The MacNeil/Lehrer NewsHour

Intro

JIM LEHRER: Good evening. Leading the news this Wednesday, President Reagan answered press questions over dealing with Iran. Eight mobsters were convicted in a major New York organized crime case. And new figures showed the economy did better than expected last quarter. We will have the details in our news summary in a moment. Robin?

ROBERT MacNEIL: After the news summary, is law enforcement really wiping out the Mafia? New York Prosecutor Ronald Goldstock and author Gay Talese disagree. Next, we have a discussion on the new political uncertainty in the Philippines. Finally, we look at the impact of the Boesky insider trading scandal on Wall Street. News Summary

LEHRER: President Reagan tonight continued his vigorous defense of selling arms to Iran. He told a nationally televised news conference the secret talks were worth the risk to renew relations with Iran and to secure the release of U.S. hostages in Lebanon. He denied it was an arms for hostages swap.

Pres. RONALD REAGAN: The only thing I know about major shipments of arms, as I've said, everything that we sold them could be put in one cargo plane, and there would be plenty of room left over. Now, if there were major shipments -- and we know this has been going on. There have been other countries that have been dealing in arms with Iran. There have been also private merchants of such things that have been doing the same thing. Now, I've seen the stories about a Danish tramp steamer and Danish Sailors Union officials talking about their ships taking various supplies to Iran. I didn't know anything about that until I saw the press our, because we certainly never had any contact with anything of the kind. And so there's -- it's just that we did something for a particular mission. There was a risk entailed. And Iran held no hostages. Iran did not kidnap anyone, to our knowledge. And the fact that part of the operation was that we knew, however, that the kidnappers of our hostages did have some kind of relationship in which Iran could at times influence them.Now always, but could influence them. And so three of our hostages came home.

REPORTER: If I may follow up, sir, on that first point, your own Chief of Staff, Mr. Regan, has said that the U.S. condoned Israeli shipments of arms to Iran. And aren't you in effect sending the very message you always said you didn't want to send? Aren't you saying to terrorists, either you or your state sponsor -- which in this case was Iran -- can gain from the holding of hostages.

Pres. REAGAN: No, because I don't see where the kidnappers or the hostage holders gained anything. They didn't get anything. They let the hostages go. Now, whatever is the pressure the brought that about, I'm just grateful to it for the fact that we got them. As a matter of fact, if there had not been so much publicity, we would have had two m ore that we were expecting.

LEHRER: Mr. Reagan was asked about Secretary of State Shultz and whether he had submitted his resignation.

Pres. REAGAN: He has never suggested to me in our meetings that resignation- and in fact, he has made it plain that he will stay as long as I want him, and I want him. So there's never been any discussion there. He knows that I want him to stay, and he has in advance said that he wants to. There's been no talk of resignation.

REPORTER: If I may follow up, sir, has he made his same condition on your agreeing not to send further arms to Iran?

Pres. REAGAN: No, there have been no conditions. As I say, we didn't discuss that. And as I've said now, there is no need to go further with this. The mission was served that made us waive temporarily that for the really minuscule amount of spare parts and defensive weapons.

REPORTER: What would be wrong with saying that a mistake was made on a very high risk gamble and that -- so that you can get on with the next two years?

Pres. REAGAN: Because I don't think a mistake was made. It was a high risk gamble. And it was a gamble that, as I've said, I believe the circumstances warranted.And I don't see that it has been a fiasco or a great failure of any kind. We still have those contacts. We still have made some ground. We got our hostages back -- three of them. And so I think that what we did was right, and we're going to continue on this path.

LEHRER: Mr. Reagan said he believed all five of the U.S. hostages in Lebanon would have been released if it had not been for the premature publicity about the secret talks. He blamed the leaks on a dissident Iranian official. Robin?

MacNEIL: In New York, a federal jury today found eight mafia figures guilty of racketeering in one of the biggest prosecutions in the history of organized crime. Bosses of three crime families were among the eight convicted. They were Genovese family boss Anthony "Fat" Tony Salerno, who is 75; Colombo boss Carmine "Junior" Persico, 53; and Lucchese boss Anthony Tony "Ducks" Corallo, 73. All of the defendants were convicted of all the charges against them, which included murder, racketeering, conspiracy, extortion, labor payoffs and loan sharking. Seven of the defendants face total maximum sentences of more than 300 years. After the verdict was handed down, the government's prosecutor explained the importance of the decision.

MICHAEL CHERTOFF, prosecutor: It is the first case which actually established that there was a nationwide mafia commission that runs the mafia in many cities. In that sense, it is unique. To the best of my knowledge, it's the first case in which someone has been convicted of an organized crime homicide, which up until this point, I think the general feeling was that these things were always so professionally done that people got away with them. I think it's going to take a long time to replace the kind of network that these men put together. I mean, these men had personal relationships and experience going back over decades, which was a kind of -- they were kind of grey eminences of the mob. And there just, hopefully, won't be people like that out on the street now that can pull this mafia together. Each of these cases is another blow at the unity of this organization, and a disorganizer.

LEHRER: On the economic front today, the Commerce Department said the gross national product rose 2.9% in the three month quarter ending in September. Heavy car sales and defense spending were cited as the major reasons for that increase. In another report, the Commerce Department said housing construction was down in October .2% -- the fifth drop in the last six months.

On Wall Street, home of the insider trading scandal, there was very heavy trading today with more than 183 million shares changing hands. Activity ended with the Dow Jones Industrial Average up almost 9.5 points, closing at 1826.63.

MacNEIL: President Reagan's Budget Director James Miller proposed a radical change in federal lending policies. He said he'll recommend to the President that future government loans to business and individuals be sold to private investors as soon as they're made. "You'll hear screams that we're holding a fire sale and that we're in collusion with Wall Street," Miller told a Washington conference. But he added that the plan would make federal agencies do a better job in their lending practices. Miller also said that in the 1988 budget, he might recommend sharp cutbacks in farm subsidies.

JAMES MILLER, Director, OMB: I have some grave reservations about the political survivability of the current farm program. I mean, I think it has cost much more than we had anticipated. It doesn't seem to be as effective in addressing the problems as we had hoped. I and some other people are taking a look at this to see what changes we might propose Congress consider.

