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Guilty Verdicts for Former Enron Chiefs; Bush, Blair to Meet to Discuss Iraq, World Affairs

Aired May 25, 2006 - 13:00   ET

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

KYRA PHILLIPS, HOST: Hello, everyone. I'm Kyra Phillips live at the CNN world headquarters in Atlanta. Enron verdicts. The corporate corruption scandal that rocked America. Today, guilty verdicts for Enron's founder and former CEO. We're live from Houston.
Retirement accounts wiped out. Savings accounts dried up. Lives forever changed. I'll speak with a former Enron employee who lost everything.

Immigration battle. Will the House and Senate collide or meet halfway when it comes to illegal immigrants? Build a fence or create a pathway to citizenship or both? Senator Ted Kennedy joins us live right after the vote.

It was called the ultimate example of corporate corruption. Greed, mismanagement, manipulation and deceit, ending in the most spectacular business failure in U.S. history. It's Enron. And now we know the company's founder and one-time CEO are guilty of a lot more than bad management.

CNN's Ali Velshi joins me live from Houston with the outcome of the fraud and conspiracy trial -- Ali.

ALI VELSHI, CNN CORRESPONDENT: Kyra, six counts for Ken Lay. All six, found guilty on. The former president and CEO of the company, Jeff Skilling, was charged with 28 counts, including 10 insider trading charges. He was found guilty of 19 of those 28, just one insider trading count he -- that he was convicted on. But these two men have been found guilty in the corporate trial of the century.

There have been people waiting for this for the last four years. Enron, a company that was destroyed, Arthur Anderson destroyed, thousands of people put out of work, millions of investors. This was one America's seventh largest company. And these two men have maintained their innocence from the beginning.

Well, today, they have been found guilty. The judge has decided, Judge Sim Lake has decided that sentencing will take place on September 11. Now, if you add up all those charges, it's many, many years for both of them. A lawyer I just spoke to suggests that it's going to be well in excess of 30 or 40 years. Ken Lay will definitely -- if he doesn't get this overturned on appeal, spend the rest of his life in prison. And they are -- Ken Lay has been asked to surrender his passport and put up a cash bond. We believe that the same thing has happened for Jeff Skilling, but we haven't gotten confirmation of that yet. This jury deliberated. This was their sixth day of deliberation. And no requests from the judge, no read backs, no clarifications, nothing. They went into that jury room and stayed there until they had a verdict, and the verdict came down today, Kyra.

PHILLIPS: I think a lot people are wondering, is the investing world a safer place now? You know, what did the government achieve here?

VELSHI: You know, this was -- this was the granddaddy of all of those corporate crimes, but there were many others. There was WorldCom and Adelphia.

And what happened after that is the Sarbanes-Oxley bill, and part of that was to say that when a company has financial statements, the CEO has got to sign the financial statements and say "I know what's in here. I understand what's in here, and I agree with what's in here." Because Ken Lay said he didn't know what was going on. Well, now that's a problem. You can't to that anymore. So some rules have been put in that should make it safer.

Are there going to be bad apples? Sure. The difference now is you can't do the stuff they did and say you didn't know it was going on.

The other thing was that the government need a conviction somewhere. They had 16 senior executives of Enron turn and provide evidence for the government. But all those millions of investors and thousands of people who are laid off and lost their life's savings, they needed closure and they wanted to know, did this come from the top? Did this rot at Enron start at the top? And that's what the jury said, that they did know what happened and it did start at the top.

So is the world safer, is the investment world safer? I think investors know that the government has teeth. And if someone does them out of their money, someone can -- the government will go after them and can succeed in getting a prosecution. So it should make investors feel that, yes, things are a little safer today.

PHILLIPS: Ali, stay with me as we wait for the Justice Department to bring us a news conference. We did just hear from Jeffrey Skilling and his attorney post-verdict. Let's take a listen.

(BEGIN VIDEO CLIP)

DAN PETROCELLI, SKILLING'S DEFENSE ATTORNEY: This is a difficult process for everyone, and everyone's treated us with utmost courtesy and respect and cooperation.

We had a trial. We obviously did not come out the way we had hoped. It doesn't change our view of what happened at Enron and certainly doesn't change our view of Jeff Skilling's innocence. The jury saw it differently. That was their right. And we will take it from here and continue to fight the good fight. This is obviously a very, very difficult time for Mr. Skilling, his children, his family. There's a lot of thinking to do about the next steps that we take. But we're going to stand behind him. As I told him, we've just begun the fight.

