The MacNeil/Lehrer NewsHour

MR. MacNeil: Good evening. I'm Robert MacNeil in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Wednesday, we get four views of the giant AT&T/McCaw telephone merger, a reporter updates the Navy's Tailhook investigation, and we have excerpts from the news conference of a kidnap victim who survived. NEWS SUMMARY

MR. LEHRER: The State Department today placed Sudan on the list of nations which sponsor terrorism. It makes the East African country ineligible for all U.S. aid money, except humanitarian assistance, and severs the few trade links that exist between the two countries. State Department Spokesman Mike McCurry explained the decision.

MIKE McCURRY, State Department Spokesman: The evidence currently available indicates that Sudan allows the use of its territory as sanctuary for terrorists, including the Abi Nidal Organization and members of Hezbollah and Palestine Islamic Jihad. We also believe safe houses and other facilities used to support radical groups are allowed to exist in Sudan, with the apparent approval of the Sudanese government's leadership. Further, we believe that reports of training in Sudan of militant extremists that commit acts of terrorism in neighboring countries are credible. The United States, both in Khartoum and in Washington, have been in frequent communication with the government of Sudan for well over a year. The government of Sudan has failed to date to respond positively to our concerns.

MR. LEHRER: Sudan's military ruler denied the chargers. Lt. Gen. Omar Hasan El-Bashir said the State Department report lacked evidence and was based on U.S. bias against Islam. He said Sudan would reject $50 million in famine relief from the United States because it would allow U.S. spies to infiltrate his country. Sudan is the seventh country on the U.S. list of terrorist states. The others are: Iran, Iraq, Libya, Syria, North Korea, and Cuba. Robin.

MR. MacNeil: Four were killed and fifteen wounded today in an attempt on the life of Egypt's interior minister. The attack took place in downtown Cairo, where assailants set off a bomb and opened fire on the minister's motorcade. It was believed to be the work of Islamic radicals seeking the overthrow of Egypt's secular government. We have a report narrated by David Symonds of Worldwide Television News.

DAVID SYMONDS, WTN: Pandemonium struck after the bomb blast rocked the city's center. Many of the victims were passers-by going about their daily business, but the attack was aimed at Hasan Ala- Fi, the newly promoted interior minister in charge of national security. The dead and wounded were rushed to hospitals in Cairo. Doctors performed emergency surgery on Ala-Fi, who's only just recovered from a gall bladder operation in London. As minister for police, Ala-Fi has many enemies. The attack is thought to be the work of radical Muslims who want to turn Egypt into a hard line Islamic state. Many Egyptians are wondering exactly what will happen next. In the 18 months since the terror campaign started hundreds of people have been killed by militant bombs. The loyalties of ordinary citizens are deeply divided. Civilian courts have repeatedly thrown out prosecution claims accusing police of torturing suspects. For the government, the latest outrage is a massive blow. Many believe it was winning the war against extremism. From his hospital bed, a defiant Ala-Fi denounced the outrage, but the attack demonstrates the government remains vulnerable to fundamentalist violence.

MR. MacNeil: The radical Egyptian cleric, Sheik Omar Abdel- Rahman, may accept deportation from the United States. A lawyer for the Sheik said today he would leave voluntarily if allowed to go to Afghanistan. Followers of the blind cleric have been charged in the February bombing of the World Trade Center and in the alleged plot to bomb other New York City landmarks. His deportation was ordered because he allegedly lied on immigration papers. His appeal of that order was rejected on Monday by a federal judge.

MR. LEHRER: The Israeli Supreme Court rejected a new trial for John Demjanjuk today. The judge delayed the alleged war criminal's deportation until Friday, pending another appeal by Holocaust survivors. Last month, the court acquitted the retired Ohio autoworker of being the Trablinka Death Camp guard known as "Ivan the Terrible." But it found evidence he served as a guard at other camps. Demjanjuk is seeking to return to the United States. The Justice Department is opposing that. Serbs, Croats, and Muslims agreed today in Geneva to put the Bosnian capital of Sarajevo under U.N. administration for up to two years. The U.N. would take control once the three warring parties reach an overall peace settlement.

MR. MacNeil: A Florida judge ruled today that Kimberly Mays' biological parents have no legal claim to her and should have no contact with her. The 14-year-old girl was switched at birth in a Florida hospital in 1978. The child her biological parents took home died of a heart defect in 1988. Kimberly sued to sever all ties with her birth parents and to remain with the man who raised her. Her lawyer said he hopes the biological parents will not appeal today's ruling.

