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CNN Live Event/Special

Ari Fleischer Holds Press Conference

Aired January 10, 2002 - 12:30   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: Now to the White House, where Spokesman Ari Fleischer is talking to reporters.

(JOINED IN PROGRESS)

QUESTION: ... General Musharraf (OFF-MIKE) fighting in Afghanistan, and he bought 46 of the fighter planes with U.S. money, because the U.S. gave Pakistan $1 billion.

ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: Well, as the president said when he visited Shanghai last year, met with President Jiang, the president sees opportunities for much progress to be made with China. China is now a member of the World Trade Organization. The president believes that there is much the United States and China can do, particularly on the trade front. There are issues where the United States and China disagree. In all cases, any disagreements will, of course, be resolved through political dialogue and through diplomacy.

QUESTION: I want to ask you about Enron, too. The president has said he's worried about the effect on the stockholders, on the pensioners and on the American people. Is there anything the government can do to help people who have lost all their savings?

FLEISCHER: That's what the Department of Labor is looking at now in regard specifically to the Enron case. What's happened as a result of the president's announcement today is the government is proceeding on two tracks. One is the investigative track, dealing directly with Enron, and on that front the Department of Justice yesterday announced a criminal investigation of Enron to determine whether or not there is criminal wrongdoing. The same token, the Department of Labor is also reviewing and investigating Enron to see what took place with the workers' pensions at Enron and to see if anything can be done.

More broadly than that, the president thinks it is just crucial to focus on how to prevent this from ever happening again. There are major policy implications that have to be explored. So today the president directed his government to take a look at, one, how to protect people's pensions as a result of the way pension rules are written for people's benefits within the corporations; as well as taking a look at the accounting practices and procedures that are under way so people have accurate financial information.

QUESTION: The president said this morning he hadn't talked to Mr. Lay in the last six weeks. He also said that the last time he saw him was last spring. Have you been able to establish when the last conversation between the two was?

FLEISCHER: It seems like it was last spring, based on...

QUESTION: So they didn't talk in between last spring and...

FLEISCHER: That's what the president said this morning, that's correct.

QUESTION: I'm just wondering, you're painting a picture then, I'm wondering if this is accurate, that the president made a specific effort to stay out of the loop on this. Or are you saying that when the decision by the administration was made not to offer any kind of bailout to Enron, that in fact the president made that decision or at least signed off on that decision? Or was he specifically...

FLEISCHER: No, it's exactly as I indicated to you this morning. Secretary Evans talked to Secretary O'Neill and they agreed that no action should be taken.

QUESTION: But did the president know about that? Did he sign off on that conclusion? Or as I suggested...

FLEISCHER: No, that was, appropriately so, between the Cabinet secretaries.

(CROSSTALK)

QUESTION: Wait a second. You didn't answer the question, Ari. The question was, did he sign off on it? And the answer question was, did he make a specific decision to distance himself from any discussions or decisions about Enron or from even being briefed as to the accurate and current condition of their financial...

FLEISCHER: I repeat my answer to you. Secretary Evans called Secretary O'Neill and they agreed that no action should be taken in response to the call to Secretary Evans.

QUESTION: The answer is no, he wasn't briefed and didn't sign off.

FLEISCHER: That's what I've said to you. I'll say it for the second time now.

(CROSSTALK)

QUESTION: Well, you didn't say it, Ari. Wait a second. You warned Congress against launching partisan investigations on this issue against the administration. Would it be improper for Congress to look into ties or possible contacts between Enron officials and administration or White House officials? Would that be improper?

FLEISCHER: I think that it's very important for the federal government at all levels, from the Executive Branch to the legislature to look very carefully at what has happened to Enron, to determine whether it was criminal wrongdoing on behalf of Enron, and also to see what needs to be done to protect people so this cannot happen to them and their companies and to protect people's pensions. If this were to become what people have become so used to in watching Washington, which is a politically charged, politically motivated effort to blame one party or to look only at one party, when clearly Enron is a corporation that has given hundreds of thousands of dollars to both parties, then I think people would think that the Congress is not on the right path. And I hope that won't happen.

It's very important for Congress to take a good hard look at the facts here and to develop good policies, and that would serve the country well.

QUESTION: What are you saying exactly? I mean, can I follow-up on the...

(CROSSTALK)

FLEISCHER: Yes, follow-up.

QUESTION: Are you saying that Congress should only look into contacts between Enron and the administration if it also looks into contacts between Enron and Democrats, or are you just saying that they shouldn't look into contacts between Enron and the administration at all?

