The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. Leading the news this Monday, there were conflicting reports on Lebanon terrorists releasing American hostage Jesse Turner and firefighters finally stopped a deadly fire in Northern California. We'll have the details in our News Summary in a moment. Charlayne Hunter-Gault is in New York tonight. Charlayne.

MS. HUNTER-GAULT: After the News Summary, the hostage story is our lead focus tonight. Next, we have a report on the campaign for the Secretary General of the United Nations, then on the eve of more hearings on the BCCI scandal, Correspondent Paul Solman explains how the bank fooled so many people for so long.NEWS SUMMARY

MR. LEHRER: There were reports today that American Jesse Turner had been freed in Beirut after nearly five years as a hostage. But this evening, foreign ministry officials in Syria said it hadn't happened yet. The 44 year old college professor had been held by a group called the Islamic Jihad for the liberation of palestine. That group issued a statement yesterday, saying an American would be released within 24 hours. The group also holds American Prof. Alann Steen. The U.S. State Department initially confirmed the release of Turner and called his wife in Boise, Idaho, to give her the news, but this evening, State Department Spokesman Richard Boucher said he would not dispute the later Syrian report. Early today, Israel freed 15 more of its Arab prisoners. They have been held by Israel's allied militia in South Lebanon. The release was arranged under the auspices of the United Nations. Also today, Israel attacked what it said was an Arab guerrilla base in Southern Lebanon. Three civilians were wounded. The attack was an apparent reprisal for an Arab guerrilla bombing that killed three Israeli soldiers yesterday. After that attack, the group holding American Terry Anderson released a statement saying the Israeli raid could hamper efforts to free more Western hostages. We'll have more on this hostage story after the News Summary. Charlayne.

MS. HUNTER-GAULT: In California, a raging fire that killed at least 10 people and destroyed hundreds of homes has been brought under control. Nearly a thousand firefighters have battled the deadly blaze that began yesterday and has swept through the dry hills above Oakland and Berkeley. We have a report by Spencer Michels of public station KQED in San Francisco.

MR. MICHELS: The fire started at midday, the flare up from a blaze firefighters thought they had extinguished on Saturday. Large clouds of smoke billowed over some of the most expensive sections of the Oakland and Berkeley Hills. A five year long drought had made the trees in the hillsides tinder dry. The weather was unseasonably hot and Santa Ana style winds were swirling. Cinders began blowing. Fires sprung up throughout the hills and soon dozens of structures had caught fire. A 400 unit apartment housing a thousand people was among the first to go. Meanwhile, police ordered residents of endangered areas to leave quickly. Some had to brave firestorms to drive their cars down from the hills. The fires jumped city streets and freeways, astounding officials. Water pressure was too low to operate some hoses as electricity that ran the pumps failed.

FIREMAN: We have so many companies working and it's up hill. We're trying to get water. If we can get some water pressure, we can make a stand right here.

MR. MICHELS: Shifting winds made it impossible to predict the direction the fire would take. And areas that appeared to be spared were devastated a short time later when the fire reversed direction. At least 10 people died, including a battalion chief and a police sergeant who was trying to lead a group of residents to safety. A huge pall of smoke could be seen throughout the San Francisco Bay area. The fires burned on uncontrolled into the night, with everyone hoping the winds would die down, and with them, the firestorm. Early this morning, state and local officials flew over the fire area and were shocked. Gov. Wilson said that one area of expensive homes looked as if it had been shaved. He also said that it was obvious that homes with tile roofs fared far better than homes with shake or shingle roofs, but in some areas like this, everything went. Police kept residents away from the burned out areas, areas that were completely devastated. Wires were down, water and gas mains were on, and the streets were unsafe. Homes ranging in price from 300,000 to a million dollars were empty shells. Automobiles that residents had not had time to remove were wrecked. But the worst seemed to be over as winds this morning were light. But for some residents, the nightmare had only begun. the shock of yesterday and today had not really sunk in.

SPOKESMAN: It's amazing thing. It's like the earthquake deal. It's kind of like your nervous system is on hold until you find out what the true facts are. And when you find those out, then you go bananas.

RESIDENT: I think we were one of the last out with the pets, you know, just got the bird, and the dog, and the wallets, and that's it.

MR. MICHELS: How much time did you have?

RESIDENT: I'd say we had six minutes as they were cordoning everything off. The flames across the street were 20 feet high and there was this firestorm going on.

MR. MICHELS: Slowly, residents got permission to approach their neighborhoods and find out the fate of their homes and their possessions. Officials think firefighters should have the blaze under control tonight, though no one is predicting what could happen should the winds pick up. But everyone agrees that this is one of the worst fires ever seen in California.

MR. LEHRER: White House Spokesman Marlin Fitzwater said today President Bush might support a tax cut for middle income Americans. He said nothing had been decided but it was an option that might spur the economy. Yesterday Democratic Sen. Lloyd Bentsen of Texas proposed a $72 billion tax cut aimed mainly at the middle class. His proposal included a $300 tax credit for each child under 18 and deductions of up to $2,000 a year for Individual Retirement Accounts. His plan would be financed by a 5 percent cut in military spending.

MS. HUNTER-GAULT: Another Democratic hat was thrown into an increasingly crowded Presidential ring today. Former California Gov. Jerry Brown made his announcement outside Independence Hall in Philadelphia. He said both the Democratic and Republican Parties had allowed themselves to be trapped and corrupted by the powerful forces of greed. Brown is the seventh Democrat to officially announce. White House Spokesman Marlin Fitzwater spoke out today against former Ku Klux Klan Leader David Duke, who is now the Republican candidate for governor of Louisiana. Duke was a winner in Saturday's primary. He faces former Democratic Governor Edwin Edwards in a run off on November 16th. When asked about the Republican candidate, Fitzwater said, "We don't support him, we don't agree with him, we don't like him."

