Share

THE MCLAUGHLIN GROUP

HOST: JOHN MCLAUGHLIN

GUESTS:
ELEANOR CLIFT;
PAT BUCHANAN;
JAMES WARREN;
MORT ZUCKERMAN

TAPED: FRIDAY FEBRUARY 8, 2002
BROADCAST: WEEKEND OF SATURDAY, FEBRUARY 9, 2002

.STX

(C) COPYRIGHT 2001, FEDERAL NEWS SERVICE, INC., 620 NATIONAL PRESS BUILDING, WASHINGTON, DC 20045, USA. ALL RIGHTS RESERVED. ANY REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION IS EXPRESSLY PROHIBITED.

UNAUTHORIZED REPRODUCTION, REDISTRIBUTION OR RETRANSMISSION CONSTITUTES A MISAPPROPRIATION UNDER APPLICABLE UNFAIR COMPETITION LAW, AND FEDERAL NEWS SERVICE, INC. RESERVES THE RIGHT TO PURSUE ALL REMEDIES AVAILABLE TO IT IN RESPECT TO SUCH MISAPPROPRIATION.

FEDERAL NEWS SERVICE, INC. IS A PRIVATE FIRM AND IS NOT AFFILIATED WITH THE FEDERAL GOVERNMENT. NO COPYRIGHT IS CLAIMED AS TO ANY PART OF THE ORIGINAL WORK PREPARED BY A UNITED STATES GOVERNMENT OFFICER OR EMPLOYEE AS PART OF THAT PERSON'S OFFICIAL DUTIES.

FOR INFORMATION ON SUBSCRIBING TO FNS, PLEASE CALL JACK GRAEME AT 202-347-1400.

THIS IS A RUSH TRANSCRIPT.
-------------------------


MR. MCLAUGHLIN: Issue One: Four Fifths in a Row.

ANDREW FASTOW (FORMER ENRON CFO): (From videotape.) I respectfully decline to answer the question based on the protections afforded me under the Constitution of the United States.

MICHAEL KOPPER (FORMER CHEWCO MANAGER): I respectfully decline to answer the question based on my right under the Fifth Amendment to the United States Constitution not to be a witness against myself.

RICHARD CAUSEY (ENRON CHIEF ACCOUNTANT): (From videotape.) I will respectfully decline to answer that question.

RICHARD BUY (ENRON CHIEF RISK OFFICER): (From videotape.) I've lost my voice -- I respectfully decline to answer any questions.

MR. MCLAUGHLIN: Thursday's parade of current and former Enron Corporation leaders before a congressional committee began with four very short turns in the hot seat. The pace picked up when Jeff Skilling, CEO of Enron for half of 2001, until his abrupt resignation in August, became the first key player to sit still for a grilling.

JEFF SKILLING (FORMER ENRON CEO): (From videotape.) I have not exercised my rights to refuse to answer a single question, not one, and I don't intend to start now.

MR. MCLAUGHLIN: Despite that opening promise of forthcomingness, Skilling's answers were riddled with carefully-worded evasions and calculated ambiguities, quickly annoying the committee members.

REP. JAMES GREENWOOD (R-PA): (From videotape.) Mr. Skilling, here's the problem I have at the end of this day. You came in here, and you and I stood up and we raised our right hands and you swore to tell the truth. 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.

MR. MCLAUGHLIN: Earlier in the week, when Enron CEO Ken Lay reneged on his agreement to testify before the Senate committee, Republican Senator Peter Fitzgerald of Illinois summed up Enron's business plan.

SEN. PETER FITZGERALD (R-IL): (From videotape.) Enron Corporation went way beyond all hat and no cattle. It was pure bull. In my judgment, in my opinion, Enron was running a gigantic Ponzi operation.

MR. MCLAUGHLIN: Question: Is the Enron-Andersen picture that is emerging that of a huge catalogue of crimes with a wide circle of players and potentially hundreds of indictments? Pat Buchanan.

MR. BUCHANAN: Well, first, we used to have Fifth Amendment communists. Now we have the Fifth Amendment capitalists. Yeah, this is going to be very broad. It's going to drag in Andersen and the Enron people.