FLEISCHER: It's appropriate to take a look into what lead to the bankruptcy at Enron, and whether or not anything was done wrong, in the process of Enron going bankrupt. But if that's a politically charged, a politically motivated effort, then I think the American people are going to want say that this is just another fishing expedition, another endless investigation, the type that they've soured on over the last many years.

QUESTION: I still have another question. Can Congress look into contacts between Enron and administration officials? Is that proper or not?

FLEISCHER: Again, it depends if it's done -- Congress has the right to do as it sees fit, and Congress will act as it sees fit. I think that it's important for Congress to act in a way that helps solve the policy problems and not in a way that is suggestive of the partisan politically charged investigations that I think people have been part of.

QUESTION: Ari, these two Cabinet secretaries are offices if you will of the United States government. The United States government has regulatory and statutory authority over pension plans, over 401(k) plans, over publicly held and publicly traded companies. If Ken Lay conveyed information about the companies finances that was contrary to what the company was saying publicly at the time about its finances, did they not have a legal and a fiduciary responsibility to tell the FCC, to tell the Labor Department, to tell other regulatory agencies in the governments to look into this company and to make sure everything was OK? FLEISCHER: And I think those are questions you can properly address to the agencies to see at what point. And as I told you last fall, the government began monitoring all of these issues. So I know those efforts did begin last fall. I can only relate to you everything that I have been told by the secretaries this morning. I think these are appropriate questions, and I know the secretaries will be happy to take them.

QUESTION: Has anybody in the administration had been in contact with (OFF-MIKE) or other credit-rating agencies concerning Enron?

FLEISCHER: I can only tell you about what Secretary Evans told me this morning, and he did not -- again you ask about anybody in the administration, I can tell you the president did not, and I just don't know if anybody else in the administration -- it's a very big administration, but there's no information I have that would lead me to suggest to that is yes.

QUESTION: Ari, does the president feel he was appropriately served and informed by his Cabinet officers who apparently at least considered the possibility of a bailout for this company with huge political and economic consequences?

FLEISCHER: Again, I think you need to -- your words, it's nobody else's words about what they considered or what the nature of it was.

QUESTION: (OFF-MIKE) a situation...

(CROSSTALK)

FLEISCHER: To answer your question directly, the president is pleased with the actions that his Cabinet secretaries took. He thinks they acted wisely and properly.

QUESTION: Couple of questions, first of all, you just said that we should take a look and see if anything can be done that could prevent this from every happening again a couple of minutes before that you said bankruptcies happen. What? To prevent what from ever happening again?

FLEISCHER: Well, under the rules for 401(k)s and pensions that are under the purview of the Department of Labor to protect pensions of employees, they have options they can look at. And this is exactly what the president charged the Department of Labor of looking at today. One issue involves exposure. Are people's pensions flexible enough? That they are invested in more than just the company in which they work.

Obviously, if your entire retirement program depends on your company's retirement assets or its stock market portfolio, then you are very vulnerable to that company going either up or going down. Diversification portfolio is a way to spread out that risk and to serve people very well.

Obviously, many people who have been invested in the stock market in companies are going to retire in great comfort and with a lot of wealth, because they were invested in companies.

But the question the Department of Labor will now look at, as a result of the president's direction, is diversification. That's one example. Holding periods is another example. The president is concerned about a situation in which regular working employees could not sell their stocks, while others were able to. The president charged the Department of Labor with taking a look at the holding periods by which employees are prohibited from selling their stocks as part of their retirements funds. Those are the types of things that can be done to help other workers to keep their pensions.

QUESTION: And a related question. What does this say to the president's desire to allow people to invest a portion of their Social Security in the stock market, given that, as you said, bankruptcies happen -- apparently quite large ones?

FLEISCHER: And this is not the first bankruptcy, and it won't be the last bankruptcy in a free and capitalistic economy, in which the goings ups and the goings downs allow people to make investments and retire with wealth.

And the president continues to believe, and as I indicated, there are many people who are enjoying retirement in wealth and in comfort, as a result, and now for the first time, being given access to 401(k)s and the retirement plans.

It's been a very healthy trend throughout society that people have been able to retire with money invested in companies. And it's lead to, throughout the '90s, in fact, one of the great expansions in people's wealth, as a result of the increased ownership Americans have had through mutual funds and through stocks. So it's a widespread phenomena throughout the economy that people have their invested in their company's retirement plans, and it served people well.

The president wants to make certain, though, that in those instances in which there are bankruptcies, protections can be put in place. There have been in the past. The president has directed the secretary of labor to look at how those protections can be improved.

QUESTION: But that does not speak to the investment of Social Security funds in the stock market. The president is no less committed to that now than before Enron's bankruptcy.