MR. LEHRER: The Eastman Kodak Company announced today it will eliminate 10,000 jobs by the end of 1995. The cut will be achieved mainly through layoffs. They represent roughly 7 percent of the company's current work force. A Kodak spokesman said it was part of a restructuring plan that will cut costs and raise profits. Robert Maynard, the former editor and publisher of the Oakland Tribune and a one time essayist for this program, died last night of cancer. The Oakland Tribune was the only black-owned major daily newspaper in the United States until Maynard sold it last year. He was 56.

MR. MacNeil: That's it for the News Summary. Just ahead, a new connection, justice in the ranks, and a survival story. FOCUS - COLLECT CALL

MR. MacNeil: First tonight, the AT&T/McCaw Communications merger. On Monday, the largest long distance phone company jolted the telecommunications industry by announcing a $12 billion deal to acquire the nation's largest cellular phone company, McCaw Communications. In a moment, we'll discuss the impact on this rapidly changing industry and on how you use the telephone. First, a little history. If you're older than about 10, you can remember when the phone company was the phone company, was the phone company. To many who grew up with it, that may have seemed the natural order of things. But it wasn't. That system actually took shape at the turn of the century when a single firm, American Telephone & Telegraph, agreed to submit to government regulation in exchange for a monopoly over most telecommunications in the United States. AT&T made and owned the phone in your home. It usually owned the local phone company that switched calls between nearby cities, and it owned the vast network of long distance lines that routed calls around the country. The system was affectionately or apprehensively dubbed "Ma Bell." It survived, staid, reliable, essentially unchanged until the historic day in 1982 when the company agreed to settle a long anti-trust lawsuit by breaking up into component parts.

CHARLES BROWN, Chairman, AT&T: [1982] Today's action clears the way for a new order in the telephone industry.

MR. MacNeil: Local phone companies were spun off into independent businesses, still regulated monopolies in their areas. The surviving parent, AT&T, retained its long distance network. In return, it was finally free to enter new businesses. Within a few years, the industry went from a staid minuet to a brutal free for all. The last decade hasn't gone precisely according to anyone's plan, including the trust busters. Newer long distance companies, like MCI and Sprint, began to take growing amounts of business away from AT&T through brutal advertising and marketing wars. AT&T began to expand into new businesses like credit cards and computers, but it also continued to dominate and draw most of its revenue from long distance with a greatly improved and automated network. Meanwhile, local phone companies, the so- called "Baby Bells," won the right to get into new kinds of business the original anti-trust settlement never foresaw, like cable TV. And they've lobbied for the right to get into long distance. That presents a new challenge to their old parent, AT&T. It was against this background that AT&T shook up the industry on Monday by agreeing to buy McCaw, the firm that runs the nation's biggest cellular phone system.

ROBERT ALLEN, Chairman, AT&T: Together, we share a vision for future wireless communications, a vision of any time, anywhere communications.

MR. MacNeil: The deal is important because it blends the portability and convenience of cell phones, pagers, and wireless faxes with the reach and power of the biggest long distance system. To make a long distance call on the cellular phone currently, the call must be routed through the local phone company once it's picked up by land line and then through a long distance system, then into another local phone system to the receiving phone. The AT&T/McCaw merger would let cellular users hook directly up to the long distance network. That would bypass the local phone system entirely. Some Baby Bells have already complained that the new system might cost them money and create a new phone monopoly in place of the one that ended in 1984. The Baby Bells have also been laying their own ambitious plans for various hi-tech services in the future. The deal announced this week could change the whole competitive landscape of telecommunications. For that reason, the deal will almost certainly not be completed until it's examined by the Justice Department and the Federal Communications Commission. Now we'll get the views of AT&T, a Baby Bell, and two outside experts. Thomas Norris is the AT&T vice president for government affairs in Washington. James Young is vice president and general counsel for Bell Atlantic, a regional Bell company that provides phone service in six mid-atlantic states and the District of Columbia. Gene Kimmelman is legislative director at Consumer Federation of America, an umbrella group for 250 consumer organizations across the country. George Gilder is an author of several books on telecommunications and technology, including Microcosm and Life After Television. Mr. Norris, simply, why does AT&T want to merge with McCaw?

