The MacNeil/Lehrer NewsHour

MS. HUNTER-GAULT: Good evening. I'm Charlayne Hunter-Gault in New York.

MR. LEHRER: And I'm Jim Lehrer in Washington. After our summary of the news this Friday, Jeffrey Kaye reports on the latest legal maneuvers in post-riot Los Angeles. David Gergen & Mark Shields assess the politics of the week, an economist explains the billion dollar bankruptcy of the world's largest real estate developer, and Time Magazine's Cairo correspondent reports on pollution in Africa's largest city. NEWS SUMMARY

MR. LEHRER: A Los Angeles judge today ordered another trial for Police Officer Lawrence Powell in the beating of Rodney King. Superior Court Judge Stanley Weisberg said there was sufficient evidence to retry Powell on a charge of assault under color of authority. Last month, a jury deadlocked on that charge, voting eight to four in favor of acquittal. Three other police officers were acquitted of all charges. There will be a hearing next week to determine where the new trial will take place. We'll have more on this story later in the program. Charlayne.

MS. HUNTER-GAULT: The man known as "Dr. Death" was back in the news today. Michigan Doctor Jack Kevorkian is already facing murder charges for helping two women kill themselves last year. Today, Kevorkian was present when a 52-year-old woman suffering from multiple sclerosis committed suicide in a Detroit suburb. Kevorkian's attorney said he counseled the woman but didn't assist in suicide, which involves self-administered carbon monoxide. Kevorkian was not charged by police when they arrived on the scene.

MR. LEHRER: A federal grand jury has subpoenaed the office records of House, Ways & Means Committee Chairman Dan Rostenkowski and two other Democratic House members. The grand jury is investigating the operations of the House post office. Subpoenas were issued to Representatives Austin Murphy and Joseph Kolter, both of Pennsylvania, as well as Rostenkowski of Illinois. Rostenkowski has served in the House 33 years. The subpoenas asked for six years of records for goods and services, including postage stamp allotments.

MS. HUNTER-GAULT: The crew of the space shuttle Endeavour had a relatively relaxed day in orbit today. After a record four space walks and the rescue and re-deployment of a four and a half ton satellite, the astronauts put away their space suits and cleaned up their cabin for the return home. They also held a news conference this afternoon. Richard Hieb was one of the three astronauts who wrestled the satellite into the shuttle's cargo bay. He talked about what it was like.

RICHARD HIEB: It wasn't really obvious how we were going to get that 9,000 pounds turned around and get the capture bar put on it. One of the things that I discovered made it kind of hard to handle was with three people holding onto the 9,000 pounds, you were never quite sure if what you were doing was causing any change in the motion, or what somebody else was doing was causing the changes, so you weren't quite sure how to correct. Once we kind of, like Tom said, once we held it for awhile, I felt a lot better about it too and it was just a matter of working very, very slowly. And I thought since that perhaps we could have moved a little bit faster, but we didn'tknow if we could and so we did the safe thing and moved just as slowly as we could to get the job done.

MS. HUNTER-GAULT: Endeavour and its crew return to Earth tomorrow. The Federal Reserve today reported output at the nation's factories, mines and utilities rose 1/2 percent in April. It was the third straight monthly gain, led by a sharp rise in auto production.

MR. LEHRER: The world's largest real estate development company has filed for bankruptcy protection. Toronto-based Olympia and York is dealing with a debt of more than $18 billion. The company owns dozens of skyscrapers in cities throughout the United States and the world, 12 in New York City alone. A company spokesman said the filing covers about a third of its operations. We'll have more on this story after the News Summary.

MS. HUNTER-GAULT: Russia and five former Soviet republics signed a collective security agreement today. They did so at a summit of leaders of the commonwealth of independent states, a summit which was perhaps more notable for who did not attend. James Mates of Independent Television News reports from the Uzbek capital, Tashkent.

MR. MATES: Barely half the leaders of the commonwealth of independent states saw fit to turn up to this summit. After four similar meetings of which nothing of substance was decided, it seems that several leaders are not distancing themselves from a body that's becoming increasingly irrelevant. Russia's President Yeltsin still says in public at least that the commonwealth does have a future. Arriving this morning, he was resolutely upbeat.

PRESIDENT BORIS YELTSIN, Russia: [Speaking through Interpreter] The mood is good. If we can get agreement on 12 of the 18 issues on the agenda, we'll have taken a good step forward.

MR. MATES: But getting any meaningful agreement without the President of the Ukraine and four other republics being present seems unlikely. At least two of the absentees stayed away because of trouble at home. It's the sort of instability that could ultimately make any decisions taken today in Tashkent quite irrelevant.

MS. HUNTER-GAULT: One of the two troubled republics was Azerbaijan, where a political crisis raged in the capital. Opposition forces seized the parliament building and declared themselves in control of the republic. There were an undetermined number of casualties in the violence. It was sparked by yesterday's reinstatement of the president, who was forced to resign two months ago. Local news agencies said his whereabouts were not known. Mud slides have killed at least 200 people in the Central Asian Republic of Tadjikistan. The Itar Tass News Agency said dozens of villages have been buried or washed away by the mud. The slides began Wednesday after heavy rains and were still continuing today.

MR. LEHRER: Another cease-fire has been brokered in Bosnia- Herzegovina. A United Nations spokesman said today representatives of the warring Serbs, Muslims, and Croats would meet in the Bosnia capital of Sarajevo tomorrow if the truce holds. Every other previous cease-fire has been broken within days or hours. And that's it for the News Summary tonight. Now, it's on to the legal aftermaths in post riot Los Angeles, Gergen & Shields, the Olympia and York bankruptcy, and pollution in Cairo. UPDATE - L.A. LAW

MR. LEHRER: The decision today to retry one of the police officers is only one of many legal fallouts from the Rodney King case and its aftermath. We have a full update report now from Jeffrey Kaye of public station KCET-Los Angeles.

