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Aired September 9, 2002 - 18:00   ET

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


LOU DOBBS, HOST: Tonight, a remarkable comeback on Wall Street. Stocks up on the day. The Dow posts the first back-to-back gains in nearly three weeks. Christine Romans, on the New York Exchange.
CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: Lou, the Dow Industrials overcome an early sell-off to post its biggest two-day rally in more than a month.

GREG CLARKIN, CNN FINANCIAL NEWS CORRESPONDENT: And a rally in biotechs and Internet stocks help list the Nasdaq back over 1,300.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: President Bush and Canadian Prime Minister Jean Chretien publicly talk about border security, but privately, President Bush pressed for the case for the removal of Saddam Hussein.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: We may have heard from Osama bin Laden again, this time in the form of new audio tapes, where he names and praises the September 11 hijackers.

KITTY PILGRIM, CNN FINANCIAL NEWS CORRESPONDENT: Arab countries are among the poorest in the world. A regional war could mean economic disaster. We will look at the costs of the conflict for the Arab states.

DOBBS: Multimillion dollar lawsuits against corporations are often settled in secret. The federal judges in South Carolina have decided that may be un-American. We will have a special report.

Good evening. President Bush today took steps to improve security at this country's northern border. The president announced programs aimed at making border inspections more rigorous along the U.S.-Canadian border, the initiative unveiled during a meeting with Canadian Prime Minister Jean Chretien. Neither leader made any public remarks about Iraq, but privately, Mr. Bush made his case to overthrow Saddam Hussein. White House correspondent Suzanne Malveaux joins me now with the story -- Suzanne.

MALVEAUX: Well, Lou, President Bush earlier today met with the Canadian Prime Minister Jean Chretien in Detroit. They talked about homeland security. They also reviewed the border safety initiatives that were set up between the United States and Canada just after September 11.

But privately, the two also discussed Iraq. This is all a part of President Bush's courting world leaders to convince them of the need to overthrow Saddam Hussein, to remove him from power. Chretien before has been somewhat critical and cautious, saying that he wants to see more evidence, to see the need -- the immediate need of overthrowing Saddam Hussein, and the possibility of using military action.

Now, Vice President Dick Cheney tells CNN that there is new irrefutable evidence that shows that Saddam Hussein is resupplying, restocking his weapons program.

(BEGIN VIDEO CLIP)

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: We have to worry about the possibility that Saddam Hussein, for his own reasons, can use that growing capability on our friends and allies in the region, on U.S. forces in the region, or on the United States itself.

We know he has this capability. We know he is developing it. We know he sits on top of 10 percent of the world's oil reserves. He has got a significant cash flow coming in to finance these acquisitions and procurement projects. And the world has sort of gotten relaxed about him, if you will, and a lot of people are doing business with him now.

(END VIDEO CLIP)

MALVEAUX: Now, French President Jacques Chirac talked about a possible resolution, a two-tier U.N. resolution, that he is suggesting giving Saddam Hussein three weeks to allow weapons inspectors back in the country. If he does not comply, that the second tier of the U.N. resolution would authorize a military action.

This is not really too far from what the White House is considering: A U.N. Security Council resolution that would set a deadline for Saddam Hussein to go ahead and let those weapons inspectors in. If he did not comply, to face some sort of punitive action from them, hoping that the language would be broad enough the permanent members of the U.N. Security Council to sign on to that. But clearly, the president, preparing before the U.N. General Assembly, making a case for the ousting of Saddam Hussein -- Lou.

DOBBS: Thank you, Suzanne.

A new report says Iraq might be able to build a nuclear weapon in months, if it had foreign help. That is the conclusion of an investigation of Baghdad's arms program by the London-based International Institute for Strategic Studies. The report also says Iraq could have been stockpiling chemical and biological weapons since 1998. But in Baghdad, former United Nations weapons inspector, Scott Ritter, is now dismissing reports of an Iraqi buildup. Ritter says there is no hard evidence that Iraq has weapons of mass destruction.

(BEGIN VIDEO CLIP)

SCOTT RITTER, FMR U.N. WEAPONS INSPECTOR: I am willing to put facts on the table and back it up with sound analysis. You know, let us not be fooled here, OK? This would not be the first time that a president of the United States has lied to the American public to facilitate a war.

Think to the Gulf of Tonkin resolution, and how we got entangled in Vietnam. I believe the same thing is happening right now. If President Bush has a case to be made, if this administration has a case to be made, for war against Iraq, then by God, they better start making it.

(END VIDEO CLIP)

DOBBS: Scott Ritter in Iraq.

The Pentagon says its latest military maneuvers in and around Iraq are routine. The Pentagon insists those maneuvers not the beginning of preparations for an attack on Iraq, but many of the Pentagon's routine actions could lay the groundwork for future military action. Senior Pentagon correspondent Jamie McIntyre is here -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Lou, the question here is, can extraordinary things be done in a routine way. For instance, the movement of U.S. military equipment from Qatar to Kuwait. That does put more equipment on the front lines with the border with Iraq, but the Army insists that is simply moving more equipment in place to help the greater number of troops that have been exercising there since September 11.

Here is how the Army secretary explained it.