MR. NORRIS: As our chairman, Bob Allen, said in the news conference, McCaw and AT&T are joining together in order to enable people to be connected any time, anywhere.

MR. MacNeil: Well, does that mean it's a way for you to get back into the local phone business, linking cellular -- as our illustration showed -- linking cellular phone users directly with long distance and bypassing the local phone company?

MR. NORRIS: Well, the charts were correct as far as they go. But let me point out that only 5 percent of cellular phone calls are involved in long distance and also point out that 99 percent in 1993 of cellular phone calls use the local telephone networks before they're completed. That number will also be 99 percent in 1994, and as far as we can see into the future.

MR. MacNeil: So you say it is not a way, the thin end of the wedge of getting back into the local phone business?

MR. NORRIS: Well, it's hard to say what will happen ultimately, a decade from now, but we certainly don't see this as an entry into the local phone business.

MR. MacNeil: Mr. Young, Bell Atlantic, why are Baby Bells against AT&T and McCaw doing this merger?

MR. YOUNG: Robin, the deal that we're talking about here is an enormous deal. It takes the largest telephone company in the country, which is also the largest manufacturer of equipment, including cellular equipment, and combines it with the largest cellular company. And that result is, is an economic colossus. I'm not here to tell you that big is bad. I certainly don't believe that. But the fundamental question that has to be asked of a combination like this is: Where is the effective competition to protect consumers? Now, the seven most logical competitors who are the AT&T/McCaw combine are Bell Atlantic and the companies like it, the others which you referred to as Baby Bells. But under the government rules that continue to govern us, we are prohibited from going toe to toe, competing on equal terms. That means there is no effective competition. That means consumers are denied choice, that they're denied the lower prices that they would otherwise get. That's the problem.

MR. MacNeil: Mr. Gilder, is this a good thing for the telecommunications marketplace? I mean, is it more competition, or a return to monopoly?

MR. GILDER: There's never going to be any kind of monopoly in communications again. What's really happening is that the entire industry's becoming part of the computer industry, which itself consists of thousands and thousands of companies. And all of them are targeting the local loop. This is, indeed, the most competitive industry in the entire world economy. And what this agreement does is demolish all the assumptions of the regulatory apparatus that's based on the idea that there's still a natural monopoly somehow in telecommunications.

MR. MacNeil: So you see plenty of communication in spite of a big merger -- plenty of competition I mean.

MR. GILDER: Yes. Pinatas of competition bursting out in every local route.

MR. MacNeil: Mr. Kimmelman, how do you see it from the consumer point of view? Is it a good thing for the consumer? Should it be approved?

MR. KIMMELMAN: Well, I hope Mr. Gilder is right, but I do think Mr. Young is right that we need to look to make sure there's enough competition, and so we hope the Justice Department and the FCC will work together to make sure, first of all, that everyone using a cellular phone can pick whatever long distance companies, Sprint, MCI, or AT&T for that service, and to make sure that any of the equipment that's used for cellular service is not all purchased from AT&T, which after all is one of the largest manufacturers of telecommunications equipment, although they have not been making cellular phones recently. So there are important issues on the margin. I think Mr. Gilder's right, that we're moving towards a more competitive environment, but the world consumers see today is that every call, whether it's made on your home phone or whether it's made on your cellular phone, still goes through a Bell Telephone Company line or another local phone company line. And as long as that is the case, we have remnants of monopolies that need to be broken, or they need to wither away before we let the Bell Companies move out back into the long distance business.

MR. MacNeil: I'm going to come to that point in a moment. I just -- let me go to Mr. Norris. You heard what Mr. Kimmelman just said. Is it AT&T's intention that people who make calls or go through McCaw will only use AT&T or will be free to use any long distance phone company?

MR. NORRIS: It's not only AT&T's intention, it's AT&T's commitment to take what steps are necessary to maximize customer choice, whether it's customer choice in the telephone instrument they buy, the cellular carrier they use, or the long distance company they use.

MR. MacNeil: Why would it be to AT&T's advantage to encourage that when with the biggest cellular phone company you could get such a huge piece of the cellular phone business for your own long distance line?

MR. NORRIS: Well, in the first place, AT&T and McCaw will not anything like dominate the cellular telephone business. There are at least two wireless communications providers in every market. There are three or four long distance telephone companies available to all customers. There are myriads of telephone equipment manufacturers selling telephone equipment. The market is already so competitive that any attempt by AT&T to attempt to restrict customer choice would simply punish AT&T. The information market is littered with the debris of companies who have tried to keep their systems closed. And AT&T is committed to open systems and communications and in computing.