So, again, thank you, all. If you have any questions, I'd be happy to try to answer them, but I want to be brief.

UNIDENTIFIED MALE: Jeff, do you think you can ever -- do you think you will ever be able to admit to yourself that you may have committed crimes?

JEFFREY SKILLING, FORMER ENRON CEO: No.

UNIDENTIFIED MALE: Why not?

SKILLING: Because I didn't. But I'd just like to thank my -- first of all, I'd like to thank Dan for all of his support, everything that he made happen. I'd like to thank my family for sticking by me, and particularly my kids, Christian, Jeffrey and J.T. They're just great.

And I think we fought-- we fought the good fight. And some things work, some things don't. So -- but thank you, guys, because you really have been very polite, very pleasant, and I appreciate it.

UNIDENTIFIED FEMALE: What appeal grounds do you have?

PETROCELLI: Oh, I -- we're going to sit down and take a look at everything. And I know there are a number of issues that we litigated hard and lost before the trial and even during the trial. It's too early for me to try to comment on that. But we will have a full -- we will have a full and vigorous appeal.

UNIDENTIFIED FEMALE: Did you expect the jury to come back this rapidly? I mean, this was five days. I mean, you know I realize you can't get on that but...

PETROCELLI: No, you can never tell. Yesterday we got a note that they wanted exhibit lists. And we all speculated they were going to be in there a bit longer. So we were a little surprised today. But they gave it five full days. And they saw it their way so...

UNIDENTIFIED MALE: You had said that you wanted to fight the good fight with every ounce of your body, everything -- something along those lines earlier. Do you still feel that way? And if you do, would you tell us about that?

PETROCELLI: I still feel that way, absolutely feel that way.

UNIDENTIFIED MALE: Can you expand on that a little bit?

SKILLING: Not much to expand on. We're going to have to go back and, I guess, think this thing through. But obviously, I'm disappointed. But, you know, it's the way the system works.

PETROCELLI: Thank you, folks, thanks a lot...

UNIDENTIFIED MALE: Do you think you would have a different result if this case were tried elsewhere?

(END VIDEOTAPE)

PHILLIPS: Let's go to our senior legal analysis, Jeffrey Toobin. He's on the case, as well, in our New York bureau.

What do you think about what Ali Velshi was saying, Jeffrey, you know, about this happening again? All these new laws in place. You hope this is the last big trial that we see with regard to this issue.

JEFFREY TOOBIN, CNN LEGAL ANALYST: Well, certainly, it's the last big trial of the major scandals of the late '90s, you know, up to and just after 9/11. I -- you know, human nature is not going to change.

But, certainly, the Sarbanes-Oxley Bill has reminded corporate executives that the defense of "Hey, I didn't know what was going on," "My underlings did it," "I'm just, you know, a big dumb guy on top, leave me alone," that defense is out. And a lot of corporate executives don't like that because they don't like being personally responsible for numbers in a huge organization.

But as far as I've been able to tell, it has tightened up those organizations. And that's the purpose of the law. So -- so I think there is more accountability in the system now, but crooks never disappear entirely, and I'm sure they won't here either.

PHILLIPS: Especially when it comes down to money. It's like the movie "Wall Street" playing out right here before our eye, the outcome.

You and Ali both mentioning the Sarbanes-Oxley Bill. Because of that, American companies go through a lot more audits now, isn't that right? Or there are stricter...

TOOBIN: Well, that's right. I mean, they have to self -- they have to discipline themselves. The executives literally sign sworn documents now that say, "I certify that I know personally these numbers are correct." And, you know, quite appropriately that puts the fear of God into these executives. So they say to their underlings, "Look, you show me that these numbers are good."

And it cascades through the system, that kind of accountability, that at least so far -- I mean, it's only been a couple of years. And these crimes -- as Enron illustrates -- takes a long time to uncover and prosecute. But as far as I've been able to tell, there has not been nearly as much of the kind of corruption we saw in Enron, in WorldCom, in Adelphia.

We also have had a much less frenzied stock market, which doesn't create as many opportunities. But I think the system is cleaner now.

PHILLIPS: Final question: investors, people who lost their job, individuals that lost their entire retirement accounts, are they going to get anything back?

TOOBIN: Well, the people who lost their jobs, very unlikely. I mean, those are just gone.