LEHRER: Overseas, there was more violence today in the Philippines. A businessman friend of Defense Minister Juan Ponce Enrile was assassinated, along with two companions. A band of gunmen dressed in women's clothes committed the murders. And 35 other people were injured when a bomb exploded in a Manila department store.

And Eastman Kodak today became the latest U.S. company to quit doing business in South Africa. The large photo equipment manufacturing company said it would stop selling its products in South Africa and close its offices.

MacNEIL: The Supreme Court today refused to allow the execution of multiple murderer Ted Bundy for the 1978 slaying of a 12 year old Florida girl. The justices, without any recorded dissent, refused to vacate an appeals court order that indefinitely postponed the execution. Bundy was scheduled to die in Florida's electric chair on Tuesday. The lower court ruled that more time was needed to consider Bundy's claim that he was mentally incompetent to stand trial and act as his own attorney. Bundy is suspected of as many as 36 murders, mainly in the West and Northwest.

LEHRER: That's it for the news summary tonight. Now it's on to focus segments on today's mafia convictions, the new crisis in the Philippines, and investor confidence in Wall Street, home of the insider trading scandal. Guilty!

MacNEIL: We now look again at the convictions of eight mafia figures today by a federal court in New York. Do this and other recent successes mean that law enforcement agencies are now really making progress against organized crime? We'll be discussing that with one of the prosecutors leading the battle and with an authorwho knows the mafia. But first, some background on today's case.

[voice-over] The trial lasted for ten weeks, and it took the jury five days to reach a verdict that filled 24 pages. The jury found that all eight defendants were guilty of participating in a commission which has acted as a board of directors for the mafia ever since the 1930s. Prosecutors charged that the commission met periodically to settle territorial disputes, divide money and authorize h igh level mob murders. The jury found that the commission members had used extortion to control New York City's construction industry, dictating which cement companies would be allowed to bid on contracts over $2 million. The commission got a 2% kickback. The companies got a guarantee of no labor problems. The jurors also found that the commission authorized the murder of crime boss Carmine Galante at a Brooklyn restaurant in 1979. The defendants were convicted under a federal law known as the Racketeer Influenced and Corrupt Organization Act, or RICO. The law allows attorneys to prosecute individuals not just for specific criminal acts, but for ongoing participation in a criminal organization. Justice Department officials called today's verdict the most powerful blow ever directed at the mafia's symbol of power.

WILLIAM DORAN, FBI, Criminal Division: With the deposing of the heads of the families as we know them, I think that a power vacuum will be created within the superstructure -- within the structure of the Cosa Nostra -- that, as with any centralized organization -- and I would say that a criminal enterprise needs centralization even more so than a legitimate enterprise, because of the need to control greed -- I think that there will be a tremendous amount of turmoil. There will be a power struggle that will ensue -- people vying for these top slots. And I think that it should give us in law enforcement an upper hand to take advantage of the turmoil of the disorganization of what the present members see as a disintegration of their structure, their discipline, the code of silence and all the other characteristics associated with the Cosa Nostra.

MacNEIL: Do these successful prosecutions mean that law enforcement agencies are gaining on the mafia? To discuss that, we have Ronald Goldstock of the Organized Crime Task Force, who helped produce today's convictions. Also with us is Gay Talese, author of a best selling book on organized crime.

They're calling this one of the biggest, if not the biggest, blows ever against organized crime. Does this mean that the mafia are being beaten?

RONALD GOLDSTOCK, New York Organized Crime Task Force: I think this particular conviction speeds up the process of them being beaten. What is happening is there are sociological changes within the mob, new generations are taking over, they don't have the values of their elders, internal discipline is weakening, there are a larger number of informants, electronic surveillance is more possible, and that's occurring over time.

MacNEIL: You mean to say, even if you guys left them alone, they would be -- they would be running out of steam?

Mr. GOLDSTOCK: I think that inevitably they would, although I think that would be a mistake. They could last a lot longer and do a lot more damage during the intervening period of time. I do think, though, that these convictions speed up the process enormously in the long run. In the short run, it makes it much more difficult for them to operate.

MacNEIL: The pattern in the past has always seemed to be that, no matter what convictions law enforcement was able to get, the mafia, to use the sort of common name for these families, the mafia always seemed to be able to grow another branch or another arm or throw up new figures and replace anybody who was -- like new soldiers in the battle. Why can't they continue to do that?

Mr. GOLDSTOCK: Well, first, about the name mafia. I use that to refer to the group in Sicily and the group in the United States Cosa Nostra, which is different than the group in Sicily. It's not a transplanted unit over to the United States. This is uniquely American. The second thing is that before, we were fighting a war of attrition. We were talking off one person at a single time, occasionally putting them in jail for a short period of time. The RICO statute allows us to take large numbers of people, the hierarchy of a family, an entire crew within a Cosa Nostra family, and put them in prison. And that disrupts activity. Furthermore --

MacNEIL: Would you stop there for a minute and define the RICO statute for us and say what difference it makes to you law enforcement people?

Mr. GOLDSMITH: The RICO statute stands for Racketeer Influenced and Corrupt Organizations Act. It was passed in 1970. It was so advanced that really prosecutors only learnerd how to use it in the last five or six years. And what it does is to allow law enforcement to go after large numbers of people -- syndicates -- rather than individuals. It also allows the use of civil remedies and other kinds of remedial action in the organized crime area. That's made a major difference.

MacNEIL: You said a moment ago that the structure of the crime families was changing. There were sociological changes. Describe those a little more.

Mr. GOLDSTOCK: Sure. When the mob was first formed in the United States, around 1930, those who formed it were first generation Americans who were born in Sicily or Italy. They had old world values -- those of honor and respect and kinship. They grew together, and the ties that bound them together were those values. As the generations passed, the new generations that are coming in, the second and third generations, are more motivated by power and wealth. And what ties them together now are those values. And those are more likely to be broken when pressure is put upon them. And so we see the mob changing and allowing them to cooperate with law enforcement for the first time. It took an insider in the mob 30 years the first time. Joe Valachi spoke in 1960. And no one else for ten years after that. And now we find them coming out month after month -- people from within the mob, top bosses, lower level figures, testifying, writing books.

MacNEIL: Gay Talese, you're an expert, at least from the outside, on the codes of honor and so on in the mafia. Your book,Honor Thy Father, suggests that. Are there these deep, sociological, generational changes happening, and are they having the effect that Mr. Goldstock says?

