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White House on Iran; Haditha: What Happened?; Indonesian Quake Survivors

Aired June 01, 2006 - 13:59   ET

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

CAROL LIN, CNN ANCHOR: No thanks to the carrot because of the stick. Iran says it won't go for the U.S. offer of multilateral talks because they'd have to suspend all nuclear activity. So can the U.N. Security Council break the stalemate with economic sanctions?
CNN's Elaine Quijano live at the White House with more on President Bush's efforts to lobby China and Russia on a critical vote.

They've got veto power in the Security Council -- Elaine.

ELAINE QUIJANO, CNN WHITE HOUSE CORRESPONDENT: Well, that's exactly right. Good afternoon to you, Carol.

It's interesting to note that a senior administration official said yesterday there was actually consensus, this official said, on the idea of using sanctions against Iran if necessary. The key question, as you just noted, whether China and Russia would be fully on board with that.

Well, today, what's interesting to hear, President Bush said that he got a positive response from Russia's president, but he did not answer directly when asked the same question about China, whether or not there was a positive response from the Chinese president. Mr. Bush spoke with him by phone today.

Now, President Bush, for his part, did emphasize that he is seeking a diplomatic solution, and he said that the ball is now in Iran's court.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The choice is theirs. And we'll see whether or not that is the firm position of their government. And if that's what they decide to do, then the next step, of course, will be to -- for our coalition partners to go to the United Nations Security Council.

And the choice is up to the Iranians. And they've already said, by the way, that they're willing to suspend. And this gives them a second chance to make their words mean something. I want to solve this problem diplomatically and I want to solve it peacefully.

(END VIDEO CLIP)

LIN: Now, as for Russia and China, White House officials are saying that the U.S.' allies all realize that the next track, if Iran, in fact, does not corporate fully, includes the U.N. Security Council and possible sanctions.

Meantime, Secretary of State Condoleezza Rice is in Vienna to discuss the issue. She is meeting with five permanent members of the Security Council, plus Germany -- Carol.

LIN: That meeting's going on right now.

Elaine, thank you very much.

Well, the U.S. Marine Corps promises to learn the truth about what happened in Haditha, Iraq, and promise to release everything to the public. But until then, there's no shortage of speculation and nor shortage of indicators that something very, very bad and possibly criminal occurred in November in Haditha.

Here's Ryan Chilcote.

(BEGIN VIDEOTAPE)

RYAN CHILCOTE, CNN CORRESPONDENT (voice-over): These are the death certificates of the Haditha victims. It's the first time they have been shown publicly, and they make shocking reading.

KHALID SALMAN AN-SAYIF, LAWYER (through translator): Most of the reports show that the bodies arrived to Haditha Hospital with bullet wounds in the head or chest or abdomen.

CHILCOTE: Among the death certificates shown to CNN by the victims' lawyer, those for 76-year-old Abdul Hamid Hassan Ali (ph), his wife and their son. According to the coroner's report, the son's body came in totally charred. That may be because, according to witnesses, U.S. Marines used grenades, as well as gunfire, in their assault that day.

The director of the hospital in Haditha says the bodies of all 24 civilians were brought in by the U.S. military. It was 1:00 a.m., hours after the alleged massacre. The hospital director says his night shift examined the bodies before they were released to the families.

WALID ABDUL KHALAK UBAIDI, HOSPITAL DIRECTOR (through translator): Abdullah Hamid (ph) was only 3 years old; Hamid Salem (ph), 2 years old; Aisha Salem (ph), 2 years old; Zanab Salem (ph), 5 years old.

CHILCOTE: The mayor of Haditha says the town will never forget what happened on November 19, 2005, or how it began.

EMAD JAWAD HAMZA, HADITHA MAYOR (through translator): Three families and a number of college students were executed at the hands of U.S. soldiers after the roadside bomb exploded. The people of Haditha have declared this a day of human catastrophe and contend that war crimes have been committed by U.S. soldiers. It was a black day in Haditha's history.

CHILCOTE: He and others in Haditha say they immediately went to the U.S. military and demanded an investigation and punishment.

(END VIDEOTAPE)

CHILCOTE: But it took the U.S. military three months to open that investigation. And that big delay has really upset a lot of people here -- Carol.

LIN: Ryan, the commander of multinational forces today announced that troops are going to be going through core values training in Iraq. Has that begun yet?

CHILCOTE: That has begun, as far as we understand. It's going to go on for the next month.