But I will say this. There's grandstanding on the part of Congress. But, John, something more serious is at work here. This is the end sort of industrial capitalism and the beginning of sort of a casino capitalism, where people run around making money out of money rather than producing things.

What did these guys produce? It wasn't energy. It was derivatives and stuff like that. And I think the blow that has been taken by our system, which is based on trust and belief of the markets, I think it's really a crippling blow. A couple more like this and you can really permanently damage American markets.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, what they're saying on Capitol Hill is there haven't been so many Fifths taken since Prohibition. (Laughter.) I got my joke in. Look, what this scandal has done is, just like Watergate, ripped the lid off the way government did business and the sleazy practices of politicians. This is now exposing the corporate world to the same kind of scrutiny and where it intersects with politics.

I think people are going to go to jail. The directors at Enron, some of those people, are going to go to jail. But I don't think there's going to be hundreds of indictments, because a lot of what they did was legal. And the government is responsible for allowing this to proliferate, these kinds of practices to proliferate. Now they're going to have to decide what's purely illegal and what's simply the sleazy practices that go on throughout the business world, the corporate world, and its relationship with government.

MR. MCLAUGHLIN: The hundreds question I put to Arthur Levitt. He thought it was an extremely wide circle, and he mentioned investment banks, brokerage houses and analysts. Do you think there are going to be a lot of indictments?

MR. ZUCKERMAN: Well, I don't think it'll reach to that circle, but I do think there are going to be some very serious indictments. And I think what happened here is illegal behavior. There is a lot that is legal. But to give you one example, I mean, I think this guy Skilling should change his name to "Shilling." I mean, it really was an outrage, what he said, as far as I'm concerned.

You have -- I'll give you one example. There's a company called White Wings, to which they transferred $4.7 billion worth of assets. Now, I don't care what company it is, no matter how big it is, you do not transfer $4.7 billion without the CEO knowing about it.

Okay, but those assets were overstated in value. They guaranteed the assets in terms of financing by agreeing to put up stock from Enron to give it equity. When the assets plummeted by something like $2 billion, they had to come up with all the stock. And when that got revealed, that's when the company really got in trouble.

Then he says, by the way, it was a run on the company like a run on the bank. But it's what produced the run on the company which were these outrageous acts of overinflating assets in order to get both cash and income into the company. It all had to be restated once this came out. And there are dozens of that, of huge magnitude. So I think the top officers of these companies are going to be in real serious legal problems.

MR. MCLAUGHLIN: Welcome, James. What are your thoughts?

MR. WARREN: I thought I'd come back to sort this out for you. You referred to Arthur Levitt, former Securities & Exchange commissioner, who was stymied by many of the same folks who are waxing righteous in Congress right now, when he tried to get key accounting changes done during the Clinton administration.

I think, at minimum, you've got deceptive accounting. I think it's a little bit early to talk about whether you have criminality. I think Skilling, at minimum, was incredibly arrogant. I talked to some of the key Enron lawyers and other folks in this case, other lawyers, who were stunned that he publicly testified. I think he let his ego get in the way of being judicious. He should have stayed away and taken the Fifth also.

But at minimum, I think he was also too slick by half. Did you catch the thing about how he had the same amount of stock at the beginning of 2000 as he did when he left the company in August 2001? Not telling anybody last week that, in fact, he'd been given free, from the board, 125,000 shares, January 22nd, 2001, and each Wednesday -- wouldn't this be nice for all of us? -- each Wednesday sold 10,000 shares and made millions. No word of that.

MR. MCLAUGHLIN: Okay, Andersenville. Accounting firm Arthur Andersen -- still showing a pulse, by the way -- is trying to look cooperative, and sent CEO Joseph Berardino to testify before a skeptical, if not totally disbelieving, House committee on Tuesday.

JOSEPH BERARDINO (ARTHUR ANDERSEN CEO): (From videotape.) I don't know, with authority, what we knew and when we knew it.

REP. GARY ACKERMAN (D-NY): (From videotape.) Maybe it's better to be dumb than culpable, but we want some answers.

MR. MCLAUGHLIN: Question: Don't you think Arthur Andersen CEO Joseph Berardino's testimony might be credible, especially since so many of the e-mails were deleted and the documents were shredded before the information even possibly reached him?