GAY TALESE, author: There are certainly changes, because the mafia that was transported to the new world with immigration -- which really began in 1880 in a large way, from Southern Italy; not in 1930 -- did bring with it mostly an agrarian culture into an industrialized society, be it Chicago, New York or wherever we're talking. The -- today we have the third from, or fourth generation, from that early immigration. And you have still unpronounceable names, some of them convicted today. But I do suggest the larger question, is this going to be the end of the mafia? I suggest it is no any more than it was in 1957 when I was a young reporter for the New York Times, and we covered the great rounding up of all the kings of the United States' mafia establishment. And we were told at that time, it would be the end of the mafia. I've heard this too many times, and I'm tonight, while impressed with the achievements of the law enforcement officials and their success with the new technology, I'm never unimpressed with the skill with which human nature can adjust to the new technology. And I don't think there's going to be an end to the mafia tonight, as long as there is a need for the products with which the mafia trades and makes profit. As long as that market is there, as long as there are enough, in a sense, of the American lawless population wishing what the mafia provides or any other lawless group provides, there is going to be a market, and there is always going to be those to be the middle men, called the mafia or whatever.

MacNEIL: Let's come back to that larger question in a moment. But on the specific point of Mr. Goldstock's point that there are these sociological changes, I mean, it was always a matter of faith in the mafia that nobody squealed. Joe Valachi was the first. It took 30 years, you said. And then ten years after that. He says the motives now are money and power and that -- suggesting that this blood code of honor is no longer the operating glue that it was.

Mr. TALESE: I think that's a rather romantic notion to think that these men who came over here were looking for honor. They were looking for wealth. We're talking about the early -- the latter part of the 19th century, as well as the early part of the 20th century. You see, the people who were in the mafia really represented the most avaricious of the immigrant group, unwilling to work lawfully as barbers and shoe shine people, All the people who came to this country, whether they are Irish or Italian or Jewish or whatever they are, by and large started at the bottom, doing rather menial tasks and being rather humbled by the experience in America and willing not to be rich in one generation. The mafia really were, I think I said before, a rather avaricious group who wanted to get it in one generation. And so this greed that is characteristic of the element that became notorious --

MacNEIL: That's not new.

Mr. TALESE: It's not new. And you're always going to find that in this young group.

MacNEIL: You're saying, fundamentally, they're not changing.

Mr. TALESE: I'm saying, fundamentally, while there are technological changes -- they can wiretap and --

MacNEIL: But the mafia, the ties within the mafia itself and their motivation are not changing.

Mr. TALESE: I don't think they're being changed by any group in law enforcement. That is, the market -- the American market for lawless transactions, be it drugs or whatever it is we're talking about, whatever it is. Secondly, there is always going to be in a new immigrant group from whatever country -- now we're talking about Sicily and Southern Italy primarily when you're talking about mafia -- there are always going to be those middle men who want to capitalize on the market. So unless you eliminate the market, you're certainly not going to eliminate the marketeers, which is what the mafia happens to be.

MacNEIL: How do you view all this?

Mr. GOLDSTOCK: Well, I think what I suggested before is right -- that there are changes. I'm not suggesting that the mob is going to be completed tonight and it's over, nordo I think it has an effect necessarily on the underlying criminal activities, of which Gay is right -- there is a market for them, and there will be somebody providing those goods and services. And in some cases, even providing predatory activities. The difference is that it may not be the Cosa Nostra as we know it today. And I think the difference is that the family will change dramatically in the next five to ten years, because they are not tied together the way they were before. I think your explanation of it was accurate.

Mr. TALESE: As you used to have prize fighters with Italian names, you don't have it so much anymore. Yes, you will in the future have the new fighters in the lawless world of organized crime, perhaps with different names. Maybe they won't be ending in vowels; there will be some other name. But you're still going to have the same structure, or a structure -- not the same structure -- a structure that is going to cater, as I am saying, perhaps too repetitiously, to the need for whatever it is -- the product.

MacNEIL: Well, let's take a product that is very much talked about today, and that is drugs. Are other immigrant groups, other ethnic groups, now beginning to erode the dominance of the Italian descended mafia, and are they becoming more powerful?

Mr. GOLDSTOCK: Well, they're becoming powerful in another way. The mob never had dominance in the narcotics field, at least with respect to cocaine and marijuana. They did for a short time in the importation of heroine. But they are different -- they're a different entity. And they're growing around drugs, and they have a single service purpose. Whereas the mob when it began -- and I suggested 1930 not because the migration was in 1930, but because of the Caso Marici war and the original organization by Mario Zano --

Mr. TALESE: But Prohibition was established. The market then was illegal liquor.

Mr. GOLDSTOCK: That's right. Except that --

Mr. TALESE: That's what brought the mafia into such a cohesive force, because the profits were so large.

Mr. GOLDSTOCK: Except that, even during that period of time, the individuals in the mob were involved in a wide variety of criminal activities. And they were merged together, because the mob gave them a system which provided opportunities for them to enhance those activities. And that was really the function of the mob. But it is conceptually different than drug groups, which are not involved in wide activities in a whole variety of the economic sphere, but only in the importation.

MacNEIL: Are you confident with the new tools you have -- the electronic devices that let you wiretap or eavesdrop, as was the case. I mean -- and I think your office provided some of the means. There were conversations that were tapped inside a Jaguar that belonged to one of these family bosses and presented in evidence. That and the new laws you have as tools. Are you confident, although you haven't done it tonight, that you can actually, if not eliminate, greatly reduce the activities of the mafia?

Mr. GOLDSTOCK: Yeah, I think so. And I put the time period within five to ten years. I think that the use of electronic surveillance, combined with the RICO statute, combined with the fact that there are informants within the mob, people within the mob willing to wear concealed recorders and tape conversations with their colleagues, makes a major difference. And I think that we will have a tremendous impact on them.

MacNEIL: Isn't the -- a case like today's and the other recent successful prosecutions -- isn't that going to make younger members of these mafia families or potential recruits think twice about it -- wonder whether the inviable code that nobody will squeal isn't so often violated now that somebody they deal with may be wearing a listening device. Isn't that going to change --

Mr. TALESE: No, there's always going to be, among any element, those who are the overreachers, the most ambitious, the most willing to take risk, which is in the great American tradition. And I suggest that the mafia is very much in the tradition of free enterprise. And there are going to be those who are more driven to succeed and who take the chance to confront the odds and to profit where there is great profits to be made. And as long as these profits are to be made, there are going to be those seeking those profits.