In terms of the investors there are, pending now, several major lawsuits by shareholders. Not so much against Enron, because Enron doesn't have much money left. But against the -- what you might call the enablers, the investment banks, the law firms, the accounting firms, that actually made some of this fraud possible. And there have been many significant recoveries in those cases, in the billions of dollars.

You know, that probably only is going to mean cents on the dollar to shareholders. But they will probably get something at the end of the day. But in terms of the big losses and the job losses, those are really gone forever, I think.

PHILLIPS: Jeffrey Toobin, thank you.

And as Jeffrey and I just talked about when Enron went belly-up, so did the life savings of thousands of Enron workers and other investors. Roger Boyce lost his livelihood and his retirement fund. He joins me now from Minneapolis.

Roger, I know you've been watching this. What's your reaction to the verdict?

ROGER BOYCE, FORMER ENRON EMPLOYEE: I guess justice has been served, and it's a satisfying verdict, as far as I'm concerned.

PHILLIPS: And I hope I'm not getting too personal. Do you mind if I ask you how old you are?

BOYCE: I'm 72.

PHILLIPS: Seventy-two. And how many years did you work for Enron?

BOYCE: Close to 30 years.

PHILLIPS: So 30 years. So you obviously had a tremendous amount of money in your retirement fund. What would you say, a million plus?

BOYCE: In excess of $2 million.

PHILLIPS: Now, do you remember Jeffrey Skilling, Kenneth Lay, coming out, making speeches to the company, putting out memos, saying, "Trust us. This is the way to go. Put all your money into Enron stock"?

BOYCE: Absolutely, many occasions, to that effect.

PHILLIPS: And how did they sell you? Why did you believe them?

BOYCE: I think I represent most of the employees in saying there was a tremendous trust within the company of management, because what they said they would do, they did. And they were extremely trustworthy, and there was a tremendous betrayal as a result of it.

So it was -- I think it was more commonplace to have everybody -- all the employees trust management than otherwise. It was a great company to work for.

PHILLIPS: So they -- so they started out basically they were great bosses. You trusted them. They came through on whatever they said for a number of years.

BOYCE: Yes, that's correct.

PHILLIPS: And so when did you realize something's just not right here, something's not making sense?

BOYCE: Well, I retired in March of 2000, and it was probably in the early fall of 2001, which, you know, when Skilling quickly exited the scene, and Lay came back in. You know, that should have been a red flag. When Lay came back in, he said, "You know, everything is really going well with the company. Good opportunity to actually buy stock at that point in time." And so everybody, basically, believed him.

And it went on from there. It wasn't just the employees -- or retirees that were convinced of it. The financial community and Arthur Anderson and everybody, the banks and so forth, all were saying it's still a great stock, up until the time of bankruptcy.

PHILLIPS: Do you think that these two truly believed that they could turn that company around, that deep down they were good-hearted and were trying their best?

BOYCE: I think when Lay took back over the company from Skilling, I believe that he thought he could turn it around, and possibly he could have, you know. But with everything that just collapsed on him, it was just impossible to turn around at that point.

So we were misled. But I think, you know, initially, at least when he got back in there, I think he believed he could turn it around.

PHILLIPS: Roger, this no doubt has been a tremendous hardship for you and your family. Are you working now? Do you have to work? And how has the family pulled through?

BOYCE: Tremendous support from my wife and the family. We're a very close-knit family. And so we've been able to pull this through with their help, of course.

And as far as the other side of it is concerned, I am doing some consulting work at this point in time. And we're doing OK. We're getting by with it. Obviously, when you lose over $2 million, it's quite a jolt in your retirement.

But, you know, it isn't just me. It's all the employees and the retirees that have been connected with. And there are a lot of them suffering very badly as a result of this, so sympathy goes out for them, too. But most of the people have the same determination to come back. So I'm very proud of that fact.

PHILLIPS: Well, my guess is if you were with Enron for about three decades, you've got a pretty tough soul and you know how to survive. And you're keeping a great attitude.

Roger, I know you feel some sense of justice. It was good to hear that. And thanks for being with us.

BOYCE: My pleasure.

PHILLIPS: Well, coming up, we're waiting for a Justice Department news conference about this Enron verdict. It should get under way pretty soon. We're going to bring that to you when it happens.

More LIVE FROM straight ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SKILLING: Obviously, I'm disappointed. But, you know, it's the way the system works.