MR. BUCHANAN: But, John, you know, look, with due respect, they put this fellow up there. He doesn't have all the information. He's under oath, under threat of perjury, and he's being demagogued, excuse me, by a lot of these congressmen, who, as you mentioned, some of them are probably partly responsible for this. And he doesn't want to get himself into deep trouble. I mean, I think there's a certain unfairness.

Look, clearly Arthur Andersen has got a real problem in terms of the standards of accounting it used and all the rest. But I don't think you can scapegoat this fellow.

MS. CLIFT: Well, it's hard to feel sorry for any of these accounting firms. I mean, what they did was marry accounting services and consulting services.

MR. BUCHANAN: Well, yeah, but he didn't do that.

MS. CLIFT: And -- but he certainly has profited by it.

MR. BUCHANAN: Well, he's up there trying to explain it.

MS. CLIFT: The company profited by it, and he's the head of it. And he also should know that when you go in to do somebody's books -- nice, boring work -- but you're also doing consulting services, there's a conflict. So they advised the company how to cook their books. Then they get the audit committee to tell them, "You cooked it just right."

MR. BUCHANAN: He's not gonna come up and say, "We cooked the books, by the way." (Laughs.)

MS. CLIFT: No, but he doesn't deserve our sympathy for not admitting that.

MR. MCLAUGHLIN: James.

MR. WARREN: Eleanor, in fairness, we did not know that they advised them to cook the books. There is a difference between stuff that is complex --

MS. CLIFT: They advised him, presumably --

MR. WARREN: -- and stuff that is criminal.

MS. CLIFT: Well, they advised him presumably on creating these partnerships, and they're not nearly complex. I think they do --

MR. MCLAUGHLIN: Are we any closer --

MR. WARREN: The reality is that someone like Mort, who has even more money than you do, knows that some of the accounting rules are such that laying off some of these subsidiaries off the books, right or wrong, was legal, given SEC rules, stuff that Levitt tried to change, but failed to do.

MR. MCLAUGHLIN: I want a quick comment on this. Are we any closer to this financial scandal becoming a political scandal? And I'll hear from anyone. Who would like to touch that?

MR. ZUCKERMAN: Oh, I think it's a political issue.

MS. CLIFT: Oh, I'd love to touch that.

MR. MCLAUGHLIN: You would?

MR. ZUCKERMAN: Oh, absolutely.

MR. MCLAUGHLIN: You mean --

MR. ZUCKERMAN: I'll tell you one thing --

MR. MCLAUGHLIN: -- congressional figures?

MR. ZUCKERMAN: No, no, I didn't say that, okay, but it is a political scandal in that the ramifications are going to be political. And it'll last at least until five days after --

(Cross-talk.)

MR. ZUCKERMAN: -- after the election, because it's going to raise this whole issue of a whole group of people in this country, the little guy who feels he's being ripped off by the big guy, who's taking advantage of this tax deal and that accounting deal and this financing deal and getting out with all the money while everybody else gets killed.

MR. MCLAUGHLIN: We know --

MR. ZUCKERMAN: That is not going away.

MR. MCLAUGHLIN: All right, just a moment --

MR. ZUCKERMAN: That is not going away.

MR. MCLAUGHLIN: Let me make myself clear. The dynamic on which Enron functioned, and Andersen, is not a marketing dynamic. It is protectionism supplied by local or federal governments through modifying regulation to accommodate their capitalist greed. Okay?

Now, the question is, can it be shown -- can we connect the dots so that we can identify those politicians who sold out? For example, in the 1991 Private Securities Litigation Reform Act, which had the effect of neutralizing reforms that were set in after S&L when the six then big accounting firms were fined $1 billion. Recall that, Pat?

MR. BUCHANAN: Yeah. Look --

MR. MCLAUGHLIN: Now, that act, that law, in 1995 effectively immunizes these corporations -- not the corporations, but the accountants, and to some extent maybe the corporate senior-level officials, from liability by lawsuits brought against aggrieved shareholders. Are you with me?

MR. BUCHANAN: But look --

MR. ZUCKERMAN: Yes, I am.

MR. MCLAUGHLIN: Now, the question is, are we yet into political dynamite?