MacNEIL: You mean whether it's Ivan Boesky or whether it's --

Mr. TALESE: Yeah, whether it's -- perhaps I see in the streets of New York people from Kenya are selling hot watches. And maybe the people from Kenya within a generation will be moving the people named Malanzano and Luciano and --

MacNEIL: So you are not as confident. You just don't believe that Mr. Goldstock, with his new --

Mr. TALESE: Let me tell you about Appalachia about 20-some years ago. All the kings of the underworld were rounded up and put into a couple years of pretty much solitary confinement. And here they're flourishing with a new group. There will alwyas be new groups as long as the market is there.

Mr. GOLDSTOCK: I don't think we disagree at all. I'm suggesting that's probably true in --

Mr. TALESE: But you're just changing characters. The names are changing, but the system is the same.

Mr. GOLDSTOCK: That's right. And that's why I am not talking about organized crime. I am talking about the Cosa Nostra. And I think that this has dealt a major blow to the Cosa Nostra, because the changes are --

Mr. TALESE: Well, then you're talking about the Italian assimilation into the American system. Then you have --

Mr. GOLDSTOCK: That's all part of it.

Mr. TALESE: -- the Italians can become significantly successful in legitimate business t*hat they have no need to be illegitimate.

Mr. GOLDSTOCK: No, I don't think that's true. I think that the Italians are amazingly successful in legitimate business at the present time.

Mr. TALESE: Yes they are, but we have coincidentally all these Italian names in your --

Mr. GOLDSTOCK: But that's Cosa Nostra. It's limited to Italians. There is, certainly, Hispanic organized crime and Asian organized crime and Jewish organized crime.

Mr. TALESE: But not as famous as you seem to make them. They're not as pursued, or let's say, so dramatized and publicized as are the Italians.

Mr. GOLDSTOCK: Wait five years. Because the Hispanics with the drug trade will be --

Mr. TALESE: Well, the Spanish have been around a long time now. They've been around a long time.

Mr. GOLDSTOCK: That's right. And drugs are not coming into their own.

MacNEIL: Okay. Thank you both, gentlemen. Two views. Mr. Talese, Mr. Goldstock, thank you both. Revolution under Fire

LEHRER: There has been the hope, if not the expectation, that the coming to power of Corazon Aquino would end the strife and the turmoil in the Philippines. But it hasn't happened. Not yet, at least. And we explore now why it hasn't. Just today, a bomb exploded in a Manila department store, and there was the second major political assassination. Today's victim was a right wing supporter of Defense Minister Juan Ponce Enrile. A leftist leader was shot and killed last week. We set up our discussion about these and other troubles in the Philippines of Corazon Aquino with this report from correspondent Tom Kennedy of the Canadian Broadcasting Corporation.

TOM KENNEDY [voice-over]: Last January's campaign to put Corazon Aquino into power has become today the campaign to keep her there. Rallies like this one are common in Manila -- a march through city streets, and then a speech by a key personality, in this case, the president's 15 year old daughter Chris.

CHRIS AQUINO: I'm sure if we all work together, we can work this out.So your being here now is giving peace a chance.

KENNEDY [voice-over]: This call for unity has intensified the last few weeks since the military and political coalition that dumped Marcos began disintegrating. One of the key people in that coalition is the minister of defense. If Juan Ponce Enrile had not backed Aquino nine months ago, there probably never would have been a revolution.

JUAN PONCE ENRILE, defense minister, Philippines: And in fact, we are still in a condition of the revolution. The very fact that the government is a revolutionary government suggests to us that we are in a condition of revolution.

KENNEDY [voice-over]: Enrile is one of the most powerful men in the Philippines, and some believe it's just a question of time before he uses that power to try to put himself in the presidency. Another threat to Aquino could come from her own vice president, Salvador Laurel, who's implied there should be a new election. A factor in Aquino's favor is the apparent support of the armed forces chief of staff, who for the moment is calling for unity.

FIDEL RAMOS, chief of staff: As a people, we must try to remain as united and as cooperative with each other as possible. The times call for no less.

KENNEDY [voice-over]: This is the problem that most threatens the country's political stability. Since Aquino took power, the on again-off again war with the communists has cost more than 2,000 lives. Caught in the middle, the peasants, poor, taxed by both sides of the conflict, and abused by most anyone with a gun. Aquino's critics say she's too inexperienced and weak to deal with this problem. Her strategy has been negotiation and reconciliation, and there have been some successes. For example, in a remote area in the south, some communist fighters are giving themselves up to join what's called the Returnee Program. They stay at this center for three weeks, taking courses. Then they leave with a presidential pardon. Those who take advantage of the offer -- about 160 so far -- credit Aquino.

RETURNEE: She's helping a group of the Philippino people.

KENNEDY [voice-over]: Aquino's other major problem is the economy. Most of the country's farmers are in terrible financial shape. Some are even starving. Thousands of desperate Philippinos are coming to the cities, cramming themselves into some of the worst slums in the world. But aid is coming. The International Monetary Fund and the World Bank have promised more than $1 billion, the U.S. more than $500 million. It's still been a difficult nine months for Aquino, but her supporters say she's made one fundamental, vital breakthrough.

JOVITA SALONGA, Commission on Good Government: What we have now is a functioning democracy. And that is a worthwhile achievement. You don't get into a full fledged democracy so soon after 20 years of dictatorship.

KENNEDY: The reality, though, is that after nine months with Aquino, Philippinos are just as poor as they were under Marcos. And even though peace may be at hand, it's not here yet. But Aquino's popularity is buying her time and tolerance from the people. There's a feeling that she can turn things around. And there's an overwhelming attitude here to give her a chance.

LEHRER: We talk more about the troubles of the Philippines now with an analyst who just returned from there, Richard Kessler of the Carnegie Endowment for International Peace; and the State Department's chief official on Philippine affairs, Assistant Secretary of State for East Asian and Pacific Affairs Gaston Sigur.

Mr. Kessler, to you first. Is Mrs. Aquino's presidency in serious trouble, in your opinion?