MR. KAYE: On April 29th, "not guilty" verdicts in the case of four police officers charged with beating LA motorist Rodney King shocked the world and raised questions about American justice. Yesterday, a Los Angeles case stemming from another videotaped beating began. Four defendants are accused in the assault of truck driver Reginald Denny. Denny was assaulted in the violence that followed the stunning acquittal in the Rodney King beating trial. Legally, the two cases are unrelated. But to some, they raise troubling questions about equal standards of justice.

SAKIAH ABDULLAH: It's got to be the same justice for everybody. And if you're going to say these people are getting life, then those officers should also get life, because we saw what they did. We saw their faces. We didn't see the faces of these brothers out there in the streets.

MR. KAYE: The King beating case verdicts eroded public faith in the justice system. President Bush moved quickly to try to restore confidence.

PRES. BUSH: Within one hour of the verdict, I directed the Justice Department to move into high gear on its own independent criminal investigation into the case. And next, on Thursday, five federal prosecutors were on their way to Los Angeles.

MR. KAYE: Not only did federal prosecutors start to work with state authorities to investigate the King beating case, they also teamed up with local law enforcement to prosecute riot-related matters.

LOURDES BAIRD, U.S. Attorney, Los Angeles: Their focus will be to look at, investigate, and prosecute riot-related crimes. And our anticipation is that this that you see today is only the beginning of a series of those cases.

MR. KAYE: This week at a joint press conference, Lourdes Baird, the U.S. Attorney in Los Angeles, together with L.A. District Attorney Ira Reiner said they are working together on both the Denny and King beating cases.

IRA REINER, Los Angeles District Attorney: There is only a single standard of justice and that standard is that where a crime has been committed, it will be investigated and it will be prosecuted. It was prosecuted in the King case and it's going to be prosecuted in this case right here.

MR. KAYE: Reiner's firm's stance followed the President's earlier promise of justice in the King beating case.

PRES. BUSH: Since 1988, the Justice Department has successfully prosecuted over 100 law enforcement officials for excessive violence. I am confident that in this case the Department of Justice will act as it should.

MR. KAYE: The federal government has not yet made a decision, but the likely choice is to prosecute one or more officers for violating Rodney King's civil rights. But Laurie Levenson, a former federal prosecutor who teaches at Loyola Law School in Los Angeles, thinks that the President's strong statement has risks.

LAURIE LEVENSON, Former Federal Prosecutor: I think that the average viewer watching the Bush speech would say now the Feds are going to come in. They're going to try this case. They're going to do it right and they're going to win the case, which is a little bit of a dangerous message to send out, because any criminal case is not a guaranteed matter and certainly not one where 12 jurors have voted to acquit.

MR. KAYE: Federal charges in the King matter won't be filed until the U.S. Attorney's Office has a chance to thoroughly review the state's case. The only remaining charge in the case is the single charge of assault against Officer Lawrence Powell, which ended in a hung jury. Today in court, Judge Stanley Weisberg rules that Powell will be retried on one count of assault.

MICHAEL STONE, Powell's Attorney: Based upon my view of the evidence presented in the just concluded trial and including all of the factors that I have just mentioned, I find that the interests of justice require that there be a second trial in the case of People vs. Powell.

MR. KAYE: Powell's lawyer, Michael Stone, argued his client should not get a fair trial, but a second trial could lead to another outbreak of unrest.

JUDGE STANLEY WEISBERG, Los Angeles Superior Court: It's our position that even if a new jury were persuaded, the prosecution had failed in its effort to prove the truth of the charge beyond a reasonable doubt. It's probable that they would not convict anyway in order to avoid what is very obviously a risk to their own personal safety, ridicule and condemnation from the community which has been experienced by the last jury, and the risk of sparking another series of riots in urban centers across the United States. A single criminal trial cannot cause or solve the major social and economic and other problems that exist in society. This retrial will deal solely with whether or not Mr. Powell is guilty or not guilty of the charge that remains against him.

MR. KAYE: Weisberg called a hearing for next Friday to discuss where the trial will be held. The first case was moved out of Los Angeles because of pre-trial publicity to a predominantly white community. After today's hearing, District Attorney Reiner said he wants the trial held in Los Angeles.

MR. REINER: Our position is that in a county such as Los Angeles, as large and as diverse as it is, that a fair jury can be obtained from that rather advanced jury pool.

MR. KAYE: When Powell is retried, his defense is likely to be similar to the case he made in the first trial, namely that Rodney King posed a threat to police officers. Provocation could also figure as an issue in the Reginald Denny beating case. One man, Gary Harris, who says he witnessed the beating, claims that Denny made obscene remarks to pedestrians from inside his truck.

REPORTER: -- Reginald Denny yelling something out of the truck?

GARY HARRIS: He yelled out " -- Rodney King!" That's exactly what he said. That's exactly what he said. He took out his truck and all I'm sayin' he got what he deserved. That's how I feel. I'm sorry. He shouldn't have said what he said. He should have kept rolling. Didn't nobody stop that truck -- the front of him, there was nobody blocking his path. He could have kept on rolling.

MR. KAYE: A lawyer for Damian Williams, one of the defendants, said that issue could be a factor in his case.

DENNIS PALMIERI, Defense Lawyer: Provocation is one of the defenses that is very, very pertinent to this case, obviously.

REPORTER: What provocation are you talking about?