MR. BUCHANAN: Yes, look, in this sense, not in terms of is Bush or Cheney. What you have is a systemic scandal of the corporate money and politics, and money going this way and favors going that way. And it is a scandal of the system.

MS. CLIFT: You have that, but it is also --

MR. BUCHANAN: It is a scandal of the system.

MR. MCLAUGHLIN: What he said earlier was that the effort of Arthur Levitt, which was a persistent and grave effort, was defeated, and particularly by 13 senators who wrote to him and tried to fake him out by saying, "Let us think about this until February 2001," knowing that he would leave office in February 2001.

MR. BUCHANAN: That is the scandal of the system. "We do all this for you. You do all this for us." This fellow Levitt, he tries to do the right thing. He's out.

MS. CLIFT: It's right that it is a systemic failure, but it has lots of little tributaries. And we're going to find out who the vice president met with, and then we're going to see how much money they gave to the Republican Party and when they gave it. And we may have the Bush version of the Clinton coffees. Then we're going to find out who was in all these little partnerships; maybe nobody involved in the administration, maybe some people --

(Cross-talk.)

MS. CLIFT: There is a lot of political paydirt out there somewhere.

MR. MCLAUGHLIN: I want to hear from James.

MR. WARREN: Here's where the rubber meets the road. This is an election year. I think, unfortunately, even though there will be, I think, short-term impact -- in fact, even diehard Republicans now think they may lose on the subject of campaign finance reform in the House precisely because this will take the reformers over the top -- I would still suspect that 99 percent of these guys, even if they're on the take from the industry, will all be re-elected in November. So, to that extent, Mort, I don't think that the onus will carry to the ballot box.

MR. ZUCKERMAN: CBS had a poll that showed 55 percent of people didn't believe the Bush administration on this issue, and only 19 percent believe them. There is that sense of association.

MR. WARREN: But they've never, of course, believed the Bush administration when it comes to the energy industry, and they've always thought that they were --

MR. MCLAUGHLIN: You know what might haul in the politicians is if RICO, Racketeering-Influence-Corrupt Organization Act, can be pulled in here, because if that happens -- and I think a strong case can be made for that happening -- that we're dealing with a corrupt organization with the necessary three predicates that you need to show, besides corruption, similar to a drug cartel --

MR. BUCHANAN: No --

MR. MCLAUGHLIN: -- where you have --

(Cross-talk.)

MR. MCLAUGHLIN: This is a separate subject for a separate program. I've exhausted it on another brilliant program, which is called "One on One," which airs this weekend with Arthur Levitt and with Jon Corzine.

(Cross-talk.)

MR. MCLAUGHLIN: Let's move on. Exit question: On a financial scandal scale -- Ivan Boesky at the bottom, Michael Milken in the middle, and the 1990 S&L crisis, which resulted, as I noted earlier, in the big six accounting companies paying $1 billion in fines -- that's at the top, the S&L crisis -- where does Enron-Andersen -- and I think they were in cahoots in some level, as also part of RICO -- where does Enron-Andersen fit?

MR. BUCHANAN: As a political thing, it's getting up toward 10.

MR. MCLAUGHLIN: Really?

MR. BUCHANAN: Toward 10, toward the top.

MS. CLIFT: If there are more Enrons out there, it will surpass the savings-and-loan scandal. Right now it's a notch below the S&L.

MR. ZUCKERMAN: Well, in the first place, I agree you exhausted the RICO issue on your other program. (Laughter.) In the second place, I will say this. I think this is going to be a huge scandal. I think it covers a lot of other companies. Global Crossing is now having its accounting looked at.

MR. MCLAUGHLIN: Right.

MR. ZUCKERMAN: A lot of companies --

MR. MCLAUGHLIN: Is there trouble there?

MR. ZUCKERMAN: I don't know. All I'm saying is, I mean, I know what they did. And the question is, it may be legal, but it's still scandalous.

MR. MCLAUGHLIN: Are you making news here?

MR. ZUCKERMAN: No, no, no. It's been reported. It's probably something you haven't yet covered in another brilliant "One on One" program, or you'll get to it. (Laughter.)

MR. MCLAUGHLIN: James.

MR. WARREN: I bring some --

MR. ZUCKERMAN: It's a 10.

