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CNN Wolf Blitzer Reports
Trouble on United Airlines Flight; Former Enron CEO Testifies Before Congress
Aired February 07, 2002 - 19:00 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.
WOLF BLITZER, CNN ANCHOR: Now on WOLF BLITZER REPORTS: trouble in the cockpit on a flight from Miami to Argentina.
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UNIDENTIFIED MALE: We all jumped on top of him. Several of the crew members and three passengers, we were restraining him.
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BLITZER: Flight attendants get ready for the next time.
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UNIDENTIFIED MALE: This story of financial collapse and betrayal is of epic proportions. It is almost Biblical in scope.
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BLITZER: Congress vows to get to the bottom of the Enron scandal, but that may not be easy.
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UNIDENTIFIED MALE: On the advice of my counsel, I respectfully decline to answer the question.
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BLITZER: I'll question business executive and former presidential candidate, Steve Forbes.
A U.S. predator drone stalks and strikes an al Qaeda convoy. What are the odds that the missile attack killed Osama bin Laden?
Hello, I'm Wolf Blitzer in Washington. We'll continue to monitor the hearing involving the Enron investigation on Capitol Hill. But first, let's check some other news. And we did hear some very disturbing words once again today -- words that brought back some horrible memories. And that tops our "News Alert."
A passenger tries to force his way into the cockpit of a United Airlines flight. This one was headed to Buenos Aires, Argentina, from Miami. From all accounts, the co-pilot was the hero, subduing the man with an ax. Upon landing in Buenos Aires, the man was taken into custody. We'll have much more on this in just a moment.
A shift in policy for the Bush administration. Today the president announced the Geneva Conventions would apply to certain Afghan war detainees, those who are determined to be Taliban fighters. Mr. Bush says the new rights would not apply to al Qaeda fighters.
A demand from the White House for the "unconditional and immediate release" of Daniel Pearl. There's still no sign of "The Wall Street Journal" reporter, kidnapped last month in Pakistan. Karachi police say the investigation has slowed down, adding they haven't heard from Pearl's captors in more than a week.
We're awaiting the arrival of the Israeli Prime Minister Ariel Sharon at the White House. He and President Bush are scheduled to meet this hour about the tattered peace process in the Middle East. More coming on that as well.
And now back to our top story, the passenger who tried to storm the cockpit. It happened on a United Airlines flight from Miami to Buenos Aires, Argentina, this morning. CNN's Mark Potter is following the story and he joins us from Miami -- Mark.
MARK POTTER, CNN CORRESPONDENT: Hello, Wolf. Plans are under way now to bring 28-year-old Pablo Moreira back to Miami overnight, to face federal charges that may include the charge of interfering with a flight crew. He's scheduled to have his initial appearance in a magistrate court in downtown Miami tomorrow.
He still is in custody at this hour in Buenos Aires. We're told that he will be accompanied back to Miami by FBI agents. He is described as a bank employee from Uruguay. According to the FBI, this is what happened. Flight 855 left Miami around midnight, heading for Buenos Aires. One-hundred fifty-seven people were on board that flight, including three pilots and about 12 flight attendants.
At about 5:30 in the morning, Eastern time, he allegedly got out of his seat and began kicking the cockpit door, karate style. He kicked out the bottom panel of the door and began to crawl into the cockpit. He then was confronted by a co-pilot, who hit him in the head with an ax. Passenger John Boyer said he actually spoke with the man.
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JOHN BOYER, PASSENGER: I asked him what he was doing and he said he wanted to talk to the captain. And before I knew it, he had inserted himself into the cockpit through the lower part of the door, which was, you know, had been kicked in by him. So we all jumped on top of him. Several of the crew members and passengers, actually, three of us. And we were restraining him.
We didn't see what was going on, but found out later what was going on on the other side of the cockpit door, which was basically the actions of the co-pilot with the ax. (END VIDEO CLIP)
POTTER: Now, Moreira was restrained for the rest of the flight. He was injured in the scuffle, and he was treated on the ground in Buenos Aires by a doctor who had described him as stable and lucid. Now, the FBI says it doesn't know why this happened. Agents did not find a weapon. United Airlines, meanwhile, is crediting a recently reinforced cockpit door and a fast-acting crew with preventing him from actually getting further inside that cockpit -- Wolf.
BLITZER: Mark, do we know anything else about this passenger? Oftentimes, some of these incidents, not a series of this occurs, there's a suggestion a passenger may have been drunk. Is there any indication of that?
POTTER: There has been a discussion about whether he was drunk. Some people said he appeared to be. Other indications are that he is not. The FBI spokesman here earlier in the day said that its agents had no indication of that. That's still being worked out. Right now nobody seems to know what the man wanted to do, except that he was intent on getting inside that cockpit, and he didn't do it. At least not very far.
BLITZER: Mark Potter in Miami. Presumably we'll know a lot more very soon. And of course, we'll be on top of this story as it unfolds. Thank you very much for that report.
The Baltimore-Washington International Airport got a scare of its own today, but it proved to be a false alarm. At least 1,500 passengers were evacuated from one concourse after a faulty piece of equipment triggered a security breach alarm. FAA officials reopened the concourse two hours later. All passengers were rescreened before being allowed to board.