(BEGIN VIDEO CLIP)

TOM WHITE, U.S. ARMY SECRETARY: The army is in the Gulf region -- is conducting its normal operations in the global war on terrorism, and that is the principal thrust of our activity.

(END VIDEO CLIP)

MCINTYRE: So normal operations, is what Secretary White says. But nevertheless, the number of troops exercising in Kuwait is now nearly 10,000. That is more than double the number that usually exercises there. And if you look at the air strikes recently in Iraq, the number overall for the whole year is not that unusual, but in the last couple of days, there have been quite a few, including a heavier- than-normal strike last week that involved a dozen airplanes dropping about 25 bombs on a key air defense center.

Routine, perhaps. And what about the Navy contracting commercial ships to bring equipment to the Persian Gulf? Again, the Pentagon spokesman insists it is just business as usual.

(BEGIN VIDEO CLIP)

VICTORIA CLARKE, PENTAGON SPOKESWOMAN: We move people and resources all the time. We have exercises going on around the world. So I just would not connect too many dots right now, if I were people, and not read too much into it.

(END VIDEO CLIP)

MCINTYRE: Meanwhile, the U.S. has moved an aircraft carrier back into the Persian Gulf, after having all of its carriers over near Afghanistan for a while. And the British have deployed their aircraft carrier, the Arc-Royal, to a NATO exercise in the Mediterranean, but could be diverted to the Persian Gulf.

So, again, Lou, all of these things could be routine, but they have the net effect of putting the United States a little bit ahead, as it contemplates war in Iraq.

DOBBS: Jamie, thank you very much. Jamie McIntyre reporting from the Pentagon.

The United Nations Secretary General Kofi Annan said the U.N. Security Council must have the opportunity to debate any military action against Iraq. Annan says he is personally opposed to a U.S. attack. Annan also tells journalists he is worried about what would happen to Iraq after an invasion.

Well, the drum beat for war against Iraq has been beating for sometime. Since the Clinton administration, in fact. The United States has been talking about the need to overthrow Saddam Hussein since President Bill Clinton ordered U.S. forces to attack factories and installations in Iraq on December 16 of 1998. Shortly after that, members of the Clinton administration talked about need for a regime change in Iraq, at least half a dozen times.

The Bush administration started talking about the need to remove Saddam Hussein just over six months ago. Since then, President Bush, Vice President Dick Cheney, Defense Secretary Donald Rumsfeld and Secretary of State Colin Powell have been talking repeatedly about the need to overthrow Hussein. Just yesterday, three members of the Bush administration appeared on national talk shows to talk about the need to overthrow Hussein.

A new CNN-"USA Today" Gallup poll suggests public support for removing Saddam Hussein is growing once again. The poll shows 58 percent of Americans surveyed now favor sending in U.S. troops to remove the Iraqi president; 36 percent are against.

Three weeks ago, just over half of Americans surveyed favored using force. That was a decline from June, when as many as 61 percent supported such an attack. Last November, nearly three-fourth of those surveyed favored using force against Iraq. That was when the Taliban was removed from power in Afghanistan.

Most Arab economies are suffering stagnation. A report by a group of Arab researchers for the United Nations is now calling for major changes in the way those Arab states conduct themselves, and manage their economies. The prospect of conflict between United States and Iraq, in fact, is likely to worsen economic conditions for the Arab world. Kitty Pilgrim reports.

(BEGIN VIDEOTAPE) PILGRIM (voice-over): At the turn of this new century, the GDP of Arab countries combined was less than that of Spain. In the Arab world, there are 65 million illiterates, two-thirds of those are women. A recent U.N. study found in the last two decades the world has seen its per capita GDP climb. Even Latin America and the Caribbean, despite deep pockets of poverty, have shown improvement. Not so the Arab world. The GDP of the average Arab citizen is only 13 percent of those of the OECD, or developed countries.

AMB. DAVID MACK, V.P. MIDDLE EAST INSTITUTE: One of the systemic weaknesses in the Arab world has been a lack of intelligent self- criticism, and that document is certainly an exception to the general rule, that the Arab intelligentsia has not been doing a good job of self-criticism. And it is important to point out that, that not only has the endorsement of the United Nations, but it was also endorsed by the Arab League.

PILGRIM: Scholars hoped, pointing out the problems will generate policy changes by Arab governments. Most importantly, investing oil wealth back for the benefit of their own people. A conflict in the region would likely make things worse.

CLOVIS MAKSOUB, ARAB HUMAN DEVELOPMENT REPORT: It would, undoubtedly, also affect the economy growth throughout the region inasmuch as they would have to shift from the civilian into the more military preparedness in the region, if there is going to be a spillover of the conflict in the region.

(END VIDEOTAPE)

PILGRIM: One of the big worries in terms of stability are the large number of unemployed men in the Arab world. Now, this report says Arab economies have to grow 5 percent to absorb new entrance into the labor market and also the unemployed. But in fact, they are growing at an average of 3.3 percent. Even in peace time, that kind of equation is not sustainable -- Lou.

DOBBS: The Arab world, in terms of its economies, are simply in disarray. It is a shame that these countries have so many people who are impoverished. There is little development.