(END VIDEO CLIP)

PHILLIPS: There you go. You hear from Jeffrey Skilling after that guilty verdict was read today on a number of counts. We're waiting for the Department of Justice to react to the Enron verdicts. We will take that live as soon as it begins.

Meanwhile, united in war, embattled at home. President Bush's biggest ally in Iraq is on his way to Washington for a one-on-one and later a chat with the media. So what can we expect? Let's bring in CNN White House correspondent Ed Henry for more.

Hi, Ed.

ED HENRY, CNN CORRESPONDENT: Good afternoon, Kyra.

Well, as you know, these two leaders were riding high together at the beginning of the war. Now they're suffering together through very low poll numbers, questions, battered by allegations, in fact, that they may have twisted the intelligence to, in fact, justify the case for war in Iraq.

And what we expect to hear tonight is for them to try to use some of the good news coming out of Iraq to try to rebuild their popularity.

(BEGIN VIDEOTAPE)

HENRY (voice-over): At their first big meeting in February 2001 at Camp David, President Bush and Prime Minister Blair immediately bonded.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We both use Colgate toothpaste.

TONY BLAIR, BRITISH PRIME MINISTER: They're going to wonder how you know that, George.

HENRY: Little did they know how much closer they would become.

BUSH: I can assure you that when either of us get in a bind, there will be a friend on the other end of the phone.

HENRY: They're both in a bind now, joined at the hip, defending a war that has sent their popularity plummeting.

BUSH: The progress we've made has been hard-fought, and it's been incremental. There have been setbacks and missteps like Abu Ghraib.

HENRY: When Baghdad fell in April 2003, 49 percent of the British people were satisfied with the job Mr. Blair was doing. Today, it's just 28 percent.

An even steeper drop for Mr. Bush. His approval rating, 70 percent when Saddam Hussein was removed, has plunged to 36 percent. That's why, this week, the two leaders will try to pivot off the formation of a new Iraqi government, to urge Iraqis to take a greater share of the burden.

BUSH: A watershed event that took place this weekend in Iraq.

HENRY: A theme the prime minister picked up Tuesday during a visit with new Iraqi Prime Minister Nuri al-Malaki.

BLAIR: This is a new beginning. And we want to see what you want to see, which is Iraq and the Iraqi people able to take care of their own destiny and write the next chapter of Iraqi history themselves.

HENRY: Malaki issued a written statement Wednesday, declaring Iraqi forces will be able to take over security by the end of 2007.

(END VIDEOTAPE)

HENRY: Moments ago, repeated to reporters what he's been saying for days now: do not expect a major announcement about troop cuts tonight when Mr. Blair and Mr. Bush address the media together in prime time -- Kyra.

PHILLIPS: Well, if the Iraqi prime minister is coming out and saying, "Hey, I can handle security by the end of 2007," then why won't the president come out and say, "OK. This is when I can set a timetable for bringing troops home"?

HENRY: Good question. What Tony Snow just said a few moments ago is, look, this new prime minister has only been in office for literally about five days. And what Snow said is, let's see whether he can deliver on that. And I think what's implied there, obviously, is you know, the new prime minister in Iraq can say almost anything at this point, but they still have to see whether he can really get this government going, whether he can really take charge of security. And if Mr. Blair and Mr. Bush go too far out on a limb tonight and then the Iraqi prime minister can't deliver, they'll be the ones holding the bag. So I think they don't want to be overly optimistic, Kyra.

PHILLIPS: What about Iran? Will they talk about that?

HENRY: Well, you can bet that will be near the top of the list. Of course, Iraq being first, because Mr. Blair just came back from Iraq, the first world leader to visit there since the formation of the new government.

Iran will be a hot spot, of course. They're trying to, once again, build an international coalition. This time, to stop Iran from obtaining nuclear weapons. But obviously, because of the questions about the case for war in Iraq, if ever -- and it's a big "if" -- Mr. Blair and Mr. Bush need to make the case for Iran, it's going to be a tough case for them because of the lingering questions about Iraq -- Kyra.

PHILLIPS: Well, I don't know about you, but don't you feel so much better that the president came forward and said that he and Blair both use Colgate? I think that was...

HENRY: Absolutely, you know, it does make me feel better.

PHILLIPS: Ed Henry. Very serious topic, although, besides that. Thanks, Ed.

Well, CNN is planning special live coverage of the Bush/Blair news conference. Wolf Blitzer will be in "THE SITUATION ROOM", 7 p.m. Eastern. The leaders will meet reporters at 7:30 right here on CNN. You can expect some tough questions from Ed Henry.

