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CNN Student News

Aired January 23, 2002 - 04:30   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: You're watching CNN STUDENT NEWS seen in schools around the world because learning never stops and neither does the news.

MICHAEL MCMANUS, HOST: CNN STUDENT NEWS kicks off this Wednesday taking care of business. Leading the pack, Kmart in trouble? Yes, Kmart. Next, we focus on Islamic charities under the microscope. Still about business in "Perspectives," we travel to the other side of Africa to mine diamonds. Then, Student Bureau profiles some young people doing their part to show they care.

Welcome to CNN STUDENT NEWS. I'm Michael McManus.

Retail giant Kmart files for a Chapter 11 bankruptcy. Kmart CEO says the move will allow the company to restructure operations, evaluate the profitability of each store and possibly emerge more viable.

(BEGIN VIDEO CLIP)

CHARLES C. CONAWAY, CEO, KMART: Kmart is not going out of business. In fact, this is going to help Kmart actually expedite its turnaround plan and be stronger, more profitable and ultimately more competitive in the marketplace.

(END VIDEO CLIP)

MCMANUS: Turning now to the financial woes and subsequent fallout of another major company, the fallen energy giant Enron. The FBI is now investigating allegations of document shredding at the company itself, not just at its auditor Arthur Andersen. Federal agents paid a visit on Tuesday to Enron's headquarters in Houston where a former Enron employee is said to have discovered the shredding of box loads of documents being sought in various investigations and lawsuits. Attorneys for some Enron investors are asking a federal judge to take possession of those papers and other documents.

The unfolding scandal between Enron and Arthur Andersen does follow a pattern and that involves the destruction of document, a practice that often becomes the focal point of criminal as well as congressional investigations.

Tim O'Brien has more.

(BEGIN VIDEOTAPE)

TIM O'BRIEN, CNN CORRESPONDENT (voice over): It wasn't the Watergate break-in that drove President Richard Nixon from office, as it was his efforts to cover it up. A jury never convicted former White House aide, Oliver North, of the massive arms-for-hostage deal he orchestrated, but rather for shredding documents and obstructing Congress. It wasn't Bill Clinton's relationship with Monica Lewinsky that led to his impeachment, as much as it was his lying under oath about it. History shows that it is not the underlying offense that causes trouble, as often as it is efforts to cover it up.

David Duncan, the Arthur Andersen auditor who headed up the Enron audit, has not admitted ordering thousands of Enron-related documents destroyed on October 23rd, the day after the SEC launched an inquiry of Enron's finances.

The company fired Duncan citing his bad judgment. Duncan says he followed the advice of in-house counsel, but that may not help.

PROFESSOR JOHN COFFEE, COLUMBIA LAW SCHOOL: If you either destroy yourself or persuade others to destroy, alter, mutilate any document with the intent of making that document unavailable for use in that official proceeding, it's a Federal felony and there's not much you can say by way of defense. It's not easy to say, my lawyer told me to do this. That's not a recognized defense.

O'BRIEN: Arthur Andersen did have a policy of routinely shredding documents. "Accountants are like packrats," said CEO Joseph Berardino. "We save lots of stuff that's not relevant."

And company lawyer, Nancy Temple, did send a memo out in early October reminding Duncan and other employees of that policy concluding, "it would helpful to make sure that we have complied with the policy."

(on camera): House investigators have been questioning both Temple and Duncan, and Duncan is expected to be called as a witness before the House Energy and Commerce Committee Thursday. His lawyers have disclosed he will invoke his Fifth Amendment right against self- incrimination, that he'll speak only if granted immunity. That is, assurances that nothing he says will be used against him in court.

Tim O'Brien, CNN, Financial News, Washington.

(END VIDEOTAPE)

MCMANUS: More on business as we focus on the war on terrorism. Cutting off funding for international terrorist groups has become a top priority of the U.S. government. Investigators are targeting suspected bankrollers in many countries, including the U.S.

CNN's Allan Dodds Frank brings us a closer look at the crack down on Islamic charities.

(BEGIN VIDEOTAPE) ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Jerusalem, 1997: suicide bombers kill five, wound 192. The terrorist organization Hamas takes credit. Investigators discover possible connections between Hamas and some charitable organizations in America.

Now the United States government says it has strong evidence that a network of U.S.-based Islamic charitable organizations has been funding not only Hamas, but also Osama bin Laden and his worldwide al Qaeda network. FBI agents last December raided the Holy Land Foundation for Relief and Development, The biggest Islamic charity in the country.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Money raised by the Holy Land Foundation is used by Hamas to support schools and indoctrinate children to grow up into suicide bombers. The money raised by the Holy Land Foundation is also used by Hamas to recruit suicide bombers and to support their families.