MR. LEHRER: The Supreme Court today ordered new arguments in a key smoking case. The order could mean that the Justices have deadlocked four to four on it. If so, Clarence Thomas could cast the tie breaking vote after he is sworn in next month. The case will determine whether cigarette manufacturers can be sued for allegedly misrepresenting the dangers of smoking. Thirty-three coal companies pled guilty today to fraud charges for tampering with coal dust samples. Federal prosecutors said the company submitted false samples to a government program designed to protect miners from excessive coal dust levels.

MS. HUNTER-GAULT: Thousands of soldiers in India searched today for survivors of a major earthquake. It hit along yesterday along the border with Tibet, killing hundreds of people and flattening thousands of homes. At least 2,000 people were injured. The quake, which measured 6.1 on the Richter Scale, destroyed many roads, hampering rescue efforts. That's it for the News Summary. Just ahead on the NewsHour, the hostage story, the race for U.N. Secretary General, and a Paul Solman primer on the BCCI scandal. FOCUS - LEBANON HOSTAGES

MR. LEHRER: The reported then denied release in Lebanon of American hostage Jesse Turner is our lead story tonight. Turner is a 44 year old Beirut University from Boise, Idaho, who was kidnapped in January 1987. There were a number of reports from Beirut today that Turner had been freed, but late in the day a Syrian official in Damascus told reporters the rumors were not true, no hostages had been released today. Four Americans still remain in captivity with Turner, Associated Press Correspondent Terry Anderson, captured in March 1985, Thomas Sutherland, seized three months later, Joseph James Cicippio of the American University in Beirut taken hostage in September of '86, and Alann Steen of Beirut University College, who was captured at the same time as Turner. Four Europeans, including Church of England envoy Terry Waite, were still being held. The reports of Turner's release followed diplomatic activity in the Middle East and the United Nations. We have a backgrounder by Ian Williams of Independent Television News.

MR. WILLIAMS: Early this morning, surrounded by Israeli soldiers, Ali Fawad, the Lebanese captive, was driven out of Israel and back into Lebanon. With his freedom, the process of swapping hostages appeared to be back on again after more than a month's deadlock. At the same time, the 14 Arab detainees were released from the Al Kiam Prison in Southern Lebanon, where they'd been held by the Israeli-backed South Lebanese army. They were reunited with family and friends, a small fraction of the 300 detainees still held at Al Kiam, but the first released since the process broke down amid accusations by both sides of broken promises. There was a price. On Saturday, the family of Yosi Fink, an Israeli serviceman missing in action in Lebanon since 1986, was told her son was dead. Information about him had been an Israeli condition and it was yesterday in Beirut that Lebanese kidnappers issued a photograph of Jesse Turner, together with a statement saying a Western hostage would be released within 24 hours. Mr. Turner, one of five Americans still held captive, lectured in computer sciences at Beirut University College. He disappeared, together with a colleague, Alann Steen. They're shown here in an earlier picture released by the kidnappers. Turner's Lebanese-born wife received a letter from her husband last week inviting her to Beirut, where the kidnappers had promised them a meeting. Jesse Turner has never seen his daughter, who was born soon after he was kidnapped. Today's developments drew an optimistic reaction from the Israeli prime minister amid speculation that more Lebanese prisoners and Westerners could soon be released.

YITZHAK SHAMIR, Israeli Prime Minister: Well, I think it's one step in the series of steps we have agreed on with the Secretary General of the United Nations and this step to lead to the release of our prisoners and missing soldiers.

MR. WILLIAMS: The release came in spite of clashes between Israeli forces and Lebanese guerrillas. Yesterday three Israeli soldiers were killed and several others wounded in a bomb attack in Southern Lebanon. Today the Israelis retaliated by bombing what they describe as a command center for pro-Iranian Hezbollah fighters in a village eight miles North of Israeli's security zone in Southern Lebanon. The latest breakthroughs in the hostage crisis result from behind-the-scenes negotiations by the United Nations and in particular the Secretary General's special envoy, Jan Dominico Piko. Others though see next week's Middle East peace conference as the catalyst.

HAZHIR TEMOURIAN, Middle East Analyst: I would say that the Iranians particularly and their Hezbollah clients panicked, seeing that the international media were putting all their attention upon this forthcoming Middle East peace conference, and they don't want that. They want to be, seem to be still relevant to the Middle East scene. They want to be seen to be playing a part in the faith of the Middle East.

MR. WILLIAMS: There was little sign of panic though among hard line Palestinian and Lebanese groups who gathered in Tehran at the weekend for a conference strong in anti-Israeli and anti-peace conference rhetoric. And today there were warnings from Islamic Jihad who hold other Western hostages that Israeli raids are obstructing moves towards further hostage exchanges.

MR. LEHRER: For more on this story, we go to Josh Friedman, who covers the United Nations for the New York newspaper Newsday, Andrew Whitley who's a Middle East, a former Middle East correspondent for the Financial Times, now director of Middle East Watch, and to As'ad Abukhalil, a visiting professor at Colorado College in Colorado Springs; he joins us tonight from Denver. First to you, Josh Friedman, is there anything that you picked up at the United Nations that you can add to this question of whether or not Jesse Turner was released today and, if not, what happens, or if so, where is he?

MR. FRIEDMAN: I don't think that people who really know about what's happening are particularly worried about the details of today, tomorrow, next week. I think there's a general sense of optimism that the process is going along and will be solved soon.

MR. LEHRER: So the fact that there was apparent foul-up today of some kind, or a premature release, is not something that people are all upset about?