MR. PALMIERI: Provocation that was -- an individual comes into the community, perhaps starts yelling racial slurs, maybe gestures with his hands in an offensive manner and considering the circumstances, we feel that that may have provoked the individuals to respond in perhaps a way that is alleged that they did respond.

IRA REINER: Those suggestions should be seen for what they are, and that is people trying to be an apologist for what was just violent, violent behavior. It wasn't just Reginald Denny driving his truck through that intersection. There were anywhere from thirty to forty to fifty cars that went through that intersection that were assaulted. Women were stopped in their cars and beaten up. People were -- other people were dragged from their cars and beaten up. What is it that's being suggested, that every single person that drove through the intersection of Florence and Normandy, between thirty, forty, fifty cars, each one leaned out the window and shouted some insult, and that's why the crowd moved on 'em?

MR. KAYE: The state charges against the defendants in the Denny beating include attempted murder, torture, and robbery. Those cases will move forward first. The federal cases will follow, with different charges being leveled.

LOURDES BAIRD, U.S. Attorney, Los Angeles: The charges that would probably be the most appropriate would be civil rights charges, that is, violation of civil rights of Mr. Denny, as well as riot- related charges.

MR. KAYE: All four defendants in the Denny beating case were brought in for arraignment yesterday. The arraignment was postponed a week. In both the Powell and Denny beating cases, prosecutors hope that neither outcome becomes an issue on the streets. To ensure that, they'll have to convince the public that no matter what the verdict, justice has been done.

MS. HUNTER-GAULT: Still to come on the NewsHour tonight, Gergen & Shields, the big Olympia and York bankruptcy, and dirty air and water in Cairo. FOCUS - '92 - GERGEN & SHIELDS

MR. LEHRER: Now some Friday night analysis of matters political from Gergen & Shields, David Gergen, editor at large at U.S. News & World Report, syndicated columnist Mark Shields. First gentlemen, on the post Los Angeles politics, is the bipartisan move for quick congressional action holding, David?

MR. GERGEN: Reasonably well. It's unraveling on the edges, but I still think we're going to get a series of measures adopted by the House and the Senate that will be blessed by the President. There was more opposition than expected yesterday in the House, Jim, on the first vote on urban aid. There were some 166 members of the House who opposed it, including 14 Republicans from California who said they disliked the measure. And these are rural Republicans. But I think the larger issue is not whether the initiatives are pass. I think they'll pass. The question is whether the initiatives will do the job. And on that issue, I think it's hard to be -- it's hard to contain one's skepticism.

MR. LEHRER: Mark, is there some legitimate political hay to be made on this urban problems issue beyond the blame game that it seems to me we have gone beyond already?

MR. SHIELDS: I think the public has just had it with the blame game. I think people will just say, they're not interest in that - - they really don't -- who's going to get the edge. I think just a slight exception to what David said; Bob Dole, the Senate Republican leader, said, we agree on everything except the details, and I think that may be the real bipartisanship which on matters on this usually has a shelf life slightly longer than that of a unkept bottle of club soda. And I am concerned that bipartisanship will not survive in this election atmosphere. As far as the advantage, right now, Jim, there's a sense, first of all, that both parties are hurting. There is a sense, first of all, that people really do identify the failure of the Reagan and Bush administrations to deal with urban problems as a principal contributing factor and cause, but secondly, that the Democrats have to come up with new ideas.

MR. LEHRER: The old ideas --

MR. SHIELDS: The old things just aren't working. So both parties are behind and neither one, I don't think, is gaining a great advantage. If it becomes an issue, obviously, George Bush is not a big winner on it, but he's going to learn a lot more, quite frankly, about the economy, where right now he is seen as third best of three behind Ross Perot and Bill Clinton.

MR. LEHRER: How do you have a legitimate -- to use my word earlier -- and honest and constructive debate about all of this without appearing to be playing the blame game, David?

MR. GERGEN: Well, it's hard. I agree it's hard. I think what's happening, Jim, is that on both the Democratic side and the Republican side, for the very reasons Mark has been suggesting -- because people feel under siege -- both parties feel under siege - - that the leaders of both parties are scrambling to put together a package that they can take back to the electorate and will keep the peace through the election cycle. The mayors are going to be here leading a march tomorrow and they're going to make the argument very vociferously that too little is being done.

MR. LEHRER: By both the Democrats and the Republicans?

MR. GERGEN: The mayors were in today, for instance, meeting with some Democratic Senators, beating up on them that they had to do far more, that this was way too modest. But I think the issue is, yes, the question is: Have we even had the kind of national discussion that you began a couple of weeks ago with the editors here on the show which the viewers responded to very positively which is a candid discussion about what our real problems are? Now, I spent some time with Sen. Patrick Moynihan today, of course, a man who back in 1965 identified the underlying problem, and that was the breakdown of the family structure among poor blacks, that is a class issue as well as a race issue. And none of the legislation that's now being proposed is likely to pass, the enterprise zones or the tenant ownership, will really address that serious concern. And that still has not been part of our national debate. Now, people like Bill Bradley, and Sen. Kerry, and Jack Danforth are willing to discuss it, but by and large, we have not had either the national discussion, the attention to it, or the effort made to deal with these fundamental underlying conditions.

MR. LEHRER: Is there a danger then, Mark, that what could happen is that both parties realizing they've got problems, they have problems on this issue, have just kind of quietly said, well, let's get this, let's get it off the table while we argue about other things because there's nothing to be gained by either of us?

MR. SHIELDS: I don't think so, Jim. I think Los Angeles put it on the agenda for 1992. I don't think it's going to go away. It's the American cities, the concern that Republicans have, those Republicans in the House who voted, especially the California Republicans, is that the appearance at revolt is being rewarded, that because Los Angeles explodes, then the money comes. But I don't think that there is a chance in 1992 of either party or either nominee or any of the nominees being able to duck the urban issues and the fact it's there. I mean, it's there for every one of us to see.