And now to the war in Afghanistan in the eastern part of that country. U.S. forces are trying to confirm the identities of suspected al Qaeda members killed in a hellfire missile attack. It's believed the attack killed a prominent al Qaeda leader. And on Capitol Hill today, the man in charge of the war delivered a progress report to a Senate committee. For details, we turn to our CNN military affairs correspondent, Jamie McIntyre. He's over at the Pentagon -- Jaime.
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Well, Wolf, bad weather in southeastern Afghanistan continues to prevent the United States from getting special operations troops on the ground at the site of that hellfire missile attack, fired from a CIA drone, at a group of people believed to include a prominent al Qaeda leader.
Now, U.S. intelligence says that they believe that this was a prominent person because it was a group of three people that were fired on from this unmanned drone, that appeared to be surrounded with a lot of security, and also given great prominence, great deference, to one of the people who seemed to be quite tall. Now, we know Osama bin Laden is tall as well, but there are other al Qaeda leaders who are also tall. At this point the U.S. says it has no confirmation of the identities of the three people it believes were killed in the missile attack.
As far the progress of the war itself, General Tommy Franks, the U.S. central commander, told members of Congress today that he would agree with their assessment that there's still a long way to go. In fact, he said we're only about halfway there in achieving the goals he set out to do.
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GENERAL TOM FRANKS, U.S. CENTRAL COMMAND COMMANDER: What remains to be done? Analysis of every piece of intelligence information, with respect to where we may find potential weapons of mass destruction sites, where we have reason to believe that there may have been pursuit of such weapons. Senator, we have to go there with military forces, to investigate these places, to gain intelligence information, to gain insight into the construct of the al Qaeda network.
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MCINTYRE: Now, in a separate hearing before the Senate intelligence committee, the head of intelligence for the Pentagon, the head of the DIA, Vice Admiral Thomas Wilson, told members of the committee that he believes that at least six of the top al Qaeda leaders are dead, and two more have been captured. More than a dozen are still at large. He also delivered his assessment that if Osama bin Laden were to be killed, that al Qaeda would fracture, and result in different factions headed by different people with different interests -- Wolf.
BLITZER: Jamie, tell our viewers what General Franks said about the whereabouts, as far as he knew, of Osama bin Laden and of the former Taliban leader, Mullah Mohammed Omar.
MCINTYRE: Well, interestingly, Franks didn't utter the name of bin Laden or Mullah Omar, although it did come up in some questioning. The U.S. position is they still don't know where bin Laden is. Obviously, they're still trying to find out if this strike could have possibly been bin Laden. They have a pretty good idea, they think, of where Mullah Omar is. They think he's in Afghanistan. They think they know the general area where he is, but not enough information to move against him yet.
BLITZER: OK, Jamie McIntyre at the Pentagon, thank you very much. And CNN military analyst, the retired General Wesley Clark, joins me now to talk about the ongoing search for Osama bin Laden and other al Qaeda and Taliban leaders.
General Clark, thanks for joining us. What do you make of this hellfire attack, this predator hellfire against this convoy that may or may not have had al Qaeda leaders on it?
GEN. WESLEY CLARK (RET), FMR. NATO SUPREME COMMANDER: Well, you can hope it was successful and that there really were al Qaeda people there. The odds are about 50-50. We know we had some mistakes in the past where we've hit the wrong people, but hopefully we've been watching this group. Maybe we confirmed the visual sightings with signals or intelligence, or some other reasons to believe they're not just another group of warlords around there. And we struck them, so we have to hope for the best on this.
BLITZER: This is the first time that -- we believe, the CIA has been using this predator drone, this unmanned aircraft with a hellfire laser-guided missile onboard. I don't think it has been used before in earlier military operations. Tell us a little about this.
CLARK: Well, the predator was put in place in the Kosovo campaign. But at that time, it wasn't armed. It does have optics on it. It's go real-time television linkage all over the world. So you've got a lot of people watching whatever is out there in the field. It's very precise in what it looks at. It knows exactly where it is. This one has a laser beam that it can designate a point at which the missile will impact.
BLITZER: Why is the CIA operating these drones with the hellfire missiles, as opposed to the U.S. military?
CLARK: Well, I bet you there's a lot of people inside the Pentagon who have asked that, too. But I think the answer for this is this was a program that was at first to be concealed, covert, not something with the U.S. flag on it. Didn't want a large U.S. military footprint to host the predator there in Pakistan or someplace.
So it was a normal thing before the campaign got under way, to give it to the CIA. And they also had the authority to strike, which may not have been given to the military at that point. Now they've still to the asset, and they're using it.
BLITZER: You mean to say the CIA can do certain things in this kind of military confrontation that the regular rank-and-file of the U.S. military can't do?
CLARK: I think that's exactly right. Now, especially at the outset, they could do things before the main operation got under way. They could have had a presidential order, called a finding, that would have enabled them to strike and use lethal force in executing a mission, before the United States armed forces would be committed.
BLITZER: You were once the NATO supreme commander and the European commander as well. Does General Tommy Franks command that CIA operation in Afghanistan?