MR. FRIEDMAN: No, not at all.

MR. LEHRER: So you believe that Jesse Turner, if he is not free, he will soon be free, is that right?

MR. FRIEDMAN: Well, it may not be him first; it could be another hostage, and then he'll be out later. Unfortunately, the last few months show that there is a lot of last minute switching and psychological game playing. But I think in the long run, he and the other Western hostages will be out in the next few months.

MR. LEHRER: Mr. Whitley, do you agree? Does your information jive with that?

MR. WHITLEY: Yes, it does. I believe that Josh is right when he says that the process is moving along. There are hitches and there will continue to be hitches, as we saw with Jackie Mann's release last month. There was a week's delay before he finally got out after it had been announced that he was going to be released. So I think all the sides are signaling that they continue to be wanting to deal. There are some significant obstacles still remaining down the road and it may be that the peace conference will complicate matters. But, nonetheless, I think for the moment, the signs are still reasonably good, despite tonight's uncertainties.

MR. LEHRER: What do -- how do you read that uncertainty?

MR. WHITLEY: I think that there could be some internal bargaining going on. These groups are not monolithic by any means, and I think a deal that is struck between Mr. Picco, the UN envoy, and the representative of the hostage takers, is not necessarily one that can be sold to all the others. They may be arguing that the number of people who were released by Israel today is insufficient so they should say that perhaps some of our brethren that we specifically asked for have not been included in this batch, we don't know. But each of them in putting in their own particular demands and wanting them now, not tomorrow.

MR. LEHRER: Mr. Abukhalil, how do you read this, these events of today involving Jesse Turner specifically?

MR. ABUKHALIL: Well, I think the confusion of today has to do more than anything else with the timing. It is rather odd to have Iranians, as well as the Syrians, as well as the Lebanese, appearing to be appeasing the West and the United States at a time when there is now a conference being held in Tehran, which is intended only to discredit an international conference in the Middle East. So I think what we might see would be some delay, although I believe that there was already a deal that was struck in Iran in the past four, five, six weeks, and it included negotiations, on the one hand, between the Iranians and the Lebanese government, and the Iranians and the Syrian government, on the other hand. And it involved not only the issue of the hostages but the issue of the 3,000 revolutionary guards stationed in Lebanon. However, one must not lose sight of the domestic politics in Lebanon, itself, for example, the bombing raid by Israel today and also what is significant is that one of the released prisoners from Kiam for the first time brought news about Sheikh Obeid, who is a very highly respected cleric that Israel kidnapped last year, I believe, and this --

MR. LEHRER: Excuse me, what kind of information about him?

MR. ABUKHALIL: Well, the information he brought is for the first time the Shiites were told that he existed, people saw him, that he was leading prayers. And it seemed to me that aroused a lot of emotions. It increased the apprehension on the part of the captors for anything that would be viewed as being a concession to Israel. More importantly, without confusing the audience with a lot of details, what is important to note is that we have now two set of captors and the motivations for both of them are personal and familiar, rather than political. Although Iran and Syria do involve themselves in rationalizing releases and captivities through politics, one family is interested in releasing some of the hostages because a relative of the main leader of the captors was freed during the Iraqi invasion and occupation of Kuwait. He was a major reason why so many hostages were taken by this group. There, on the other hand, is another group which is very much concerned about the plight of two Shiite prisoners in West Germany who were convicted with bombing attacks and whatever. Now, the other set or group is interested in obstructing any attempt by the other group to release the hostages, because they believe that both groups should coordinate in order to make the agenda common between both of them.

MR. LEHRER: But you say five or six weeks ago, a deal was struck, right?

MR. ABUKHALIL: Well, I am not judging by something that is rumorless. I am talking about reports in the Persian and Arabic press. There were details about a visit to Iran by the foreign minister of Lebanon. There was a report two weeks ago about a more important visit by the chief of staff of the Syrian army who was in Tehran, and it was reported that he talked with the Iranians about the revolutionary guards in Lebanon and about the hostages. However, as Mr. Whitley said, it seems that the issue of the conference, which is surprising to everybody in the region, could complicate matters or could postpone the release. It also could, one should also bear in mind, lead to other set of problems and very likely other set of hostages because many groups in the Middle East and Iran, itself, is very displeased with the conference, itself. And what is also noteworthy is that the Persian Press has begun in the past 10 days to criticize Syria for the first time, for the first time ever really, and its role with the United States and the peace conference.

MR. LEHRER: Mr. Friedman, that sounds like there's still a long way to go before this thing gets resolved. Does your information jive with what Mr. Abukhalil just said?

MR. FRIEDMAN: It does in the sense that there's a big picture, there's a medium range picture, there's a little picture. Basically, the big picture is that Iran and Israel want this problem solved. They want to get it over with. And I think all of the ins and outs and the price demanded by the particular surrogates of Iran holding people may be obstacles, but Iran has a very definite problem, which is a rapidly dwindling amount of time. They need certain cooperation from U.N. Sec. Gen. Javier Perez DeCuellar before he leaves office at the end of December. If that, if he leaves and they haven't gotten his cooperation with regard to settlements of the Iran-Iraq War, they stand to lose up to $50 billion worth of loans that they could make from the West. I don't think that disputes between two families in Lebanon, given the ability of Iran and Syria to solve such disputes in the past will be an obstacle. I'm sure they'll find a way to solve that dispute.

MR. LEHRER: Is it your understanding, Josh, that a deal has been struck, that an overall deal for the release of all the Westerners in exchange for various prisoners in Israel has been struck, and it's just a case of going through these steps one at a time, very slowly?

