The NewsHour with Jim Lehrer

GWEN IFILL: Good evening, I'm Gwen Ifill. Jim Lehrer is off this week. On the NewsHour tonight: Our summary of the news; then, as the 9/11 commission prepares to wrap up, we'll have excerpts from today's report on the attack plot and the plotters, plus, the views of the Commission Chairmen, Thomas Kean and Lee Hamilton; a look at the investigation into billions of dollars siphoned from the U.N.'S oil-for-food program; and an update on the ever-growing number of people without health insurance in America.

NEWS SUMMARY

GWEN IFILL: The 9/11 Commission has found "no credible evidence" that Saddam Hussein helped al-Qaida target and attack the United States. That conclusion is part of a report released today in Washington, as the bipartisan panel opened its final two days of public hearings. The commission found that although Osama bin Laden sought help from some Arab leaders to build an Islamic army, nothing indicated a "collaborative relationship" between Iraq and the terror network. At today's hearing a CIA official said U.S. security had successfully thwarted several al-Qaida plots on the U.S. since 9/11.

TED DAVIS: We've probably prevented a few aviation attacks against both the East and West coasts. That doesn't mean that we've totally stopped that particular threat. There are operatives involved in those plots that we still cannot account for. And it is only safe to assume that they are still out there. They are still thinking about ways to conduct those attacks or that they might move on to some other al-Qaida plot against the homeland.

GWEN IFILL: The commission's findings contradict assertions made within the past week by both President Bush and Vice President Cheney. The final 9/11 report is scheduled for completion next month. We'll have more on today's hearings right after this News Summary. Oil exports from the southern Iraq port of Basra were cut off today, after the second attack this week on a vital oil supply line. The pre-dawn acts of sabotage brought a halt to all oil exports from Iraq's main ports. They're expected to remain closed for ten days, costing at least $10 billion in revenue. Also in Kirkuk, the Iraqi official in charge of the northern oil fields was assassinated. We have a report narrated by Louise Bates of Associated Press Television News.

LOUISE BATES: The targeting of Iraq's oil sector has put back hopes of the country recovering economically from decades of war, international sanctions and Saddam Hussein's tyranny. Insurgents are striking at the country's infrastructure apparently to undermine confidence in the new government, which takes power in two weeks. Meanwhile, in Kirkuk, gunmen ambushed and killed the top security official for the state- run northern oil company-- the third such killing in recent days. Three gunmen shot at Ghazi Talabani's car after his bodyguard briefly left the vehicle in a crowded market. He was the cousin of Jalal Talabani, the leader of one of the two main Kurdish political parties, the Patriotic Union of Kurdistan.

GWEN IFILL: OPEC said today it will ask major oil producing countries, including non- members, to help offset the supply disruption in Iraq by increasing output. The president of the oil producing cartel said he was concerned that, without Iraq's exports, prices would continue to climb. Russia, a non-member, told OPEC it lacked the capacity to increase production. Two U.S. soldiers were killed today, in a rocket attack on their military base; it happened 50 miles from Balad in Baghdad; 25 people were wounded. To the West in Ramadi an Iraqi police officer was killed and five civilians were wounded in a roadside bombing. U.S. Marines arrested seven suspects, including six members of the Iraqi civil defense force. Also today, in Najaf, rebel cleric Muqtada al-Sadr issued a statement calling on his militiamen to leave that city unless they live there. President Bush warned the bloodshed will increase as the date of the government hand over nears. The president spoke at central command headquarters in Florida. His message was televised to troops overseas.

PRESIDENT GEORGE W. BUSH: We can expect more violence in the weeks and months ahead. But the future of a free Iraq is now coming into view. As the interim government assumes authority and Iraqi security forces defend their country, our coalition will play a supporting role. And this is an essential part of our strategy for success.