Well, the Mexico -- the president of Mexico, rather, in apple country. Vicente Fox and a fruitful swing through Washington state. Why is he there? We'll explain, straight ahead on LIVE FROM.

And the Justice Department reacts to the guilty verdicts in the Enron trial. We're going to go to that news conference as soon as it begins.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(BEGIN VIDEOTAPE)

VELSHI (voice-over): A wedding dress designer saying "I do" to more than fashion on today's "Blue Chips".

If you're a red carpet watcher, chances are, you've seen her gowns. Vera Wang's name is synonymous with modern evening and bridal wear. The former "Vogue" editor started her label 16 years ago and is known as the woman who infused fashion into the bridal industry.

VERA WANG, FOUNDER AND CEO, VERA WANG GROUP: Because design goes by so quickly, and things are old by the time they get to market. You have to be very vigilant about what is going on around you.

VELSHI: Today, Wang's multimillion-dollar empire has expanded to lingerie, jewelry, fine papers, a houseware line and much more.

WANG: One of the most important things in any career is to feel passionate about what you do. And that makes the effort that much easier.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: ... testimony, I would go home one night, a little swayed in one direction. The next day, cross or direct, when it began, and it would go the other direction. And I think we all felt that. You felt like a ping-pong ball, because the attorneys were very good. The testimony was very good. I don't really think I had made up my mind one way or another until we entered for deliberations. And it all came together.

(END VIDEO CLIP)

PHILLIPS: Listening to one of the jurors there reacting to the Enron verdict. We're also waiting for a live news conference from the Justice Department. They are going to be reacting to the Enron verdict.

I'm being told it's getting started right now. Let's go ahead and listen in.

PAUL MCNULTY, DEPUTY ATTORNEY GENERAL: Good afternoon.

The collapse of the Enron Corporation put thousands of employees out of work and cost investors billions in losses. Enron has become the leading symbol of corporate scandal.

Today, a jury in Houston convicted former Enron executives Kenneth Lay and Jeffrey Skilling on multiple counts of fraud, conspiracy, and related offenses. The judge also convicted Lay of bank fraud and false statements in a separate case tried to the bench.

Lay, Skilling, and their numerous co-conspirators, perpetrated an elaborate scheme to mislead analysts and investors about Enron's true financial picture. Their efforts to mislead the markets were protracted, deliberate and dishonest.

At a time when the company was foundering, these defendants perpetrated a lie: that Enron was a robust and growing company in the strongest financial condition it had ever been in. And as they knew, the truth was something very different. Enron faced significant financial difficulties that had been systematically masked by a series of deceptive transactions and accounting tricks.

The message of today's verdict is simple: our criminal laws will be enforced just as vigorously against corporate executives as they will street criminals. No one, including the head of Fortune 500 companies, is above the law.

We understand the importance of our efforts here to fight corporate fraud. The president's corporate fraud task force has worked several years now with great effort to try to focus on this kind of corporate corruption. We've done it because we care about the victims of this corporate criminal behavior -- employees who lose their jobs and lose their pensions, investors who lose their savings. And so this verdict encourages us. It encourages us to continue to combat corruption wherever we find it.

The Enron task force was formed in late 2001. It involves multiple agencies including the FBI, the FCC, the IRS, and this task force that has worked on this Enron debacle has worked thousands and thousands of hours. They've gone over millions of pages of documents. They have devoted years of their professional life, sacrificing time from families, all in the effort to try to hold individuals accountable for corruption.

I want to thanks, on behalf of the Department of Justice, I want to thank the investigators, and particularly the leaders, who have made this possible. Alice Fischer (ph), the assistant attorney general for the criminal division, who is here with me today. Sean Berkowitz, the head of the Enron task force. Cathy Rimler (ph) -- Cathy Rimler is the task force deputy director. The prosecution team, Sean and Cathy, and John Huston (ph), Cliff Strickland, Leo Weisz (ph), Rob Atkins, Doug Wilson, John Drenan (ph) and Andrew Staulper (ph). These individuals, along with the FBI -- and I want to thank the FBI for its efforts -- have done a great service to the American people.

With their hard work, their dedication and this tremendous win in bringing these important convictions. I also want to thank Matt Freidric (ph) for his work on this task force and his service in the criminal division. We will continue to pursue relentlessly this type of corruption.