MR. FRIEDMAN: It's as if Iran and Israel have agreed to dance a very intricate dance. They know the name of it, they know the steps. They're about five steps into this twenty step dance. Sometimes they start disagreeing about who takes the next step. The point is the rules of the game are Israel wants back either the remains or the four remaining Israeli servicemen who are unknown. Iran is willing in exchange for that to release the Western hostages and will, but expects Israel to release the 300 or so shiite prisoners which it holds or are held by its surrogates in Southern Lebanon. How that all plays out gets confusing sometimes. But Iran needs that to happen by the end of the year so that that's why they continually push the process and why you see them releasing people as a first initiative.

MR. LEHRER: Mr. Whitley, do you agree with that, that there are more, there are all kinds of obstacles, all kinds of problems -- we just heard Mr. Abukhalil's analysis of them -- that there's more push for this to be resolved than there is holding back to keep it from being resolved?

MR. WHITLEY: I think I agree with the other speakers that there is an intent on all parties to try to resolve it and to resolve it as soon as can be done. There is considerable mistrust and suspicion that still remains. I think the picture is slightly more complicated than Josh Friedman. Obviously, he was pointing to the main element, but there are a number of series of bilateral deals that still have to be worked out, and the South Lebanon army, for example, wants some of its hostages back who are being held by the same hostage keepers. The Islamic Jihad people, the Germans and the two German captives, and who are being held in Lebanon are also a separate deal that needs still to be finalized so there are a number of elements. The big picture is clear but those smaller, separate bilaterals are still to be resolved.

MR. LEHRER: Mr. Whitley, what is your analysis of how the Middle East peace conference now set for October the 30th, just a little over a week away, in Madrid, Spain, impacts the hostage situation and the other way around?

MR. WHITLEY: It impacts it because it gives a chance to the most reluctant of the parties to throw a spoke in at the last minute, and that's really a very serious problem, which everybody is fearful of that it could come up, that at the very last moment Iran could throw in as its card that it'll refuse to release Terry Anderson or Terry Waite, the British clerical envoy, because it doesn't like the way that the peace conference is growing, and that is a card that has freedom to play at will almost.

MR. LEHRER: Is Perez DeCuellar aware of that problem, Josh Friedman? Is he trying to get this thing done before the peace conference, or is he trying to keep 'em separate, or what's the strategy?

MR. FRIEDMAN: Well, he and Giandomenico Picco have been working in an atmosphere of frenzy for the last couple of months for two reasons; one, to a lesser degree, the conference, but to a greater degree, they know that if they don't get it done before they leave, it's going to go back to ground zero. And I didn't mean to say that it's definitely going to be solved.

MR. LEHRER: Yeah.

MR. FRIEDMAN: But there's a good chance that it'll be solved. They're working, especially Picco, with a tremendous amount of urgency.

MR. LEHRER: Mr. Abukhalil, do you agree that there is a kind of forced timetable here, if this thing doesn't get resolved by December, then the whole thing could go back to ground zero?

MR. ABUKHALIL: Well, it seems to me --

MR. LEHRER: If not before.

MR. ABUKHALIL: -- that a timetable has been effective to a large measure by the events and the announcement about the peace conference, and it is also inaccurate to state, as Mr. Friedman did, that all parties to the conference are interested at this point in having a resolution of the issue. I think for one, Iran is very much disinterested at this point because of that announcement of the peace conference to be perceived to be rendering a free service or a concession to the United States. There is no question that Syria is interested but Syria has very little influence among the captors. Syria is relevant to the hostage story insofar as it produces the show of the lease, orchestrating the details in order to make credit for their lease as it can. But as far as the Iranians are concerned, it is also inaccurate to assume that the Iranians have the final say about the hostages, themselves, because after the death of Khomeini, there has been a large measure of independence that has been acquired on the part of the captors, and they never release any of their hostages without any price in return, financial, political or even military. And I would also add that we should not underestimate the extent to which conflict between the various families affect the outcome of the hostage story.

MR. LEHRER: Okay.

MR. ABUKHALIL: In the past, there were many instances where releases were obstructed and sometimes hostages shifted from one place to another as a result of those conflicts.

MR. LEHRER: Well, gentlemen, thank you all three very much for being with us tonight.

MS. HUNTER-GAULT: Still ahead, the campaign for U.N. Secretary General and Paul Solman on the BCCI scandal. FOCUS - EXECUTIVE SEARCH

MS. HUNTER-GAULT: Next, a different kind of political campaign, this one for who will lead the 166 countries of the United Nations when the current Secretary General's term expires, as you just heard, at the end of the year. It's been a campaign of quiet intensity and starting to heat up. The Security Council begins meeting today to try and narrow the field of contenders. In the corridors of the UN, it was a subject that was on just about everybody's lips, including the current Secretary General's.

JAVIER PEREZ DE CUELLAR, UN Secretary General: I said this five years ago, that I didn't want to continue as Secretary General, but it was five years after. And now it is 10 years after. Then it is a double and then I think that I will be very much understood by all of you, you know, that I feel, myself, that it is time to change the stewardship of this organization.

MS. HUNTER-GAULT: Even President Bush, who was rumored around the UN to have wanted Perez DeCuellar to stay on, publicly seemed ready to move on.

PRES. BUSH: [Sept. 23] And I also want to salute especially Sec. Gen. Javier Perez DeCuellar, who will step down in just over three months. But let me say, Sec. Gen. Perez DeCuellar has served with great distinction during a period of unprecedented change and turmoil. And for almost 10 years, we've enjoyed the leadership of this man of peace, a man that I, along with many of you, feel proud to call friend.