GWEN IFILL: The world's largest Islamic organization pledged today to "actively assist" Iraq in its transition to democracy. Foreign ministers from 57 countries spoke at the end of a three-day conference in Istanbul. They stressed that the handover of U.S. authority must give Iraq full sovereignty. The son of kidnapped American Paul Johnson appealed to the Saudi government today, to do all it can to secure his father's release. Johnson was abducted by militants in Riyadh Saturday. They have since threatened to kill him by Friday, unless Saudi authorities release jailed al-Qaida suspects. A presidential commission today called for giving private business a greater role in the U.S. space program. President Bush ordered a study in January, to determine what NASA needed to resume human flights to the moon by 2020, and later to Mars. Today, Commission Chairman Edward Aldridge said a for- profit space industry would make NASA more effective.

EDWARD ALDRIDGE: This allows NASA to really focus on those things which are going to be very difficult to do and let the private sector take on more of the operational kinds of services that certainly will exist in support of this mission but not necessarily take the attention away from the primary focus and the difficult focus of space exploration.

GWEN IFILL: The commission's report specifically sets aside human flights as the exclusive responsibility of NASA. Democratic Presidential Candidate John Kerry made two campaign promises to working parents today. He said he would spend $1.5 billion to keep public schools open for after-care, and he proposed increasing the child tax credit to $5,000, from the current $3,000. He would pay for the first promise by repealing tax cuts; the second would cost $20 billion over ten years. Kerry spoke at a campaign event in Columbus, Ohio.

SEN. JOHN KERRY: If you're a family earning $25,000-$30,000 two kids you're going to get $800 additional help in order to be able to try to take care of your children, where additionally if you're a single parent and you're earning more than that, you get a little less help depending on the amount of money that you earn.

GWEN IFILL: Kerry's campaign said today he raised $100 million from March through May. It gives him $140 million in contributions so far, compared to $216 million raised by President Bush. Growing numbers of people in the United States do not have health insurance. That's according to a study of census data released today by the private advocacy group, "Families U.S.A." The report found nearly 82 million people, or one-third of the U.S. population under 65, were uninsured at some point during the past two years. That included some middle class families; minorities were disproportionately affected, with 60 percent of Hispanics, and 43 percent of African Americans without health coverage. We'll have more on this story later in the program. Output at U.S. factories, mines and utilities grew last month. The Federal Reserve reported today industrial production was up 1.1 percent in May. That's the largest increase in six years. On Wall Street today, the Dow Jones Industrial Average lost a fraction of a point to close at 10379. The NASDAQ rose more than two points to close at 1998. The underdog Detroit Pistons are champions of the National Basketball Association. The pistons defeated the heavily-favored Los Angeles Lakers last night 100-87, to win the best-of-seven series four games to one. Point Guard Chauncey Billups was selected as the finals' most valuable player. He averaged 21 points a game. The championship is the Pistons' first, since winning back-to- back titles in 1989 and 1990. That's it for the News Summary tonight, now it's on to: The 9/11 plot; the oil for food program; and the uninsured.

FOCUS - THE 9-11 PLOT

GWEN IFILL: An early draft of the 9/11 attack plan called for hijacking ten planes and targeting buildings on both coasts. That was one of the details revealed at today's hearing in Washington, as the 9/11 Commission prepared to conclude its investigation. Kwame Holman reports.

KWAME HOLMAN: The commission investigating the Sept. 11 attacks opened this morning's hearing with a staff report tracing the 15-year emergence of al-Qaida to become the global terrorist network it is today. While the commission found evidence of state-sponsored support for al-Qaida in countries such as Afghanistan, Pakistan, Iran and Sudan, it said it found no such support from Iraq.

DOUGLAS MAC EACHIN, Staff, 9/11 Commission: A senior Iraqi intelligence officer reportedly made three visits to Sudan and finally met with bin Laden in 1994. At that time, bin Laden is said to have requested space to establish training camps, assistance in procuring weapons. But Iraq apparently never responded. There have been reports that contacts between Iraq and al-Qaida also occurred after bin Laden had returned to Afghanistan, but they do not appear to have resulted in a collaborative relationship. Two senior bin Laden associates have adamantly denied any ties existed between al-Qaida and Iraq. And so far we have no credible evidence that Iraq and al-Qaida cooperated on attacks against the United States.

KWAME HOLMAN: Commissioner Fred fielding followed up with a question to witness Patrick Fitzgerald, a U.S. Attorney and the lead prosecutor in several terrorism cases, including one specifically brought against Osama bin Laden.