MR. MacNeil: Does that reassure you, Mr. Kimmelman?

MR. KIMMELMAN: It certainly helps. I think Mr. Norris is right about the pattern we've seen over the last decade since the break- up, and this company is committed to that. I would hope the Justice Department and the FCC could see their way to making sure we get more mobile service companies growing on the local level, that we really see what Mr. Gilder is talking about.

MR. MacNeil: Excuse me interrupting. At the moment, as I understand it, in each community there are two mobile services licensed, because of the distribution of frequencies, is that correct?

MR. KIMMELMAN: That is correct, but the Congress just passed a new law requiring the FCC to make more licenses available. So we're really at the beginning of a new era here. We're, we're hopeful that consumers will ultimately have choice in the wireless world that is the alternative to the local Bell telephone company. The AT&T/McCaw deal doesn't bring us that yet. But we're hoping that with the FCC's actions and the market developments, new technologies, and prices coming down, consumers will finally have choice of more than one company for their local phone service.

MR. MacNeil: Let's go back in to Mr. Young of Bell Atlantic. You Baby Bells, like Bell Atlantic, would like to get into the long distance business and other businesses. You are precluded from that under the terms of the break-up consent decree signed by AT&T when it was broken up. To put it bluntly, do you see this merger deal and the debate that will go on about it in Washington as an opportunity, as a leverage for you to argue for access to long distance business?

MR. YOUNG: It is certainly a confirmation of the fundamental change that is going on in telecommunications. Mr. Gilder referred to pinatas of local competition. We certainly are seeing that kind of explosion, not just from wireless business, from cellular business, but from other forms as well. This is a fundamental change. Policy makers have got to recognize that this is going to happen. They should not be lulled into --

MR. MacNeil: That what's going to happen?

MR. YOUNG: That this increasing local competition is happening now. Mr. Norris said a few minutes ago, well, he doesn't think AT&T is really going to be getting into the local business. This will not put back together all the elements of the old Bell system. He says maybe 10 years, you have to wait and see what's going to happen. I think AT&T and McCaw are about the only two people -- the only two companies on the planet who believe that. Almost every objective analyst who looks at this deal recognizes that local competition is growing and growing dramatically and because of that, restrictions on companies like mine, like the remaining restrictions in the court decree that keep us out of long distance, that keep us out of manufacturing, these are based on anachronisms the restrictions have to go.

MR. MacNeil: So the answer is yes, you will use this opportunity to argue as -- use your influence to try and leverage --

MR. YOUNG: In a word, yes.

MR. MacNeil: In a word, yes. Do they have that kind of influence? Is this going to be a -- is this going to be a tug of war, a seesaw thing here in, in the regular circles in Washington?

MR. GILDER: I think it's going to be a tremendous battle in the regulatory system, but I hope everybody loses. I want -- except the customer and competition --

MR. MacNeil: Do you mean --

MR. GILDER: -- this is a perfect opportunity for all kinds of competition. There's going to be not only McCaw but there's three PCN providers and several --

MR. MacNeil: What is that, PCN?

MR. GILDER: Personal Communications Networks. It's higher up in the spectrum than the cellular band, but it can accommodate lots of very low power phones and computers and TBA's and personal communicators, and as well, your set top box. Every -- the next phase in cable industry set top boxes contains a two gigaherz radio, a little cellular radio, so you can use your TV remote to mute the program and receive a phone call, if you want, or make an order for a product. I mean, all these industries are converging today in a massive competition. And there's just -- there are going to be riots of competition. And the idea that we need more regulation in this situation which is moving too fast for any company to dominate I think is a mistake.

MR. MacNeil: Mr. Kimmelman, do you think it is a good time to deregulate the Baby Bells and let them start competing in the long distance area?

MR. KIMMELMAN: Well, frankly, I think it's too early. We made this mistake with the cable industry in 1984. It looked like there was competition coming. Congress deregulated, let them loose, and what we found was rates skyrocketed and cable reinforced its monopoly in the local market. I think the Bell companies remain a monopoly. We can see towards where Mr. Gilder would like us to go, that the market isn't there yet, and so I think we have to take it in stages. Let's see if the wireless companies really develop, if they really can offer an alternative to the Bell companies, provide consumer service, and I say, once you and I can choose a different company than a Bell company for our local phone service, I have no problem with letting the Bell companies into the long distance business to take on AT&T.