The whole idea is to reinforce the training that all of the troops get before they even come into Iraq. The focus is on the morals and the ethics that the U.S. military command wants the troops to be thinking of when they are in combat situations.

And General Chiarelli -- he's the number two commander here who issued those orders, also issued a statement -- he said that 99.9 percent of the troops are doing a great job, performing very professionally. But then he said -- and he didn't make any direct reference to the events in Haditha -- he said that some soldiers sometimes have chosen the wrong path. So obviously his hope is that this will put a stop to that or prevent that from happening -- Carol.

LIN: Ryan, can you tell us more about the state of emergency in Basra right now?

CHILCOTE: Well, Basra is a place that once upon a time, as recently as a year ago, was known for being relatively peaceful. But it has been anything but that.

In particular, for the last month, the month of May, was a very violent month. At least 140 Iraqis killed there. All kinds of violence.

A real increase in the number of attacks on British troops. A lot of gang warfare, basically Shiite militias battling it out on the streets. And there's also been a lot of sectarian violence, a lot of Sunnis getting killed.

It's a mostly Shiite city. A lot of the Sunnis are saying that they believe that there Shiite death squads operating out there.

So the prime minister announced this state of emergency yesterday. It goes into effect today. It's in place for a month. And he's hoping that his lockdown will help in bringing the violence to a stop.

LIN: Ryan Chilcote, thank you so much.

Straight to Fredricka Whitfield, who is working on a developing story right now.

Fred, what's going on?

FREDRICKA WHITFIELD, CNN ANCHOR: Hello, Carol.

Well, remember the Valdez oil spill back in 1989, some 11 million gallons of oil that polluted the Prince William Sound and the Gulf of Alaska, killing millions of marine life? Well, now the Justice Department and the state of Alaska are asking ExxonMobil to pay another $92 million to clean up the shorelines around the Prince William Sound and the Gulf of Alaska, saying that there are still some residual effects from that spill of more than 17 years ago.

The Justice Department said the need for the additional project stems from a series of 2001 studies that document the presence of residual oil from the spill along beaches in that oil spill area. The government said in a written statement that it had not anticipated the oil would remain toxic and continue to affect the area. However, we have not heard anything yet from ExxonMobil and anything about their response to this request from the Justice Department, as well as Alaska.

LIN: All right. Just in. Thank you very much, Fred.

This word from President Bush today. An election year compromise is needed on immigration legislation.

Now, speaking to the U.S. Chamber of Commerce, the president said it's time for Congress to reach a consensus on the two very different bills passed by the House and Senate. He defended his much discussed guest worker program and he also said the final bill should include tougher border enforcements.

(BEGIN VIDEO CLIP)

BUSH: The Border Patrol agents need help. And the best way to help the Border Patrol is to construct high-tech fences in urban areas, urban corridors, to build patrol roads and barriers in rural areas. We're going to create a virtual fence that employs motion detectors and infrared cameras and unmanned aerial vehicles to detect and prevent illegal crossings. What I'm telling you is that we're going to have a border that is smart and secure.

(END VIDEO CLIP)

LIN: Well, Mr. Bush did break with the Chamber of Commerce audience on at least one point. He did say he favors tougher penalties for business owners who hire illegal workers.

Well, New York City wants immigrants to get medical care when they need it, even if they are in the country illegally. City officials are sending out a letter written in 11 languages. It promises that public health workers won't reveal anyone's immigration status when they come in to get treatment. Now, some immigrant rights advocates say many illegal immigrants are afraid of going to hospitals.

Well, they escaped with their lives, but that's about the only consolation for survivors of Saturday's earthquake in Indonesia. The death toll there now tops 6,200, but those numbers will only continue to rise as more people fall victim to lack of shelter or food or even medical care.

CNN's Hugh Riminton has more on the desperate struggle to survive.

(BEGIN VIDEOTAPE)

HUGH RIMINTON, CNN CORRESPONDENT (voice over): Helicopters searching for remote survivors are finding them, but it's not safe to land. In aid terms, this is the crudest form of distribution. Only the strong stand a chance. Their food packages gone, the chopper tries again to touch down, but it is still chaotic.

"I don't have anything. My house is destroyed!" she pleads. "Please take me. Please take me to Jakarta."

The soldiers hesitate, but not for long. As rescue teams reach more and more remote areas, the list of the dead and of the injured grows.

But this, the village of Bowran (ph), remains the human epicenter of this disaster. A thousand people died here.

