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American Morning

Foreign Companies Already Run Much of America's Cargo Operations; 'Minding Your Business'

Aired February 22, 2006 - 06:31   ET

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

SOLEDAD O'BRIEN, CNN ANCHOR: A devastating picture out of Iraq to show you this morning. A major holy site destroyed. It caused big damage, it sparked protests, too.
Plus, tough words from the president on port security. He takes on his party faithful in a battle over Arab ownership of some major American ports.

And the Powerball winner is -- oh, not so fast. But, believe it or not, the record lottery winner or winners very soon might be revealed. We'll have that ahead.

Welcome, everybody. Miles is on a little vaca. Rob is filling in again.

Thank you very much. Appreciate it.

ROB MARCIANO, CNN ANCHOR: You're welcome.

O'BRIEN: Let's talk about President Bush. He hasn't vetoed a single bill in his entire time in office. Now, though, he's threatening to veto any bill that would block a deal to put an Arab company in charge of U.S. ports. It's left people wondering why the president is so fixed on this deal.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: People on the street are scratching their head in disbelief. How could we turn over one of the most vital areas of homeland security to a company run by a country that has a nexus of involvement with terrorism?

No one can understand it. No Democrat can understand it. No Republican can understand it. Average citizens everywhere we go are stopping us and saying, "What is going on?"

(END VIDEO CLIP)

O'BRIEN: There's room for debate over how risky the deal is for U.S. security. You might be surprised to learn that foreign companies already run much of America's cargo operations.

Here's Homeland Security Correspondent Jeanne Meserve with that story.

(BEGIN VIDEOTAPE) JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): Though ports are the major arteries of the American economy, the vast majority of their facilities are already operated by foreigners.

In Los Angeles, for instance, the nation's busiest port, all seven container terminals are leased to companies from China, Taiwan, Japan, Singapore and Denmark. But most experts don't lose sleep over that.

STEWART VERDERY, ADJUNCT FELLOW, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES HOMELAND SECURITY PROGRAM: Remember, no matter who owns the port, whether it's a foreign government, a foreign company, a U.S. company, or U.S. government, it is Customs and Border Protection, federal agents, who do the inspections. It's the Coast Guard, federal agents, who do the patrolling of the -- of the -- of the waterways. It's the FBI and the rest of our apparatus that does criminal and terrorist investigations.

MESERVE: More worrisome to security experts are the nine million cargo containers that arrive in U.S. ports every year. Eighty percent of cargo is screened in foreign ports before shipment to the U.S., but the quality of the screening is inconsistent.

The cargo manifests of all ships are analyzed at the National Targeting Center to determine which containers should be opened or X- rayed, typically around 6 or 7 percent.

But nobody, including the former commandant of the Coast Guard, thinks the system is failsafe.

ADMIRAL JAMES LOY (RET.), U.S. COAST GUARD: I certainly cannot sit here and assure you that all the information we think we need to lock up the notion of security of our ports is now being flowing -- is now flowing day after day after day into the National Targeting Center for its use. So, that -- that is work still to be finished.

MESERVE: Technology that could detect cargo tampering is still in the development phase, as is an electronic card system to verify the identities of the thousands of people who work at ports or drive through them.

VERDERY: There has been a lot of in-fighting about whether these should be centrally produced or locally produced. Should they have biometrics, these kind of things? And it seems it has fallen off the radar screen.

MESERVE: And though the Coast Guard has seen increases in its budget, few experts think it has what it needs to track threats and respond to them over, on, or under the water. LOY: I will never be a commandant, ex or otherwise, that sits and tells you that -- that that terrific service has everything that it needs. It does not.

MESERVE: But some think the current fury could refocus attention and resources on security questions above and beyond who owns the real estate.

Jeanne Meserve, CNN, Washington.

(END VIDEOTAPE)

O'BRIEN: You'll want to stay tuned to CNN day and night for the most reliable news about your security.

Ahead, White House counselor Dan Bartlett is going to join us, talk about why the president is choosing to fight this particular battle -- Rob.

MARCIANO: Soledad, time for a check on the headlines this morning. Let's go to Kelly Wallace in the newsroom.

Good morning again, Kelly.

KELLY WALLACE, CNN ANCHOR: Good morning. Hello to you, Rob.

And good morning, everyone.