MR. MCLAUGHLIN: It's a 10?

MR. ZUCKERMAN: It's a 10. It may get to be an 11.

MR. WARREN: I'd like to bring some heartland sobriety here to this. We'll call it a four. If we have many more hearings like we had last week, with all the talk of these partnerships, America will begin tuning out, because it's just too complex for them to understand.

MR. MCLAUGHLIN: I think Boesky and Milken were minor operators compared with this, of course, but I don't think it's on the scale of the S&L crisis. But I do think it involves -- it's going to involve a lot of reputations and a lot of suffering, besides those who have already been hurt.

When we come back, even though the U.S. and Israel don't want to isolate -- do want to isolate Arafat, has the time come to talk to him?

(Announcements.)

MR. MCLAUGHLIN: Issue two: Sharon 4, Arafat 0.

Mr. President and Mr. Prime Minister, has the time come for the U.S. and Israel to talk to Mr. Arafat?

PRESIDENT BUSH: (From videotape.) Well, Mr. Arafat's heard from us. I can't be any more clear in my position, and that is that he must do everything in his power to fight terror.

ISRAELI PRIME MINISTER ARIEL SHARON: (From videotape.) Arafat has chosen a strategy of terror and formed a coalition of terror. Therefore we believe that pressure should be put on Arafat in order, it may be, I hope, to have an alternative leadership in the future.

MR. MCLAUGHLIN: Ariel Sharon's meeting with President Bush this week was his fourth such visit since becoming Israel's prime minister 11 months ago. The unstated purpose of Sharon's visit was to urge Washington to suspend diplomatic relations with Yasser Arafat, to isolate the Palestinian leader even further.

To date, President Bush has not met with Arafat. Vice President Cheney goes to Israel next month and the White House is already announcing that he will not meet with Arafat either. This isolation of Arafat does not sit well with many analysts, including the former U.S. ambassador to Israel, former Assistant Secretary of State Martin Indyk.

MARTIN INDYK (FORMER U.S. AMBASSADOR TO ISRAEL): (From videotape.) If we were to cut relations with Arafat, we would end up cutting all relations with anybody who was going to act responsibly.

MR. MCLAUGHLIN: And Director of the Woodrow Wilson International Center and former Congressman Lee Hamilton.

LEE HAMILTON (DIRECTOR, WOODROW WILSON INTERNATIONAL CENTER): (From videotape.) I think our Middle East policy is deteriorating. I think we're further away today from our goals in the Middle East than we've been in a long, long time. It is not sufficient just to say that we're not going to talk with Arafat or that we're going to isolate Arafat, whatever that may mean.

I think the president and the secretary of State have to become much more actively involved in it. I think we have to keep our eye on the target and reinforce the objective of getting these parties to talk with one another instead of standing back and just laying blame on Arafat.

MR. MCLAUGHLIN: Question: Are Indyk and Hamilton right, that it's now time to talk to Arafat? Eleanor Clift.

MS. CLIFT: I'm always on the side of more engagement as opposed to less. And Sharon doesn't have a vote to get to pick who is the Palestinian leader. Right now Arafat has more power to control the PLO than anybody else. It is limited power. He needs to do more. But he also needs some reciprocal gestures on the part of Israel so he has some incentive to move forward. And this administration, by just cutting him off, I think, accomplishes nothing.

MR. MCLAUGHLIN: You think it's counterproductive. Mort.

MR. ZUCKERMAN: Look, under the Clinton administration, they met with Arafat more than any other leader. Clinton, leading Barak a little bit, got the Israelis to offer them 97 percent of the West Bank, control over the Arab neighborhoods of Jerusalem, et cetera, et cetera. He turns it down.

So now they say, "That didn't work. Let's try something else. Let's try to isolate him and put pressure on him." Sharon, after all, just met with three leaders -- Abu Massan (ph), Abu Ala, and Mohammed Rashid -- who are the three key leaders under Arafat.

MS. CLIFT: With Arafat's blessing.

MR. MCLAUGHLIN: All old guard.

MR. ZUCKERMAN: Wait a minute.

MR. MCLAUGHLIN: All old guard.