FRED FIELDING, 9/11 Commission: The indictment reads, "al-Qaida reached an understanding with the government of Iraq that al-Qaida would not work against that government and that on particular projects, specifically including weapons development, al-Qaida would work cooperatively with the government of Iraq." So, my question to you is what evidence was that indictment based upon and what was this understanding that's referenced in it?

PATRICK FITZGERALD, U.S. Attorney: We understood there was a very, very intimate relationship between al-Qaida and the Sudan. They work hand-in-hand. We understood there was a working relationship with Iran and Hezbollah, and they shared training. We also understood that there had been antipathy between al-Qaida and Saddam Hussein because Saddam Hussein was not viewed as being religious. Clearly, we put Sudan in the first order at that time as being a part of al-Qaida. We understood a relationship with Iran, but Iraq, we understood, went from a position where they were working against each other to standing down against each other, and we understood they were going to explore the possibility of working on weapons together. That's my piece of what I know. I don't represent to know everything else, so I can't tell you what we learned since then, but there was that relationship that went from... not from opposing each other to not opposing each other to possibly working with each other.

KWAME HOLMAN: A CIA Official identified by the name "Ted Davis" added this comment.

TED DAVIS: Sir, I think the staff statement... we are in full agreement with the staff statement in terms of the Iraq- al-Qaida relationship at this time. It is an issue that we aggressively pursue in tracking down all new leads to try and deepen our understanding of what that relationship might have been.

KWAME HOLMAN: Other commissioners asked about the terrorism threat posed by al-Qaida today. Commissioner Jamie Gorelick.

JAMIE GORELICK: Our staff statement concludes about al-Qaida now that it's a loose confederation of regional networks with greatly weakened central organization. And so my question for the panel is this: Does that mean that it is less capable of harming us or is it more a multi-headed snake that is, in fact, more potent?

TED DAVIS: The one thing that I would have added to the staff statement because it is true: Al-Qaida is a much more decentralized organization today. But bin Laden, Zawahiri and the al-Qaida leadership that remains is in South Asia. It is actively pooling whatever resources it has left at its disposal and, in a very centralized and methodical way, we believe that it is plotting an attack and moving an attack forward using what capabilities it has left to attack the homeland in the next few months. So that you face threats from multiple sources and multiple directions. I think the challenge with the more decentralized al-Qaida is that it's probably a more clandestine, smaller threat. It's more difficult to find, and that's probably-- as we deal with al-Qaida as a centralized organization-- that's the challenge that we face in the future.

KWAME HOLMAN: A second statement read by commission staff detailed the intricacies of the 9/11 plot which began to hatch in 1996.

PHILIP ZELIKOW: The idea for the Sept. 11 attacks appears to have originated with a veteran Jihadist

named Khalid sheikh Mohammed, or KSM.

KWAME HOLMAN: Mohammed was captured in Pakistan 15 months agoand reportedly has supplied valuable information about the plot.

PHILIP ZELIKOW: At a meeting with bin Laden and Mohammad Atef, al-Qaida's chief of operations, Khalid sheikh Mohammed presented several ideas for attacks against the United States. One of the operations he pitched, according to Khalid sheikh Mohammed, was a scaled-up version of what would become the attacks of September 11. Bin Laden listened but did not yet commit himself. According to Khalid Sheikh Mohammed, the 1998 east Africa embassy bombings demonstrated to him that bin Laden was willing to attack the United States. In early 1999, bin Laden summoned Khalid sheikh Mohammed to Kandahar to tell him that his proposal to use aircraft as weapons now had al-Qaida's full support. Khalid Sheikh Mohammed met again with bin Laden and Atef at Kandahar in the spring of 1999 to develop an initial list of targets. The list included the White House and the Pentagon, which bin Laden wanted; the U.S. Capitol; and the World Trade Center, a target favored by Khalid Sheikh Mohammed.

KWAME HOLMAN: The staff report also contained new details about the timing of the attacks.