MR. LEHRER: But David's point about talking about -- I mean, having to dial -- forget the federal programs for a moment -- just have a real honest to goodness American dialogue about what all of these problems are, what the hostilities are between and among races and between and among classes and all of that. Is that likely to happen in a political atmosphere?

MR. SHIELDS: No. I think that's tough and I think that's really - - it's going to require Presidential leadership. I think that is a time -- I mean -- the mention of Sen. Moynihan reminds me of the speech that he helped write for Lyndon Johnson at HowardUniversity in 1965, which was, you know, the likes of which many younger members of the press had ever heard. The President talked that way about race. I mean, he talked that passionately and movingly about what the obligation is of the majority to the minority and for them. I don't know. I mean -- I think the President missed a great opportunity, quite frankly, very early in the game to bring Bill Clinton, to bring Bill Bradley, to bring Ross Perot, to bring Jack Danforth and, you know, and bring him there and say, okay, what is it, what we ought to be doing.

MR. GERGEN: Jim, I think the establishment and the political circles would like to close this debate down. I think they would like -- like to buy peace in our time.

MR. LEHRER: At any political cost?

MR. GERGEN: Yes, and get this so it's not a divisive an issue - - I do think it will stay the hand of the Republicans this year in ever playing the race card again. I think they will be very reluctant to play the race card.

MR. LEHRER: Let's talk -- both of you have mentioned Perot. How's -- there was a California poll this week that he really did surprisingly well, Mark. Is surprise still the word to use as a lead-in to anything about Perot?

MR. SHIELDS: Well, as a surprise, I mean, the West has always been a weak area for George Bush. It was a very strong area for Ronald Reagan, but it's been a weak area for George Bush. He barely won California against Michael Dukakis. He lost the states of Oregon and Washington. And for any Democrat to win in 1992, it basically has to begin with that basic states that Dukakis carried, and Hawaii, Washington and Oregon being three of them in the West and have to win California as well. Right now, Ross Perot is running first in all of those states and Washington, Oregon, and California, as well as New Mexico, in Colorado, and Texas, so there's a pattern establishing itself. There's a sense of remoteness from Washington to begin with, compounded by the fact that George Bush is seen as sort of a remote leader, not --

MR. LEHRER: What about Clinton?

MR. SHIELDS: Clinton has never really made it to the West. You know, the race has never gotten that far and the victories that he's winning now over Jerry Brown --

MR. LEHRER: You mean the primary?

MR. SHIELDS: The primary, that's right. It's an East to West process. He is not well known and he's running third in those three Pacific Coast states, which is a problem for him right now.

MR. GERGEN: In addition to what Mark has said, Jim, there are two things that are working against the mainstream candidates. One is Bush faces a problem of that in the West. The Western states have been very hard hit by the recession, the West and the Northeast has weakened Bush, going into this election cycle. His negative ratings in California are over 50 percent now. That's extraordinary for a sitting President. Clinton suffers because the character story has cut more harshly against him in the West. Interestingly enough, it's been true all year. The Western voters are not accepting the stories on character and his negatives are running over 50 percent in California. That's opened the door then to a third party, maverick candidate like Perot, who is seen as a very strong, "can do" kind of guy. And frankly, I think a lot of people in the West see him as a Reagan type person too. They see him in much that same mold, he'll come in, he's got -- they like his independence. The other thing that's been striking to me in the polls that is emerging, Jim, we see this now in California, we've seen it in Texas, ifyou look at the internals of the polls, Ross Perot is winning the white vote pretty handily. Bill Clinton wins the black vote very handily and George Bush wins the Hispanic vote pretty handily. And you've really seen a breakdown by group orientation. I think it could make for some very interesting politics this year. For instance, Bill Clinton now is clearly -- as long as Ross Perot is a strong, viable candidate Bill Clinton desperately needs a big black turnout. That gives Jesse Jackson far more leverage in this campaign as a Democrat than he's had in the -- he had four years ago. Bill Clinton needs Jesse Jackson to help turn out the black vote. George Bush needs white women to offset the white men who are going to Ross Perot. That makes the abortion issue even trickier for the President because a lot of white Republican women may flee over abortion.

MR. LEHRER: You've just come back, Mark, from three days out in Oregon. I know these are difficult things to answer, but was there any -- were you able to ascertain how deep and lasting the support for Perot might be? Is it the kind of thing that in the course of a campaign that could go right out the window?

MR. SHIELDS: Sure, it could. I mean, they don't know him. They know him I think impressionistically the way that David -- what it is more than anything else is a disillusionment or a dismay, disfavor, however you want to put it, with the two principal parties, and, Jim, the same pervasive sense of disillusionment you get as far as politics, gridlock, stalemate, elsewhere. And Perot is seen as somebody who's different and one voter said to me, you know, I'm just looking for somebody who doesn't have the usual ties and obligations that --

MR. LEHRER: It's Buchanan and Tsongas all over again.

MR. SHIELDS: Jerry Brown.

MR. LEHRER: Jerry Brown, yeah, all of that.

MR. GERGEN: But more than that. I think Perot is also seen as a person of accomplishment.

MR. SHIELDS: He is.

MR. GERGEN: And, whereas, the others were seen more as political outsiders. And I think Perot adds to that a record of having accomplished and achieved and I think people like that. And I really believe just as we turned to an Eisenhower in a Cold War that people are attracted in times of economic stress and economic stress in the West is very, very heavy, they're attracted to a business person, a person who knows how to make something and how to meet a payroll and make something grow.

MR. LEHRER: Yeah.