RICHARD KESSLER, Carnegie Endowment: There is trouble, but I don't think it's so serious to destroy her presidency. She still has wide popularity, she's trying to hold things together until the constitution's ratified on February 2 and there's legal basis for democracy. She's trying to hold things together until the local and national elections after May.

LEHRER: What is your reading of what Mr. Enrile wants?

Mr. KESSLER: Well, Enrile has a variety of things that he wants. He wants to open up the political system so that, perhaps, he could have a chance to be president. He wants to force new presidential elections. He wants to become the leader of the opposition. He wants to be a minister of national defense that has real authority. He wants to protect himself from attack for his various ill-gotten gains. So there's a variety of objectives that he has.

LEHRER: His number one objective to depose Corazon Aquino as president?

Mr. KESSLER: I don't think it would be necessarily depose Corazon Aquino. I think Enrile is like Marcos and many Philippine politicians; he perceives that there is a void of power at the top, and he wants to fill it.

LEHRER: Where -- what kind of support does he have in terms of strength and quality?

Mr. KESSLER: I don't think he has very wide support at all. In fact, in the last few weeks, his actions have weakened his support, not increased it. He's perceived as a self-serving egotist. And Corazon Aquino --

LEHRER: Is that true? Is that what he is?

Mr. KESSLER: I think so. I mean, he's a politician. It's very hard to find a politician that isn't a self-serving egotist. But I think it's important to understand that all the problems are not being caused by Enrile. You have a military that's very fragmented. You have Marcos loyalists within the military and outside the military that are trying to undermine Corazon Aquino's --

LEHRER: And Enrile? They're not helping Enrile?

Mr. KESSLER: They may be -- it may be an implicit alliance. It's not necessarily an explicit alliance.

LEHRER: All right. Who do you think is responsible for these killings -- last week the killing of the leftist leader, today the killing of the right wing leader supporting Enrile.

Mr. KESSLER: Well, the Philippines is in a very muddled situation. Things are very tense. As I said, you can perhaps see about seven factions within the military. Now, the labor leader's death, I think, could be attributed to some people within the military. They are not necessarily Enrile's people. They could be old Marcos goons. The leader that was killed -- the rightist politician, the former member of Marcos' party that was killed just recently -- that's more difficult to assess. That could have been a revenge killing for some other -- ti mean, some other issue. Somebody taking advantage of the political turmoil in the Philippines now to exercise revenge.

LEHRER: So there's no real pattern to it, as you see it.

Mr. KESSLER: There's a pattern. There is a definite pattern of events of people trying to destabilize the Aquino regime. You see bombings, you see side warfare, Olalia's killing, the kidnapping of --

LEHRER: Olalia is the leftist leader.

Mr. KESSLER: He's the leftist leader.

LEHRER: Right.

Mr. KESSLER: The kidnapping of the Japanese executive. There's a definite pattern of events that are aimed at destroying Mrs. Aquino's government. That isn't necessary -- doesn't necessarily mean they'll succeed.

LEHRER: What do you think? Are they making headway?

Mr. KESSLER: Well, they're creating a great deal of tension in Manila. And this tension is only going to increase in the coming weeks, as we approach the date for the referendum on the constitution. People are committing their prestige, their futures, to destroying her. I think you still have to bet that Mrs. Aquino is going to hold things together and will be successful.

LEHRER: But does he know that?

Mr. KESSLER: I think he understands that. I mean, he's come out now in support of the constitution, he supports the plebiscite. I think he recognizes that he can not gain by trying to undermine Mrs. Aquino. His party, Unito, is essentially fragmented. Various factions are going over to the opposition. Other groups are drawing up with Corrie supporters.

LEHRER: Well, let's go back to the plebiscite, or first of all, the constitution vote. That's is February, right?

Mr. KESSLER: February 2.

LEHRER: All right. Now, once -- if the constitution is officially ratified, then what kind of pwoer then does that give Corazon Aquino?

Mr. KESSLER: Well, that gives her the mantle of legitimacy. That's going to have to be operationalized with the national elections that are going to be held May 11, and then the subsequent local elections. So you have to understand that part of the reason why there's so much policital turmoil now is that those politicians who would like to be president, this is their last chance. If they can not prevent the ratification of the congress and new presidential elections before the constitution is ratified, they won't have another chance for six years, by which time they'll probably be too old.

LEHRER: Okay. Let's turn now to Assistant Secretary of State Sigur. From -- what is your reading of what's happening in the Philippines now, Mr. Secretary?

GASTON SIGUR, State Department: Well, I think we have to look at it in a fairly long range projection. I think if you go back to the takeover of President Aquino of the government in February and then you read up to now, you see a government that has accomplished a great deal. I think much has happened under her regime. She is moving the country from the authoritarian regime that existed before into a democratic system.

LEHRER: Is the man right in the tape when he said there is now a. functioning democracy in the Philippines?

Mr. SIGUR: It's not fully so. I think you have to have this constitution. But she's moving in that direction. And I think that's one of the reasons for all of the turmoil we see -- I mean, that it is opening. The society is opening. People are saying a great deal of things. They're talking about all sorts of things. And that's one of the things she wanted to do. At the same time, I think she's accomplished considerable in the economic area. While it may be true that the standard of living has not improved as of yet, that one can really see, the economic steps are being taken that will certainly lead to that. I don't think there's any question of it. And I think she's done, as I say, a remarkable job in the political side of getting this constitution written, moving ahead on that.

LEHRER: Has the United States, either directly or indirectly, sent the message to Mr. Enrile to knock it off?

Mr. SIGUR: We have made it, I think, as clear as we can make it in every possible way that we support President Aquino fully. We back her completely and unequivocally. There is no shadow of a doubt about that. We want her to succeed. We believe that she is moving in the right directions to succeed. We believe that she's accomplished a great deal. She's a very determined individual, a strong individual, and we have great faith in her future.

LEHRER: What about these reports several weeks ago that there were factions in the U.S. government who didn't feel she was moving swiftly enough to do something -- and strongly enough -- to do something about the communist rebel situation.

Mr. SIGUR: This is simply not accurate. We do believe that the steps that she has taken and is taking to deal with the communist insurgency are the correct ones. She is moving to try to bring as many of these people back into the democratic political process -- as many as she can. At the same time, she makes it very clear that she is building up her military forces in order to deal with those who will not return to the political process. So we think this is a proper way to proceed.