GHASSAN ELASHI, HOLY LAND FOUNDATION: We are a strictly charitable organization and we have no relation with any terrorist organizations.

FRANK: According to Holy Land's tax returns, the foundation raised more than $13 million in the year 2000 to support its programs in the Middle East. But the U.S. government has now blocked the financial assets of the foundation.

JIMMY GURULE, UNDERSECRETARY OF TREASURY/ENFORCEMENT: If the money trail leads us to a charitable institution, a charitable organization that's funding terror, that funding mechanism must be cut off.

FRANK: The Holy Land Foundation and its chairman, Ghassan Elashi, declined to speak to CNN.

UNIDENTIFIED MALE: You're convinced this is a spear campaign?

SHUKRI ABU BAKER, HOLY LAND FOUNDATION: Absolutely.

FRANK: But at an earlier press conference, the group's spokesman complained about the government's action.

BAKER: This is black day, terrible tragedy for the American Muslims and for American civil liberties.

FRANK: Holy Land and other charities targeted by the government say they are being unfairly singled out, victims of anti-Muslim feelings since the September 11 attacks.

(on camera): This mosque in southwest Chicago is the centerpiece of one of the largest Muslim communities in the United States. And within a few miles from here are offices for most of the major Islamic charities, now under investigation by the federal government.

(voice-over): Thousands of Muslims live in this suburban community which houses two of the largest American Islamic charities, the Global Relief Foundation and the Benevolence International Foundation. On December 14, the government blocked the assets of both charities.

In Global Relief's offices, there is disbelief, even as workers resume their prayer rituals days after the FBI raid. Mohamad Chehade, the executive director of Global Relief, is still upset by the FBI seizure of many personal items from his apartment. His wife and three daughters also remain rattled.

ASMAA CHEHADE, WIFE: I felt very saddened and hurt when I found out that my wedding pictures were missing.

FRANK: Mohamad Chehade is trying to resume a normal schedule. But at his office, the government's actions have brought work to a stand still even as the mail brings in stacks of new donations.

MOHAMAD CHEHADE, GLOBAL RELIEF FOUNDATION: This is a donation of $15,000.

FRANK: They pile up before being deposited into blocked bank accounts. Compassion in action throughout the world. That's the motto of Global Relief, which began in 1992 by focusing on Afghanistan. Global Relief says in the year 2000, it raised $5.3 million from about 20,000 donors. The money funded the foundation's operations in 20 countries, including many hot spots suspected by the U.S. of harboring terrorists.

(on camera): Why do you think the U.S. government has the notion that you're somehow supporting terrorist organizations or terrorist activities?

M. CHEHADE: We believe really it's a part of organizational profiling now. We are a Muslim charity operating in Afghanistan, operating in a hot spot.

FRANK: Do you it's possible that any of your funds or programs have supported any of the terrorist groups the United States government is opposing?

M. CHEHADE: I would say it's impossible. We do not tolerate violence or act of terrorism. So we make sure -- we insure that our money is spent on the proper way.

FRANK (voice-over): That claim rings hollow in Washington.

GURULE: The government has clear and credible evidence that Global Relief is supporting terrorist activities.

FRANK (on camera): Do you have reason to believe that it's related to al Qaeda or the Taliban?

GURULE: Yes, we do.

FRANK (voice-over): In fact, while refusing to cite specifics, the government admits it is investigating numerous charities and the way they interact. The government crack down bothers some legal experts.

PROFESSOR DAVID COLE, GEORGETOWN UNIVERSITY LAW CENTER: If you've got a general program of assistance to the needy, and some of the needy are needy because their, you know, father was killed in a suicide bombing or was arrested for a criminal activity, that shouldn't undermine the legitimacy of the general program.

If on the other hand, you can show that these entities are supporting children of suicide bombers in some special way, then I think you could make an argument they are in fact seeking to support the terrorist activity.

Although much of the government's evidence against Global Relief and other charities remains classified, Mohamad Chehade vows to contest the case.

M. CHEHADE: There must be organizations to fulfill the obligation of Muslims, whether they are in the States or somewhere else.

FRANK: Allan Dodds Frank, CNN Financial News, Bridgeview, Illinois.

(END VIDEOTAPE)

MCMANUS: The debate over the status of detainees from Afghanistan has landed in court. Tuesday, a federal judge in Los Angeles heard arguments that the detainees either be brought before a judge to face charges or be declared prisoners of war.