Twenty-year-old Badawi (ph) survived only because he had already left for work that day. He first found his 3-year-old daughter's tricycle and then her body nearby. It took two days to find his young wife, their 10-month-old son dead, still clutched in her arms.

"My heart is broken," he says.

Faced with all this, where do you start? There's no earth-moving equipment to speak of. If you are lucky, neighbors pitch in to help. Somehow, heroically, people are trying to retrieve the rhythms of their normal life, defying the utter destruction around them.

DR. IWAN LABAN, MEDICAL VOLUNTEER: When they remember their relatives, families who have passed away, so they will become sad. But if not, they are strong.

RIMINTON (on camera): As with all disasters, this one has its inexplicable randomness. Almost as mysterious as who lives and who dies is what stands and what falls? All that remains of this once substantial brick house is the front door and the flimsy glass alongside, untouched.

(voice over): Increasingly, food is arriving. But there is far too little shelter.

Hugh Riminton, CNN, Yogyakarta, Indonesia.

(END VIDEOTAPE)

LIN: Please log on to CNN.com for up to the minute information on the Indonesian earthquake. And you can also find out how you can help the victims of this terrible tragedy.

Well, rebuilding along the Mississippi Gulf Coast... from Oklahoma City? A verdict there could help Katrina victims fight their insurance companies. LIVE FROM is on the story.

(COMMERCIAL BREAK)

LIN: Could another Katrina, Andrew or even a Hugo be in our future? Well, forecasters are on alert as the waters to the south are heating up again.

Here again, our meteorologist, Reynolds Wolf.

First day of hurricane season today.

REYNOLDS WOLF, CNN METEOROLOGIST: Absolutely, and we've got a lot to share with you.

(WEATHER REPORT)

LIN: Thanks so much.

WOLF: No problem.

LIN: In fact, nine months later, folks, not much has changed. Parts of the Mississippi Gulf Coast are still a mess, and homeowners say it's because some insurance companies won't pay up post-Katrina.

CNN's Drew Griffin investigated for "PAULA ZAHN NOW".

(BEGIN VIDEOTAPE)

MINH NGUYEN, HOMEOWNER: This is my home right here.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: This is the front door?

(voice-over): It took the Nguyens 13 years to build their dream house. It took Katrina less than an hour to destroy it.

NGUYEN: My house falling down, the wind getting more and more heavier and everybody.

GRIFFIN: This is what was left, rubble and memories. But Minh Nguyen had an insurance policy that she hoped would restore what she and her husband had spent a lifetime trying to build -- nine months later, still no insurance payment.

(on camera): You can't build this back without insurance, can you?

NGUYEN: No, sir. That's why we...

(CROSSTALK)

DAMON: Is that -- you're in a trailer? NGUYEN: Yes, sir, me and my husband and my three children.

GRIFFIN (voice-over): Her insurer is State Farm. Nguyen's attorney, Zach Scruggs, says State Farm has not paid this claim because this engineering report says the damage was done by water, not wind, and water damage is not part of the policy.

NGUYEN: This just can't be water. Water -- I mean, if you go and get -- caused by water, because the house still stand. This is by tornado and wind. The whole neighborhood is gone.

GRIFFIN: Minh Nguyen is now joining a lawsuit suing State Farm, alleging the insurance company pressured its employees and independent contracts to create reports and findings denying evidence of wind damage.

The lawsuit also alleges, State Farm hid or destroyed copies of initial engineering reports finding wind damage, in order to influence and distort the investigation.

ZACH SCRUGGS, ATTORNEY FOR MINH NGUYEN: There are about five or six standard firms that State Farm uses to do their dirty work for them, and to deny all claims under a predetermined conclusion that the damage was caused by water, which they say is excluded by the policies.

GRIFFIN: Attorney Zach Scruggs says the very first report done last November on the Nguyens' home by a company called Forensic Engineering concluded, damage to the house was predominantly caused by wind.

(on camera): That first engineering report actually described how it must have happened, how a home sitting on these blocks was actually picked up and thrown into Nguyen's home by strong winds, possibly even a tornado. In fact, the investigator's report even had two witnesses who saw it happen.

(voice-over): In a follow-up report in December, Forensic Engineering again concluded, wind caused the damage. Remember, wind damage would be covered.

But the claim still wasn't paid. Forensic Engineering says they never altered a report to favor a company and were never asked by State Farm to make changes to benefit the insurer. In January, a different engineering firm delivered a third report. This one concluded, water destroyed the house. The claim would not be paid.