And thank you very much.

QUESTION: On an important matter, this statement you made....

PHILLIPS Tremendous coup and win for the government. As you heard from Paul McNulty there, Deputy Attorney General, as he talked about the greed, and mismanagement and the deceit, ending in probably the most spectacular business failure in U.S. history.

(BUSINESS HEADLINES)

PHILLIPS: FEMA just can't cut a break, can they? Fred, here we go again.

FREDRICKA WHITFIELD, CNN ANCHOR: No, not this time. That's right, this time impacting the FEMA director nominee David Paulison, who is undergoing confirmation hearings on Capitol Hill. In the duration, apparently some questions have come about, about his state and federal filings, and he that said upon review it has been discovered that there have been some errors.

So in a statement today, he is saying, quote, "I've determined that previous advice I have received on state filing requirements and eligible federal deductions was in error. As a result, I will file as soon as possible the required federal and state returns, and will pay all taxes, penalties or interests that may be required to immediately correct these issues."

So full disclosure from David Paulison, as he awaits confirmation as FEMA director. Now, this happening just six days away from the start of hurricane season on June 1st -- Kyra.

PHILLIPS: All right, we'll be following all the drama. Thanks, Fred.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Secretary for cyber and information security, and the acting deputy assistant secretary for information technology, I -- the honorable Allen Pittman (ph), the assistant secretary...

UNIDENTIFIED MALE: Do you solemnly swear the testimony you're about to give including answers to questions of the committee and members as the truth and the whole truth, so help you God?

Please take your seats.

(END VIDEO CLIP)

PHILLIPS: Encouraging preparation without triggering panic? Well, Tell it to the Rumanians. Several Bucharest neighborhoods were suddenly sealed off this week after three dead birds tested positive for bird flu. The quarantines are now lifted despite reports residents will be cooped up for a week. Six suspected human cases are still being monitored, but none has been confirmed as bird flu.

In Indonesia meanwhile 33 people have been asked to quarantine themselves in their homes. They've been in contact with a family that lost six of its members to bird flu in the past few weeks.

CNN's Elizabeth Cohen has more on the case that points to likely human-to-human transmission.

(BEGIN VIDEOTAPE)

ELIZABETH COHEN, CNN HEALTH CORRESPONDENT (on camera): Usually bird flu is transmitted from birds to people. There have been very few cases where the disease has gone from a person to a person, and they've been scattered over the years since 1997. However, now there appears to be a cluster of one family where there's been human to human transmission in a rural area of Indonesia. Let's look at this particular case. What happened is that there have been seven confirmed H5N1 cases. H5N1 is the scientific name for this type of bird flu. Six of those people are dead. They are all in one family. It appears that only one person in this family had contact with the birds, and that somehow that person gave that disease to other members of the family, or perhaps they only gave it to one other member, who transmitted it to other members. That part is unclear.

What is clear is that this family lived in extremely close quarters. Health authorities say it's also clear that family members were taking care of this original sick person when they were at their most contagious and when they were unaware that this person had this type of bird flu.

Now, let's take a look at what this means worldwide, sort of try to put it into some kind of context. There have been very, very few cases of human-to-human transmission of bird flu. Worldwide since 2003, there have been 218 infected people and 124 deaths. And the vast majority of those have been people who caught it directly from birds. Now, authorities aren't quite sure why in this case there was this relatively large human-to-human transmission.

What they do know -- and this is very important -- is that the virus hasn't mutated. This is the same virus that's been causing this illness for years now around the globe. So they know it's the same virus. What they think maybe is that this family had some genetic predisposition to having this contracted from human being to human being. That's one hypothesis. They're investigating that further.

Elizabeth Cohen, CNN, Atlanta.

(END VIDEOTAPE)

PHILLIPS: More LIVE FROM coming up next. You're watching CNN, the most trusted name in news.

(COMMERCIAL BREAK)

PHILLIPS: Well, the speaker is speaking up. Dennis Hastert demanding that ABC News retract a report linking him to the Jack Abramoff corruption investigation.

CNN congressional correspondent Dana Bash standing by with all the details. Dana, what do we know?

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Well, Kyra, we just caught up with Speaker Hastert about this issue, about, really, what has become a pretty intense confrontation between the speaker and -- against the Justice Department, and it incorporates ABC News.