Our Joel Hochmuth looks at what the argument was all about.

(BEGIN VIDEOTAPE)

JOEL HOCHMUTH, CNN CORRESPONDENT (voice-over): What's in a name? The U.S. military calls them detainees. They're the 158 suspected members of the al Qaeda terrorist network or Taliban fighters it holds at Guantanamo Bay, Cuba. Civil rights activists are petitioning that they be called prisoners of war or brought before a judge to face charges. Among the activists, former U.S. Attorney General Ramsey Clark.

RAMSEY CLARK, FORMER U.S. ATTORNEY GENERAL: Well everybody is entitled to civil rights. If they're prisoners of war, they can't be questioned. They shouldn't have been detained the way they have and questioned the way they have. If they're not prisoners of war, then if you're going to detain them, you've got to charge them with a crime and present them to a magistrate to determine whether there's probable cause to hold people.

HOCHMUTH: Defense Secretary Donald Rumsfeld defends the military's decision not to call the detainees prisoners of war. He says according to the Geneva Conventions that designation only applies to those fighting for a legitimate government, not to members of terrorist groups like al Qaeda. DONALD RUMSFELD, U.S. DEFENSE SECRETARY: That having those people back out on the street to engage in further terrorist attacks is not our first choice. They are being detained so they don't do that. That is what they were about. That is -- that is why they were captured and that is why they're detained.

HOCHMUTH: The judge did not rule on the petition. In fact, he expressed concern whether he even has jurisdiction in the case. He's ordered both sides to file additional briefs. Another hearing is set for February 14.

Joel Hochmuth, CNN STUDENT NEWS.

(END VIDEOTAPE)

ANNOUNCER: Exploring our world, here now is "CNN Student News Perspectives."

MCMANUS: As the saying goes, diamonds may be a girl's best friend, but the gems are especially near and dear to the women and men of South Africa. Today in the second part of our series "The Other Side of Africa," we take a closer look at diamond mining and the impact the gems have had on the South African economy.

Rudi Bakhtiar reports.

(BEGIN VIDEOTAPE)

RUDI BAKHTIAR, CNN CORRESPONDENT (voice-over): It sparkles, it glitters, it dazzles. Renowned for its natural beauty, the diamond is also the hardest natural substance known to man. Worldwide demand for this unique gem's brilliance and durability has brought tremendous economic benefits to those nations that draw it from the earth and help get it to the market. Africa is the world's richest continent for diamond mining and South Africa is where it all started.

BRIAN ROODT, DE BEERS CORP. AFFAIRS MANAGER: If one puts it in historic context, the first diamond officially found in South Africa was discovered in 1866. That was at Hope Town on the banks of Orange River about a hundred kilometers south of Kimberley. The local mines here in Kimberley were discovered around 1869 to 1871, and with the discovery of the diamonds here in the Kimberley area, the whole evolution of modern industrial South Africa as we know it really began. It was followed, as your viewers might well know, with the discovery of gold, but it was diamonds that came first.

BAKHTIAR: Between 1872 and 1908, South Africa produced more than 97 percent of the world's diamonds. Mining for both diamonds and gold became the foundation for the nation's rapid economic development.

ROODT: Prior to the discovery of diamonds, South Africa was essentially an agricultural outback and ships plying between Europe and the East used to stop here to replenish their supplies. But there was very little beyond primarily agriculture so it was the discovery of diamonds that really triggered the development of the modern industrial South Africa. BAKHTIAR: If diamonds helped put South Africa on the road towards economic progress, then De Beers can take credit for drawing the map on diamonds. Founded in 1888, the De Beers Group held a monopoly over the world's supply of diamonds for more than 100 years. Today, its monopoly diminished, De Beers is still the largest diamond mining company in the world.

ROODT: In South Africa alone, we employ in excess of 10,000 people. We pay significant taxes to the country. We generate enormous taxes for the country and the employees that we employ obviously are also paying taxes. We occupy significant areas of land in the areas where we are mining and we pay rates and taxes on that as well. So there is a major contribution to the economy of South Africa.

BAKHTIAR: De Beers is headquartered in the remote South African city of Kimberley where most of South Africa's diamond operations are concentrated. Considered the historic capital of the worldwide diamond industry, Kimberley owes its existence to the precious stone.