We're beginning with a developing story out of Iraq this morning. Major protests after a religious site was targeted. And you're looking at some live pictures right now of those protests.

This after one of the country's most famous Shia mosques heavily damaged in an attack earlier today. Iraq's prime minister is urging people to stay unified, saying the attack is aimed at sparking more sectarian violence between Shia and Sunni Muslims.

A court hearing today for three Florida teenagers. They're facing charges for beating some homeless men. And this is video of one of the attacks that was caught on tape last month. There were three attacks in total. One of the homeless men died from the beatings.

Grieving family members of some trapped coal miners in Mexico are threatening to rush the site. About 65 miners remain trapped underground after a gas explosion on Sunday. They only had extra oxygen for about six hours. So far no contact has been made with them.

A glimmer of hope for some Louisiana residents. About 300 FEMA mobile homes are now on their way to areas damaged by Katrina. Nearly 11,000 mobile homes have been sitting empty in the mud in Arkansas. This is the first time any of those mobile homes are being moved to the hurricane zone.

And we're expecting to find out the answer to a real mystery today. The winning ticket for last Saturday's powerball drawing was purchased at this store in Lincoln, Nebraska. The record jackpot, $365 million. Officials are holding a news conference later this morning to announce the winner or winners.

Sadly, Rob, it's not any of us.

MARCIANO: You think?

WALLACE: I know it's not me, but maybe if it's you, go for it.

MARCIANO: No, I wouldn't be here. Maybe it's Carol.

WALLACE: Maybe. Carol and Miles are off.

O'BRIEN: She's off today.

MARCIANO: Oh, she's off officially?

O'BRIEN: No -- right, so it could be Carol. It could be Miles. As you know, whoever it is ain't coming to work.

WALLACE: They're not coming back.

MARCIANO: It could be Chad Myers.

O'BRIEN: It could be.

MARCIANO: Bonnie is in for Chad. I'm in for Miles. Soledad is left keeping the ship afloat here.

O'BRIEN: With lots of help. Hardly, hardly on my own.

Good morning to you, Bonnie.

MARCIANO: Hi, Bonnie.

BONNIE SCHNEIDER, CNN METEOROLOGIST: Good morning to both of you.

(WEATHER REPORT)

O'BRIEN: All right. Thank you very much, Bonnie. Appreciate it.

Some Republicans are slamming a deal that would hand over U.S. ports to an Arab company. President Bush, though, says he's going to veto any plans to kill the deal. A top Bush adviser is going to join us this morning and tell us why the president is picking this battle to fight.

MARCIANO: Also, three men in the U.S. accused of plotting attacks on American soldiers. We'll look at the e-mails that may have tripped them up.

Stay with us on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Repairing America's image overseas is an uphill battle, sort of. One that's important, though, for U.S. security, as well as U.S. business.

Keith Reinhard is chairman of the advertising agency DDB Worldwide. He's also the president of the group which is called Business for Diplomatic Action. He's meeting this week -- tomorrow, actually -- with Karen Hughes, the president's chief of public diplomacy, to tackle the issue of America's tarnished image.

It's nice to see you.

KEITH REINHARD, BUSINESS FOR DIPLOMATIC ACTION: Thank you.

O'BRIEN: Thanks for talking with us this morning.

REINHARD: Thank you.

O'BRIEN: You know, we have been talking a lot about the port issue. To what degree does the brouhaha over -- over that sort of thing, an Arab investment in an American company, affect what you're trying to do, which is to get the image of American companies overseas to be better?

REINHARD: Yes. I don't think the port issue directly affects what we're doing. That's a short-term issue. Somebody's going to decide whether that's a good idea or a bad idea.

We have very good relationships with an organization called Young Arab Leaders which is based in the United Arab Emirates. We think that our relationship with that country is very friendly. But this issue is really not one for us to decide as a business community.

O'BRIEN: Scale of one to 10, how hard is your job to try to clean up America's image overseas? I'm going...

REINHARD: I would say a 10 or 11.

O'BRIEN: Yes, I was going to guess that. I was going to guess that.

REINHARD: But, you know, Soledad, this problem has been developing for a long time. It's not a recent development.

O'BRIEN: Has the Iraq war made it tougher by far?