CLARK: Well, he certainly has the responsibility to coordinate it, to know everything there is about it, and to (UNINTELLIGIBLE) issues. But that operation, to the best of my knowledge, is probably being run out of a local command center that's reporting back to CIA headquarters.
BLITZER: That must be frustrating to the military as well.
CLARK: I think there are always frustrations about command and control in operations like this. But we haven't seen the evidence of any significant problems. It's just the kind of frustration you have to live with in a big organization. BLITZER: Turf war?
CLARK: Yeah.
BLITZER: Thank you very much, General Clark. Appreciate it very much.
Our Web question of the day: will the U.S. ever capture or kill Osama bin Laden? You can vote your answer at cnn.com/wolf, a very unscientific poll, but still interesting.
President Bush has determined the Geneva Conventions do apply to Taliban fighters, but not to al Qaeda members being detained from the war in Afghanistan. But the treatment of neither group will change. To find out what this means, we turn to our White House correspondent, Kelly Wallace. You attended a briefing today with Ari Fleischer. You heard the explanation. Tell our viewers what this is going to mean, this latest change in the administration policy.
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Well, Wolf, it's been a complicated afternoon here at the White House trying to sort all of this out. A senior administration official I just spoke with said this is an important distinction that really won't have any practical difference. Just as you said, treatment of the detainees will not change. They still will not be classified as prisoners of war, so they won't be afforded the rights that POWs should get.
But clearly, the president has decided that the Geneva Conventions should apply to Taliban soldiers. The thinking is that even though the United States did not recognize the Taliban as the legitimate government of Afghanistan, the fact that Afghanistan is a signatory to the Geneva Convention, the administration decided it should apply in the case of the Taliban soldiers.
But Ari Fleischer, the president's spokesman, explained that Mr. Bush has decided the Geneva Conventions should not be applied in the case of the al Qaeda operatives, and here's why.
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ARI FLEISCHER, WHITE HOUSE PRESS SECRETARY: Al Qaeda is an international terrorist group, and cannot be considered a state party to the Geneva Convention. Its members therefore are not covered by the Geneva Convention, and are not entitled to POW status under the treaty.
(END VIDEO CLIP)
WALLACE: And in fact this afternoon, we did see another planeload of detainees arriving at the U.S. naval base at Guantanamo Bay, Cuba. Some 30 detainees arriving today, putting the total in Cuba at 186 al Qaeda and Taliban fighters. Now, Wolf, you might ask, so if there's no real distinction here -- distinction, but no real difference, why is the administration doing it? Senior administration officials say, one, this will protect American soldiers overseas. The president sending a message, should any American soldiers be captured overseas, if that country is a signatory to the Geneva Conventions, then clearly the Geneva Conventions should apply.
Also, though, U.S. officials say they're not responding to criticism. But, Wolf, you know some human rights groups, also some U.S. allies, have been criticizing the administration for its handling of the detainees. So, in some ways, the administration answering that criticism today as well -- Wolf.
BLITZER: Kelly Wallace at the White House, thanks for that explanation. As you point out, human rights groups, including Human Rights Watch, is keeping a very close eye on this entire situation involving those detainees. Joining us from New York to talk about President Bush's decision is Kenneth Roth. He's the executive director of Human Rights Watch.
Mr. Roth, thanks once again for joining us. What do you make of this decision by the White House today? It seems to be support of what Secretary of State Colin Powell was pressing for.
KENNETH ROTH, HUMAN RIGHTS WATCH: That's correct. I think that the White House was legitimately worried that its refusal to apply the Geneva Conventions was going to be endangering U.S. service members overseas who might be captured by enemy forces.
The problem is it really didn't go far enough. What the White House in essence said, is we'll apply the Geneva Conventions part way. That is to say that in a formal sense, we're willing to apply the Conventions to the Taliban. But the Geneva Conventions clearly also apply to the al Qaeda forces who were captured in the course of our conflict in Afghanistan.
Second, the administration is just wrong in saying that the Taliban members are not POWs. The Geneva Convention would clearly treat them as prisoners of war, although not the al Qaeda members.
BLITZER: But now that the Taliban members are going to be treated consistent with the Geneva Conventions, doesn't that, for all practical purposes, even if they're not called POWs, mean the same thing?
ROTH: No, unfortunately it doesn't. The big difference for the Taliban members, and the reason they should be treated as POWs, is the Geneva Conventions are clear that anybody who is a member of a regular armed force of a government that has ratified the Geneva Conventions is automatically a prisoner of war, whether or not that government is recognized.
The difference that this makes is that if you're a POW, you have to be treated the exact same way that the detaining power would treat its own soldiers if charged with comparable crimes. That means a formal court marshal, not President Bush's military commission. So that's the big difference that is not addressed by the White House's order today.
BLITZER: But as you know, as far as the al Qaeda fighters are concerned, they were not members of any regular military, they did not serve any state military, they were not wearing uniforms. And as a result, the Bush administration maintains, they shouldn't be accorded any special treatments whatsoever, except humane treatment, which they say they are receiving at the U.S. Naval base at Guantanamo Bay.
