this headline, Richard. "French Feud Gives South Africa Hope."

Back to you, Richard.

LUI: Yes, they're not calling that stupid. They're probably saying, yes, keep on having that spat. We're quite happy. We want to move ahead in the group.

Isha Sesay, thank you so much for the latest on "le spat" with the French team at the World Cup. Of course, we'll be stopping in with you throughout the rest of the World Cup.