MS. HUNTER-GAULT: At a salary of $190,000, the Secretary General's post may not be the most highly paid position in the world today, but the unprecedented attention the UN is enjoying right now makes it a far cry from the days when the first Secretary General, Trigby Lee, called it the most impossible job on this earth. Lee, a native of Norway, served from 1946 to 1952. There have been only four Secretaries General since and some have had higher profiles than others; Sweden's Dag Hamerschold from 1953 to 1961, his term ended abruptly when he was killed in a plane crash in the Congo; Burma's Yew Tant from 1961 to 1971; Austria's Kurt Waldheim from 1972 to 1982; and Perez DeCuellar from 1982 to the present. Today, because of the UN's key role in the Gulf crisis and its political successes elsewhere around the world, the job of Secretary General in the words of the Financial Times of London is more attractive than ever for a host of diplomatic over achievers. And while there is no shortage of potential candidates from this vast body and around the world, the race bears little resemblance to most political campaigns around the world.

PETER WILENSKI, UN Ambassador, Australia: It takes place, first of all, in two different places. It takes place here in the corridors of the UN, and it also takes place by special envoys or the candidates, themselves, going around in important capitals, sometimes expressly in order to gather support for a job, sometimes with some other ostensible objective, but really so they can be seen and evaluated and so on.

EDWARD LUCK, UN Association: Well, the race for the Secretary General is the most enigmatic race in the world, because very few people declare their candidacy, it's considered inappropriate, and it's all done back stage, behind closed doors. The voting, itself, is done in private, so we often don't even know who are the favorite candidates in the end.

MS. HUNTER-GAULT: The 15 nation Security Council makes a selection and it is then endorsed by the General Assembly. At the moment, the five permanent members of the Council, the United States, the Soviet Union, China, Britain, and France, are considering about 20 possible replacements for Perez DeCuellar. In a break with tradition, this year one region of the year has put forth an official slate of candidates.

IBRAHIM GAMBARI, UN Ambassador, Nigeria: So as far as we know, Africa is the only continent that has presented official candidates. The rest is press speculation.

MS. HUNTER-GAULT: Africa's six candidates include often mentioned Egyptian Deputy Prime Minister Butrus Ghali and five black Africans, Zimbabwe's finance minister, Bernard Chidzero; Ghana's Kenneth Dadzie, Secretary General of a UN agency; Sierra Leone's James Jonah, also a senior UN official; Nigeria's Alusigan Obasanjo, former military president of Nigeria; and Gabon's Niguema Francois Owono. Is your argument that it's Africa's time?

IBRAHIM GAMBARI: No, that we are seeing that we are 51 members of this club, 1/3, almost 1/3 of the entire membership, that we are the only continent that hasn't had the opportunity to provide a Secretary General, but above all, that we have first class men who could be excellent Secretary General in these changing times.

MS. HUNTER-GAULT: Other often cited but unofficial candidates include Ugandan Olaro Otunnu, head of the New York-based International Peace Academy, and Prince Sadrudan Aga Khan, the former UN High Commissioner for Refugees, who has Iranian citizenship but who was born in France, and two women, Norway's prime minister, Groh Harlem Brundtland, and Japan's Sadaka Ogata, the current High Commissioner for Refugees.

PETER WILENSKI, UN Ambassador, Australia: Well, it's certainly the principal topic of conversation in the corridors.

EDWARD LUCK, UN Association: Well, so far it's been a pretty up beat kind of a race.

MS. HUNTER-GAULT: Despite this optimistic assessment, there are a number of people and organizations who would like to see the process changed.

PETER WILENSKI: Well, I think the process is very haphazard. The process is one of names percolating through and slowly becoming known as possible candidates.

BRIAN URQUHART, Former UN Official: Well, this is very depressing, I think. I mean, last year when we published a study on this here at the Ford Foundation, everybody said, oh, yes, goodness, yes, there must be a search procedure and that's a terrific idea, but I noticed for various political and diplomatic reasons nothing has happened, there is no search procedure. No organization in the private sector would dream of electing its Chief Executive Officer in this way. My view is the initiative should be with the Security Council to find the very best worldwide, man or woman.

MS. HUNTER-GAULT: Still, there is widespread agreement that the end of the cold war provides a greater than ever chance for selection on the merits.

BRIAN URQUHART: In the past, the appointment of the Secretary General has been very much influenced by the cold war. It's been extremely difficult to find anything except a compromise candidate and in fact, the only time they got beyond that, they did it by accident when they elected Dag Hamershold, for the simple reason that nobody knew what Dag Hamershold was like.

EDWARD LUCK: But I think for once, we don't have the East-West divide, you don't all of a sudden have American vetoes of Soviet candidates and vice versa, so I think there will be a fair range of people who are agreeable to all five permanent members and to the larger body politic at the UN.

MS. HUNTER-GAULT: Some concern is being voiced among third world nations that the United States will have a bigger voice than other members of the Security Council in the selection of a Secretary General, but those complaints so far have been muted. Meanwhile, another byproduct of the end of the cold war is a new plan to increase the power of the new Secretary General. Negotiators from 22 nations have called for a major overhaul of the organization's unwieldy hierarchy.

BRIAN URQUHART: The United Nations was set up in 1945. It grew at least three times the size it was in members or more than three times in fact. It started at 50; it's now 160 something. It's been through a very tumultuous period of change in world history and the way the Secretariat is organized has very much reflected partly the constraints of the cold war and also the enormous expansion in not only the membership but also the range of activities of the organization. For example, there are well over 30 senior officials on the books reporting directly to the Secretary General. How on earth is the Secretary General supposed to handle an organization like that? It simply is, it's not really very manageable. And there a lot of things like that which can be looked at, and I think that as a matter of fact there is an initiative to do that which has been put forward by 22 countries, of which the United States is one, and I think it's time. Any organization needs to be overhauled once in a while, and the time when you're changing the leader of it is obviously the time to do it.