ROTH: Correct. The Bush administration is correct that the al Qaeda members would probably not be found to be prisoners of war, largely because they didn't generally respect the rules of war. But it's wrong in saying that the Geneva Conventions don't apply to them. The Conventions, by their terms, clearly apply to any combatant who is captured in the course of an international armed conflict. Afghanistan clearly fits that bill. So the Geneva Convention should apply to both the Taliban and the al Qaeda factions who are captured, even though probably only the Taliban in the end would be found to be POWs, and the al Qaeda members probably not.
BLITZER: All right. Kenneth Roth of Human Rights Watch in New York, thanks very much for joining us.
And I want to go back to the House committee looking into the entire Enron situation. Jeff Skilling, former CEO, is testifying. He's talking about the suicide of his good friend, Clifford Baxter, a former high-ranking official at Enron.
(JOINED IN PROGRESS)
JEFF SKILLING, FORMER CEO, FORMER PRESIDENT, ENRON: And then he turns around and walked back inside his house and closes the door. And Cliff said, you know, from that day forward, your life has changed. And he said they're calling us child molesters. He says that will never wash off.
REP. CLIFF STEARNS (R), FLORIDA: Mr. Skilling, you don't believe that?
SKILLING: I don't believe what?
STEARNS: You don't believe that the press and everybody calling Cliff Baxter or yourself or anybody on the board of the directors, denigrating or tainting you, you don't think it's accurate. That's what you're saying here today. That you're standing up here saying everything the press is saying, everything that Sherron Watkins is saying, all the testimony you've we've had before you, including the law school, the University of Texas -- all of that is wrong, is what you're saying to us today?
SKILLING: I will not say that. I've read every press account I can read over the last four months, for the specific meetings or representations that the press has made that I was intimately familiar with, where I was there, I'd say the press is getting it right maybe 1/3 of the time. And the other 2/3 of the time, they are just totally, totally off base.
STEARNS: And the special committee report that the board of directors, that the dean of the law school at the University of Texas, is off-base, in your opinion?
SKILLING: I can only comment on what I know. To the extent that that report in any way says I did something that was not in the interest of the shareholders of Enron corporation, then, yes, I disagree with those passages in the report, vehemently. I do not believe -- I did not do anything that was not in the interest, in all the time that I worked for the Enron corporation, that was in the interest of the shareholders of the company.
STEARNS: Mr. Skilling, I'm not an attorney, but you're practicing plausible deniability, which is a term you're using to deny all -- what people have said. Sherron Watkins said Cliff Baxter complained mightily to you, and all who would listen, about the inappropriateness of these transactions with LJM. Jeff McMahon did the same thing.
(CROSSTALK)
STEARNS: Three people who have said that you were told specifically all about these transactions, the conflict of interest. In fact, Jeff McMahon laid out five steps to you on how he thought it should be corrected, because of all the conflict of interest, inherent conflict of interest. So you're asking me to...
SKILLING: Congressman, you are flat out misreading...
STEARNS: I'm reading right from Sherron Watkins' letter. "Cliff Baxter complained mightily to Skilling and all who would listen about the inappropriateness of these transactions." Are you saying Sherron Watkins is not telling the truth? Are you telling me that today? Just yes or no. Is Sherron Watkins telling the truth?
(CROSSTALK)
SKILLING: Can you give me time to specifically go through -- this is serious stuff, sir.
STEARNS: IT's serious stuff.
SKILLING: It's very serious stuff.
(CROSSTALK)
STEARNS: ... whether Sherron Watkins' letter is truthful or not.
SKILLING: The discussion I had with you about what Cliff Baxter said to me related to time, subsequent to me leaving the company, did Cliff Baxter raise an issue about LJM? Cliff Baxter raised an issue with me probably in January or February of last year. To my best recollection, cliff said I don't know anything about the transaction because he would have no basis for knowing about the transaction.
But he said he and Andy were not -- they had a very strained personal relationship. And he says I don't think you ought to be doing anything for Andy Fastow. That was the sum total of our discussion about it. And then Cliff, I think, subsequent to that was open with people that he did not particularly like, any investment vehicle that Andy would have a personal interest in.
STEARNS: So Sherron Watkins, what she's saying here is not truthful?
SKILLING: If Sherron Watkins says that Cliff complained mightily, as I think she said, to anyone who listened, I would say that is probably true. If you are asking when Cliff Baxter and I discussed the situation, I have a very clear recollection that Cliff said -- in fact, I even asked him. It was my recollection, I asked him, do you think there's anything wrong with the structure in place?
And his answer to me was, I don't know what the structure in place is. I said, do you have any reason to think that there's anything bad going on? He no, I think it looks bad to have a related party transaction, period. And that was the last discussion that we had about it.
STEARNS: Mr. Skilling, I'm going to give you the last word. My time has expired.
BLITZER: An exchange between Jeff Skilling, the former CEO of Enron, and Congressman Cliff Stearns, a Republican from Florida, involving the suicide of Clifford Baxter, a former high-ranking official at Enron. Jeff Skilling, once again insisting he did no wrong, had no knowledge of any wrongdoing while he was CEO.