ROODT: There were originally five operating mines in Kimberley. Of those five, two have already ceased production. The world famous Big Hole, which was also known as the Kimberley Mine, closed down in 1914. The De Beers Mine, after which the company was ultimately named, closed down at the end of 1990. So we still have three operating mines here in Kimberley. They are the oldest and deepest underground diamond mines in the world.

BAKHTIAR: But while diamond mining has a proven record of accomplishing great economic good, as in South Africa and neighboring Botswana where De Beers also has business interests, it has also been the source of horror elsewhere in the continent.

In countries like Angola, the Democratic Republic of Congo and Sierra Leone, control over diamond mines has been intertwined with civil wars, wars that have fueled countless human rights abuses and atrocity. Diamonds from those countries are known as blood diamonds or conflict diamonds.

The diamond industry says these stones only account for up to 4 percent of the market, but human rights campaigners say the actual number could run as high as 15 percent. So against a backdrop of finger pointing and a potential threat that customers would stop buying diamonds if they didn't know where they were from, De Beers and the larger diamond industry agreed to take action.

PETER MOETI, DE BEERS PRODUCTION MANAGER: The measure we've taken basically is to make sure that we are not selling or even buying any diamonds which the money of will be used by the rebels to go buy arms and hurt or even kill people at the end of it.

BAKHTIAR: De Beers also supports a plan for global certification of all rough diamonds. It's an initiative being worked out by participants in the Kimberley process, an intergovernmental forum mandated by the United Nations. MOETI: If everyone is concerned about what is happening in terms of conflict diamonds and insists on a certificate of (UNINTELLIGIBLE) before doing a transaction in diamonds, that will further and even marginalize (ph) people that dealing in conflict diamonds that they will run out of people to sell to.

BAKHTIAR: The objective, allow customers to obtain the entire history of any diamond, where it was mined, how much it weighed originally and where it was cut. Yet difficulties remain.

ROODT: If one has a large parcel of diamonds or a pile of diamonds, which we call a run of mine parcel, then it is possible to look at the general characteristics of that parcel and say, yes, these look like they come from a particular area. But if one took a single diamond from that parcel and looked at it in isolation, it wouldn't be possible, and this is part of the problem and the difficulties that one has in establishing a so-called order trail with the whole issue of diamonds from conflict areas.

BAKHTIAR: Another concern for De Beers, preserving its presence in South Africa for generations. To that end, the company is planning to build a new plant in Kimberley. Without it, the city would face a complete halt in operations by the year 2003.

ROODT: We have managed to extend the life of the underground operations for another 8 to 10 years. And it is the intention also that we will start to treat all the dump material that one sees around the city and that means that Kimberley is going to continue producing diamonds for the next 35 to possibly even 45 years which is very exciting for the local economy.

BAKHTIAR: Full production at the treatment facility is expected by the middle of next year. In the meantime, the search for diamonds goes on and South Africa counts its blessings and its bounty thanks to this dazzling product of nature.

Rudi Bakhtiar, CNN, Kimberley, South Africa.

(END VIDEOTAPE)

MCMANUS: Body piercing, low riders, tattoos, all trends of the moment, symbols of Generation Y which begs the question, what fuels a trend and how do consumers get plugged in to what young people want?

Our Bill Delaney met a man who has some of the answers.

(BEGIN VIDEOTAPE)

BILL DELANEY, CNN CORRESPONDENT (voice-over): Why out of the mysterious collective wisdom or nuttiness of any given generation will one thing get to be the thing? Like right now 12 to 24 year olds, Generation Y, why piercings? Why tattoos? Shoes with soles as thick as Michelins, bare bellies and how to predict a summer or so ago there'd be so many?

Well what Tru Pettigrew gets paid to do... TRU PETTIGREW, MARKETING RESEARCHER: Now the suburban kid, when we went shopping...

DELANEY: ... is stay always at least a nose ring's length or so ahead of the curve, the next big thing.

PETTIGREW: I mean you hear a lot of the same brands.

DELANEY: For Y Access in Boston, he calls himself proudly the voice of the consumer.

You tell your clients what young people want to buy.

PETTIGREW: That's one of the things we do, but we also tell them why they want to buy it, what the influences are, what motivates them and ways to communicate with them.

DELANEY: Pettigrew's rare enough gift is communicating with them, getting often weary, overly marketed kids to let on where they're coming from. It probably helps where Pettigrew comes from, a former rap singer raised poor in Baltimore.

PETTIGREW: But the people that I talk to and the people that I deal with, you know, I talk to and deal with the same people I grew up with.

DELANEY: He talks to urban kids and the suburban kids who then tend to fall in step behind them, harvesting insights that can then sway how a company spends millions.