MS. HUNTER-GAULT: Although the plan would deprive the United States and other powers of the senior posts they've automatically claimed in the past, they all participated in its drafting and signed off on most of its provisions. UN observers and diplomats also say that the plan points the way to a less political organization, one that could be run by international civil servants loyal to the Secretary General, the No. 1 civil servant in the world. And it would also create an organization that is prepared to respond to a new and different set of world problems.

ABDALLA AL ASHTHAL, UN Ambassador, Yemen: The more democratization there is, the more self-determination there is, the more countries and the more ethnic groups and nationalities will want to have their own independent states. And that creates any problem for the United Nations.

BRIAN URQUHART, Former UN Official: Environment, the global problems, the problem of poverty, the problem of natural resources, there are a whole slew of interconnecting problems which will require what is now that of global management. And I think the Secretary General is going to have to be someone who can articulate ideas of that kind and then really manage an organization which can do something about it.

BARBARA McDOUGALL, Former Minister, Canada: The emphasis on multilateralism, such as President Bush expressed in his speech to the General Assembly, and others are looking at, the increased cooperation among countries since the end of the cold war, the view that that is the wave of the future, that that is what is going to enable countries, underdeveloped countries to become democratized, to assist in their economic development, to assist in the delivery of aid and other forms of assistance. All those things I think are very much the wave of the future in the UN, and we are dealing in a new environment.

IBRAHIM GAMBARI, UN Ambassador, Nigeria: We need somebody understands that can show leadership, initiative, somebody that can carry forward the gains in the area of protecting the weak against strong and check international aggression.

EDWARD LUCK, UN Association: Well, traditionally, we've always looked for the best bureaucrat, the best diplomat, and now, it seems to me there's a demand for a good, strong manager to make the system work now that it has all this new found potential, and also someone who's more effective at communicating with the world, who can go beyond simply governments, reach the people, reach the media, make the case for the UN, make the case for international causes. We've lacked that in years past. Now that's not necessarily what governments want, because governments don't necessarily want someone who's effective at communicating with the people and going around them, but I think the world is ready for this.

MS. HUNTER-GAULT: The Security Council is expected to make its recommendation soon and a decision is expected late this month. Meanwhile, the campaigning continues and the names of the front runners and other candidates keep changing, almost hourly. FOCUS - TAKE THE MONEY AND RUN

MR. LEHRER: The BCCI banking scandal returns to the headlines tomorrow as Senate hearings open on what happened and why, among other things, the federal government was so slow in doing anything about it. As a hearing preview, we have a refresher course on the scandal now by our business correspondent, Paul Solman, of public station WGBH in Boston.

MR. SOLMAN: In a sense, BCCI is a textbook of international bank fraud. To understand it, it helps to understand how banks and banking regulations work. Boston University's School of Management was kind enough to lend us a classroom and a blackboard to help lay out the steps in the process. So No. 1, you need money to start a bank, to hire the employees, to set up shop and so on. BCCI got the money from something called the United Bank. Aga Hasan Abedi had run Pakistan's United Bank back in the 1960s. A recent documentary on Britain's Channel 4 reported that while at United, Abedi authorized $2 million in loans to a group of friends. Then, it's alleged, he had United Bank illegally write off the loan. With this money, Abedi and friends started BCCI. Thus, it seems, from the beginning at BCCI, crime paid. Don Billings was a bank regulator at the Federal Reserve.

DON BILLINGS, Former Bank Regulator: It can be rational to break the law. It's simply a question of expected value. If the payoff is $100 million and the chances of getting caught are quite small, it can be rational behavior to break the law.

MR. SOLMAN: So Abedi had some start-up money. It was on to Step 2. A bank needs to develop some trust to get a reputation. Abedi did it by making the right connections. Right off, the charming Mr. Abedi made the right friends, like the prestigious Bank of America. Bank of America's good name helped launch BCCI, according to former U.S. Comptroller of the Currency, John Heimann.

JOHN HEIMANN, Former U.S. Comptroller: Most of the banking persons around the world, people involved in banking, businesses, and certainly the regulators knew Bank of America and had to believe that they would only be associated with first class people, the people they trusted, who they thought were good bankers.

MR. SOLMAN: BCCI, with Bank of America's backing, opened a branch in London, as well as making deals with Sheikdoms throughout the Persian Gulf. By 1980, B of A, now queazy about BCCI, dropped the partnership, but the damage had already been done. BCCI was established and eventually had branches in some 70 countries, assets of more than $20 billion. [LIST OF COUNTRIES FLASHED ON SCREEN: Australia; Bahrain; Bangladesh; Barbados; Isle of Man; Japan; Kenya; Korea; Cameroons; Lebanon; Canada; Luxembourg; Cayman Islands; Malaives; China; Mauritius; Cyprus; Netherlands; France; Oman; Gabon; Panama; Germany; Philippines; Gibraltar; Sierra Leone; Hong Kong; Spain; India; Sri lanka; Indonesia; Sudan; Trinidad; Turkey; UAE; United Kingdom; United States; Uruguay; Yemen; Argentina; Bahamas; Botswana; Brazil; Colombia; Egypt; Ghana; Italy; Jamaica] Okay, BCCI had some money, had some contacts. Now on to Step No. 3. Any bank needs to register in a country where regulators can keep an eye on it. BCCI wasn't crazy about scrutiny and so it made life a little easier on itself and a little harder on those who would later look into it. BCCI did this by registering itself in the land of sun and snorkel, the Cayman Islands. Hal Scott is an expert on international banking regulation.

MR. SOLMAN: What is regulation like in the Caymans?