MR. ZUCKERMAN: What was the message? The message is, "I'm not trying to throw out the Palestinian Authority. I want to meet with other people whom I could rely on." Everybody knows, everybody in the administration, knows you can't rely on Arafat. The Arabs know; the Egyptians, the Saudis, the Jordanians. They all know it.

MR. BUCHANAN: John --

MS. CLIFT: You can't rely on anybody --

(Cross-talk.)

MR. BUCHANAN: John --

MR. MCLAUGHLIN: I want to get -- let me get Pat in here.

MS. CLIFT: (Inaudible) -- balancing all those extremists.

MR. BUCHANAN: The United States needs a policy in the Middle East that's made in the USA and not by Ariel Sharon. Isolating Arafat accomplishes exactly zero. It's a cul-de-sac, an end. You're going to have to talk to the Palestinians and the Israelis.

Eleanor is right. Arafat; you've got to put pressure on him to stop the terrorism and the rest of them, to the degree he can. But, listen, Sharon has got to be told, "No more settlements. You've got to stop building them and you're going to have to withdraw them." Is the United States, John, going to play the role of honest broker, or are we just going to be a cheerleader for Ariel Sharon? That's the question, because that's all we are right now.

MR. MCLAUGHLIN: As Mort pointed out, Ariel Sharon, a week ago last Wednesday, met at Ariel Sharon's residence with the three men that he mentioned. So there's a little bit of hope that there's negotiation going on, although nothing was accomplished.

Also, another little ray of hope is that Arafat had an op-ed piece in the New York Times last Sunday, and in it he said that he was open to, quote/unquote, "creative" -- I think he said "advances." And he was talking about on the issue of Palestinian right of return to what is now -- what will be Israel proper. And if he can give on that, which they've had since 1968, that might be -- there might be hope that Sharon and Arafat could get together. Do you have thoughts on this.

MR. WARREN: Same old, same old with Arafat. He's now trapped like a rat. He's almost self-immolating. But, having said that, look at the fact that Sharon's popularity is way up, but so is Arafat's. And I think you ultimately, as much as you hate it, Pat, you've got to deal with the guy.

MR. MCLAUGHLIN: Also, we haven't mentioned that within the --

MR. BUCHANAN: Mort is right --

MR. MCLAUGHLIN: -- Palestinians, there could be a minor civil war, because all of these three fellows that he talked about, that Sharon met, are old guard.

MR. BUCHANAN: Mort is right in this sense. Camp David and Taba are the basis of an agreement. And Arafat was wrong to turn it down. But you've got to get back to that. It's the only hope.

MR. MCLAUGHLIN: We'll be right back with predictions.

(Announcements.)

MR. MCLAUGHLIN: Predictions, Pat.

MR. BUCHANAN: You know, with the Enron thing, John, and the markets wobbling again and the problems in the Middle East and the "axis of evil" problems, I predict Mr. Bush's poll ratings, which have hit 90 and are in the 80s, are going to start down month by month to the 70s and 60s.

MR. MCLAUGHLIN: Pat, one more terrorist outrage and Bush is right there. And that outrage is inevitable. We don't know when or where, but it's inevitable.

MS. CLIFT: The president's first high-profile nomination, court nomination, Thomas J. Pickering, will not get confirmed.

MR. MCLAUGHLIN: Really?

MS. CLIFT: Really. Very controversial.

MR. MCLAUGHLIN: (Inaudible.)

MR. ZUCKERMAN: Well, this is one that I -- I couldn't disagree with you more strongly about Bush. I think he's going to maintain his popularity right through the year.

MR. MCLAUGHLIN: That's what I'm saying. You're disagreeing with him.

MR. ZUCKERMAN: Yeah, I'm very much disagreeing with him. I think Bush has got a way of capturing now the attitude of the American public in a way that we haven't seen in a long time. He's going to stay right at the peak of his game, right through the year.

MR. WARREN: Despite playing at home, despite the U.S. Olympic Committee spending $50 million on our athletes, tiny Norway wins more medals.

MR. MCLAUGHLIN: Conditions in Argentina will get worse before they get better, but they will get better before Thanksgiving.

Next week: Happy Valentine's Day. Bye bye.

(End of regular program.)

(Begin PBS segment.)

MR. MCLAUGHLIN: Issue Three: Base Metals.