MR. SHIELDS: I just -- I guess, is it going to stay -- I mean, you look at a state like Oregon. I mean, it's granola crunchies and East Coast urban burnouts and politics -- all the way from the left to get the U.S. out of North America to on the right libertarians want to abolish the stop sign -- I mean, it's a really strange mix, and to see him running with 42 percent in a poll just completed this week and the President of the United States at 31, I mean, it's just absolutely remarkable.

MR. GERGEN: It's astonishing. It really is astonishing. It's still building, don't you think?

MR. SHIELDS: It is and I -- you know, I don't know, for Bill Clinton's sake, it's awfully tough to attack him because he is doing the job of bellin' the cat where George Bush is concerned. I mean, his concentration of his fire has been almost exclusively - -

MR. GERGEN: Bill Clinton has to get moving. He has to get moving.

MR. LEHRER: All right. We do too. Thank you both very much. FOCUS - BOOM TO BUST

MS. HUNTER-GAULT: We go next tonight to bankruptcy on a grand scale. Olympia & York is the world's largest real estate developer. Its buildings have altered skylines in New York, London and Toronto, its home base. But now the property giant is altering more than skylines as it struggles with more than $18 billion worth of debt. After court filings in New York and Toronto yesterday, a third of the developer's holdings are now under bankruptcy protection. Olympia & York is a privately held, family empire built over three decades by the reclusive Reichmann Brothers. We will hear more about them and the rise and fall of their enterprise after this report from Toronto.

DER HOI-YIN, CBC: It was a snap news conference called almost at the crack od dawn today. Olympia & York President Gerald Greenwald making it plain O&Y is determined to stay alive, to stay in business.

GERALD GREENWALD, President, Olympia & York: This is not bankruptcy. This is not liquidation. This is not the end of O&Y. This is a restructuring.

DER HOI-YIN: Greenwald insisted operations outside Canada will not be affected.

GERALD GREENWALD: Our operating companies, our major real estate companies, in the U.S. are unaffected and we believe that is the right way to move forward. Our UK operations, especially our Canary Wharf operations, are unaffected.

DER HOI-YIN: While the Tokyo market took a battering early today, apparently over O&Y jitters, North American traders were much calmer about the potential impact of O&Y's filing.

SPOKESMAN: A few weeks ago, the initial wave of selling came in and then things stayed up a bit and as more information became known and things became out in the open, the market adjusted accordingly.

DER HOI-YIN: This analyst agrees.

ANALYST: It's not that significant in the whole process of what O&Y's been going through for upwards of the last year. It is just one step. And you're going to see other steps continue for the next year or two.

DER HOI-YIN: Last evening, teams of O&Y lawyers headed into the supreme court of Ontario to seek protection from creditors who want to seize its assets and properties here. O&Y and four of its Canadian companies also filed for bankruptcy protection in the United States early last night to buy some breathing space to reorganize its affairs. O&Y says yesterday's moves protects its restructuring plan. It wanted a five-year payment freeze on most debts. Now that Olympia & York has filed for bankruptcy protection, analysts say banks will have to declare their O&Y loans non- performing. They might even have to take substantial write-offs. And that could make the banks start constraining credit even more, making them even more tight-fisted than they are today at a time when the economy, if anything, needs a boost. Der Hoi-Yin, CBC News, Toronto.

MS. HUNTER-GAULT: For more on the Olympia & York bankruptcy and its impact we are now joined by Richard Hoey. He is chief economist of the Dreyfus Corporation, a mutual fund management company based in New York. Mr. Hoey, I've said that O&Y haltered skylines in New York and Toronto and other places. Can you give us some further examples of their reach and the buildings we might know, the places, spaces they inhabit.

MR. HOEY: They have been regarded as probably the premier real estate company in the last two decades. They're involved with the World Financial Center here in New York. They're involved with the leading buildings in Toronto, and they had a giant construction in London called "Canary Wharf," which was a huge new project which was part of what has caused them to go into a form of bankruptcy in Canada.

MS. HUNTER-GAULT: Okay. We'll get to that in a minute. But what about -- you just heard the report from Canada -- Mr. Greenwald saying that this is not bankruptcy, they're going to survive -- what does all that mean? Help me understand what's happening here.

MR. HOEY: Well, it is correct it's not liquidation. Liquidation would be if there were a forced sale of all of these big office buildings that they own. The court in Canada is not going to force them to sell these out at distressed prices. It is similar to what we have in Chapter 11 here where the company management itself attempts to reorganize the company but doesn't immediately have to pay its interest. It's protected from paying its interest by the court intervening. But the management is also subject to the court supervision. So they no longer have as much freedom as they had before the court was called in. So its closest analogy in the United States is Chapter 11, where the management stays in operating control of the business, unlike say Chapter 7, where you liquidate the business and sell off all the assets.

MS. HUNTER-GAULT: So we're not going to see skyscrapers suddenly being empty and problems of --

MR. HOEY: Unfortunately, we now have skyscrapers that are empty because nobody rented them.

MS. HUNTER-GAULT: And is that --

MR. HOEY: But we're not going to have a sudden liquidation, a sudden fire sale of buildings. It's not in the interest of the lenders to have a fire sale. So they're not going to be dumped on the market. What will happen is other real estate operators who have borrowed money from banks are going to find their banks not willing to provide them with a lot of extra credit. So they'd better have their finances in order because the banks look at what happened with the Reichmanns, who were regarded as the best in the business, and they look at the rest of their real estate portfolio, and I'm sure they worry a little more.

MS. HUNTER-GAULT: Well, just briefly -- I mean, I was going to ask you this later, but you brought this up -- what did do them in? And can this happen to other companies?

MR. HOEY: Yes. What did them in was an overbuilding in the entire office building business, commercial real estate.