HAL SCOTT, Harvard Law School: I couldn't tell you. I've never seen an example of it. I mean, I'm sure -- by the way, we joke a little bit -- I'm sure that the Caymans does have regulations. It's not just a question of what's on the books. Much more or just as important is enforcing of a regulation. But we know that the Caymans just does not have those kinds of resources, so whatever they have written on the books in terms of regulation, there's a big concern about the resources with respect to enforcement.

DON BILLINGS, Former Bank Regulator: There are certain countries that do not welcome U.S. supervisors. In fact, the nature of their comparative advantage is that they offer a certain amount of freedom from scrutiny.

MR. SOLMAN: And Caymans would be one of them?

MR. BILLINGS: Yes.

MR. SOLMAN: Now, almost banks register in just one country, which puts a primary regulator in charge. One regulator means one full set of books that someone could conceivably examine, so just to be on the safe side, BCCI registered itself in a second country, Luxembourg, the tiny European nation known for its congeniality to tourists and to foreign banks. That way, BCCI could keep the whole picture from any one set of prying eyes.

MR. HEIMANN: And if there is no one looking at the whole, then it is possible to move bad loans out of one bank into another bank, moving them before either the auditors or the bank examiners come in, thereby presenting a false picture of the strength of the individual bank.

MR. SOLMAN: So you just keep moving the bad loans back and forth ahead of the examination?

MR. HEIMANN: That's right, moving bad loans, or conversely moving in good assets before the examination or before the auditors come in to check the books.

MR. SOLMAN: In fact, BCCI played it even safer, hiring different auditing firms for its different domiciles, although, as we've seen in the case of the S&Ls, auditing firms hired by banks can be a little less than enthusiastic when it comes to checking the books of their clients. Eventually, BCCI put Price Waterhouse in charge of all its books, but the firm never found anything amiss, or, if it did, never blew the whistle. In fact, bank fraud is rarely discovered through an audit.

HAL SCOTT, Harvard Law School: The problem is it is a resource issue and if the audit is being supplied by government organizations or even private organizations that the company is paying for, they don't have unlimited resources, so in the practical world, you can fool auditors.

MR. SOLMAN: Unfortunately, BCCI's clever regulation dodge backfired when it tried to enter the lucrative U.S. market via New York in the mid seventies. At the time, John Heimann, now a vice chairman at Merrill Lynch, was New York State's Banking Commissioner.

JOHN HEIMANN, Former U.S. Comptroller: The question, of course, comes on how come there's not a primary regulator, and the answer was, well, we operate in third world countries, our systems, our patterns, our cultures are different, we've done this for tax reasons, we think this is best for our shareholders, we don't have a primary regulator. Well, now they have the choice not to have the primary regulator. Truly they can decide that, but we also had a choice whether to let them in the United States. We chose not to.

MR. SOLMAN: However, that didn't stop BCCI. Remember, Step No. 2, making the right friends and establishing trust through the Bank of America? Well, BCCI went back to the tactic and made the right friends in the United States. In 1982, legendary Democrat and statesman Clark Clifford and his law partner, Robert Altman, helped investors purchase First American Bank. It turns out BCCI was behind the deal, although Clifford and Altman, who became the bank's chairman and president, say they were unaware of BCCI's secret dealings. In fact, over the last decade, BCCI has seemed to live up to its new nickname "Bank of Crooks & Criminals." Its customers included an odd couple, Abu Nidal and Oliver North, and former business associates Manuel Noriega and the CIA. It also broke a cardinal rule of banking, it lost money, or perhaps gave it away, making bad loans to a variety of Sheiks and other big shots. But the losses, whether inadvertent or part of some grand conspiracy, were real enough and had to be dealt with. [BAD LOAN LIST SHOWN ON SCREEN: Sheik Kamal Adham - $313 million; A.R. Khalil - $150 million; Gulf Group - $405 million; Offshore Companies - $212 million; Bin Mahfouz Family - $153 million; Sheik Mohamed Bin Rashid Al-Maktoum - $121 million; Ghaith Pharaon - $288 million; Ibrahim Family - $132 million; M.M. Hammoud - $110 million]

MR. HEIMANN: What I think happened is that as BCCI grew, as its need for money grew, as its losses grew, I think that management must have encouraged its officers in the field to get deposits, because by getting the deposits, they had more money with which to work, more money with which to hide the losses, and to create at least the ambiance of a real business, a real banking business.

MR. SOLMAN: On the other hand, maybe BCCI just wanted more money to funnel to its buddies. In either case, when a bank is desperate for money, it can go to great lengths to attract deposits.

UNDERCOVER AGENT: We'll never discuss this again, but the people with whom I'm dealing are the most powerful, umm, and largest drug dealers in Colombia.

BCCI OFFICER: I want to be, uh, very clear and possibly blunt with you. I'm not concerned, it's not my business about who your customers are.

MR. SOLMAN: That's Amjad Awan from BCCI's Tampa operation caught in the act. A federal undercover agent, posing as a money launderer, is trying to make a deposit and BCCI is apparently taking every deposit it can get.

AWAN: I'm not concerned further than that because, you know, I'm not really responsible for the morals of, um, of your customers. I deal with you.

MR. SOLMAN: Since all cash deposits of $10,000 or more must be reported to the U.S. government and drug dealers aren't keen on leaving their names and addresses, they're always looking for bankers who will deposit the cash on the QT.

MR. HEIMANN: If you're willing to do that, you would take in the deposits and then spread them in dummy names, of course, it would never be in the names of a drug dealer, but in some kind of dummy name, and then the money would be transferred to other accounts in your system that were dummy names for the drug dealer, whatever, in other countries, which would then in turn be transferred now perhaps to legitimate banks in other names but companies that were controlled also by the drug dealers, and over a period of time, through many transfers of capital, eventually the investment of some of the capital, and even paying taxes on some of the capital that the money comes out clean.

