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Malaysia to Handle Black Box Investigation; Dow Tumbles at Open; Missteps in Flight 370 Search; Obama to Announce Sebelius Resignation Today; NATO Releases Photos of Russian Troop Buildup

Aired April 11, 2014 - 09:30   ET

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

CAROL COSTELLO, CNN ANCHOR: Here's what else is new this morning.

Today, search area narrowed, as I told you, narrowed to about 18,000 square miles. It looks like the most recent signal heard just yesterday won't be of any help. Search officials say it's unlikely that that signal picked up by that sonar buoy, it's unlikely that signal is related to the airliner's so-called black boxes. The other four signals are good, though. Those batteries on the black boxes, though, that send the signals to the search crews trying to locate them are now dead or dying. We're now five days past the minimum life span of 30 days.

But what about when or if the black boxes are found? Well, the answers may raise some eyebrows. Those flight recorders will be handled over to the Malaysian government whose expertise and even competence has been routinely questioned over the past 35 days. CNN's Nic Robertson is in the capital, Kuala Lumpur.

Nic, let's talk a little bit more about this. Malaysian officials came out and said once those black boxes are found, they will be turned over to the Malaysian government. True?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: What they're saying is -- yes, it is true. I mean what they're saying here is that the Malaysian authorities will lead the investigation. This is - and we've heard this from -- today from the head of -- chief of police. We've heard it from the acting transport minister as well. This is under international conventions that this would be the case.

But what the police chief did go on to say is that Malaysian lacks the experts and expertise to properly analyze the black boxes and recover the data. So what he said is that Malaysia would call in an expert to analyze the boxes. He didn't say where the expert would come from and he didn't indicate what nationality it would be. But he did admit that Malaysia, at the moment, is not up to the task, but they will lead the investigation, Carol.

COSTELLO: Well, you would think that the Malaysian authorities would send those black boxes to the experts, not bring them back to the country.

ROBERTSON: Yes, it's -- that part of it's really not clear at the moment. It's not even clear who ultimately will head the investigation. We've heard of sort of three different parts, three different groups, if you will, set up by the Malaysian authorities, each with their own chief to head those three different groups. But the Malaysian haven't yet appointed a chief investigator, not that they've made public anyway, and the indications are that once recovered, the black boxes would go back onshore in Australia. There is every possibility, and this is far from confirmed, but every possibility that the Malaysians could have that involvement and bring in the experts on site to Australia or wherever deemed necessary. It's not clear at the moment that they're demanding that they come back to Malaysian. What they are saying is that they will be making the decisions here, Carol.

COSTELLO: I'm just curious. I know Australia is heading up the search effort. How involved is Malaysia in that - in the search area?

ROBERTSON: You know, Malaysia, Malaysian officials get the first briefings, we're told. They get told what happens at sea from Ocean Shield, from HMS Echo, from all the other vessels, from those sonar buoys that are out there, sonobuoys that are out there, they get those - they get that information before anyone else. But the search teams generally report it on the ground first. They're recovering it. They've got the expertise. And the Malaysians sometimes respond to that. But they are in that information circle and they are, we are told, the first to get the information.

Carol.

COSTELLO: And the investigation continues on the ground, right, in Malaysia? Is there any update? Have they found out anything new? Are they sitting back and waiting for those black boxes to be recovered?

ROBERTSON: The black boxes are going to be an important part of the investigation, they tell us. The investigation is going to be long, they say. What we heard from the chief of police today is that they have now interviewed, taken statements from 205 different people, including, he said, some of the families of the crew members. About a week or so back, they told us 170 statements have been taken. So we can now add about another 35 to that over the past week. So they, the police, are working away at it. But they have said all along that the key information is going to come from these black boxes, or at least from the data recorder, they hope.

Carol.

COSTELLO: Nic Robertson reporting live from Kuala Lumpur.

I'm back in a minute.

(COMMERCIAL BREAK)

COSTELLO: As you know, the stock market has been on a roller coaster ride. Well, we're taking a dip today on the Dow. Let's head to Alison Kosik at the New York Stock Exchange.