PILGRIM: The big problem is education levels, and misplaced education. Education that is not geared toward the modern world, to prepare people for the work force. The second biggest crime in this whole equation is that they do not reinvest petro dollars back into their own economies for the benefit of their own people.

DOBBS: In point of fact, with this kind of economic foundation, this desperate poor economic foundation, instability in this region, with or without military conflict, is ensured in the coming years.

PILGRIM: This was an absolute worry before anyone ever discussed any conflict in the region.

DOBBS: Kitty, thank you very much. Kitty Pilgrim. DOBBS: Well, an audiotape purportedly featuring Osama bin Laden praised the 19 terrorist hijackers. It was played on Al-Jazeera television today. On that tape, bin Laden is thought to be heard complimenting those hijackers for changing the face of history. Nic Robertson has the story.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): In this, the first video of a group of September 11 hijackers to be released by al Qaeda, there is little to hint at the atrocity these men are planning. Relaxing in an Afghan style classroom in Kandahar, the men bear little resemblance to their clean-shaven look they used to enter the United States.

According to Al-Jazeera, the Gulf news agency that obtained the tapes from al Qaeda, the men are Hamza Alghamdi, who helped crash United Airlines Flight 175 into the south tower of the World Trade Center, Saeed Alghamdi, one of the hijackers aboard United Airlines 93 that ultimately crashed in a field in Pennsylvania, Wail M. Alshehri, a hijacker aboard American Airlines Flight 11, the first plane to hit its target, and Ahmed Alnami, another of the hijackers aboard UA 93.

Another of the tapes Al-Jazeera obtained, the suicide statement by Abdulaziz Alomari, one of the hijackers. It is the second such video al Qaeda has released. This hijacker, who flew with Mohammed Atta into the north tower of the World Trade Center, pours scorn on the United States and praises Osama bin Laden for his help.

ABDULAZIZ ALOMARI (through translator): God praise everybody who trained and helped me. Mainly, the leader Sheikh Osama bin Laden, may God bless him.

ROBERTSON: The third tape, Al-Jazeera claims, carries the voice of Osama bin Laden. We hear what could be the al Qaeda leader, naming and praising the hijackers for the first time.

OSAMA BIN LADEN (through translator): These great men have consolidated faith in the hearts of the leaders and undermined the plans of the crusaders and their agents in the region.

(END VIDEOTAPE)

ROBERTSON: For those familiar with al Qaeda, these tapes bear the hallmarks of one of their well-choreographed media campaigns. Their release now apparently timed to remind the world of what al Qaeda sees as their greatest achievement. The question remains, however, was this a call from beyond the grave by Osama bin Laden, or is he still alive? Lou.

DOBBS: What does the best analysis suggest, Nic, in answering that question?

ROBERTSON: In answering that question, the answers come from a number of sources. There are intelligence sources who say he is alive. When you look simply at this audiotape, it can't be proven definitely whether or not it was Osama bin Laden -- the quality is quite poor. Can't be proven either when it was recorded. It could have been recorded earlier this year. He could have succumbed to his illnesses or injuries since then. So it's very, very difficult to say -- Lou.

DOBBS: These tapes, if you will, are retrospective on a heinous event almost a year ago. Why would the Al-Jazeera broadcast these now? How did they get access to them now? And why would the al Qaeda presumably provide these tapes now?

ROBERTSON: Al-Jazeera late last year received a number of videotapes from al Qaeda, speeches by Osama bin Laden. They have become essentially a conduit, in many ways, for al Qaeda do release its material to the world. Al Qaeda has only received this -- Al- Jazeera, rather, has only recently received this material, and as a news organization, has chosen to broadcast it. They allowed us to have some of that material as well. It is, we understand from them, as a news broadcaster, they felt behooven to broadcast it.

DOBBS: Nic Robertson, thank you very much.

Authorities in the Philippines tonight are on full alert because of a plot by radical Islamists who attacked the U.S. and Israeli embassy in Manila. CNN has learned the details of that plan to attack the embassies became known during the interrogation of an al Qaeda operative. That operative was arrested in Oman in March, and in U.S. custody. At least four tons of explosives are missing in the Philippines, and authorities believe those explosives are intended for use by suicide bombers.

Palestinian leader Yasser Arafat today condemned every act of terror against Israeli civilians, but Arafat did not explicitly call for an end to suicide attacks. Arafat told the Palestinian Parliament that peace between Israel and the Palestinians is possible. Arafat also said Palestinians are nearing the threshold of having their own independent state. Israel said there was little new in his comments.

A dramatic recovery to tell you about on Wall Street, where the Dow reversed a triple digit loss and posted a gain -- an impressive gain on the day, nearly $100 billion of market capitalization created today. Financial stocks powering the turnaround. Volume however, remained light. Just over a billion shares traded on the New York Exchange. The Dow up 92 points on the day. The Nasdaq, S&P 500 up 9 points. We will have complete market coverage coming up. Jan Hopkins will have the market for us later here in the broadcast.

Also still ahead, a former television journalist says that Iraqi intelligence agencies were involved in the bombing of the federal courthouse in Oklahoma City. Jayna Davis will be here to tell us why there may have been an Iraqi connection.