Very briefly, before we go to the tape, ABC News reported that Speaker Hastert is a part of -- now they say that they reported in the mix -- of an investigation that has to do with Jack Abramoff, the lobbyist who has really enveloped a lot of Republicans when it comes to a corruption scandal. Well, the speaker has vehemently denied that. The Justice Department has stood by the speaker, saying that he is not under investigation at all. We caught up with the speaker. Let's listen.

(BEGIN VIDEO CLIP)

REP. DENNIS HASTERT (R), HOUSE SPEAKER: ... but we need to protect the division of powers in the Constitution of the United States. And that's one of the things that I talked to the president about. That's one of the things that we're concerned about in this issue. And that's an ongoing discussion that we have. Now, I don't know if this leak out of the justice department or wherever it came was a coincidence or not, but I'll let anybody else try to, you know, connect the dots.

QUESTION: Someone trying to intimidate you?

HASTERT: I wouldn't say that. I don't know.

(CROSSTALK)

HASTERT: That's speculation.

QUESTION: Do you stand by...

QUESTION: What would you remedy from ABC News at this point? What would you like to see to them?

HASTERT: That's something that my lawyers are taking care of right now. Thank you.

UNIDENTIFIED MALE: Thank you very much. We're going to move.

QUESTION: (INAUDIBLE) lawsuit?

(END VIDEO CLIP)

BASH: I'll just put that into a little bit more context there, Kyra. What we heard there is the speaker talking about the whole question of whether or not, perhaps, because, he was -- he has been in this confrontation with the justice department about a raid over the weekend on Congressman Jefferson's office here on Capitol Hill.

There has been a constitutional showdown between the speaker and the Justice Department. Whether that has raised the possibility that this particular issue had got out there as retribution, essentially, to try to intimidate the speaker. You heard him there back off that, saying that, you know, maybe it was just a coincidence. But earlier today in a radio interview in Chicago, he actually did say that perhaps somebody who leaked this was trying to intimidate him -- Kyra.

PHILLIPS: Well, I also heard -- you were really going at him with those questions, Dana. And I heard you say something -- you asked him about a lawsuit. Did you get an answer out of him?

BASH: Well, here's another part of this, the aspect of this story. And it's very complicated. But basically, where we are right now is that the speaker's attorney wrote a letter to ABC News, still demanding that they retract the story. ABC is standing by their story. They will not retract it. They reported it last night and again this morning. And they're, again, standing by it.

So what we had today here is a letter from the speaker's attorney to ABC News, once again, saying you must demand -- you must retract this story. And it's suggesting, very strongly, that perhaps they could file suit against ABC if they don't retract the story.

PHILLIPS: Dana Bash, thanks for getting that interview and bringing it to us.

Well, Mexico's president whirlwind touring the American west right now. The two big issues are business and immigration -- the former what Vicente Fox wants to talk about; the latter, what he has to talk about.

Glenn Farley of our Seattle affiliate KING reports.

(BEGIN VIDEOTAPE)

GOV. CHRISTINE GREGOIRE, WASHINGTON: We're expecting a bumper crop this year and we're ready to export them.

GLENN FARLEY, KING 5 REPORTER (voice-over): Washington Governor Christine Gregoire hosting Mexican President Vincente Fox. One key issue for this trip, exports of Washington apples to Mexico. Now Washington does export apples to Mexico now, but could export a lot more. But due ongoing trade dispute, apples from growers such as G & G Orchards must pay a 45 percent duty going into that country.

The second major issue, Vincente Fox's support for a guest worker program to provide labor for agricultural work in immigration reform for Mexican immigrants who have been living illegally in the United States, sometimes for decades.

Both issues are big ones for the large Latino community here in the Yakima Valley, the largest in Washington. And speaking to a largely Mexican-American audience, Fox was willing to address those issues. Changes in immigration laws are being debated in Washington, D.C. this week.

PRES. VICENTE FOX, MEXICO (through translator): For sure I know that we're watching, you know, minute by minute, following the deliberations, the debates, that the Congress of the United States has been having.

FARLEY: On the issue of apple exports.

FOX (through translator): Coming from the private sector, I learned that many times the dialogue between the growers can resolve things that the authorities and the government cannot find the solution.

FARLEY: Apple grower Rene Garcia (ph), who hosted the event at his farm. UNIDENTIFIED MALE: He says he wants to fix it to where it's free trade.

FARLEY (on camera): Do you think it will be duty free maybe someday?

UNIDENTIFIED MALE: He wants to look into it. He wants to help us out.