Good morning. Tell us more.

ALISON KOSIK, CNN CORRESPONDENT: Good morning, Carol. No rebound today. We are seeing stocks continue to slide. And the Dow down another 107 points. This is on top of the big selloff from yesterday. In case you missed it, the Dow fell 266 points, its third biggest selloff of the year. Yesterday the Nasdaq fell 130 points. It hasn't fallen that much in three years. So these are huge moves actually causing some traders to be a little disturbed by the movement.

Why is this happening? We are right in the middle of first quarter earnings season. It actually just got started this week. It's not really impressing at this point. Two big banks reported today. One actually beat expectations, Wells Fargo, but JP Morgan missed. We are seeing shares of JP Morgan down more than 4.5 percent.

The overall market, a sea of red just continuing today. Take a look at the Dow. It's at the level of 16,072. I bet you can remember when we were talking about those record highs. We're far away from that now. We could see the Dow dip below that 16,000 level maybe today.

Carol.

COSTELLO: Maybe. You know, I always hear that we're in for a correction and investors keep saying that. And every time this sort of thing happens, we say, well maybe part of the reason it's falling is because there's some sort of correction in play. Is there?

KOSIK: Well, I talked with a trader about that today and actually he sees this more as a standard pullback. As tough as this is to watch, to see that -- those triple digit moves of red every - you know, for a couple of days, it is a little bit much to stomach. But this trader telling me, this is more of a standard pullback than a correction because a correction would actually be 10 percent off the highs. He doesn't see that happening.

Just to put it in a little perspective for you. So far this year, the Dow is down about 3 percent. Guess how much it was up last year? It was up last year 25 percent.

COSTELLO: Wow.

KOSIK: So when you put it in perspective like that, you realize the 3 percent lower really not that big of a deal. However, it is a little bit tough to watch this happen. Sort of grind forward every day.

Carol.

COSTELLO: You got that right. Alison Kosik, thanks so much.

The search for Malaysia Airlines Flight 370 has dragged into its 35th day and it has been filled with misinformation, missteps and frustrations. But where does the blame lie? Randi Kaye has more for you.

(BEGIN VIDEOTAPE)

RANDI KAYE, CNN CORRESPONDENT (voice-over): Frustration with the Malaysian government started early on, beginning with the flight plan.

MR. WEN, FATHER OF PASSENGER (through translator): Malaysia talked nonsense and lied, which delayed the search and rescue for eight days. We want an explanation for this.

KAYE: It was the satellite company, not the Malaysian government, which figured out the flight plan and provided vital information to narrow the search area. But despite that information, Malaysian authorities kept directing some searches in the complete opposite direction, including the coast of Vietnam.

UNIDENTIFIED MALE: Until we assess the locate of MH-370, search and rescue operations will continue in both corridors.

KAYE: Those searches tax limited resources. And the clock was ticking every second on the plane's black boxes. Eventually, they did abandon the search in the northern corridor and focus solely on the southern Indian Ocean. But valuable time was lost.

KAYE (on camera): Also in early March, U.S. investigators determined the plane had flown for hours after its last communication based on satellite data from systems on board. The Malaysian reaction, they denied it. But only days later, the Malaysian prime minister told reporters the plane had indeed flown for about seven hours after that last communication.

KAYE (voice-over): And what about the last words from the cockpit?

AHMAD JAUHARI YAHYA, MALAYSIA AIRLINES CEO: As far as the pilot com or the pilot communication, understand according to the record (ph), it was about 1:19 I understand.

UNIDENTIFIED MALE: (INAUDIBLE) it was 1:19 when we got -

YAHYA: Yes.

UNIDENTIFIED MALE: The last transmission from the cockpit that says "all right, goodnight."

KAYE: Not exactly. They got that wrong, too, admitting later on it was actually "good night Malaysian 370." A mistake that, quite frankly, is hard to fathom since they had the transcript of air traffic control's communication with the cockpit. Not only was that incorrect, but so was their original statement about who said it.

YAHYA: The initial investigation indicated it was the copilot who basically spoke the last time it was recorded on tape.