We're going to continue monitoring this coverage. We'll be back with more of the hearing from the House of Representatives, right after this.
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BLITZER: Welcome back. On Capitol Hill, a former Enron executive is taking the hot seat while others take the fifth. Lawmakers are trying to untangle the complex web of partnerships that led to the company's financial meltdown.
Our congressional correspondent Kate Snow is keeping track of everything that is going on. And she is joining us now live.
Kate, we just heard an interesting exchange between Jeff Skilling, the former CEO, and Congressman Stearns of Florida, talking about the suicide of Cliff Baxter, a former high-ranking official at Enron.
Give us the context, what all this means.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Yes.
And we picked that up sort of halfway through. So let me, for those who were watching -- they were talking, Mr. Skilling and Mr. Baxter were best friends. And he said to Mr. Skilling -- the Congressman asked, "What did Cliff Baxter say to you?" because there's been a lot of speculation about what Cliff Baxter said to his friends and colleagues before committing suicide and taking his life just a couple of weeks ago.
And the answer from Mr. Skilling was that he had business concerns about Enron, that he wouldn't detail what those business concerns were. But he offered up an analogy. And he said: "Look, Cliff Baxter came over -- came to me and was talking to me just before he took his life. And he said, 'Jeff, it's like having a neighbor come over to your house, and you are playing outside in your yard, and your neighbor comes over and starts screaming out to the world, "This man is a child molester."'"
And he said: "He said to me, 'Jeff, they are calling us child molesters.'" So that was the analogy that he used to explain what Cliff Baxter had said to him before taking his life.
This former Enron CEO, Jeffrey Skilling, covering a lot of ground with lawmakers here -- he is the highest-ranking Enron official to testify before Congress thus far. And he has clearly had a message, Wolf, that he wanted to deliver. He wanted to say: Look, when it comes to the outside partnerships that Enron had with these funny names, like Chewco, LJM, JEDI, he thought there were adequate controls in place to be sure there were no conflicts of interests.
He also said he had no knowledge that those partnerships would be used to conceal Enron losses. And he said, when he left the company last summer, he thought the company and the economics were in good shape.
(BEGIN VIDEO CLIP)
REP. JAMES GREENWOOD (R), PENNSYLVANIA: Mr. Skilling a massive earthquake struck Enron right after your departure. And people in far inferior positions to you could see cracks in the walls, feel the tremors, feel the windows rattling and you want us to believe that you sat there in your office and had no clue that this place was about to collapse.
JEFF SKILLING, FORMER CEO, Enron: On the day I left, on August 14th 2001, I believed the company was in strong financial condition.
(END VIDEO CLIP)
SNOW: Now, his answers and explanations clearly have not been very satisfactory for a lot of these members, Democrats and Republicans alike. Many of them have been almost incredulous about the answers they are getting from Jeffrey Skilling. At one point, one member said: "You are a control freak. How is it that you didn't have control over your company?" -- Wolf.
BLITZER: Kate, you have been monitoring these hearings all day. From the questions that we've heard from the members of the panel, what are they trying to get out of Skilling?
SNOW: They clearly have a line of questioning here. What they are worried about is: How much did Jeffrey Skilling know about all these outside partnerships? He told the committee that he doesn't recall being asked to sign off on certain transactions involving these partnerships. He actually said he wasn't required to sign off on any of them.
He was also, though, confronted with minutes showing that one of his colleagues, Andrew Fastow, who was the chief financial officer, who worked for Skilling, said in a board meeting that Mr. Skilling did need to sign off on all of these deals. Mr. Skilling was confronted with that here this afternoon and said: Well, I don't recall that.
Mr. Fastow is not here to explain any of this, because he, this morning, appeared and took the Fifth. He, along with three other Enron executives, Wolf, this morning took the Fifth, their protection under the Constitution, and declined to testify before the committee -- Wolf.
BLITZER: And Mr. Skilling also kept insisting that he resigned as CEO for -- quote -- "personal reasons," nothing to do, apparently, with any concerns he may have had inside the company. He said when he left, the company was in good shape.
Did he ever explain what those personal reasons were?
SNOW: No. I have been listening to almost every minute of this and I haven't heard him explain that. I can tell you, I talked to an associate of Mr. Skilling who tells me there is a deeply personal reason for his departure last summer. And even that associate wouldn't tell me exactly what the reason was, but that it was personal in nature.
BLITZER: OK, Kate Snow.
We'll be monitoring this hearing as it continues.
We are going to take a quick break. When we come back, we will speak to someone who knows intimately what has been going on inside Enron. We will speak to Steve Forbes, the former Republican presidential candidate.
Stay with us.
(COMMERCIAL BREAK)
BLITZER: Welcome back.
We'll get back to Enron and we'll speak with Steve Forbes shortly. But first, there are developments going on at the White House right now.
The Israeli prime minister, Ariel Sharon, arrived there just a few moments ago to meet with President Bush. It's the fourth time in a year the two leaders have met.
Our Jerusalem bureau chief, Mike Hanna, is now in Washington covering the Sharon visit. He joins us now to give us a little preview.
What do we anticipate, Mike, is going to happen?