MS. HUNTER-GAULT: During the '80s.

MR. HOEY: During the '80s and what happened was there was an enthusiastic overbuilding of office buildings and there's more space out there than people need to rent. We have a sectoral depression in the commercial real estate business. It's not a depression in the whole country. But in terms of downtown office buildings, there's a tremendous excess supply way beyond what anyone needs and, therefore, those buildings aren't full and the rents are low because there's so much empty space.

MS. HUNTER-GAULT: And then there was one particular project that seemed to be it -- to bring in the issue, the coup de gras.

MR. HOEY: Yes. The Canary Wharf was something that they've been building just now which -- where already we're beginning to see signs in London that there was too much space in London and they proceeded to build even more space and create an even bigger excess supply over there.

MS. HUNTER-GAULT: Is anybody going to get hurt by this in either New York or Canada?

MR. HOEY: Yes. There will be those that will be hurt, especially those who are in the commercial real estate business. This is going to have a negative impact on them. I don't think that it's going to cause major damage to major banks. At least that's the first reading. It's only one day afterwards. We don't have all the details yet.

MS. HUNTER-GAULT: So as far as you can see now, there's not going to be any ripple effect in the local economies where these buildings are, or in the larger economies of New York, or Canada, or --

MR. HOEY: There will be some. There may be some postponement of tax payments or something like that. But the problems that will occur will occur because there are all these half empty office buildings. Whether or not Olympia & York is technically in bankruptcy or had managed to stay out, you still have those fundamental problems.

MS. HUNTER-GAULT: What briefly can you tell us about the Reichmann Brothers and how they got to where they are? I understand they bought all the junk that was available and made it -- you tell me.

MR. HOEY: In past real estate cycles, they were very aggressive and bought buildings when no one wanted them, when they were in tremendous excess supply, such as we have now. They were buyers in earlier cycles, managed to hold on until the real estate market improved, and they made tremendous profits from that. This time they missed getting the cycle right, I'm afraid.

MS. HUNTER-GAULT: But how did they get in the position to do that, because even though they were buying junk buildings, they still had to have a lot of money to do that?

MR. HOEY: Well, they were very credible people who had dealt with their borrowers and their bank, their lending banks over the years and built up a sense of confidence as one deal after another had worked successfully. So you start with a small deal that works and that builds confidence over time. They were very respected people in terms of their business dealings.

MS. HUNTER-GAULT: Did they start out in real estate? I mean, there's a big myth --

MR. HOEY: The family came from Eastern Europe. This is not -- this was in a sense bootstrapping up to a giant empire. This is not an empire of many generations and it's a tremendous -- it was a tremendous empire that was built. But, as I say, they overbuilt at the end and they were taken down basically by the economic forces of recession and just too much office space around the world.

MS. HUNTER-GAULT: Have they got stock -- I mean, they have a privately held company. Does that mean they have no stockholders?

MR. HOEY: There's no public stock available. It's a very tightly held family firm. And as a matter of fact, many of the financial details of their firm is not known. In fact, roughly $18 billion was lent to them by banks without those banks ever having seen really full, complete, and comprehensive financial statements.

MS. HUNTER-GAULT: How could that happen?

MR. HOEY: It's an amazing thing to me as well.

MS. HUNTER-GAULT: You have no idea?

MR. HOEY: Basically it happened because year after year they performed well in their businesses and so they built up an expectation of confidence.

MS. HUNTER-GAULT: I understand they are also good corporate citizens, in Canada especially. They've built large philanthropic - - made philanthropic contributions and built hospitals and things like that.

MR. HOEY: That's right. They generally have been regarded as people of high reputation and great business success, but obviously, that doesn't protect you from making the mistake of overbuilding in some business that later turns sour.

MS. HUNTER-GAULT: But you think they can make it possibly, I mean, it's possible?

MR. HOEY: It's conceivable that they could come back out of this form of bankruptcy, but not for sure --

MS. HUNTER-GAULT: And it will be a while.

MR. HOEY: It'll be a while. And you must remember that, of course, those buildings are still there and they're worth something. It's not like they're all worthless.

MS. HUNTER-GAULT: All right. Well, Mr. Hoey, thank you for joining us.

MR. HOEY: Thank you. FINALLY - JEWEL OF THE NILE?

MR. LEHRER: Next tonight, third world pollution. The upcoming Earth Summit in Brazil will focus a lot on how industrialized countries pollute the world. But the underdeveloped countries have serious environmental problems too. Take for instance the situation in Cairo, Egypt, the largest city in Africa and the Middle East. Time Magazine Correspondent William Dowell, who lives in Cairo, does just that in this report.

MR. DOWELL: There is an Egypt of romanticized novels and tourist brochures. And then there's a place where contemporary Egyptians actually live. Egypt's population is increasing by roughly 1 million people every nine months. Nearly one out of three Egyptians now lives in Cairo, the largest city in the Arab world, as well as on the African continent. Cairo will soon rank as one of the mega cities of the third world. For much of the world, this may be the wave of the future, desperately poor people moving to desperately overcrowded cities. As a result, Cairo now faces what amounts to an environmental catastrophe. Yet, many Egyptians seem unaware either of what's happening to them or of what can be done about it. With more than 1/2 million cars, the air in Cairo has become dangerous to breathe. The city lives under a perpetual poisonous haze of dust and exhaust fumes. A recent study showed that lead levels in the blood of traffic policemen was at least three times the tolerable limit set by medical experts. Just the background noise in Cairo averages about 98 decibels, more than twice the limit people can safely tolerate. One physician here warns that many people are simply going deaf without realizing it. The signs of breakdown are everywhere. Some neighborhoods are now inundated by waste water that's simply overflowing the system. One casualty is the city's priceless Islamic heritage. The Sala Kali Mosque is nearly as old as Paris's Notre Dame Cathedral. Its foundations are now helplessly submerged by rising groundwater and garbage. The same thing is happening to the Sphinx. Prof. Kenneth Horner directs an environmental studies program at the American University in Cairo. He says Egypt's environmental breakdown directly affects the output of the country's economy.