KAYE: Now sources tell us it was the captain.

More than a month of dubious information and denials.

UNIDENTIFIED MALE: We have done quite an admirable job.

KAYE: And still no airplane.

Randi Kaye, CNN, New York.

(END VIDEOTAPE)

COSTELLO: The hunt for 370 has been called the most difficult search in human history. So how does it compare to the search for the Titanic? A task that took more than 70 years. I'll talk with an oceanographer who helped design the technology used to find the Titanic. That's ahead on the next hour of NEWSROOM.

(COMMERCIAL BREAK)

COSTELLO: One of the faces of Obamacare and its botched rollout will soon resign, in just about an hour and 10 minutes to be exact. The President expected to announce that at that time. Kathleen Sebelius is stepping down as Health and Human Services Secretary. She's been under fire in the early days of Obamacare when Web site problems overshadowed everything else. In her place the President plans to nominate Sylvia Mathews Burwell, the current director of the Office of Management and Budget.

To talk more about this I'm joined by senior White House correspondent Jim Acosta and Jennifer Haberkorn the health care reporter for Politico. Good morning to both of you.

JENNIFER HABERKORN, HEALTH CARE REPORTER, POLITICO: Good morning.

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Good morning Carol.

COSTELLO: Good morning. So Jim, I'll ask the obvious question. Some people asking why did it take so long?

ACOSTA: Well you know what the White House is saying is that she came to the President back in March and said that she thought Obamacare was on a better path and that she wanted to step aside after the end of this open enrollment period which just wrapped up in the last week. And so that is what is happening.

But no question I mean the President was under a lot of pressure up on Capitol Hill to show Kathleen Sebelius the door. He did not do that he is load to do that by the way. He does not like to throw people overboard when they come under criticism. And so held firm and kept Kathleen Sebelius in that job even during some pretty rough moments. Carol you remember last fall when she was up on Capitol Hill testifying about Healthcare.gov and then healthcare.gov crashed during a congressional hearing as she was talking about. That was one of the low points of her tenure.

But she held tough. She stayed in there. The Web site was repaired and enrollment picked up. And she got to announce yesterday that they had 7.5 million signups. So she gets to leave on somewhat of a high note.

COSTELLO: Somewhat of a high note, Jennifer. But you hear so many different stories about Obamacare, I'm not sure people know what to think even now. HABERKORN: Right. But in terms of the last six months this is definitely the best that Obamacare has had. You know they're riding on the high note. It's the end of open enrollment. They're able to say they enrolled 7.5 million. That number might even go up. If you think about the last six months or the last year, you know Obamacare has been hit with bad headline after bad headline after bad headline.

And if she's going to go out at all in 2014, this is the time to do it you know ahead of the midterm election. The closer it gets to November, the harder it's going to be for lawmakers on Capitol Hill to confirm anyone who takes her place.

COSTELLO: Ok well let's talk about that confirmation process, Jim. Will it be easy?

ACOSTA: Right, you know it is going to be easier than if somebody out of HHS or somebody out of the implementation of Obamacare was going up on Capitol Hill to be confirmed. Sylvia Mathews Burwell is the current budget director for this White House and she really doesn't have much of a health care background. Her background is really sort of managing bureaucracy.

And they do really like her over here at the White House. They see her as somewhat of a rising star. She goes all the way back to the Clinton days, worked in the Clinton war room back in 1992.

By the way, she's from West Virginia and so her fellow West Virginian Joe Manchin likes this nomination. John McCain tweeted about it last night that he likes Sylvia Mathews Burwell. She was confirmed 96-0.

But you know as I'm sure my counterpart is going to talk right here in just a few moments when she goes up to Capitol Hill Sylvia Mathews Burwell to be confirmed during this hearing, this will be another chance for the Republicans to talk about Obamacare which will be a potent issue this fall and so you know it's not going to be 96-0 once again. I don't think.

COSTELLO: No, no Jennifer it's going to be dragged out isn't it?

HABERKORN: Oh yes, this is going to be a very contentious confirmation hearing. You know the vote for OMB director position didn't get nearly as much attention as this is going to get.