A tornado brings destruction to a small town in Utah. That tornado brought with it hail stones the size of golf balls.

And violent crime across America declines to levels not seen for decades. We will have that report for you, and a new report detailing the risk for wrongly prescribed drugs when you go to the hospital. That story, a great deal more still ahead.

(COMMERCIAL BREAK)

JAYNA DAVIS, JOURNALIST: ... for sponsorship, there are very compelling indicators. I was working as a reporter for the NBC affiliate in Oklahoma City, and one of the first reporters on the scene of the Oklahoma bombing of the federal building. And, one groundbreaking lead to our station led me directly to the doorstep of what several esteemed intelligence experts have told me was a Middle East terrorist cell, Lou, living and operating in the heart of Oklahoma City.

And several witnesses, 22 in all, have signed sworn witness affidavits and positively identified eight Middle Eastern men acting in collusion with McVeigh and Nichols at various stages of the bombing plot. Those Middle Eastern men, the majority of whom are Iraqi soldiers. One soldier in particular, Lou, is Hussein Al-Husani (ph), and he was identified by seven witnesses, tying him to Timothy McVeigh, the Ryder truck, downtown Oklahoma City and the get-away vehicle aggressively pursued by the FBI the morning of the bombing.

DOBBS: You realize, Jayna, that there is great incredulity as we listen to your statements about an Iraqi cell operating in Oklahoma City, being involved in this, because simply the authorities have in no circumstance suggested such a connection. Yet you say that your sources, presumably intelligence sources, are the ones who validated the information that this person was Iraqi, and eight other Iraqis. What has been the response of the federal authorities and local authorities in Oklahoma City, and nationally to what you are suggesting here tonight?

DAVIS: Well, all I can say is this, that this information may have innocently fallen through the cracks of a massive federal investigation, Lou.

However, what I can explain is why the FBI turned me away in 1997, when I tried to surrender the evidence to the Bureau directly. And they told my attorney that the Department of Justice did not want any more documents for discovery to turn over to McVeigh and Nichols defense teams. When the FBI finally took custody of the evidence in 1999, because I repeatedly knocked on the door, they took the 22 sworn witness affidavits about the specific identification of Arab men involved in the Oklahoma City bombing.

They did not call one witness, Lou. They did not interview them. And to this day, the man identified by several witnesses, as John Doe 2, cannot provide one witness affidavit to establish his whereabouts for the morning of April 19. And to this day, the Department of Justice has been unable to provide an explanation to the Government Reform Committee investigators who have been looking into this for five months, as to why they never questioned this possible Iraqi John Doe, and why they have never officially cleared him on the record.

DOBBS: Where do you believe John Doe #2, as referred to, and where do you believe he is, and whom do you believe he is? DAVIS: Well, I believe that he is a former Iraqi soldier. I submitted this investigative file to the former chief of human intelligence, to the Defense Intelligence Agency. And this gentleman studied the background of Hussein Al-Husani (ph).

What information we have from this international rescue committee records, and the INS, and also studied a very distinctive military tattoo on his upper left arm. And he came to the conclusion that most likely, Hussein Al-Husani (ph) served in the Republican Guard and was recruited by the elite unit 999 of the Iraqi Intelligence Service. And this is based, this service, is based out of Salmanpac (ph), which is southeast of Baghdad, and is responsible for carrying out clandestine operations at home in the Middle East, and abroad.

Where do I believe he is today? I believe he went on to Boston. I have information that in 1997, four years before the suicide attacks of 9/11, before those hijackings, Hussein Al-Husani (ph) told his psychiatrist in confidence that he was afraid of working at his job at Boston Logan International Airport, because if there was a terrorist strike there, quote, "I would be blamed for it."

DOBBS: What is next for you?

DAVIS: Next for me is I am continuing to work with investigators on the House side and Senate side, and I am hoping the American people will demand answers for these questions in congressional hearings.

DOBBS: Jayna Davis, thank you for sharing your views and raising the questions.

DAVIS: Thank you for having me.

DOBBS: Coming up next here, the new technology designed to make this country's northern border more secure. A special report for you from the St. Lawrence seaway.

Confidentiality agreements have long been a key component in civil lawsuits. We will tell you why an increasing number of judges say those agreements act against the public interest.

Subtropical storm Gustav continues to march toward the Carolina coast. We will bring you the latest on that, and Martha Stewart could know very soon, whether she will face charges over her controversial trade in ImClone stock.

That story and more still ahead. We will be back in one minute.

(COMMERCIAL BREAK)

DOBBS: Firefighters are battling yet another wildfire in California tonight. That fire is burning in brush land in the area of a wilderness park that is surrounded by the Los Angeles suburbs of Glendale and Burbank. The fires started shortly before noon, then rapidly spread to more than 80 acres. No homes have been destroyed yet but 30 buildings have been evacuated as a precaution. Subtropical storm Gustav continues to march toward the Carolina coast tonight. A tropical storm warning is in affect for parts of Carolina, but coastal residents from Florida to Maine are likely to feel the effects of Gustav. Waves are already pounding the shoreline. They have crested at 10 feet in Cape Hatteras. Subtropical storms are rare, because they are formed with warm air on the bottom, cold air on the top. The more common tropical storms are formed only by warm air. Gustav could become a full-fledged tropical storm as early as tomorrow.