MR. MacNeil: Mr. Norris, do you think that -- what do you think of the proposition that in you asking, you seeking approval of this merger you will run into the Baby Bells saying, okay, you approved the merger, FCC, but in approving the merger, let us loose to compete in the long distance market?

MR. NORRIS: Well, in the first place, let me say that I think Mr. Gilder does describe a plausible future. But that is not the current condition. We also think that there are public policy decisions that need to be raised. But we think that the Bell companies have gotten them in the wrong order. As Mr. Kimmelman says, the first public policy that needs to be evaluated is the public policy which protects the Bell companies in their monopoly for local telephone service. As soon as most of us have a choice of where we get local dial tone, then AT&T's concerns about long distance competition will have gone away.

MR. MacNeil: It's too early, Mr. Young, AT&T says, and Mr. Kimmelman seems to agree with him. Until there are more -- until you have more competitors in your mid-atlantic states, it's too early for you to be released, unleashed to go into the long distance area.

MR. YOUNG: Well, I have to say, first, Robin, that it's a little surprising to hear AT&T say that. When the degree was negotiated, the degree that imposes these restrictions on us, AT&T told the decree court repeatedly in 1982 and in 1983 that at least in connection with these wireless services, the longest distance restrictions made absolutely no sense. They were right then. They are wrong now. I, I have to think there is this fundamental fairness and equity in saying if AT&T is permitted at least to provide wireless services locally, then we should be able to provide the long distance component of wireless service.

MR. MacNeil: So that's going to be what regulators are faced with, those are the two questions, whether this is the time to do one or both of those. Now, Mr. Gilder, going forward a few years from now, are we headed, and should we be headed for a time when AT&T and other long distance companies, maybe some of them by then Baby Bells, are allowed to provide service all the way, end to end service, one stop service, that you pick up your phone anywhere and one company takes you right through the country or next door or around the world, as it used to be with AT&T when it had the monopoly, or there are many of them? Is that the way where we're headed, and should we be headed that way?

MR. GILDER: I think we're headed for a great variety of arrangements. There'll be all sorts of arrangements that, that will be tested, and the ones that prevail in the marketplace should prevail. I don't think that any one company will be able to offer global service of all the kinds that people will want. I think that there'll be computer companies deeply involved, because in the end all these are going to be computer networks. Some of them will be wireless computer networks. Some will be wired computer networks. I think the most pervasive personal computer of the next decade will be a digital cellular phone. It'll be as mobile as your watch, as personal as your wallet. It will recognize feet. It'll navigate streets. It'll take notes. It'll collect your mail. It will perform a wide variety of services that we can't even imagine today. And I really think to talk about laws promulgated in 1983 or 1984 is like looking back into the dark ages. I mean, it just is going to be a completely different arena. I call it the "death of telephony" in an article I've just written. I don't think we will -- telephones will be as an archaic a word as picture radios or ice boxes or something as the decade proceeds.

MR. MacNeil: Mr. Kimmelman, looking into this future a few years, what do you see as the, as the best set-up for consumers, just totally unregulating everything so that a bunch of companies can do everything they want to do and see how it sorts out for the consumer?

MR. KIMMELMAN: Well, we don't want to take too many risks. We don't want to repeat the mistake we made with the cable industry, where we ended up with a bigger entrenched monopoly and higher prices, so we want to go one step at a time. I think Mr. Gilder's right. We need to get rid of all the vestiges of monopoly, but they're not all gone yet. That local telephone network is still predominantly a monopoly. So we want to go step by step, open that up, and test it. Let's see if other companies, maybe AT&T, maybe someone else, can come in and offer local phone service and competition with the existing Bell company. If we can get choice for the consumer, then we see no need for further regulation down the road, other than general government oversight to make sure that there is true, fair, competitive rules in the marketplace.

MR. MacNeil: Mr. Norris --

MR. KIMMELMAN: Until we break that monopoly, that last vestige of monopoly, we're not ready to just let everything loose.

MR. MacNeil: Mr. Norris, does AT&T in an ideal world want to provide all services, to become the kind of full service company that it used to be again?

MR. NORRIS: AT&T has no designs on becoming the kind of full service company that --

MR. MacNeil: I don't mean monopoly obviously.