PHILIP ZELIKOW: Bin Laden had been pressuring KSM for months to advance the attack date. According to KSM, bin Laden had even asked that the attacks occur as early as mid-2000, after Israeli opposition party leader Ariel Sharon caused an outcry in the Middle East by visiting a sensitive and contested holy site in Jerusalem that is sacred to both Muslims and Jews. Although bin Laden recognized that Atta and the other pilots had only just arrived in the United States to begin their flight training, the al-Qaida leader wanted to punish the United States for supporting Israel. He allegedly told KSM it would be sufficient simply to down the planes and not hit specific targets. KSM withstood this pressure, arguing that the operation would not be successful unless the pilots were fully trained and the hijacking teams were larger.

KWAME HOLMAN: But the commission staff also reported that several al-Qaida leaders opposed the attacks, as did Taliban leader Mullah Omar, bin Laden's host in Afghanistan.

PHILIP ZELIKOW: KSM claims that Omar opposed attacking the United States for ideological reasons but permitted attacks against Jewish targets. KSM denies that Omar's opposition reflected concern about U.S. Retaliation but notes that the Taliban leader was under pressure from the Pakistani government to keep al-Qaida from engaging in operations outside Afghanistan. While some senior al-Qaida figures opposed the 9/11 operation out of deference to Omar, others reportedly expressed concern that the U.S. would respond militarily. Bin Laden, on the other hand, reportedly argued that attacks against the United States needed to be carried out immediately to support the insurgency in the Israeli occupied territories and to protest the presence of U.S. military forces in Saudi Arabia. Bin Laden also thought that an attack against the United States would reap al-Qaida a recruiting and fundraising bonanza. In his thinking, the more al-Qaida did, the more support it would gain. Although he faced opposition from many of his most senior advisers-- including Shura Council members Shaykh Saeed, Sayf al Adl; and Abu Hafs, the Mauritanian-- bin Laden effectively overruled their objections, and the attacks went forward.

KWAME HOLMAN: Commissioner Tim Roemer said a good deal of information about Khalid sheik Mohammed was known months before the 9/11 attacks. Roemer asked the panel of FBI And CIA Witnesses how that information was shared.

TIMOTHY ROEMER: According to the staff report .KSM was widely known to be planning some kind of an operation against the United States. The staff statement says, quote, many were even aware that he had been preparing operatives to go to the United States as reported by a CIA source in June of 2001. What did the CIA specifically do with that type of threat coming in from KSM, who is at the top of the rendition list, who is widely known to have associated with these terrorists and been involved in different activities, and he's sending people to the United States to do an operation. How would you prioritize that? What happened to this?

RUDOLPH ROUSSEAU: The first thing that happened with it was that it was disseminated to the FBI, to other consumers so that we made folks aware that this threat was out there.

TIMOTHY ROEMER: You're disseminating this information to the domestic agency.

RUDOLPH ROUSSEAU: Correct.

TIMOTHY ROEMER: Who should be looking at this threat internally.

RUDOLPH ROUSSEAU: Correct.

TIMOTHY ROEMER: Let me skip quickly to see if we have anybody in the FBI That recalls seeing that. Do we have anybody here that can... do you have any awareness of this being disseminated to the FBI? Mr. Fitzgerald?

FITGERALD: No, sir.

TIMOTHY ROEMER: Mr. Drucker?

DRUCKER: No, sir.

TIMOTHY ROEMER: Ms. Maguire.

MAGUIRE: No, sir.

TIMOTHY ROEMER: This is pretty jarring. Most of the common... the common knowledge at that point was it probably was... the attack was going to take place probably outside the United States. This pointed to the possibility of KSM doing something inside the United States. We're not quite sure what happens to it at that point.

KWAME HOLMAN: Tomorrow the committee will hold its final hearing, examining the immediate response to the Sept. 11 attacks by the Federal Aviation Administration and by the military.

GWEN IFILL: Margaret Warner takes it from there.

MARGARET WARNER: For more on these latest findings, and today's testimony, we're joined by the chairman of the commission, former New Jersey governor Thomas Kean, and the co-chair, former chairman of the House Foreign Affairs committee, Lee Hamilton. Welcome, gentlemen once again. Your conclusion today in the staff statement was-- and I quote-- we have no credible evidence that Iraq and al-Qaida cooperated on attacks against the United States.

Chairman Kean, are you unanimous in that conclusion and what makes you so sure?