Officials in Utah say it is a miracle that no one was killed in a powerful storm yesterday. A tornado tore through the town of Manti, destroying house, uprooting trees and tearing down power lines.

Golf-ball sized hail rained down on the town as the tornado touched down not once, but three times. Power is still out for most of the town. Officials estimate damages at more than $1 million. A remarkable look at that tornado.

Heavy rains continue to fall tonight in southern Colorado. This weekend, those downpours led to widespread mudslides, boulders as large as 5 feet across, smashed into homes. Hundreds of people were trapped inside buildings and cars. The Durango area has been vulnerable to floods and to mudslides since a 70,000-acre wildfire. The fire stripped the slopes of trees and vegetations that would normally stop mudslides and erosion.

As we reported earlier, there was a high-profile meeting today between President Bush and Prime Minister Chretien. Border security between Canada and the United States at the top of their agenda. The St. Lawrence seaway is jointly operated by the United States and Canada, and it's now developed a plan to keep track of every ship along every inch of the 425-mile waterway all the time. Allan Dodds Frank reports.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The St. Lawrence seaway appears so peaceful, so far removed from the threat of terrorism. Yet for the Canadian and American authorities who run the seaway, there is a sense of dread that the waterways between the Atlantic Ocean and the Great Lakes are not secure.

ELLEN ENGLEMAN, DEPT. OF TRANSPORTATION: This is a perfect example of how we've had to address transportation issues differently since September 11. Because let us never forget, transportation system was used as a weapon against our nation, my nation, and it was used as a weapon against the world.

FRANK: Immediately after the September 11 attacks, seaway officials, using old-fashioned ship-to-shore radios, scrambled to locate and identify vessels spread along the St. Lawrence and the Great Lakes. Now to combat potential terrorists and enhance maritime safety, the seaway has unveiled a new automatic identification system that uses satellite technology to track vessels continuously. ALBERT JACQUEZ, ST. LAWRENCE SEAWAY DEVELOPMENT CORP.: With this system, we don't have to rely on trust, the trust of who's going to be responding to us. We know exactly where they're going to be, within three meters, whether they want us to know or not.

FRANK: Hundreds of ships go through the seaway system annually, but they are barely monitored.

(on camera): Commercial vessels make more than 4,000 trips a year through the seaway, but right now only nine ships, including the Robinson Bay, have the automatic identification system aboard. Next year, all ships will be required to have one, and those that don't will be equipped with a portable unit to go through the seaway.

(voice-over): When the seaway system becomes operational next April, it will be the first waterway in North America to employ this technology.

JEFF HIGH, U.S. COAST GUARD: If we find a ship that is out there that is not transponding and if it is a ship that should be carrying this kind of equipment, it would be a ship of interest. We would look for that ship.

GUY VERONNEAU: And in terms of security and in the sense of terrorists or things like that, the better you know the position of any ship, the more alert you can be.

FRANK: Under pressure from the United States, the International Maritime Organization is moving to require 30,000 ships worldwide to install automatic identification systems within three years.

Allan Dodds Frank, CNN Financial News, along the St. Lawrence seaway, Montreal, Canada.

(END VIDEOTAPE)

DOBBS: The U.S. Mint is thinking about changing this country's coins. A report by a group of experts that the Mint suggests redesigning all U.S. coins except for the quarter. The experts and collectors say the current designs are what they call, after careful study, "just plain boring."

The nickel would be the first to change. A new design could be introduced as early as next year. One can almost sense the anticipation building. A new dime, half-dollar and penny would quickly follow. The popularity of the state quarter program, introduced in 1999, sparked the talks and the study. And for those of you not ready for change of change, the decision is not final yet. Congressional approval would be required for any change in change.

And that's the topic of tonight's MONEYLINE poll. And the question is, should we change our change? Yes or no. Please cast your vote at cnn.com/moneyline. We'll have the results for you coming up later in the broadcast.

Up next, the dangers facing hospital patients from wrongly prescribed drugs. Errors are more common than you might think or hope.

The confrontation between the president and the Senate over the Department of Homeland Security. Author -- attorney Phil Howard will be here to tell us how civil service protection can act against the common good.

And basketball star Chris Webber has been indicted by the Justice Department. We'll have that story for you.

And investors give stocks a lift today after a hesitant start to today's trading on Wall Street. Jan Hopkins will have the market for us when MONEYLINE continues in one minute.

(COMMERCIAL BREAK)

DOBBS: Tonight, another NBA star in trouble with the law. Sacramento Kings basketball star Chris Webber, indicted by the Justice Department on charges of obstruction of justice and lying to a grand jury. They claim Webber, his father and his aunt tried to conceal cash, checks and other gifts. Those officials say the gifts were given to him by a University of Michigan basketball booster in the years between 1988 and 1993. That booster, Ed Martin, has been convicted of money laundering. Martin admitted giving Webber and three other former University of Michigan players loans and gifts totaling more than $600,000.