MR. NORRIS: AT&T, however, would like to use all of our technological capability, all of our marketing know-how, to offer customers the choices of AT&T's service and AT&T product if that's what they want.

MR. MacNeil: And Mr. Young, Bell Atlantic would like to become a company that does everything, that does from the local phones through, through long distance, and manufacturing?

MR. YOUNG: Robin, we're not afraid of competition from anyone. But when we compete, we want to be able to compete on equal terms. If I could, for just a second, I'd like to --

MR. MacNeil: We have about a quarter of a minute.

MR. YOUNG: Well, then I'll leave it with that. We want to compete on equal terms.

MR. MacNeil: Thank you very much, indeed. Gentlemen, thank you all.

MR. LEHRER: Still to come on the NewsHour tonight, a Tailhook update, and the Harvey Weinstein story. UPDATE - CONDUCT UNBECOMING?

MR. LEHRER: Now, an update of the Navy's investigation of the Tailhook scandal. Margaret Warner is in charge. Margaret.

MS. WARNER: Criminal and disciplinary proceedings are finally underway against Navy and Marine officers accused of improper behavior during a Navy fliers convention two years ago. Yesterday, a pre-trial hearing at Quantico Marine Base in Virginia produced the first courtroom confrontation between a female officer and a Marine captain whom she accused of assaulting her. Navy Lt. Paula Coughlin, whose allegations of assault broke open the Tailhook story in 1991, repeated her accusation at a pre-trial hearing for Marine Capt. Gregory Bonham. Capt. Bonham insisted, however, that he never even saw Lt. Coughlin on the night in question. For more on yesterday's hearing and other Tailhook prosecutions, we turn to Patrick Pexton. He's a reporter for the Navy Times, a privately owned newspaper that covers Navy matters. Pat, yesterday's hearing, of course, was just a preliminary one to see if there's enough evidence to order a court martial. How good was the prosecution's case?

MR. PEXTON: Well, the prosecution's case consisted entirely of Lt. Paula Coughlin's testimony. She took the stand and in vivid and calm testimony described how she was assaulted on the third floor hallway of the Las Vegas Hilton. She described how she entered this hallway while she was looking for a friend, and there a group of 20 aviators, both Marine and Navy, assaulted her. It began right at the beginning of the hallway. She said she was bumped by a man, bumped bodily by a man, said she was knocked off stride. She turned around to him to say excuse me, and then as she did that, they started to chant, "Admiral's aide, admiral's aide," because she was an aide to an important admiral. And then after that, she was grabbed from behind on the buttocks, lifted into the air almost by Capt. Bonham, she says, and then after he grabbed her, he then pushed her down the hallway, and then reached over her shoulder into her tank top that she was wearing, grabbed her breasts, and then she proceeded to try to throw him off.

MS. WARNER: And what was the defense's case against this? What could you tell about their strategy?

MR. PEXTON: The defense case has really took two avenues of attack. One they tried to say that it was a case of mistaken identity. They provided testimony that when she pulled Capt. Bonham's photo out of a group of photos and then out of a police lineup that she wasn't so confident of it as she was in the courtroom yesterday. Yesterday she was very confident of it. But they provided earlier testimony that she was hesitant when she chose him out of the line-ups. And the second part of their defense is really to impugn Paula Coughlin's character. She was on the stand for more than four hours, and whereas, he was only on the stand for an hour. And she was asked to describe all of her activities in the three days she was at Tailhook, who she had dinner with, who she had lunch with, how many drinks she had, what clothes she wore, how short was her skirt, what was her relationship with the male aviator that she paled around with. I mean, it was an extensive interrogation.

MS. WARNER: So unlike a civilian say rape trial or any kind of sexual assault trial, the woman's sexual history is very much at issue and discussed?

MR. PEXTON: It was. The defense attorney tried to establish that, that Lt. Coughlin had a relationship with a married Navy lieutenant while at Tailhook.

MS. WARNER: I gather also that there was a photograph that showed Captain Bonham wearing a completely different color shirt the night in question than she recalled.

MR. PEXTON: Yeah. That's correct. Lt. Coughlin said that her assailant wore a burnt orange T-shirt. But the defense presented a photograph allegedly taken the night of the assault that shows Captain Bonham wearing a very distinctive outfit, a bright green shirt and purple shorts. It was a very distinctive outfit.

MS. WARNER: You know, after all thepublicity about Tailhook and about Lt. Coughlin coming forward, is this what it all comes down to? I mean, is this the best case you think the Navy can present?