FLEISCHER: No, it's just what I indicated. The president remains fully committed to it, because of the reasons I gave. As a result of people being invested in the stock market and having 401(k)s, people are now retiring with more money than they ever did before, even with companies going bankrupt.

QUESTION: Ari, back on the investigations. Are you aware of any White House officials hiring outside attorneys at this point?

FLEISCHER: No.

QUESTION: Have there been any -- in anticipation of the investigations, have there been any discussions yet, where people are beginning to anticipate who might be called in any of the various investigations, either through Justice or up on the Hill -- here at the White House...

FLEISCHER: Nothing I've been told about it or I'm aware of, no.

QUESTION: There's been no communications, no meetings...

FLEISCHER: I'm not aware of any (OFF-MIKE) here. I'm not aware of that involving people in the former administration

FLEISCHER: I'm not aware of any of that.

QUESTION: I know this sounds idealistic, but is there any mechanism in the government to get the money back to the people who, very naively, lost their funds? They were not responsible for what happened to them. Can the money be taken away from those who profited, if it's found that fraud was committed?

FLEISCHER: That's a question you need to address to the Department of Labor. It's all covered by the labor laws dealing with pensions.

QUESTION: Would the White House like to see this happen, if possible? The president has expressed concern.

FLEISCHER: I'm not going to -- that's something the Department of Labor is more expert in.

QUESTION: My name is Lambros Papantoniou, correspondent here in Washington of the Greek opposition leading newspaper in Athens, Eleftheros Typos, assigned to the White House. Earlier today, I was told officially that only my name was excluded from the three correspondents on the group which is going to cover the today's meeting between President Bush and the Greek prime minister, Kostas Simitis, and the exclusion was purely on a political basis criteria. The office of the prime minister next door is claiming that you, the White House, eliminated my name from the list, something I do not believe at all. Since this is an act of bias and discrimination against the freedom of the press and the democratic rule, could you please comment?

(LAUGHTER)

FLEISCHER: Let me take a look at that. As you know...

QUESTION: (OFF-MIKE) because they say exactly the opposite, which I do not believe.

FLEISCHER: Let me take a look at it. This is the first that I've heard about any of this. As you know, any time there is a pool event, we must shrink the press corps down to a group that is sizable to fit everybody in. So we'll take a look at whether you were a part of that pool or not.

QUESTION: (OFF-MIKE) correspondents here in Washington, there were three and they excluded only one. I'm not talking about those who are coming from overseas. So it is very important. I would like you to pay your attention...

FLEISCHER: I shall...

QUESTION: ... for the agenda. You told us that they are going to discuss terrorists and also the Olympic Games. Do you know, if they are going to discuss also the Aegean issue in the framework of the Greek-Turkish relations?

FLEISCHER: Let me suggest you allow the meeting to take place and there'll be a pool report and let's see if you're going to be part of that pool or not. I'll take a look.

QUESTION: Has Judge Gonzales or anyone in the White House, sort of, taken on the responsibility of doing information gathering or being the point person for any requests for information from the White House? Has the president organized a way to deal with this Enron situation?

FLEISCHER: The only request that I'm aware of -- been received by the White House, were requests made to the vice president's office and the vice president's counsel, who are pursuing that.

QUESTION: Is there any move to consolidate the effort to put information together and be responsive to requests in one central place?

FLEISCHER: Well, I think one thing you've always seen in this White House, we always work together. And they're really the -- we're one team and we work very closely together and talk with each other. But if you're asking something more formal, I don't know if you're making comparisons to the way business used to be done in the White House, we always do our business -- we do our business a little differently.

QUESTION: Has the president felt, for appearances' sake, alone, that it was necessary for him to keep distance between what was happening with Enron and himself?

FLEISCHER: No. No, I mean, and I think you've seen that in times that you've asked the president questions; he's answered them directly. You ask me questions; I answer them directly.

This morning when I had the answer to a question which was, "Has anybody in the administration had contact?" I shared everything I knew with you.

But I want to remind you that communication is routine between this country and the people in government. What you're asking about is wrongdoing, and I haven't heard anything in here from anybody suggesting wrongdoing. You've only said contact, communication, as if there is something wrong inherently with contact and communication and there is not.

QUESTION: But my point which is, given that all that is accurate, then -- that's why I asked the question about why, for instance, when Ken Lay calls the administration and says, "You know, we might be interested in a bail out. What can be done?" and the administration makes the decision to say, "No, not in this case, not appropriate," given the size of the company, given the importance to the economy and given, quite frankly, the personal relationship and business/political relationship that the president has had, that he wouldn't either be informed or actually make that conclusion to sign off on it, as he will with other very important matters.