We may know as soon as tomorrow whether Martha Stewart will face criminal charges or a subpoena. U.S. lawmakers will announce their findings of the inquiry into Stewart's sale of ImClone shares tomorrow afternoon. Congressman Billy Tauzin and James Greenwood will hold a news conference. Tonight, a spokesman for the committee leading the investigation said the door is "still open to a solution," as he put it, if Stewart's attorneys cooperate. Stewart sold nearly 4,000 shares of ImClone Systems stock just a day before regulators rejected the cancer drug Erbitux. Stewart has repeatedly denied any wrongdoing.

Well, it's now time to update our Enron/corporate America criminal scoreboard. No criminal charges to report tonight. The only change to report tonight: The number of days since Enron filed for bankruptcy, 281.

Federal judges in South Carolina have voted to ban confidentiality agreements as a condition for the settlement of most civil lawsuits. Pledges of confidentiality have become a staple of settlements, with large corporations, and often between individuals as well. But the judges concluded these agreements have hidden the truth about hazardous products, inept doctors, sexually abusive priests as well. Tim O'Brien has the report from Washington.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The Catholic Church has acknowledged that it has quietly settled scores of sexual abuse cases brought against its priests. Would the public have been better served had those settlements not been secret? Firestone made confidentiality a prerequisite for any settlement, leaving the public in the dark for years about its defective tires.

In urging his South Carolina colleagues to ban such confidentiality deals, Chief Judge Joe Anderson wrote: "Arguably, some lives were lost because judges signed secrecy agreements regarding Firestone tire problems."

The nation's trial lawyers have long crusaded against secrecy agreements. On their Web site, they claim when courts allow them, future victims die.

MARY ALEXANDER, TRIAL LAWYER ASSOCIATION OF AMERICA: We are talking about pharmaceutical products, like Fen-Phen. We're talking about IUDs (ph) like Dalkon Shield, exploding tires, cars that roll over, Pinto gas tanks that explode, and many other cars that had exploding gas tanks, asbestos, tobacco.

O'BRIEN: All of which have involved fatalities and secret settlements.

Steven Gillers, who teaches legal ethics, says confidentiality agreements amount to obstruction of justice and violate the ethical rules governing lawyers.

STEVEN GILLERS, PROFESSOR, NEW YORK LAW SCHOOL: When you know that there is a priest who is abusing youngsters, I think that any request that the person with that knowledge remain silent offends justice.

O'BRIEN: Yet, confidentiality agreements have become routine. Arthur Miller, one of the country's leading authorities on federal civil procedure, says banning them not only discourages settlements, but also threatens personal privacy.

ARTHUR MILLER, PROFESSOR, HARVARD LAW SCHOOL: If you say to everybody that you now stand in -- absolutely naked in terms of commercial data, in terms of personal privacy, that will inhibit and ultimately cost the system more in terms of getting cases resolved.

O'BRIEN (on camera): Roughly 90 percent of the civil lawsuits filed in the U.S. never get to a jury. They are settled. The judge signs off on them, and the public rarely learns about them. Private justice in public courts that, at least in some cases, can carry a high price.

Tim O'Brien, CNN MONEYLINE, Washington.

(END VIDEOTAPE)

DOBBS: The number of violent crimes committed across this country has declined again. Those figures, however, exclude murders. The Bureau of Justice Statistics says the number of people who reported they were victims of violent crime dropped more than 9 percent last year. That's the lowest level, 5,744,000 since the government began studying these victims nearly 30 years ago. The number of assaults dropped 10 percent. The study points to economic strength and tougher sentencing laws as the reason for the decline. Hospital patients may be receiving the wrong treatment on a rather regular basis. A study of three dozen hospitals and nursing homes in two states have discovered an average of 40 potentially harmful drug errors at each facility every day. The most common mistakes: Giving patients medicines at the wrong time or not at all. Overall, the number of errors amounted to two per patient per day.

Now, for our weekly segment on the way the law can sometimes look ridiculous and act against the common good. Today, we are looking at the battle between the president and the Senate over the new Department of Homeland Security. The president wants broad powers to hire, fire and reward employees at the new agency, but Democratic senators say the administration is trying to strip federal workers of their civil service protection.

Joining me now, Phil Howard, who is the author of the "Collapse of the Common Good." Well, this is a classic showdown over the rights and prerogatives of federal employees against the administration, a Republican administration. What is at stake here?

PHILIP HOWARD, AUTHOR, "COLLAPSE OF THE COMMON GOOD": Well, what is at stake is whether this agency can really work properly. I mean, every administration for about five administrations, including the Democratic administrations, have tried to clean up the civil service system. When they talk about the rights of the workers, what they really mean is that any disgruntled worker who doesn't like his assignment can take the supervisor to an arbitration hearing, a legal proceeding that can take in the case of a dismissal proceeding, several years.

DOBBS: But don't these employees have these same rights right now?

HOWARD: Yeah, they do have the rights right now. And government agencies are routinely thought to be unmanageable. I mean, to give an example, 434 federal employees last year were dismissed for poor performance, 434 through this process, out of 1.8 million federal employees and out of 64,000 who actually were categorized by their supervisors as unfit for performance. You just can't get rid of anybody.

DOBBS: Well, isn't that just a testament to the extraordinary competence and the skill of federal employees?