Republicans are going to use this confirmation hearing to drag out every problem that they see with Obamacare. That people lost their insurance plans. They think the law it cost too much money, they think the Secretary has too much control over the decisions in the law. That is going to be a huge point of contention.

Republicans are not going to want to vote for anyone whose number one job responsibility is implementing this law. The big issue is going to be hanging on the moderate Democrats who are up for re-election in red states this fall. I was thinking Senator Shaheen in New Hampshire, Senator Hagan in North Carolina -- they have to hang onto at least 50 Democrats and get to -- in order to get her confirmed and that's going to be difficult. COSTELLO: We'll wait for the fun to start. Jim Acosta, Jennifer Haberkorn many thanks to both of you.

HABERKORN: Thank you.

COSTELLO: I'll be right back.

(COMMERCIAL BREAK)

COSTELLO: New this morning, as concern grows over the Russian troop buildup near the Ukraine border, a U.S. guided missile destroyer is now in the Black Sea, the "USS Donald Cook" arrival is part of the military effort to demonstrate U.S. support for eastern European allies. It comes as NATO release a satellite photograph of 40,000 Russian troops stationed near the Ukrainian border. And according to NATO those troops are ready for combat. Phil Black is Russia where those troops are massing. Tell us more Phil.

PHIL BLACK, CNN CORRESPONDENT: Yes Carol good morning, yes we are in the southwest Russia, the region close to the Ukrainian border. We have been exploring this region for some days now -- driven more than 1,000 miles without seeing any significant Russian military presence in this very remote very far territory. Now NATO, as you say, has released these satellite images which it says backs up its claim of 40,000 Russian soldiers ready to roll across border saying that they show a wide range of capability with hardware with motorized infantry, the special forces, the artillery, the tanks even air access as well.

We've visited two of the sites featured in the NATO photographs. We have seen a Russian military presence, but not of the scale or of the capability that these photos show.

Now that doesn't mean it's not there. We did not have unlimited view, we didn't not have unlimited access. But we didn't see from where -- where we could stand precisely what these photos show. It is also important to know these photos now being released by NATO are already more than two weeks old. The Russian position has always been these forces are in this region conducting exercises. Some of them have been (inaudible).

NATO believes this is an invasion force or potential invasion force. Establishing where the troops lie, even here on the ground, close to the border, even now outside these (inaudible) -- it is not straight forward -- Carol.

COSTELLO: so Russia's position is that these images are old and what are you talking about NATO right?

BLACK: Yes, that's right. they say they were taken last year during another military exercise in this region. And NATO has already come back and said no, that is not true. These are valid. And they reason they released photos which they say show clear and empty fields before this most recent military build up. And what these same locations look more recently once these forces, NATO says, have already been established here. So no real fighting just yet. But Carol -- they are going to establish two different version of the truth. They're very much under way -- Carol.

COSTELLO: Phil Black reporting live from Russia, driving along the Russian-Ukrainian border. Thanks so much. The next hour of CNN NEWSROOM after a break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

COSTELLO: Happening now in the NEWSROOM, closing in.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We are very confident that the signals are from the black box.

(END VIDEO CLIP)

COSTELLO: The search narrowing.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He went a little further than any Australian official has so far.

UNIDENTIFIED MALE: I'm confident they are in the right place.

(END VIDEO CLIP)

COSTELLO: New American search power on the way.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Pretty incredible if you look at where we started.

(END VIDEO CLIP)

COSTELLO: weeks after disappearing from radar, and from almost three miles down.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You're going to see something on the surface. We'll find it.

(END VIDEO CLIP)

COSTELLO: The search enters its fifth week.

You are live in the CNN NEWSROOM.

Good morning. I'm Carol Costello, thank you so much for joining me. Day 35 the search area shrinks again. But a sobering reality is settling in. It may not shrink by any more. Five weeks in. The batteries of the flight's so-called black boxes are now dead or dying. But hopes rise on this morning's up beat assessment from Australia's prime minister. He met a short time ago with China's presence. They discussed the international search effort and each other's vital role in it.