PROF. KENNETH HORNER, American University, Cairo: I think it affects productivity. I think that's the most serious problem here, how to get productive individuals to work in their lifetime to produce the kinds of goods and services that the economy actually depends on.

MR. DOWELL: In a classic vicious circle, aggressive productivity often contributes more to the problem than to answers. Down the Nile River just South of Cairo is Helwan. It used to be an idyllic resort, where Egyptians could enjoy pure air. Now, the stacks at this cement factory belt sickening smoke 24 hours a day, seven days a week. The smoke is so thick it casts a shadow over its own chimneys. This village is only a few hundred yards downwind from the plant. As one Western environmentalist put it, "The people who live here are literally cementing their lungs." The government which owns the factory says it has put electrostatic filters on the chimneys, but no economical way has been found to dispose of the dust they collect, so the filters are often not turned on.

SALAH HAFEZ, Egyptian Environmental Affairs Agency: They've been used intermittently. The experiment was successful.

MR. DOWELL: Salah Hafez is chairman of the Egyptian Environmental Affairs Agency.

SALAH HAFEZ: They were -- they reduced the problem by 99 percent, but the problem is to remove the dust. It's very costly to remove the amount of dust that is being collected from the filters. Recycling the dust was considered, but the constituents of the dust is not of the quality to be recycled.

MR. DOWELL: Cement factories mean jobs and productivity. In the delicate balance between the economy and environment, the economy usually has the highest priority. Leila Takla is a former member of Egypt's parliament.

LEILA TAKLA, Former Member of Parliament: This is where the civilized countries, so-called "civilized countries" -- I'm sorry I'm using that -- should be more aware of the practical situations here and they can't say, all right, who's going to close the cement factory because it's fuming.

MR. DOWELL: That applies to polluting the water as well. Alongside Helwan runs the Nile River, literally Egypt's source of life since the beginning of time. Today it endures the ravages of pollution.

PROF. KENNETH HORNER: If I go, for instance, an hour South of Cairo, I find that sewage trucks actually pick up oil, sewage, debris, all in one container and then take it to the sewage canal and dump it into the sewage canal. If I follow that sewage canal down several kilometers, I find that the sewage canal eventually makes its way into the Nile River, which eventually gets picked up someplace downstream and then is distributed as irrigation water or, in fact, could be drinking water for the rest of the population.

MR. DOWELL: Tourists in Egypt are warned to avoid swimming in the Nile River and its adjoining canals but the people who actually live here have little choice. These women are washing themselves in a canal that has literally also become a garbage dump. This woman is washing her family's dishes in the same water. This canal attracts a lone angler. The river provides a bare living for this fishing family. And these boys swim. No one in this hot climate would deny them that simple delight. Elsewhere, a canal only a few feet from the market where food is sold is being infiltrated by a broken sewer line. In the final analysis, it's overpopulation which is the biggest source of pollution in Egypt. Not only is the population increasing rapidly, but it's migrating. Rural people are clogging the cities in search of employment and a higher standard of living, or perhaps a more stimulating environment. Here in Madi, once a luscious, fertile suburb South of Cairo, an encroaching urban lifestyle takes fields out of production to accommodate high rise buildings. And there is very little enforcement when it comes to the most perplexing problem for the government and the people. And that's garbage. It accumulates in a volume that frankly embarrasses Egyptians. Given even half a chance, most Egyptians are obsessive about cleanliness. They're always sweeping, cleaning or washing like these waiters outside a cafe. But culturally, there seems to be a lack of accountability.

PROF. KENNETH HORNER: Realistically, if you go here in the streets at midnight, you will find people very busy sweeping up the day's accumulation. The day's accumulation comes from people who carelessly discard whatever it is that they have in their hands into the street and therefore, expect someone else to pick it up. The average person in the street is interested in putting food on the table for himself, his family and his relations. And the environment is the job of the government and students will tell you that. They will say that's the job of someone else, not my job.

MR. DOWELL: Government officials are the first to admit that they are often helpless to enforce laws, whether they relate to traffic or making the city's inhabitants pick up their own trash.

SALAH HAFEZ: The standards are not practical. We have to start off by mild standards so people could adhere to and honor, and then with time and awareness and credibility from the side of the government standards could be improved until eventually, hopefully, we reach the standards of the rest of the world.

LEILA TAKLA: For example, when you go in Cairo's streets, you find that some of the cars are fuming with poison. There is a law and I personally presented that in parliament, but the punishment - - the penalty for that is small. And it costs much more to fix the burning of the car so this does not happen. So a lot of people, especially cab drivers, instead of fixing the car and spending 70 pounds, they would pay the fine, which is 10 pounds.

MR. DOWELL: There are attempts at solutions. The United States gives Egypt nearly $3 billion a year in aid. American dollars and British pounds are paying for a sizeable portion of the reconstruction of Cairo's sewage system. Further solutions require further contributions.

LEILA TAKLA: What we need is money. I mean, there's no other word for it, financing for those problems.

SALAH HAFEZ: The problem, of course, you know, we are talking about investment with no direct return so this is even more difficult to sell or to market. If there is a definite return, then, you know, you could figure out the return on investment and usually even banks could finance projects like this, but the problems of environment, the return is not direct. Of course, you could always convert consequences into money but not tangible money, not direct money.