HOWARD: That's right. General Electric is so envious. No, I mean, it's absurd. Again, we have 64,000 employees categorized as unfit, and seven out of 1,000 of them are dismissed.

DOBBS: I just find it remarkable that everybody in Washington, I'd like to get your thoughts on this, seems to be ready to sign off on this, so long as this issue can be resolved. Frankly, to me, the term homeland security is an alien term, not a one that makes sense in terms of this country, and the idea of another 170,000-person bureaucracy -- and we all know that's precisely what there will be -- beginning more effective than the separate bureaucracies is mind- boggling. HOWARD: Well, it's not going to be more effective, in my opinion, unless they can actually manage it. I mean, what happens today is if you give someone an assignment that's not within their job classification, they can take the supervisor to a hearing. They don't have to do it. It's like dealing with people who never have to do what they're asked to do. It's really a very difficult situation.

DOBBS: Let me turn quickly to the story out of Carolina. Federal judges wanting to end the secrecy, these sealed agreements, which I think is a terrific idea. What do you think?

HOWARD: Well, I think, in general, it's a terrific idea, too. I mean, there are cases -- you can think of embarrassing situations that are solely personal, where you can imagine confidential agreements being OK, but in general, if somebody does something wrong, the public ought to know about it.

DOBBS: I'm not sure I agree with that. I mean, once you go into the public court system, paid for by the taxpayers, you're under its jurisdiction, why should anything denied...

HOWARD: I don't know. If your child does something embarrassing and makes a mistake and somebody puts a claim...

DOBBS: Well, I'm not talking about minors. That is a separate issue.

HOWARD: OK. Your child who is 21 years old makes a mistake. I mean, you know, you can imagine situations...

HOWARD: I don't know about you, but my children have never done that. I can't even imagine such a thing.

HOWARD: Certainly not. Certainly not. But in general, what the court did is a very good thing, because we have the Catholic Church with secret settlements, we have dangerous products...

DOBBS: It's mind boggling.

HOWARD: (UNINTELLIGIBLE) secret settlements. Yeah.

DOBBS: And how about all of those secret government deals and documents that still remain inaccessible, inaccessible to the American public? We have got a lot more to talk about the next time. Phil, thanks for being here.

HOWARD: Nice to be here, Lou.

DOBBS: There is still time to vote in our MONEYLINE poll tonight. As we reported earlier, a group of officials from the Mint, they are the ones who do the big thinking about these things, they want to change the country's coins because they think they're boring. The question ,is should we change our change? Vote at cnn.com/moneyline. We'll have the results for you in just a few minutes. Coming up next, AOL Time Warner lowers the bar once again for online advertising revenue, and the stock market proves resilient, despite investor concerns about the anniversary of the terrorist attacks against this nation.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: As we reported, a stunning recovery today on Wall Street. The Dow, 250-point trading range today. The Nasdaq closed back above 1,300. Jan Hopkins is here with the market for us. Quite a day.

JAN HOPKINS, CNN FINANCIAL NEWS CORRESPONDENT: Quite a day. It was a dramatic turnaround, Lou, and a lot of people said it came out of nowhere, and certainly it was not the way the day began, because investors were quite worried about the possibility of an attack on Iraq. And also, the possibility or the fact that this is the week of the anniversary of the September 11th attacks.

But later in the session, after lunch, investors seemed to take a second look at the news that consumers continue to spend, and they started betting on consumer stocks and the economy. By the close, the Dow was up nearly as much as it fell early on. The Dow, the Nasdaq and the S&P all closing with about 1 percent gain. Christine Romans is at the New York Stock Exchange, Greg Clarkin at the Nasdaq marketsite -- Christine.

ROMANS: Jan, the Dow recovering from 112-point deficit. Citigroup gained 3 percent after it replaced the head of Salomon Smith Barney, but a downgrade kept JP Morgan lower.

AOL Time Warner recovered from a warning about AOL division revenue. It closed up 20 cents. Ford rallied 5 percent. It now forecasts a small profit in the third quarter instead of a loss, and Northrup-Grumman rallied on Iraq war talks and a favorable mention from SG Cowen.

Now to the Nasdaq and Greg Clarkin.

CLARKIN: And Christine, this is one of the lightest trading days of the year for the Nasdaq, but there were some notable winners. Shares of Oracle got a nice pop, that after an upgrade out of Wachovia. Also, Nextel down, despite the wireless company saying its subscriber growth is strong. Royal Gold among the gold stocks on the Nasdaq. It was up 12 percent. Lending Tree, that's an online lender, gained 13 percent. The company now saying that they will post a profit for the quarter, thanks to a robust loan business, and Microsoft was the best big-cap performer, up almost 2 percent on the day.

With this gain today, the Nasdaq back up over 1,300 for the first time in just over a week. Jan, back to you.

HOPKINS: Thanks, Greg.

Not only did stocks move higher, so did oil prices, interest rates and gold. Gold and silver have been moving higher for the last six weeks, as there is more and more talk about an Iraqi attack. Mining stocks have benefited from the rise in precious metals, and mining stocks are the best performing industry group in the last three months. In fact, Lou, they're up 65 percent over the last year. Quite impressive.