ALFONZO HALL (IAM MEDALLION MANUFACTURER): (From videotape.) IAM Foundry never meant to offend anyone. Our purpose, and our purpose still is, to commemorate the heroes that lost their lives.

MR. MCLAUGHLIN: International Agile Manufacturing, IAM, a foundry located in Georgia, has found itself embroiled in controversy. It is accused of profiteering from the September 11th attacks by selling commemorative medallions made from World Trade Center structural steel.

SALLY REGENHARD (WTC VICTIM'S MOTHER): (From videotape.) It's gruesome to us, it's macabre, it's bizarre, it's tasteless. There are nearly 2500 innocent souls who are still down there. And I really feel that, you know, cashing in in this way is just an outrage.

MR. MCLAUGHLIN: IAM bought hundreds of tons of steel scrap from the twin towers wreckage and melted it into commemorative medallions. The medallions weigh one pound each and they depict the pre-September 11th New York skyline with an American flag waving in the background. They cite Psalm 37, "In memory of those who perished."

The price tag is $29.95. But if you belong to the family of a victim, you're eligible to receive a medallion free of charge. IAM pledges to give 10 percent of profits to charities. IAM further says it bought the remnant steel after discovering that it was destined to be sold abroad, probably in China or South Korea. "We recognize the importance of retaining some portion of the steel here in the USA."

In fact, more than 60,000 tons of the steel have been shipped to recyclers worldwide, where it will be used in products ranging from beer cans to carburetors and plumbing hardware. But now the New Jersey recycler that sold IAM the steel says it canceled its future shipments after learning how the steel was being used. IAM says too late -- it already has enough to make 3 million medallions and has sold 10,000 to date.

Question: Are the WTC medallions profane profiteering or commendable commemoration? James.

MR. WARREN: Let's see. I'd say probably absolutely both. I mean, is it any --

MR. ZUCKERMAN: One of each.

MR. WARREN: -- better that the stuff winds up in cans, appliances, buildings or cars? The fact is, every day journalists, authors, Hollywood script writers are exploiting tragedy of one sort.

You've seen it since September 11th; come on, everything from the TV ads for the Postal Service to the airlines to print ads I've been seeing this week for a security firm, which actually uses that black-and-white photo of Muhammad Atta, the terrorist, going through the security checkpoint at the Portland, Maine airport. Everybody is absolutely exploiting this. It's the market.

MR. MCLAUGHLIN: When Abraham Lincoln died, there were produced mourning buttons with his image, and they sold, and they were in commemoration of the martyred president; they bore his likeness. And they're still available with a small piece of original black mourning cloth.

MR. BUCHANAN: Well, this is really --

MR. MCLAUGHLIN: What about the Berlin Wall, too?

MR. BUCHANAN: Well, the Berlin Wall, they took parts of the Berlin Wall. And I don't know that they've sold them, but they certainly handed them out. But, look, this clearly started as a profiteering operation, and I think --

MR. MCLAUGHLIN: Well, "profiteering" is a strong word. It's $29.95. It weighs a pound.

MR. BUCHANAN: Well, they grabbed all that steel and just --

MR. MCLAUGHLIN: He's got to smelt it. He's got to emboss it. What do you think? You're from New York.

MR. BUCHANAN: Why do you think he did it, to commemorate it or to make money?

MR. MCLAUGHLIN: Well, I think it could be both, Pat. You can have mixed motivation.

MR. ZUCKERMAN: The Berlin Wall, I have to say, is something completely different, because that was a triumph that we were celebrating when we were taking up -- since I was there and I was hammering away at it.

MR. MCLAUGHLIN: But people got killed on the wall.

MR. ZUCKERMAN: No doubt about it. I'm just saying that it was the wall coming down. My point here is that there is always --

MR. MCLAUGHLIN: Would you buy one?

MR. ZUCKERMAN: There is always something that seems to go beyond the levels of taste or acceptability, and this is what happened here --

MR. MCLAUGHLIN: Why?

MR. ZUCKERMAN: -- even though there are all of those different things.

MR. MCLAUGHLIN: Why do you say that? Everything is relative. As he pointed out, do you want that steel to be converted to a beer can?


####
®FC¯END
®FL¯
_