LEHRER: As a practical matter, Mr. Secretary, the United States has committed itself to helping, as the piece also said, that the United States is helping in trying to get the economy back on its feet in the Philippines. But as a practical matter, does this political instability just fly in the fact of that? As long as there's political instability, are you going to be able to get U.S. companies or any other kind of companies to invest in the Philippines?

Mr. SIGUR: Well, there's no question that is a problem. But we have shown our government's support. As both the President and Secretary of State have said, we are bullish on the Philippines. We remain bullish on the Philippines. We have shown this in so many ways, in terms of the support that we are giving, financially as well as otherwise. Mrs. Aquino has just had a very successful trip to Japan, where she has received promises of very considerable Japanese support. She has been able to reach an agreement with the International Monetary Fund for a considerable sum of money -- half a billion dollars -- is negotiating with the World Bank. All of these things, I think, should make our business people think about the need to return and do what they can to support this government, which is the great hope for the future of the Philippines.

LEHRER: Mr. Kessler, do you think that the United States government has been playing it right?

Mr. KESSLER: Yes. I think the United States has been -- has made it, as the secretary said, very clear to all the forces in the Philippines that the United States does not back a military coup, fully supports Mrs. Aquino, and sees no other alternative to Mrs. Aquino's rule. I think that's been --

LEHRER: And they understand that in the Philippines? You think Enrile and those guys --

Mr. KESSLER: I think they understand it very well. That doesn't necessarily mean that they'll do exactly what we want them to do. But they understand that message. It's been relayed to them, as I undersand it, at many levels and very consistently. Now, you have to understand that it's not just Enrile.There are other elements trying to destabilize the situation.

LEHRER: You heard what the secretary said about his view or the U.S. government's view of Mrs. Aquino. How do you feel about -- you know, there was the criticism going in that she didn't have experience, that she was too soft to run the government, etc. How is she perceived now by you and others who have looked from the outside?

Mr. KESSLER: I think it's very clear that Mrs. Aquino's strategy was to open up the political system to allow, if you will, 100 flowers to bloom. Now, that's what's happened. It is true that the people around her, particularly her chief presidential assistants, do not have a great deal of experience in managing a government. Nor do many of ther cabinet ministers. And so there is a lot of on the job training. She hopes that there will be a -- she expects to reshuffle the cabinet following the referendum, when many of these people decide to run for the senate. At whicht time, I think you'll see more technocrats coming in, and more forceful management.

LEHRER: Mr. Secretary, Mr. Kessler has already declared himself, he believes that Mrs. Aquino is going to make it -- that she's got whatever it takes to get through this; a combination of factors. Do you agree with that?

Mr. SIGUR: Oh, I do indeed. I think everything that she has done, from the manner in which she carried out her campaign against the former regime to the way in which she has assumed control of her government, the steps that she has taken which have required tremendous courage and forthrightness and candor and so forth on her part, I think can lead us to no other conclusion but that she's going to achieve success.

LEHRER: And the other side -- those who would do her ill -- just don't have it. Right, Mr. Kessler?

Mr. KESSLER: Well, in any political game, there are losers and winners. I think you have to put the odds on Corrie. It's going to be very difficult for her. She's being put under intense pressure. And I think so far she has carried through with a great deal of resolve. She hasn't broken under that pressure.

LEHRER: I notice that she has given in to one pressure. When she wants to Japan, she quit wearing her yellow dress and wore a dark suit -- a dark, presidential suit, as they say. Well, Mr. Secretary and Mr. Kessler, thank you both for being with us.

Mr. KESSLER: Thank you.

Mr. SIGUR: Thank you. Wall Street's Watergate?

MacNEIL: Some parts of Wall Street have developed a bad case of the jitters over the insider trading case of Ivan Boesky. Charlayne Hunter-Gault has more. Charlayne?

CHARLAYNE HUNTER-GAULT: It's been six days since the Ivan Boesky scandal rocked Wall Street, asnd the after-shocks are still reverberating. First, it was disclosed that Boesky has paid a $100 million fine for illegal insider trading. Then Wall Street woke this week to discover that, as part of his settlement with the government, Boesky helped investigators tape confidential talks with some of the biggest movers and shakers in the financial world. Now the wait is for more shoes to drop. Takeover stocks continued to drop today, but the market as a whole rebounded from yesterday's slump, to the relief of small investors. Kwame Holman reports from Denver.

KWAME HOLMAN [voice-over]: Denver area stockholders say this is a conservative investment community -- that individual investors here are holding stocks for the long term and are unlikely to sell out because of yesterday's downturn in the market. Dave Mullen is sales manager at Merrill Lynch.

DAVE MULLEN, Merrill Lynch: On the short term basis, you know, when the market drops 40 points, you know, you have a paper loss. There's no doubt about that. Nobody likes it. But for a long term investor, I don't think it -- they're really being victimized. I think that if they were to sell on that day, they'd be victimized. But that's not what we're encouraging.

BROKER: Yeah, I just wanted to get back in touch with you and see if you had any questions about the market yesterday.

HOLMAN [voice-over]: While brokers were reassuring investors about the downturn, some investors even saw a positive result of the revelations about insider trading. Investor Harold Haag:

HAROLD HAAG, investor: Well, I think the individual investor, unless he owned those particular stocks that were involved, may feel better about this thing. It clears the air, for one thing. And probably stops a lot of these mergers, leveraged buy-outs and so on which should have not occurred anyway.

HOLMAN [voice-over]: Denver businessmen and stockholders C. R. Bailey and Bill Mobeck have two different views on the impact of the downturn on the individual investor.

C. R. BAILEY, investor: I think it has twofold problems linked to it. Number one is for the small investor. He is going to feel stepped upon again if he's not careful -- that he'll be the last one to get the word of what's going on on the inside of any company. Secondly, the person who's going to be investing for the large trust funds, which is a large part of the market today, is going to have to be more cautious, see who all is involved, and if we're not careful, we'll end up with a glorified hit list on the corporate levels as to who's involved in all of this when all the dust settles to see what names come up, who's going to be involved. And I think it's going to cause more of a cautious investment scenario for both the trust fund and the small investor.