MIKE HANNA, CNN JERUSALEM BUREAU CHIEF: Well, Wolf, as you say, it's the fourth time since Ariel Sharon was elected that he has visited with President Bush. And Yasser Arafat, the Palestinian leader, well, he is under siege in the West Bank city of Ramallah. He hasn't yet received an invitation to the Bush White House. And the message that Sharon is taking to President Bush is his belief that Yasser Arafat is responsible for the ongoing violence in the region and that the U.S. should back Israel in isolating Yasser Arafat politically, and also going so far as to severing ties with the Palestinian leaders.
In recent weeks, Ariel Sharon has held a meeting with senior Palestinian leaders indicating, perhaps, his belief that he can do business with leaders other than Arafat. Now, this is something denied by Mr. Arafat. It's also denied by the Palestinian leaders who undertook talks with Ariel Sharon with the full knowledge and approval of Yasser Arafat himself.
But, still, Sharon will be looking to the Bush administration to step up the pressure on Yasser Arafat, to expect -- ask him to clamp down on the activities of militants. But, at the same time, a known thing among the Israelis is that there is no free lunches in Washington, as one Israeli source says. And that is that they fully expect to hear from President Bush that ways must be found to alleviate the great suffering of many ordinary Palestinians, Wolf.
BLITZER: Has there been any movement whatsoever in recent days, Mike, on any movement on the part of the Israelis and the Palestinians to start a dialogue up once again?
HANNA: Well, there have been these ongoing contacts within the last few weeks between senior Palestinian leaders, such as Ahmed Qureia, also known as Abu Ala. He was present at that meeting with Ariel Sharon. He has also met recently with Shimon Peres, the Israeli foreign minister.
So these contacts have been going on, and this for the first time in a long period of time. There have also been contacts on the ground between security representatives from the two sides for the first time in well over a month. Those have been very important contacts. Although they have not led to any cessation of hostilities in the past, it is very important that they do be seen -- that they are seen to be taking place.
So, within the last week to 10 days, Wolf, there's been a much greater degree of contact between the two sides on the political level, but also on the security level on the ground. And that is hopeful for those hoping to get some kind of beginning to some kind of end to the violence, leading down the road to possibly some kind of resumption of negotiation.
BLITZER: All right, Mike Hanna, our Jerusalem bureau chief, now covering the Sharon visit here in Washington, thank you very much.
And we just heard from Mike what we might expect during this meeting between the prime minister and the president. Now let's hear from both sides of the conflict.
The PLO's chief representative to the United States, Hassan Abdel Rahman, standing by here in Washington. We will be talking with him shortly.
But first let's speak with Israel's former ambassador to the United Nations, Dore Gold.
Ambassador Gold, thank you for joining us.
I know you are in joining the prime minister at these talks here in Washington. You heard Mike Hanna suggest that, in the past few days, there has been a little bit of movement, some sort of dialogue on security matters between the Israelis and the Palestinians. Is there a prospect for some real breakthrough anytime soon?
DORE GOLD, SPECIAL ADVISER TO ARIEL SHARON: Well, Israel is making very strong efforts to maintain channels of communication open to the Palestinian security personnel, to Abu Ala, Abu Mazin, who met with Prime Minister Sharon just a few days ago.
And we are making all efforts to create, to preserve a set of understandings with the Palestinians. But, at the same time, the people of Israel, the government of Israel, and I would say, many in the U.S. government as well, are exasperated with Yasser Arafat. We have negotiated about nine cease-fires with Mr. Arafat under American auspices. He has failed to fulfill a single cease-fire. And the situation has just deteriorated.
BLITZER: Ambassador Gold, as you know, there was an enormous amount of publicity given to some recent comments from the prime minister in an interview with the Israeli newspaper "Maariv," in which he seemed to suggest he wished that the Israelis had assassinated Yasser Arafat in 1982 when he withdrew from Beirut. But, at the same time, in the same interview, he said there is still hope he can negotiate peace with Yasser Arafat.
What is the -- give us the context. What was his point?
GOLD: Well, I think the main point the prime minister will express with the president is tremendous appreciation of President Bush's State of the Union address: the determined struggle of the U.S. government against terrorism worldwide.
Israelis together feel that there is no cause, no possible grievance, no possible sense of denial that the Palestinians can voice that can possibly justify the kind of attacks we have been facing. Just last night in Moshav in the Jordan Valley, a mother and her son were butchered by Palestinian gunmen.
We want this violence to come to an end. If the violence comes to an end, if the intifada that has been launched against Israel since last October of 2000 comes to an end, we can negotiate and we can reach peace. But we are saying that violence is diametrically opposed to the concept of peacemaking, to the concept of diplomacy.
BLITZER: "The New York Times" had an editorial reacting to the op-ed piece that Yasser Arafat wrote last Sunday condemning terrorism.
But in "The New York Times" editorial, it said this about Israel's behavior: "The growing harshness of Israeli military practices in the West Bank and Gaza is creating thousands of potential suicide bombers and Israel haters, as well as coarsening a generation of young Israeli soldiers. The endless growth of Israeli settlements in the West Bank and Gaza Strip is depriving Palestinians of hope."