REINHARD: Yes, it did, but experts say that for the last two decades, at least, our image has been deteriorating around the world. And then Iraq and Abu Ghraib ignite these latent anti-American feelings and, yes, make it worse. So I would say a 10 or 11.

O'BRIEN: Karen Hughes, you are meeting with her tomorrow. Obviously, you don't create foreign policy, but you have to work in the context of a foreign policy as an American business working overseas.

REINHARD: Right.

O'BRIEN: What's your meeting with Karen Hughes about? What are you going to talk about?

REINHARD: Well, our organization is really to try and get the private sector to help whatever the government might be doing. And so our meeting is about trying to promote more tourism to the United States. You know, tourism is still down. Inbound arrivals way down from pre-9/11 levels. And research shows conclusively that if you get people here, they have a much more positive image of our country and of us than if they have never visited.

So we're working with the transportation -- or the tourism industry, I should say, to see if we can find ways to invite more people back to the United States. Tourism -- for example, Brazil, 43 percent down from...

O'BRIEN: It's hard for people to get a visas out of Brazil.

REINHARD: It is. And that's another -- we are urging the government to simplify the visa policy and then to do something about the attitude that visitors often encounter when they finally arrive here...

O'BRIEN: Which is?

REINHARD: ... and they're treated -- well, they're abused verbally. I mean, some of the horror stories are really incredible.

O'BRIEN: Why business? Why do you think business can tackle this better than some other groups?

REINHARD: First of all, the reach and the resources of U.S. multinationals tremendous. How many lives does American business touch around the world every day? And how many business executives are traveling? What a tremendous citizen diplomacy core that could represent.

Business has a vested interest in this, too.

O'BRIEN: Money at the end of the day.

REINHARD: Exactly.

O'BRIEN: And I guess that vested interest comes back to Americans, as well, right? I mean...

REINHARD: Absolutely. I mean, business also needs to attract the best and brightest talent around the world. And that's been the success of our business -- of our global expansion, being able to attract really bright people in the expansion countries. If this trend continues, young people say maybe I'll work for a Dutch company or a Japanese company.

O'BRIEN: Yes, you're in big trouble. Your 10 or 11, as you describe your job, as in difficulty, goes up to about a 35.

REINHARD: I would say.

O'BRIEN: Keith Reinhard is the chairman of DDB Worldwide.

Nice to talk to you, sir. Thanks for coming in to talk to us.

REINHARD: Thank you, Soledad.

O'BRIEN: We appreciate it.

Let's get to Andy with a little preview of what's coming up this morning.

Good morning, Andy.

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE": Good morning, Soledad.

We're going to be talking about America's most admired companies. Do you work at one, shop at one, or own stock at one? We'll tell you coming up next.

Plus, a group of NFL players saying they're getting whacked by a bad hedge fund.

Stay tuned for that coming up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Andy is "Minding Your Business" in just a moment. First, though, Kelly Wallace with the headlines again.

Hey, Kelly. Good morning.

WALLACE: Good morning again, Soledad.

We're beginning in Iraq, where there are protests across the country this morning after an attack on a mosque in Samarra earlier today. U.S. military officials say men dressed like Iraqi police stormed a Shia mosque and set off an explosive under the dome. The sacred site was heavily damaged, triggering demonstrations around the country. Iraqi authorities have arrested 10 suspects.

A convicted murderer and rapist will stay on California's death row for now. The execution of Michael Morales was delayed twice Tuesday after anesthesiologists refused to participate in the lethal injection on ethical grounds. A hearing on the constitutionality of California's lethal injection process is scheduled for May.

A proposed deal over six U.S. ports is pitting the president against his own party. Some Republicans are criticizing the deal which lets a Dubai-based company run the ports. President Bush says he backs the agreement and has threatened to veto any bill that tries to block the deal. We'll hear from White House spokesman Dan Bartlett just ahead.

The city of New Orleans gearing up for a mayoral fight. Lieutenant Governor Mitch Landrieu will officially announce his candidacy later today. He is the latest to throw his hat into the ring. Incumbent Ray Nagin, who's trying to hold on to his job, faces at least 12 candidates in the first mayoral election after Hurricane Katrina.

One out of every five of your tax dollars will eventually be spent on health care. That's the prediction from government analysts. They say over the next 10 years health care costs for Americans will be more than $4 trillion a year. Half of that money will come from consumers. The other half from the government.