MR. SOLMAN: Illegal accounts helped the bank grow, plus big fees can be charged on them, pure profit for the bank. Amjad Awan is currently serving a 12 year sentence for his efforts. But the point is despite such flagrancy, BCCI managed to stay in business. With its operations in two countries, thereby guaranteeing lax oversight, and BCCI's skill at buying influence, it took almost 20 years for authorities in England and the U.S. to catch up with the bank. In a recent study, Hal Scott found loopholes in world banking regulation big enough to drive a BCCI through. But even with tighter regulation, scams like BCCI's will be hard to catch.

HAL SCOTT: Crooks are some of the cleverest people out there and you put down a system of regulation and immediately go find a way to beat it. So we can't, we cannot protect against fraud. What we can hope to do is discover it rather promptly after it happens, but we can never be devising some foolproof system to avert fraud.

MR. SOLMAN: So far at least, no American depositors have been hurt by the BCCI scandal, although depositors in other countries, especially England and the third world, have been literally devastated. But the question that remains here is this: Did Mr. Abedi and his friends of BCCI somehow penetrate First American Bank and use the same tactics here they used around the world? In that case, First American could be in trouble and could suffer the same fate as BCCI.

MR. LEHRER: Tomorrow, the Senate Foreign Relations Committee hears from Abdur Sakia, who ran BCCI's operations in Miami and New York City. ESSAY - GHOSTLY PRESENCE

MS. HUNTER-GAULT: We close tonight with an essay. As we reported earlier, today former California Gov. Jerry Brown entered the 1992 Presidential campaign, the seventh Democrat to officially seek his party's nomination. Los Angeles writer Anne Taylor Fleming found that they had more in common than just party affiliation.

SEN. HARKIN: Are you ready for a President who will turn this country in a new direction?

AUDIENCE: [Shouting] Yes!

MS. FLEMING: Finally!

DOUG WILDER: I have decided to run. I have decided to run for the Presidency of the United States in 1992.

MS. FLEMING: It seemed as if they'd never somehow get here to the Presidential starting gate.

MR. KERREY: I am announcing today my candidacy to be the next President of the United States of America.

MS. FLEMING: But now, at least a handful of honest to goodness, hard core sixties kids are making a run for the White House and I confess it sets the old idealistic, pre-mortgage heart aflutter.

GOV. CLINTON: Today, I proudly announce my candidacy for President of the United States of America!

MS. FLEMING: Think of it, one of them in here. Can they repackage their old, anti-war selves and actually sell them to the American people? Stay tuned, they're trying. Clinton, Kerrey, Harkin, Tsongas, Wilder, and that perennial sixties era maverick, Jerry Brown, all with their still emphatically youthful faces, despite the graying hair, and what a balancing act they have to pull off. These are the Kennedy kids in the true sense of the word, the heirs apparent to Jack and Bobby. They're products of the Peace Corps and the civil rights movement and Vietnam, above all that. Kerrey and Harkin both served in the war and later turned against it, and it's probably fair to count the other candidates as Vietnam vets in a political sense, certainly veterans of the Vietnam era. So how do they do it? How do they update themselves for the brave new society created in Ronald Reagan's image, proud and patriotic, folksy and family-oriented? How do they balance the old images with the new realities, the old hearts versus pocket book dilemma? It's quite a tight rope walk. In a very real sense, they are the walking embodiment of our own mid-life crisis, we aging baby boomers, those of us who are trying to answer these very same questions for ourselves. Yes, it's cosmic reckoning time for some of the boomers, time to count the wrinkles and tote up the accomplishments, in case all of you non-baby boomers out there hadn't noticed yet, pretty hard to miss I think. In their nostalgia and narcissism, they're having at it big time as if no one before was bored in the job and wondered what it was all about and felt the grave drawing nigh, from Woodstock to wrinkles in the blink of an eye and what do they have to show for it? Did they leave their marks, make good on the old dreams of peace and love? And now what? Remedies for baldness, plastic surgery, even girdles. Oh, yes, they're actually making a comeback. They go by sly aliases like Hip Slip, but make no mistake, their elastic intent is to squash the aiming boomer body. And now here come these candidates. Looking at them is like looking in a mirror, an aesthetic shock and a conscience call all at the same time. How are they going to pull this off? How have they evolved from the old values? Can they find the resonant new rhetoric while trotting out the old symbols? Most seem caught in some mushy middle ground, trying to read the currents, trying to walk the line between Kennedyesque calls to action and Republican sounding verse of pragmatism and patriotism, trying to figure out what of the old sixties spirit will play in a generally dispirited time, politically and economically? How do you light the old fire, or do you? Can you anymore? Oh, I suppose for some, especially those turned off politics pretty much in toto, the ideologic dance of the Democrats might be a bit of a snore. But it does, inevitably, tug at the heart strings of some of us aging baby boomers as we reckon with our own ghosts. I'm Anne Taylor Fleming. RECAP

MR. LEHRER: Again, the major stories of this Monday, there were conflicting reports about the release of U.S. hostage Jesse Turner in Lebanon. The 44 year old professor has been held by an Islamic terrorist group for nearly five years. Early today, the Iranian news agency said he had been freed. But this evening, Syrian foreign ministry officials said the release had not yet taken place. And firefighters in Northern California have stopped the spread of a fire that has claimed 10 lives and destroyed hundreds of homes. Good night, Charlayne.

MS. HUNTER-GAULT: Good night, Jim. That's our NewsHour for tonight. Tomorrow night we have a conversation with Henry Kissinger about the prospects for the Middle East peace conference. I'm Charlayne Hunter-Gault. Good night.