PETTIGREW: They were shopping more by style than by brands.

DELANEY: Pettigrew's laboratory is a gathering like this at Massachusetts Communications College outside Boston.

PETTIGREW: My name is Tru. Our clients companies like Reebok, Timberland or JanSport.

UNIDENTIFIED MALE: I think a lot of what's in right now is being different and you know, having your own style.

UNIDENTIFIED MALE: Before you'd used to want to like have to be with the crowd and do different things and just having your own style is just appealing. You know what I'm saying?

DELANEY: What Pettigrew hears and records for a study back at the office, we'd likely miss.

UNIDENTIFIED FEMALE: I'm not really into like brand names.

DELANEY: He hears a shift right now away from wearing the same label as everybody else, meaning Pettigrew will tell clients the next trend for the next six to nine months or so will be away from the pack to a more personal wide-open style.

UNIDENTIFIED FEMALE: I listen to all types of music. If you saw my CD case you'd be like whoa.

PETTIGREW: All they want is like look, at least hear us out to understand what we want, what we're looking for and what we need.

DELANEY: Which could be, who knows, neck triangles or un-bared bellies or reading. Whatever it will be, count on Tru Pettigrew getting it before just about everybody else.

Bill Delaney, CNN, Boston.

(END VIDEOTAPE)

MCMANUS: Well to the surprise of some, the flag of patriotism unfurled after September 11 was held high by young America. Students all over the country have been raising money, making cards and doing their part to help bring a smile back to New York's face.

As our "Student Bureau Report" shows us today, included in this effort are elementary school students in Mount Pleasant, Michigan.

(BEGIN VIDEOTAPE)

HELENE WALIGORA, CNN STUDENT BUREAU: With pencils and markers in hand, these second and third graders at Pullen Elementary put forth a big effort to say two little words, thank you.

UNIDENTIFIED FEMALE: I was very sad for what happened on September 11. What I saw on the news was very hard for me. You're the best (UNINTELLIGIBLE) I could ever think of.

WALIGORA: And once completed, these tokens of appreciation were ready to be delivered to some of our nation's finest, one of the first New York fire companies to respond to the World Trade Center disaster. Although Mrs. Shepherd's (ph) class may not fully understand the magnitude of the September 11 attacks, their words reflect a sense of loss felt by much of the nation.

UNIDENTIFIED MALE: I hope all of the terrorists will stop.

UNIDENTIFIED FEMALE: I felt very sad about the terrorist attacks.

WALIGORA: The men of Engine 201 say they appreciate the cards and letters they've received from across the country as they continue to grieve for four of their own comrades who have been missing since the collapse of the first tower.

UNIDENTIFIED MALE: This here is Firefighter Greg Buck. This here is Lieutenant Martini (ph). This here is Firefighter John Schardt with his baby boy, Bobby. And this right here is Firefighter Chris Pickford, which were all working the day of September 11, 2001.

WALIGORA: To deal with their personal tragedy, the men come together around this table to eat, talk, laugh and cry. And it was at this table they sat to watch a video of students 750 miles away in Michigan who used the same word over and over to describe these men who risked their lives serving their community.

UNIDENTIFIED FEMALE: You're our heroes (UNINTELLIGIBLE) serving our country.

UNIDENTIFIED FEMALE: You're my hero.

UNIDENTIFIED FEMALE: You are great heroes.

UNIDENTIFIED FEMALE: You're a real brave hero. You are very brave, trustworthy, nice, good. Thank you for helping on September 11, 2001.

WALIGORA: And while these everyday heroes try to go on with their lives, they are constantly reminded of all that was lost on September 11. Banners, posters and cards sent from almost every state in the nation plaster churches and buildings throughout New York. And one thing is clear, cities big and small are united in expressing their heartfelt support for those who risk their lives to save the lives of others.

Helene Waligora, CNN Student Bureau, New York.

(END VIDEOTAPE)

"Where in the World" produces one-third of the world's gold, enforced apartheid for more than 50 years, home to wide variety of animals? Can you name this country? South Africa.

MCMANUS: Definitely one of my favorite "Where in the World" locations. I got the chance to visit Cape Town, South Africa three years ago, and it was indeed an incredible experience.

But tomorrow we journey from South Africa north to Rwanda. Be sure to check that out, and also click on to CNNstudentnews.com to watch and learn all about the science of diamonds. Be sure to check that out.

CNNSN is proud to be a part of your day. Thanks for watching. I'm Michael McManus. We'll see you tomorrow.

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