And Sasha Cohen has skated halfway to an Olympic gold. The 21- year-old American finished first in the women's figure skating short program Tuesday, but Cohen says she's staying on her toes. She's just 300ths of a point ahead of the second place finisher. The Olympic winners will be cited after Thursday's free skate.

And Bonnie, I was a bad girl. I stayed up late to watch the skating.

SCHNEIDER: I watched the replay this morning. It was terrific. She was excellent.

WALLACE: She sure was.

(WEATHER REPORT)

MARCIANO: Thanks, Bonnie.

There's a list of America's most admired companies, and Andy, I assume, knows which one is the best.

SERWER: The list is out. And I assume that you couldn't even sleep last night.

O'BRIEN: Who is it?

MARCIANO: Time Warner?

O'BRIEN: Big sucking up point.

SERWER: All right. It's General Electric. We'll just get right to it.

O'BRIEN: Is it really?

SERWER: It's General Electric. And they replace Dell. This is "Fortune" Magazine's most admired companies list. I work...

O'BRIEN: What's the criteria?

SERWER: Well, it -- we have an outside company called the Hay Group, Soledad, survey 10,000 analysts, directors and executives and various businesses, and they just ask them, you know, which companies do the best business, have the best practices?

O'BRIEN: It's that six sigma thing.

SERWER: It is. That's a real GE thing. So you know all about that stuff, right?

O'BRIEN: I do.

SERWER: Dell was number one. Wal-Mart dropped way down.

We have sublists, as well. And this is really amazing.

In the auto industry list, there is no pure American company in the top five. Isn't that amazing. A sign of the times.

Toyota, BMW, Honda, Nissan, and then DaimlerChrysler, which, of course, is a German-American hybrid. Ford is number six. But it makes sense, right? I mean, they are not getting the job done, so why should they be so admired on that kind of a list?

MARCIANO: Right. So it has nothing to do with what employees say about the company. It's what -- how people see them.

SERWER: It's people at the top and people outside the company, people doing business with the companies. That's right.

Want to talk about this hedge fund story and the NFL players who got tangled up in what they are saying is a bad hedge fund. They got whacked, as John Madden would say.

Filed suit the other day in Atlanta. This is a group of mostly current and former Denver Bronco players, including the likes of Terrell Davis, Steve Atwater, Rod Smith, Ray Crockett, Blaine Bishop and Al Smith.

This is -- they put in about $15 million into this hedge fund, then they said, you know, same story. Tried to get the money out. Well, maybe next month. Tried to get the money out again. Well, maybe the month after.

O'BRIEN: What's the hedge fund?

SERWER: The hedge fund is called International Management Associates run by a gentleman named Kirk Wright. He apparently is not -- they can't find him at this point.

O'BRIEN: Oh.

MARCIANO: Ooh.

SERWER: They did talk to him the other day.

O'BRIEN: That's always bad when you can't find your hedge fund manager.

SERWER: Well, these are allegations at this point.

Then the other two guys running the fund are anesthesiologists. And the judge got really ticked off about that. He said, you know, they have no business running a hedge fund. They say forged signatures, bounced checks, you can't get their money out.

That's bad.

MARCIANO: Yes, that's not good. O'BRIEN: When you can't find the hedge fund manager that should be your first clue.

SERWER: Yes. And how often do you see this? You know, athletes putting their money in some kind of fund and then they get messed up.

O'BRIEN: Well, because they don't necessarily get the best, you know, business advice.

SERWER: That's right.

MARCIANO: They need to go into car dealerships. They all seem to do that and do pretty well with that.

SERWER: John Elway, right?

MARCIANO: That's right.

SERWER: Yes.

O'BRIEN: All right, Andy. Thank you.

SERWER: Yes.

O'BRIEN: Top stories straight ahead this morning, including much more on that deal to outsource U.S. ports to an Arab company. President Bush says he's ready to veto any plans that would kill the deal. We're going to talk to one of the president's top advisers this morning and find out why the president is really going to the mat on this particular issue.

The story's ahead on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Almost the top of the hour. Let's get a look at the forecast this morning.

Bonnie Schneider's got that for us.

Good morning again.

SCHNEIDER: Good morning, Soledad.

(WEATHER REPORT)

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