(END VIDEOTAPE)

PHILLIPS: Well, the apple issue may not resound nationwide but it shows that U.S./Mexican affairs go beyond immigration. Back to the Pacific Northwest, Seattle and KING's Brad Goode.

Brad, it sort of makes sense -- I know it was a coup that Vicente Fox came to this area, but Spanish businesses have exploded there, right?

BRAD GOODE, KING 5 REPORTER: Oh, they certainly have, Kyra. And, you know, it's interesting to note, you'd expect say, someone like President Fox to come to Seattle, but our governor actually was able to get that onto his itinerary to have him come to Yakima specifically because of that.

I mean, you've got one-third of the Yakima Valley from Mexico. Many of the businesses there are owned by Mexican immigrants. And it's significant. I mean, 30 percent of Washington's apple crop goes to Mexico.

So I think she said, look, you can come and talk to business leaders here in Seattle. We need to get you on the farms here, dealing with the issue right there on the ground, to talk to people about how trade and immigration is really hitting both of these countries.

I mean, we just had a huge, huge trade agreement back and forth here with Mexico, and Governor Gregoire says, you know, we need to address this now. You need to be a part of this, because when it comes to talking about immigration, we need a -- we're going to need a program basically that's going to allow for citizenship, a robust guest worker program, she calls it, so that we can keep this agriculture tie together.

PHILLIPS: Well, what's the Hispanic leadership saying there? Is there a message to Vicente Fox?

GOODE: Well, I mean, they're hoping, as you heard in my colleague Glenn Farley's piece, they're hoping that there's going to be some headway in terms of trade, in terms of tariffs as well. They feel there's some inequalities there as well.

But a lot of these orchards that you just saw right there, I mean, they're saying, listen, we can't have our workers deported. And at the same time, the Senate just has talked about putting in a bill about fining those that hire immigrant workers $20,000 apiece. That's going to bring the agricultural industry, at least what they're talking about with apples right there and many others, to its knees.

So it's absolutely vital that our governor works with President Fox and working with Washington to come up with something that's agreeable. As you know, President Fox has been saying all along, he wants to work at something, but he says fences are not the answer.

And yet, Kyra, at the same time, he fully admits that perhaps his administration has not done enough to create enough jobs, to improve health care. So that some of his countrymen and women don't feel that they have to flee to this country to get jobs and to get proper health care.

PHILLIPS: Brad Goode, stay with us. We're going to take a quick break. Got one more question for you.

(COMMERCIAL BREAK)

PHILLIPS: We're talking with Brad Goode from KING TV as President Vicente Fox is touring the state of Washington. We talked about the apple orchards, the influence of the Hispanic community. But was interesting, Brad -- I just want to touch on a personal note.

When you and I were talking about this segment, you said you were actually on your way to Spanish immersion class with your 2-year-old daughter Haley (ph). I mean, this has affected a lot of people in the state of Washington.

GOODE: Yes, oh, it absolutely has. I mean, when you look at the fact that President Fox just this morning, meeting with business leaders from CEOs from Starbucks, Costco, Boeing, Alaska Airlines, Microsoft -- I mean, look, these two countries have merged in so many ways and will be intertwined forever in terms of trade, in terms of culture.

We're already talking about the national anthem in Spanish and so on and so on, working out something for immigration that will work. I just think -- you know, I want her to know Spanish and so she's already in a immersion class at age 2. I just think it's absolutely vital for people to be bilingual these days and it's helping me as well.

PHILLIPS: Sure, growing up in California, I can totally relate. Brad Goode, thanks so much for joining us today. We'll keep talking about this and let me know if you hook up with Vicente Fox. I know you're trying for that interview.

GOODE: All right, Kyra, thanks.

PHILLIPS: Thanks.

GOODE: Have a good one.

PHILLIPS: Thanks, Brad.

Well, we've got live pictures in, I'm told, right now of that search that continues for the remains of Jimmy Hoffa. You know, if you dig carefully, you never know what you might find. That's the instruction, at least, to work crews at this Michigan farm where former teamsters' leader Jimmy Hoffa may be buried. You never know.

It took three hours to tear down this barn at the farm yesterday. And now they're digging up the concrete floor to see what, if anything, may be under it. You may remember, Hoffa disappeared in 1975, about the same time the barn was built on that farm that was owned by a Hoffa associate.

The next hour of LIVE FROM starts right now.

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