Is your government taking steps to create greater hope for the Palestinians in the West Bank and Gaza?
GOLD: Well, first of all, I have to say that, when Yasser Arafat wrote in "The New York Times," his op-ed, that he seeks peace and that he is against violence, what we're seeing is what Yasser Arafat says in Arabic to his people. And he speaks about jihad, holy war. He speaks about shuhada, martyrs and martyrdom. And, therefore, we take much more seriously what he says in Arabic than what he writes in English in "The New York Times."
But, certainly, we hold out hope to the Palestinians. We believe that Yasser Arafat is hurting the interests not just of Israel, but he is hurting the interests of the Palestinians as a whole, because the people of Israel truly want peace. They just refuse to acquiesce to this wave of violence that's being thrown against us.
BLITZER: Ambassador Dore Gold, thank you very much for joining us.
And let's get the Palestinian response now. Joining me now here in Washington is the PLO representative to the United States, Hassan Abdel Rahman.
Ambassador Rahman, thanks for joining us.
The comments that Yasser Arafat wrote in "The New York Times" in which he condemned terrorism against Israeli civilians, has he uttered those words in Arabic to the Palestinian people?
HASSAN ABDEL RAHMAN, PALESTINIAN REPRESENTATIVE TO UNITED STATES: You know that anything written in English, in Spanish, in Japanese is translated immediately to all languages.
BLITZER: Was this article in "The New York Times" reprinted in the Palestinian press?
RAHMAN: Of course. Yes. And it was broadcast over Al-Jazeera television and over MBC and every single Arab network. So this is not -- this is the position of Yasser Arafat from day one.
Yasser Arafat is opposed to terrorism against civilians, whether it is against Palestinian civilians or Israeli civilians. Yasser Arafat went further. He put forward his vision for peace and he delineated the principles for peace with Israel. He accepted Israel within the borders of 1967. We are waiting for Mr. Sharon to present us with his vision for peace with the Palestinians. We have not seen it.
BLITZER: But it's not just the prime minister of Israel. It's the Bush administration which is repeatedly complaining in recent days that the Palestinian Authority is not doing everything it can to stop these suicide bombers going out against Israeli civilians.
RAHMAN: But you know that this is the position of some people in the Bush administration. But there is an international consensus.
BLITZER: But the president of the United States keeps saying it.
RAHMAN: Yes, of course. But, you know, with due respect to the president of the United States, if he wants to have balance, he also should have pointed to what Mr. Sharon needs to do, because only to look at what the Palestinians need to do is not going to solve the problem.
There is two parties there. The climate that is created by Mr. Sharon in the Palestinian territories is absolutely conducive towards more violence. You cannot expect a whole population that finds itself under siege -- its economic infrastructure is destroyed. Every single Palestinian man and woman is suffering from those practices. There is assassination of Palestinian community leaders, home demolition. Every crime that you can name is committed by the Israeli army in the Palestinian territories. This kind of environment cannot lead to calming the situation.
(CROSSTALK)
BLITZER: Let me interrupt for a second, because, in recent days, we have heard, really for the first time, some Palestinians openly talking about a successor to Yasser Arafat. You read about it. You have seen it.
Give us the sense. What is the Palestinian Authority president planning on doing? Is he setting the stage for someone to take over for him?
RAHMAN: Yasser Arafat was elected by the Palestinian people. He was elected in free elections in 1996. He got over 70 percent of the votes. He is -- his legitimacy comes from the Palestinian people and not from anybody else, whether it is Sharon or anyone else other than Sharon. Therefore, I don't take those conversations in...
BLITZER: So he is staying put? He is not giving up?
RAHMAN: Absolutely. He will not give up, because the Palestinian people will not let him give up.
It is not Sharon who decides who is the leader of the Palestinians, because, let me tell you what. The Palestinian people don't like Sharon. And they feel that he is not legitimate. But that's not our business. That is the business of the Israeli people.
We -- if the Israelis want to demonize Yasser Arafat -- which I have heard all over by every single member of this government -- this is not the way to do it. Look at what Europe is doing. Europe is extending -- the European Parliament, who is the ally of the United States, is extending an invitation to Yasser Arafat.
BLITZER: But so far he hasn't met with President Bush yet. RAHMAN: But President Bush -- we know that the United States was the last in the whole world to recognize the Palestinian rights. It was not the first. So we understand the realities in Washington. But that does not make what happens in Washington the right thing.
BLITZER: We, unfortunately, have to leave it there.
Ambassador Rahman, thank you for coming on.
RAHMAN: Thank you.
BLITZER: OK.
And when we come back, we'll have more on the Enron hearings on Capitol Hill. We'll also speak with Steve Forbes, the former Republican presidential candidate.
Stay with us.
(COMMERCIAL BREAK)
BLITZER: Welcome back.
Joining us now from New York with his business insight is Steve Forbes. He's the editor in chief of "Forbes" magazine and, of course, a former Republican presidential candidate.
Mr. Forbes, thanks for joining us.
They are wrapping up this Enron hearing that's been going on all day in the House of Representatives. The testimony from Jeff Skilling, the former CEO, does that ring possibly true that he was out of the loop when he resigned, didn't know about the potential disaster unfolding there?