MR. PEXTON: Well, I think what the hearing yesterday proves is how difficult these cases really are to prosecute. First of all, we're two years after the fact. There was a lot of drinking that went on, as both sides attested to yesterday, a lot of drinking of alcohol. People's memories aren't as sharp as they might be, and it also was an ordeal for Lt. Coughlin yesterday. I mean, she really had to describe her whole itinerary there and everyone she met and everyone she had talked to and repeatedly going over the attack on her. It was, it was difficult for her. She held up very well. Her voice was calm. She never wavered.

MS. WARNER: If we turn to the Tailhook affair in general, of course, the Pentagon's inspector general in April did come out with a rather scathing report, criticizing the Navy's initial investigation and saying there were 140 specific Marine and Navy officers that should be further investigated as possible suspects in all kinds of behavior. What's the status of all those cases, those 140 cases? How many have been disciplined or charged?

MR. PEXTON: To date on the Navy side, and there are both Navy and Marine Corps involved, of 120 Navy cases, 41 officers have been disciplined. All those disciplinary cases though were in, in procedures less serious than the court mentioned. They were what is called non-judicial proceedings. They go before a captain and they get a letter of reprimand or verbal reprimand. Beyond those forty-one are another about five cases that are proceeding through to the court martial process, and Captain Bonham's is one of those.

MS. WARNER: And then of course in that report, the report identified 83 cases of what it called sexual assault. And yet, I gather only three officers have been charged in connection with what is really the most serious offense, assault.

MR. PEXTON: That's correct.

MS. WARNER: How do you explain that gap? I mean, were the reports overblown of this, or is there a failure to follow up?

MR. PEXTON: I think what, what the failure is, is that military people are trained from the very beginning to work as a unit, and they call it unit cohesion, esprit de corps, and when they're taught that so indelibly, when something goes wrong, they close ranks. They don't want to tell on their buddy, their wing man in the squadron. They live and die by their cooperation they have with those men. And it's very difficult for them to I think tell an investigator, well, gee my friend was exposing himself or assaulting women. And that's -- and I think they've had a very difficult time getting evidence because of that.

MS. WARNER: And if the men were unwilling to tell on one another, what about the women involved?

MR. PEXTON: Well, there's been -- Lt. Coughlin was the first to really confront one of the accused. There was one woman who has testified in an early preliminary hearing. She was a Navy ensign who had said she was assaulted. She recanted the testimony on the stand, saying that she had made up the testimony, because she didn't want her own behavior at Tailhook questioned. And so that case, the charges were reduced against that officer.

MS. WARNER: But I mean, out of 83 cases, what happened to all the others?

MR. PEXTON: I think that's a very good question. There just doesn't seem to be the evidence to prosecute those cases. However, I will say one thing that came out of yesterday's preliminary hearing is that the Navy granted immunity to a particular officer who was said to be the informal master of ceremonies for the Tailhook gauntlet. He had organized the supposed assaults on women, and yet, the Navy granted him immunity, and he has not been charged.

MS. WARNER: Well, of course, the Naval investigative service, which is the Navy's internal investigating unit, has been criticized for a number of botched investigations from espionage cases to the USS Iowa and was criticized by the IG. Have there been any changes in the NIS structure or command of the way it operates since that report?

MR. PEXTON: There has been extensive changes in the Naval Investigative Service. It is now called the Naval Criminal Investigative Service. It is now headed by a civilian. Formerly it was headed by an admiral. And their, their mission has been circumscribed to some degree. They are now only charged with looking into criminal investigations, and their, their charter is a little bit more narrow. They're also more answerable to the civilian authorities in the Pentagon than they were before, and that was done to try to limit the influence of the uniform Navy.

MS. WARNER: Adm. Kelso, the chief of naval operations, said that this Tailhook affair had been a watershed event, that it changed the culture of the Navy. Now, before we started, you were tell me about your time at Navy Times, and really since you arrived, you've been covering social changes in the Navy. Is Adm. Kelso right, is the Navy culture undergoing a change and, if so, how much of a one?

MR. PEXTON: I think it's undergoing a very profound change, not only in the relations between men and women, which Tailhook has, has gone a long way to change, but all the way through the Navy. I think Tailhook sparked this reform in sexual harassment. There is now going to be a Navy-wide system of tracking all sexual harassment incidents so that they know what the outcome is and how they were handled. There is mandatory sexual harassment training, but beyond that, the Navy has undergone many reforms in the last two years. They completely reorganized their command staff so that no longer is there the thiefdoms between submarines, ships, and aviators, and now that has been completely reformed, and I think in part because of Tailhook, because they knew they were under attack in the Congress and from the public, and they knew they had to reform.