BILL MOBECK, investor: As of today, the market was back up in excess of nine points. So, you know, I think it's going to recover. I think you have to investigate the problems that they're faced with on the major inside trading and correct it. But other than getting involved, you know, with the little companies, I think that's -- where the little people are, they're going to continue to invest.

HUNTER-GAULT: We look further at the impact of the Boesky case on Wall Street with two leading financial writers.Dan Dorfman's syndicated column appears in 177 newspapers nationwide and in New York magazine. Ken Auletta is a columnist for the New York Daily who writes frequently for a number of major magazines. His latest book is calledGreed and Glory on Wall Street.

Starting with you, Dan Dorfman, how worried should the small investor be right now?

DAN DORFMAN, columnist: Charlayne, I don't think the small investor should be worried at all. What we've seen is -- what we've seen is an example of a couple of bigwigs doing something dirty, getting caught. Others will be caught. But you know, Wall Street goes on. After the Dennis Levine scandal, Wall Street got very worried and said, "Oh my goodness, the stock market's going to go down. There are going to be no more takeovers." Two or threw weeks later, people forgot about Dennis Levine for a while. The market began to rebound very sharply. Takeover stocks -- companies or candidates for takeovers or restructuring -- suddenly began to boom again.

HUNTER-GAULT: So that the confidence, you think -- this cautiousness that the small investor is exhibiting in the market right now -- you think that it's going to rebound as the market --

Mr. DORFMAN:Right. You have to look at what causes a strong market. A strong market is caused by low interest rates, a low rate of inflation and a gradually improving economy. And all three of those ingredients we have right now. So what I'm saying is, after the nonsense passes with Boesky, we'll see, I think, a strong, rising market again.

HUNTER-GAULT: But there are a lot of rumors floating around Wall Street that there are some other big names involved in this.

Mr. DORFMAN: Let's say you're right, Charlayne, and --

HUNTER-GAULT: Well, what are you hearing? Are you hearing those rumors?

Mr. DORFMAN: Yes, I'm hearing the same rumors, of course. There are all sorts of names being mentioned. I think it would be improper to mention them here, because it's innuendo. No one knows. But let's say -- let's say that it's correct. We do get some more big names. Is that going to minimize the investors' confidence in Wall Street? I think not. I think the small investor thinks, "You know what? There's always a big guy out there who will always get the information before me. He's done it before. He does it now. He'll do it tomorrow, next week, next year and forever."

HUNTER-GAULT: Ken Auletta, you agree with that?

KEN AULETTA, columnist: No, I don't actually, I think if you --

Mr. DORFMAN: You never agree.

Mr. AULETTA: I hope not. If we start from the assumption that we're talking about a more systemic problem than Dennis Levine initially suggested -- that in fact, it's widespread -- then I think you have to look at what makes up a market. A market is made up of people's hopes and their fears. The hopes predominate, the market rises. If the fears come into play, which I think they might if the people -- the investor -- feels that it's a systemic problem, it's a widespread problem --

HUNTER-GAULT: And perception is everything, right?

Mr. AULETTA: Perception is everything. Then you could have a panic, and you could have a decline.

Mr. DORFMAN: I don't agree with that. You've got over 40 million investors. You've got more people investing in mutual funds than ever before. While it's interesting to use the word panic, where have we seen a panic in all of this? The market was down 40-some-odd points yesterday. Is that a panic?

Mr. AULETTA: Dan, I'm not touting -- I'm not predicting --

Mr. DORFMAN: No, I'm not talking about touting.

Mr. AULETTA: -- a downturn. I'm saying it could happen if it's a more widespread problem, which I suggest it will be revealed to be.

HUNTER-GAULT: All right, you're hearing some of the same rumors, obviously, that we all are. I mean, I know that it's improper and inappropriate to name any names that you're hearing, but is there any way that you can characterize the kinds of names that are emerging in all of this?

Mr. AULETTA: You're talking -- the names that one hears -- and again, you can't separate out what's fact, what's rumor, what's imagining -- you're hearing some of the blue chip names on Wall Street and in the investment community.

HUNTER-GAULT: Is there panic there?

Mr. AULETTA: Oh, there's clearly nervousness. It's been acknowledged by Mr. Boesky and by law enforcement that he was guilty and that he was talking to a range of important people on Wall Street -- in and about Wall Street. So anyone who talked to him in the last several weeks or months has got to be nervous about what was said. Today it was reported, for instance, in the Washington Post that Carl Icahn and he were talking every day.

HUNTER-GAULT: And the name Drexel Burnham Lambert has appeared once again. And the fact that principals in Drexel Burnham have been subpoenaed. Now, that doesn't indicate guilt, of course, but what impact does that have?

Mr. DORFMAN: Well, here you've had a showing Drexel Burnham Lambert, financing many of these acquisitions through the junk bonds. If for some strange reason Drexel Burnham Lambert ceased -- went out of business -- and I'm not suggesting they've done anything wrong -- but let's say it ceased doing business tomorrow. You've got friends you've never heard of, like Merrill Lynch, Morgan Stanley, E. F. Hutton, Kidder Peabody, all the other firms waiting to come in -- First Boston and others -- and do those financing deals. There's plenty of money around. And money is at a low rate now. That competition to do -- to finance takeovers where there's justification for doing them will continue. So Drexel Burnham, you know, has been the leader, but that doesn't mean Drexel Burnham is the only player in town.

HUNTER-GAULT: Ken, you're scratching your head again.

Mr. AULETTA: Yeah, I just -- I mean, it's just a different emphasis than Dan's. I think that this could be a very salutory thing that Wall Street is going through -- to go through a cooling down period brought about by legitimate fears that people have, not just about what will happen to my investments and what will happen to me, but also maybe if it causes people on Wall Street to be a little more introspective. They've gone through five or six years of enormous growth, where their overheads have doubled, where their profits have doubled and tripled, where their bonuses have really gone through the roof. And people have done very well. And it's been like watching a political campaign. It's 16 hours a day. You're busy. The young gladiators go out, and they get their mergers and acquisition activity, make the deal, make the transaction. And there's very little time to think. And in truth, people on Wall Street, maybe too many of them, don't any longer know the difference between what is proper and what is improper. And if this forces a little more thought, a little more reflection, it could be a very useful thing.