STEVE FORBES, PRESIDENT & CEO, FORBES INC.: Well, he certainly gave what you might call very skillful testimony. He was obviously well prepared and knew what questions he was going to be asked.
I think it stretches the strain of credibility to say that he was completely ignorant of what was going on. And certainly these hearings are just the beginning. In fact there are probably so many hearings that are going to be going on, they will almost match the number of partnerships that Enron did.
But, in terms of impact, as we unfold and get into the guts of Enron, I think the major changes, the fallout from Enron is already taking place. There's hardly a major corporation in America today that is not making major changes in their audit committees. All of the major audit companies are now separating their auditing and their other services. So major changes are coming even before the hearings really get under way.
BLITZER: If there is some fuzzy math out there in the auditing and the bookkeeping procedures of these big corporations, as was the case, of course, at Enron, couldn't this have an enormous impact on the economic recovery from this current recession?
FORBES: No, I think what you are seeing now is really a healthy process. Any company who is under suspicion -- even General Electric, which is a superb company, when there were questions about their accounting, they took a hit in the stock market. This is a cleansing process that is going on.
And the sooner that it happens, the sooner the questionable companies get exposed, I think you will see, probably within three months, a major recovery within the financial markets, as long as the Fed doesn't mess up. But this is part and parcel of getting the bad out of the way and preparing the ground for a better recovery.
BLITZER: And when you say that as long as the Fed doesn't mess up, what does that mean?
FORBES: In terms of pumping in liquidity, credit, into the banking system. For a while, they were making the same mistake the Bank of Japan made, which was to lower interest rates but not supply enough credit or money to the banking system. Right now, even though money is relatively cheap in America, most small businesses, most medium-sized businesses, and now a number of large corporations cannot get credit. Their credit lines are being squeezed.
So the product is cheap, but you can't get it. And that is going to hurt the recovery. I think the Fed is beginning to recognize that it has a problem. And I they will take steps to make sure we don't go the way of Japan.
BLITZER: To his credit, Jeff Skilling did not plead the Fifth -- take the Fifth Amendment, as so many other top executives of Enron did today and earlier. But if you were a criminal defense attorney, is that smart on his part?
FORBES: Well, I certainly think, in terms of trying to get some credibility with the public, which is ultimately going to be the jury, I think it was probably smart, although highly high-risk strategy. Instead of looking like a scoundrel like "The Sopranos" taking the Fifth Amendment, he went out there, faced the harsh questions. And even if he didn't always give convincing answers, at least he was out there taking the heat.
And so, given what's going to happen, that's probably a better thing to do, given the position he had as CEO, of taking it now, rather than being passive and getting killed in a courtroom.
BLITZER: OK, Steve Forbes, always good to have you on the show. Thank you very much.
FORBES: It's good to be with you. Thank you.
BLITZER: Thank you.
And let's go now to New York and get a preview of "LOU DOBBS MONEYLINE." That begins right at the top of the hour -- Lou.
LOU DOBBS, "LOU DOBBS MONEYLINE": Wolf, thank you very much.
We'll of course have A full report on the Enron executives who today appeared on Capitol Hill, some who testified and some who chose to take the Fifth. We will also hear from a former assistant attorney general who says Vice President Dick Cheney is right and Congress is wrong. And Michael Holland will be with us to tell us what effect Enron is having on Wall Street as this investigation continues -- all of that, the president live with Ariel Sharon at the top of the hour.
Please join us -- Wolf, back to you.
BLITZER: Thank you very much, Lou.
And straight ahead, I will answer some of your e-mails. Stay with us.
(COMMERCIAL BREAK)
BLITZER: Our Web question of the day: "Will the United States ever capture or kill Osama bin Laden?" Check out the results. We'll have a new question tomorrow on my Web site: CNN.com/Wolf.
And now time to hear from you, our viewers.
This from Curtis in Maine: "Wolf, do you really think it is proper for a president to use words like evil? Is this professional? As an American, I'm frightened by his rhetoric. Where is the room for dialogue? Are we becoming a war machine?"
Ernie from Oklahoma writes: "Personally, I don't care how anyone in the former Clinton administration feels about anything. They did nothing about anything for eight years. And largely because of their inattention, budget-cutting, et cetera, we have the problems we have today in the world. If they had stayed the course in Somalia, gone after bin Laden long ago, and not sliced the heart out of the CIA, we might not have had 9/11.
Owen from Pennsylvania writes: "Let's be honest, Wolf. You don't actually read your own e-mail, do you? I must say, you're the only journalist who has a beard on camera and doesn't resemble Grizzly Adams in some way, shape or from. Love the show."
Owen, you will be happy to know I read every one of these e-mails every day. I take your comments very seriously, indeed. About the beard, no comment.
I will be back in one hour with the "War Room." The Senate International vice chairman, Richard Shelby, will be among my guests. That's at 7:00 Eastern, 4:00 Pacific.
And until then, thanks very much for watching. I'm Wolf Blitzer in Washington. CNN's coverage of America's new war continues with "LOU DOBBS MONEYLINE." That begins right now.
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