MR. DOWELL: Egypt's top environmental official predicts an ultimate resolution of his country's problems. He says Egypt will emerge like Eastern Europe from a planned socialist economy imposed during the 1950s and maintained into the 1980s.

SALAH HAFEZ: With the new factories after the open door policy and the market economy that we are reforming and introducing to our system, industry is much cleaner than before.

MR. DOWELL: In the meantime, Egypt lumbers along, as she has, for eons. While intellectuals pushed forward, hard-headed businessmen and politicians were overwhelmed or merely self-serving, combined with a general inertia resist change. In the background, an ominous military presence tries to keep chaos from exploding into anarchy. And the average Egyptian under steadily increasing pressure from the uncontrollable growth of his country's population and the garbage it produces simply tries to cope as best he can. ESSAY - BENIGN NEGLECT?

MS. HUNTER-GAULT: Finally tonight, essayist Clarence Page, columnist for the Chicago Tribune, sees some parallels between the rights in Los Angeles and the recent flood in Chicago's business district.

MR. PAGE: What lessons does the Los Angeles riot teach the rest of us about neglect? Much the same lessons perhaps that Chicago learned from its recent flood. It began like all great floods with only a few drops, a piling installed by a bridge repair crew in the Chicago River pierced a wall of an underground tunnel that runs into 60 miles of other tunnels beneath Chicago's famous downtown loop. An underground cable crew discovered the leak, videotaped it and told the city. A memo was written, $10,000, a mere pittance to a big city's budget, could repair the damage.But apparently nobody read it, or at least nobody will own up to reading it. Months went by until early in the morning on April 6th, the wall broke through. Two hundred fifty million gallons of Chicago River water spilled into the tunnels. It knocked out electrical power, halted the subway trains, and sent loop workers home early. Department stores shut down. The world's biggest commodities exchange ground to a halt, and back in city hall, the basement began to fill up with Lake Michigan fish. The mayor knew something fishy was going on as city workers tried to point fingers at each other. And for want of a happy mayor, several city workers' jobs were lost.

MAYOR DALEY: We are taking actions against a number of individual employees who did not do their jobs as well as we should expect.

MR. PAGE: The great Chicago fire of 1871 was blamed on a cow, Mrs. O'Leary's cow, who allegedly knocked over a lantern. When the city rose again from the ashes, it offered the world a number of important lessons about tenacity, courage, and the pearls of building a city out of wood. By contrast, the great Chicago flood of 1992 was blamed on incompetence and the perils of bureaucracy. But there's a larger lesson here about the perils of procrastination, about how a stitch in time saves nine, about how you shouldn't put off to tomorrow what you need to do today. It's a lesson for cities like Washington, the nation's capital, to think about after a crumbling water pipe sent millions of gallons of water gushing into its streets a few months ago, shutting down business and part of the government. The blame? Another city bureaucrat who put off repairs on a job that just wouldn't wait. New York City knows what that's like. Two million gallons of water shut down its subway last fall after its ancient water system blew a main. Here and across the nation bridges crumble. Some even fall. And what are we doing about it? We approved 150 billion federal dollars last year to maintain bridges and highways over the next six years. But transportation officials say we should be spending almost four times that much. Unfortunately, it's not politically fashionable to spend public money these days, at least not on repairs. Politicians don't mind cutting ribbons on new projects. They love it. But nobody cuts ribbons on routine maintenance. So spending on infrastructure goes down even as the need goes up. And it's not just our public infrastructure. We're losing our industrial infrastructure too. Our aging factories close, casualties to changing times or overseas competition. We know we need to revive our industrial base, but we put it off. There's always something more pressing. We know we need to revive our educational infrastructure too, to prepare our children for the jobs of tomorrow, but we put that off. And if you had a dollar for every gallon of water spilled in the Great Chicago Flood, you still couldn't pay off our trillion dollar national debt. It just gets bigger every day. Social critic Todd Gitlin recently observed that power is measured not only in its ability to administer relief or pain, but also in its capacity to accustom people to the way things are. That's how we let things fall to disrepair. It's nobody's fault, we say; it's just the way things are. Say it often enough and pretty soon you have what John Kenneth Galbraith calls a culture of contentment, a culture in which we try to live well today, while we hope and pray that tomorrow never comes. For Los Angeles, the payback day came recently in a riot. After years of neglect and unheeded warnings since the last riot, the flames lit the skies over Los Angeles like signal fires to let us know the inevitable had happened. After years of growing resentment in the low income neighborhoods we call ghettos, we no longer needed to wonder when the chaos would break out again. It just did; the loss of lives, livelihood and property was appalling. But just as appalling was the lost sense of community it demonstrated. It may be the ultimate price we pay for concentrating on the outer city, while ignoring the problems of the inner city that sooner or later boil over, sometimes in fire, sometimes in flood. As go the neighborhoods, so goes the city. As goes civic repair, so goes civic virtue. I'm Clarence Page. RECAP

MR. LEHRER: Again, the major stories of this Friday, a Los Angeles judge ordered a new trial for police officer Lawrence Powell in the beating of Rodney King. Another person committed suicide after being counseled by Dr. Jack Kevorkian, inventor of the so-called "suicide machine." The world's largest real estate company, Olympia & York, filed for bankruptcy protection for some of its properties, and tonight the United Nations Security Council unanimously approved a resolution demanding the Yugoslav army and the Croatian army withdraw from Bosnia-Herzegovina, and also demanded a disbanding of all ethnic militias in the republic. Good night, Charlayne.

MS. HUNTER-GAULT: Good night, Jim. That's our NewsHour for tonight. We'll be back on Monday. I'm Charlayne Hunter-Gault. Good night.