MS. WARNER: And in our last minute, just getting back to the case at hand, do you think that Capt. Bonham will go to court martial?

MR. PEXTON: I do think they'll refer him to court martial, but I think he may be acquitted in the end because of the mistaken identity that they tried to present.

MS. WARNER: Thank you very much, Pat, for being with us.

MR. PEXTON: Sure. FINALLY - SURVIVAL STORY

MR. LEHRER: Finally tonight, a human spirit story. It is that of Harvey Weinstein, a New York City businessman who was kidnapped and then held prisoner in an earthen pit for 12 days. The 68-year-old former Marine was freed yesterday, and today he held a news conference. Here's an extended excerpt.

HARVEY WEINSTEIN, Kidnapped Executive: Grabbing his hand through this little aperture that he had pulled from my prison was an experience that very few humans are ever given. I knew I was home. I knew I was safe. And I knew God had smiled down on me. Truly, in my heart, I know I could never have survived without the training I had received, the training and my combat experience in World War II. I am, therefore, eternally indebted and so proud to have been able to serve my country which in turn saved my life.

REPORTER: What were you thinking about?

HARVEY WEINSTEIN: I think I have the right book. It was Arthur Kessler's Darkness At Noon. I believe that was the book I read thirty-five, forty years ago, on his being in prison, in solitary in Yugoslavia I think it was. And I knew immediately that the key was my mind, not my body. I could live on one piece of fruit and plain water for a long time. My body wasn't giving out. It was a little weaker, but it wasn't giving out. It was my mind I was worried about. So I could compartmentalize, I focused. The greatest autobiography ever, never having been written, I verbally did in the cave. I would start each session, "This is the autobiography -- verbal autobiography of Harvey Weinstein, age six." And it's astounding what comes back. The memory touches, and I could do that for a half hour, forty-five minutes.

REPORTER: What are your thoughts about the people who did this to you?

HARVEY WEINSTEIN: I think the most devastating thing in retrospect, after the fact, is when I was driving back into the city after being rescued, and one of the officers told me that it was one of my own people. And that sounds patronizing, and I don't mean it to sound that way, but one of the people within my own company who had instigated this whole thing, that was crushing. [pause] I, I can't comment any further.

REPORTER: Was there any moment that you lost faith, lost hope that you might ever be found, and if so, what was it that went through your head when that occurred?

HARVEY WEINSTEIN: There were many times I did lose faith. I did lose hope. And I begged and pleaded with my captors to take me out and shoot me and leave me on the road where my family would find my body and I could be buried properly next to my parents.

REPORTER: What did you tell your captors when they told you about the ransom demand?

HARVEY WEINSTEIN: I told them, I told them they had the wrong guy. And I was very shaken. They talked about a $5 million ransom. I added up my checking account, and I thought that I was going to be a little bit short.

REPORTER: Were you worried about that?

HARVEY WEINSTEIN: Yes. I really thought they didn't know me, and I, I exaggerated. I lied. I said I drive a six year old car. Why would a millionaire drive a six year old car? It was only four and a half years old.

REPORTER: Mr. Weinstein, looking over your shoulder, a waitress yesterday said you are a creature of habit, a man of routine. Could you no longer go back to your daily routine?

HARVEY WEINSTEIN: Well, we're having a slight disagreement about it. I will not permit -- with due deference to my friends on the NYPD, I can't permit fear to govern my life. I will walk proudly in the streets of New York. I will eat where I choose, when I choose, and I will not be looking over my shoulder every 30 seconds to see who's behind me. I can't live that way. And I won't.

MR. LEHRER: Three people, including one of Weinstein's employees, have been arrested for the kidnapping. The $3 million of ransom money has been recovered. RECAP

MR. MacNeil: Again, the major stories of this Wednesday, the Clinton administration added the East African nation of Sudan to its list of states that sponsor terrorism. At least four people were killed when suspected Islamic militants attempted to assassinate Egypt's interior minister. And a judge in Florida ruled in favor of a teenager seeking to sever all ties to her biological parents. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night. I'm Jim Lehrer. Thank you, and good night.