State Farm says the complaint is completely unfounded, and that it has "handled more than 600,000 Katrina claims and paid policyholders more than $5.4 billion." Scruggs says he has hundreds of clients with similar stories, but now he has something else, a stunning court loss for State Farm that could be a preview for the Gulf Coast.

UNIDENTIFIED MALE: That's moving right at us. We got to get out of here. GRIFFIN: It relates to damage caused in 1999, when the worst tornado in history hit Oklahoma City. A jury has now found, State Farm was -- quote -- "reckless and malicious" in using an engineering firm to undervalue tornado damage to dozens of homes, or having the engineering firm say the damage was not caused by the tornado, thereby denying the claim.

SCRUGGS: State Farm, in both cases, are using engineering firms to do their dirty work for them and to deny claims systematically.

GRIFFIN: Seven years after the tornado, the jury awarded one family almost $14 million. In a class-action lawsuit, dozens of other families stand to gain as well. State Farm said in a statement that, during the trial, the jury was not allowed to hear the full story, and it is appealing the Oklahoma verdict.

In Mississippi, where the Nguyens saved for 13 years to build this house, it's likely to take a few more years before their case is resolved.

(END VIDEOTAPE)

LIN: Well, when the waters start coming, I mean, who knows? Where are you going to get help, Drew?

GRIFFIN: I can't imagine what these people are about to go through if any storm comes through. So many of them are living in these tiny little trailers. I just -- I can't imagine another storm hitting there right now, Carol. They are so unprepared for that kind of a disaster.

LIN: Do you think State Farm is worried about suits like this or the publicity from it?

GRIFFIN: I think that they are worried about lawsuits like this. And what State Farm is trying to say is, you know, these are two different animals.

What happened in Oklahoma City was a tornado, what happened in the Gulf Coast was a hurricane, they're completely separate. But they are natural disasters that wiped out houses, that had policy holders that want to be made whole.

And if a jury -- if this goes to a jury down in Mississippi, and that jury -- it can be proven to them that State Farm is somehow manipulating those engineering reports to limit the amount of money they will pay, if any, I think it could have huge ramifications financially. Seven hundred plaintiffs in the case so far. It could easily balloon into the thousands of plaintiffs that believe they have been dealt unfairly.

LIN: Can you even get insurance in these areas anymore if you are owning or building?

GRIFFIN: You know, that's a tough question. I don't know the exact answer. I know it's very hard to get insurance. LIN: Yes, and very expensive.

GRIFFIN: And very expensive.

LIN: It's like earthquake insurance in California. It's ridiculous.

GRIFFIN: Very -- yes, very high premium. You're going to have to get flood insurance through the feds. You're going to have to have many specifications on how high you have to build your house. And a lot of these people are trying to do this with absolutely nothing.

You know, their house was wiped out, many of their jobs have been wiped out, their communities have been wiped out. So that's why they're relying so heavily and looking so forward to the insurance companies to pay them back because there is no other revenue right now.

LIN: Expecting 16 major storms just this year alone. That number could double, like last year.

GRIFFIN: I just returned this morning and I'm just -- you know, in some places it looked look a storm hit yesterday. I just can't imagine if another storm hits New Orleans, the Gulf Coast, Mississippi. It would be a true tragedy.

LIN: All right. Drew, thank you very much.

Well, in the meantime, straight ahead, when the waters do start churning and the winds pick up steam, experts sound the warnings. Getting ready for what's surely in store. We're live from the National Hurricane Center with director Max Mayfield.

(COMMERCIAL BREAK)

LIN: All right. You're looking at a live picture of the meeting place where U.S. Secretary of State Condoleezza Rice is meeting with her European counterparts, as well as counterparts in China and Russia, as to whether there will be sanctions imposed on Iran for not stopping its development of nuclear programs and nuclear enrichment. So we're expecting to hear a statement any minute now whether any progress has been made there, and we're going to bring it to you live.

In the meantime, there's more interest in alternative fuels recently because of high gas prices. And now the industry may get a boost from the world's biggest retailer.

Susan Lisovicz has more from the New York Stock Exchange.

(BUSINESS REPORT)

LIN: CNN has a personal story connected to Katrina, a town that was leveled and is still struggling to recover. So we're going to show you how one Gulf Coast community is eying another hurricane season. We're going to take you back to Bay St. Louis.

Plus, I'm going to be talking with Max Mayfield, director of the National Hurricane Center, straight ahead.

Stay with CNN, the most trusted name in news.

(COMMERCIAL BREAK)

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