DOBBS: Oh, you wish we could say that about all groups.

HOPKINS: That's right.

DOBBS: Jan, thank you. Thank you very much.

Well, one of the stocks that doesn't fit into that category -- the shares of AOL Time Warner. It did end higher today, the shares reversing an early loss, tied to a warning about the America Online unit. AOL Time Warner, this network's parent, says the advertising weakness at its online unit is worse than previously reported or thought. But AOL says strength in its other divisions will make up the difference.

Peter Viles has the story.

(BEGIN VIDEOTAPE)

PETER VILES, CNN FINANCIAL CORRESPONDENT (voice-over): The weakest link of AOL Time Warner is even weaker than previously known. The company now says it's beleaguered AOL division will not meet even drastically lowered targets for advertising sales.

FRED MORAN, JEFFERIES & CO.: This is another warning after they just lowered guidance in July. It's only been a couple of months. This shows that they don't really have a handle on what significant problems they have at the AOL unit, and it shows that it's going to take a lot longer and a lot more effort to reinvigorate this unit, so I'm fairly disappointed by the news.

VILES: Through the June quarter, cash flow, as measured by EBITDA, at the AOL division was already 41 percent below last year's levels. There is other weakness in the company, the networks division, which includes CNN, also suffering advertising weakness. EBITDA there is 5 percent below last year.

But elsewhere, the trend is growth: 10 percent in music, helped by cost cutting, 24 percent in publishing, boosted by the acquisition of 80 magazine titles, 31 percent in the film business, where DVD sales are helping, and 12 percent in cable helped by higher rates.

Bottom line, the old-time Warner units are performing decently, showing EBITDA growth of 12.6 percent; AOL is in a freefall.

PAUL KIM, KAUFMAN BROTHERS: In the old-time Warner assets, you are seeing the stabilization of the overall marketplace. Advertising probably is not going to turn up, but it's probably not going to go down. And of course, film entertainment is relatively strong, the stock's up pretty strong, so I think things have stabilized, except for the AOL division, where you're seeing major negative cyclical (ph) issues.

VILES: The problem at AOL, revenue from advertising. It piqued at $720 million in the first quarter of 2001, have dropped 43 percent since that, and Monday's guidance means the collapse is not yet over.

(END VIDEOTAPE)

VILES: Now, those are the numbers, but this company also weighed down by some issues that are hard to quantify. Management is new, and it is unproven, and it faces accounting investigations by both the SEC and the Justice Department -- Lou.

DOBBS: Well, that just about wraps it up, I would say.

VILES: I wish I had better news.

DOBBS: Well, we take the news as it lies. Thank you very much.

Now, the results of our poll tonight. It follows reports that the Mint is considering changing the design of this country's coins because they are, in the words of the Mint study, "boring." Should we change our change, we ask? And you said yes, 38 percent of you; 62 percent of you were not persuaded by the argument that our coins are boring.

Thank you very much for your vote.

Coming up next, your e-mails. We will hear your thoughts about Iraq and corporate compensation and what to do about corporate corruption. Stay with us.

(COMMERCIAL BREAK)

DOBBS: Let's turn to your thoughts now. Many of you wrote in to express anger about Scott Ritter, the former U.N. weapons inspector, who has been critical of efforts by the Bush administration to prove case for an attack against Iraq. Gerald Farber wrote in to say: "Former United Nations weapons inspector Scott Ritter is a stooge, and doesn't possess the knowledge or personal means to assert that we in the United States have nothing to fear."

M.J.J. writes: "Would you guys tell this (EXPLETIVE DELETED) to shut his trap and leave diplomacy to the Bush administration? He's giving aid and comfort to the enemy," end quote.

Linda Morelli of Wilmington, Delaware wrote in to say: "On your Friday broadcast, you heard aired a story regarding the perks received by the former head of General Eclectic. On the same show, you featured a story on a Camden, New Jersey police officers making $40,000. It amazes me that in our society, we pay retired executives these salaries. After all, when was the last time they stood in harm's way for us?"

John Moody writes from California to ask: "What the hell happened to you, Lou? I've been watching your program for a month or two, and was surprised that you seemed almost even-handed. Then you took a vacation, and as soon as you came back, you take off on a rabid right- wing jag. This entire week was spent on NEA bashing, trial lawyer bashing and Clinton bashing." Diane of Ontario, Canada, however, soothes me a bit after reading that. She wrote: "Lou, I want to thank you for always providing a good, well-rounded program. There are few anchors, hosts or so-called experts that I have any respect for. You are one of the very few that I can honestly say I respect."

Diane, I thank you very much for those kind words. And there is a fellow in California I'd like you to talk with.

As always, we enjoy hearing from you. And if you would send us your thoughts at moneyline@cnn.com. We ask you include your name and address, as always.

That's MONEYLINE for this Monday evening. Join us tomorrow night. Our guests will include Ronan Gunaratna, the author of "Inside the al Qaeda." Former Defense Secretary William Cohen will also be here. We'll be talking about the administration's attempt to build a case against Iraq and Saddam Hussein. That's tomorrow night.

Thanks for being with us tonight. From all of us here, good night from New York City.

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