FLEISCHER: Yes. And it's at the secretary level and the secretaries determined that they would not intervene and an election was taken. That is what took place and properly so.

QUESTION: In this case, Enron is the largest single donor to George Bush's political career as in the house race, in the governorship, in his presidential run. So there is certainly the appearance here of a possible conflict of interest. Why wouldn't the president want to know what was going on with this company, the better to keep his distance from it, if necessary? Why wouldn't his subordinates feel it appropriate to feed him the information that they got, however belatedly?

FLEISCHER: I think that just the opposite is suggested, that the government acted as the government should. It took a look at this from a substantive matter, from when Mr. Lay made those phone calls, and decided the appropriate step was not to intervene or take any action. I think if anything else were done, you'd be making just the opposite charge; that he took action because of his prior relationship with Mr. Lay. And that is not the case here. That did not happen.

This was done based on judgment of the Cabinet secretaries and the merits and they decided properly and wisely so. The president's opinion is that the government should not have intervened in any way after Mr. Lay made the phone call to Secretary Evans.

QUESTION: But, Ari, the question is -- looking at it a little bit differently, the reason to inform the president may not be because he's this friend of his or a big political donor, the president, throughout the fall, was well informed about the trouble in the airline industry. I mean, this is an economic question. And this is a big company that went bankrupt, a lot of people were hurt by it. There were questions about the impact it might have on the energy sector.

For economic reasons, you know, the president's in the middle of a recession doing everything he can; why didn't his people feel it made sense to at least alert him that a major company that might have a dramatic affect on a big sector -- you're worried about the economy, why didn't they tell him?

FLEISCHER: Well, I think the answer to that is very much what I told you earlier this morning and repeated again right now that when Mr. Lay called Secretary O'Neill to raise the issue involving Long- Term Capital and the experience Long-Term Capital had, in which it did have an impact sector-wide, he brought that to the attention of the secretary of treasury and said that he thought the financial condition of -- this is what Mr. Lay told Secretary O'Neill -- that the financial condition of Enron could have similar implications as Long- Term Capital.

Secretary O'Neill asked Undersecretary Fisher to explore that. Undersecretary Fisher and the Treasury Department concluded that was not the case; that this was isolated and unique and focused on Enron Corporation and was not symptomatic of anything sector-wide. Just the contrary of what you say.

QUESTION: I just want to make sure that I understand. Even now, with three months hindsight, the president is not in any way at all disappointed that he wasn't informed of any of this thing.

FLEISCHER: No. The president was aware, of course, last fall about what the condition of Enron was, just like everybody else was.

QUESTION: (OFF-MIKE) Secretary Evans and Secretary O'Neill?

FLEISCHER: The president thinks they acted properly at all times and did the right thing.

QUESTION: With two months hindsight?

FLEISCHER: That's correct.

QUESTION: To make sure we're not missing a question, you say you're not aware of any communication after those conversations by Secretary Evans or Secretary O'Neill to the White House or senior officials here. Does that include the vice president and his staff?

FLEISCHER: Nothing that may -- brought to my attention or that I'm aware of.

Again, I cannot speak with 100 percent certainty about every single person in the administration that has thousands of people or even for the top officials, in which there are scores. And I know you'll ask all the relevant questions.

But again, I just want to remind everybody, the difference between communication and contact and wrongdoing, and I think these same questions are going to be addressed to this administration, I recognize that. I think in fairness, they need to be addressed if you are pursuing this line. This has been a situation that's been under way for any number of years.

QUESTION: Criminal investigation of President Clinton's Pardongate was assigned to the U.S. attorney for the Southern District of New York last February. Now, Mary Jo White has retired without one word...

WOODRUFF: You've been listening to the White House briefing today. Ari Fleischer answering reporters' questions. Clearly, this briefing dominated by questions about Enron, the huge energy company that collapsed in the last few months, creating the biggest -- the largest bankruptcy filing in U.S. history.

All of this precipitated by the disclosure today by the Bush administration that the chairman of Enron, Ken Lay, reached out to two members of President Bush's Cabinet: his Treasury Secretary Paul O'Neill and his Commerce Secretary Donald Evans in the waning -- or, in the weeks and months leading up to the very difficult last days of Enron.

A lot of questions about conflict of interest, whether the president knew -- the president saying today that he had not, himself, talked with the chairman of Enron, Ken Lay, since last spring. But since, as you just heard in that briefing, Enron was one of the largest, if not the largest contributor, to George W. Bush over the span of his political career, many questions about whether the president knew, how much he knew, how much his subordinates knew, whether they should have told him, and so forth.

Clearly, we're just beginning to hear about this story. There are many investigations underway on the part of the federal government, and on the part of congressional committees.

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