HUNTER-GAULT: Is that likely to happen, Dan Dorfman, in an arena like that, where deals and things are just going on second -- milliseconds. Are people ever going to have time to sit back and reflect, as Ken might wish?

Mr. DORFMAN: I doubt it. Maybe they'll think twice about who they talk to. Maybe they'll mumble this time, instead of shouting.You know, Ken, I have to ask you a question. If you owned a stock, would you now sell it, based on the fact that there's this investigation involving Boesky? I mean, is there legitimate reason to think -- to sell a stock?

Mr. AULETTA: Not necessarily. But don't assume rationality in this world, Dan.

Mr. DORFMAN: Well, the point is, Wall Street, the small investor, has not shown since the revelation of the Boesky scandal, since the revelation of the Dennis Levine scandal, the small investor has not shown that he's running scared. And you've got more than 40 million of them, Ken.

Mr. AULETTA: But Dan --

HUNTER-GAULT: Do they all tend to be conservative, you think?

Mr. DORFMAN: I --

Mr. AULETTA: I don't think -- look, I don't think you're just talking about the small investor. You're talkinga bout -- I mean, the market is controlled by the big pension funds and the other trust funds that are really -- they may represent small investors, but the decisions are being made centrally.

HUNTER-GAULT: But we're still talking about one out of four Americans, aren't we? Are we?

Mr. AULETTA: Yeah, but the people who make the decisions on how to vote pensions funds, you really are talking about pension fund managers and corporations.

HUNTER-GAULT: And you think they are going to be --

Mr. AULETTA: I'm just saying they're looking for where they get the best return. And if they feel they don't get it in the stock market, they get it somewhere else, they shift around. It's not necessarily -- or if the little person in Albuquerque says, "Hey, I don't feel comfortable with this." If you assume that we're talking about a widespread, systemic problem, then you're talking about something that will not be erased from the front pages of our papers and our television screens nightly, the way Dennis Levine was.

HUNTER-GAULT: Well, let me ask you -- in what the lawyers call it -- is that a rebuttable presumption? I mean, how widespread is this?

Mr. DORFMAN: Is inside information?

HUNTER-GAULT: Yeah. Is it systemic, as Ken says?

Mr. DORFMAN: It is. Inside information is a way of life on Wall Street. There is always someone. There's an executive who's going to tell a friend, and executive who's going to tell a tennis pro, a wife who's going to tell a cousin. I mean, inside information will never cease on Wall Street. It will always exist. There will always be people --

Mr. AULETTA: Dan, if Mr. Boesky does five years in jail --

Mr. DORFMAN: Right.

Mr. AULETTA: -- you donht think that will cause people who now, as you say, regularly engage in insider information to think twice before they do it?

Mr. DORFMAN: You know what I think would happen, Ken? I think they'll be a little more sensitive. I think they'll be slightly more sensitive.

HUNTER-GAULT: You know, speaking of Boesky, bringing him back into this discussion, there seemed to be just almost unabated glee over what has happened to him -- that, you know, that he got nailed. Is this a prevalent feeling on Wall Street?

Mr. DORFMAN: Well, yes. Boesky has a reputation of being arrogant. He wasn't well liked. He had, from what I'm told, deals with people and on certain occasions failed to keep his word. And I don't think I should go into specifics on that. But you know, no one is crying for Mr. Boesky. Nobody's crying for a man who went over and had himself wired and went over and turned in some of his good friends. I mean, what are you supposed to think of a man like that?

HUNTER-GAULT: Yeah, but waht about these good friends? I mean, they weren't just dragged kicking and screaming into this, Ken.

Mr. AULETTA: You're talking about a group of people --

HUNTER-GAULT: Whoever they are.

Mr. AULETTA: You know, the notion that Wall Street -- the word earlier was used, conservative place. I mean, one of the things that shocked me in doing my book and visiting with a large number of people on Wall Street was how not conservative it was. A group of people who, instead of thinking long term, wise business, conservative counselling, what is the direction we should take, were really not thinking long term and really making a lot of short term decisions about what is a good speculative investment, what is a good move for us to make tomorrow, how do we make the deal, how do we make the transaction. And I don't think thaths at all a conservative place. And so a lot of these people -- it's not just Boesky we're talking about; we're talking about a climate, a transactional climate that has transformed Wall Street and that, in fact, infects Wall Street and makes a lot of people there very skilled at what they do, but not necessarily very attractive.

HUNTER-GAULT: Dan?

Mr. DORFMAN: I continue to maintain, Ken, that the game goes on. You know, there's a furor now, and after the furor's over, it's like someone gets --

Mr. AULETTA: You're older than me, Dan. Maybe that's why.

HUNTER-GAULT: Now wait a minute. Now, let's not get personal here.

Mr. DORFMAN: I don't want to talk about age.

HUNTER-GAULT: Let me ask you this, though. You talked about the junk bond market a few moments ago. I read that there's possibly, if this goes further in Drexel, where all of the deals right now -- the merger deals -- are centered, practically, that this could really provoke a financial crisis on Wall Street. What's your --

Mr. DORFMAN: I don't believe that. I believe that there may be some deals showing that may not be able to go through, okay? But as I mentioned before, there are loads of other brokerage firms ready and willing and hungry to go in and finance deals. People who used to invest in tax shelters now invest in funds -- invest huge amounts of dollars in funds that do nothing but are involved or engaged in takeovers. So I mean, if the Drexel -- if Drexel should fall, if there should be a major problem there, I think that a number of the companies in which they're financing deals -- we saw that in the last two days and you talked about it at the beginning of the show; how the takeover stocks fell. We saw that dramatically in Gillette, which Revlon is taking over. But I guarantee you that if Drexel does have this problem, there are others who are ready to walk in. Investment banking commands huge fees. Everybody wants to get into that business.

HUNTER-GAULT: All right. Well, on that, the older, if that's the case, has to have the last word, Ken. Thank you very much, Dan Dorfman, for being with us. And Ken Auletta, thank you.

LEHRER: Again, the major story of this Wednesday. President Reagan told a nationally televised news conference tonight Secretary of State Shultz was not resigning as a result of the Iran negotiations. He strongly defended those secret discussions that led to the release of U.S. hostages in Lebanon. We'll see you tomorrow night. I'm Jim Lehrer. Thank you and good night.