THOMAS KEAN: Well, first of all, this is a staff report. It's not the report of the commission or the commissioners as yet. But the staff in their investigation has found that, yes, there were contacts between Iraq and al-Qaida, a number of them, some of them a little shadowy. They were definitely there. But as far as any evidence that Saddam Hussein was in any way involved in the attack on 9/11, it just isn't there.

MARGARET WARNER: And Mr. Hamilton, you agree with that, do you?

LEE HAMILTON: Yes, I do.

MARGARET WARNER: What about the testimony that we played that the U.S. Attorney, Mr. Fitzgerald, was commenting actually on an indictment from '98 about sort of least an understanding between al-Qaida and the government of Saddam Hussein about not doing operations against each other, maybe in the future collaborating. Where does that fit in?

LEE HAMILTON: I don't think there's any doubt but that there were some contacts between Saddam Hussein's government and al-Qaida, Osama bin Laden's people. But our finding relates to a collaborative effort, the lack of evidence for a collaborative effort to attack the United States. We're not saying that there were no contacts of any kind or description. We're quite sure on the basis of the evidence we have that there was not an operational tie between Saddam Hussein and the Iraqi government on the one hand and Osama bin Laden and al-Qaida on the other with regard to attacks on the United States.

MARGARET WARNER: And Chairman Kean, just one more question on this. The much discussed purported meeting between Mohammad Atta and an Iraqi agent in Prague in April of 2001 the staff statement says based on cell phone records and travel records that it believes that definitely did not occur. Do you concur in that?

THOMAS KEAN: Yeah, it would seem that Mohammad Atta from all the records we have was in the United States at that time. If he got over to Prague he did it in out and back in a very short time. The credible evidence seems to be that he was in the United States at that time.

MARGARET WARNER: Congressman Hamilton let's go to the details of the plot. There was a lot of new information today that there were originally maybe ten targets, the deep involvement of Osama bin Laden in the planning, the fact that the date of 9/11 wasn't really set until two or three weeks beforehand. One, where does all that information come from and what lessons do you draw from that?

LEE HAMILTON: Well, the lesson I draw from it is that al-Qaida is a very sophisticated, very careful, very patient, highly skilled organization. This attack was quite a remarkable feat of planning and execution. So the huge lesson that comes out of that very detailed description that we had this afternoon or this morning is the kind of enemy that we confront. They're exceedingly careful, they're highly trained. They're well educated. They're very sophisticated. They know exactly what they want to do. And think the nature of the enemy, as it were, is the big lesson as we look at the details of this plot.

MARGARET WARNER: What would you add to that, Tom Kean?

THOMAS KEAN: Well, this organization had problems. This plot didn't go smoothly. They had problems getting people into the United States. And some of the operatives didn't get in. They had problems getting people flight training. In fact some of the people took the money and then didn't take the training. They had disputes in their own leadership between Khalid Sheik Mohammed and Osama bin Laden. They had disputes among the hijackers themselves. They thought for a while they were going to lose a pilot. Probably they had Moussaoui being trained to be a substitute pilot. But in spite of all these problems, they were able to pull it off. That shows leadership. It shows flexibility and that we have a very serious enemy out there.

MARGARET WARNER: Does it also show that, you know, when the intelligence intercepts or chatter that they died down kind of spring to midsummer of '01 that if anyone in the U.S. Government thought the threat had died down, of course, they were dead wrong --

LEE HAMILTON: Well, they were. We were impressed, I think all of us, that-- all of us, the Congress, the executive branch, the American people, the intelligence community-- just did not realize the gravity of the threat that we confronted; not only that, we didn't have the imagination to think that they would attack us by flying an airplane into the World Trade Towers and the Pentagon. Looking back, of course, you can see all of these signals that we missed. I lived through that period. I was in the Congress in that period. And I just think all of us missed how severe this threat was, even though you had had a number of attacks on Americans in the decade or more prior to Sept. 11.

MARGARET WARNER: Governor Kean, one new piece of information that came out and we played some of it in the report which apparently was new to you all -- you just got in the last two or three weeks --was that we've always been told the intelligence chatter at that time focused on the likelihood of an attack overseas, that there was a CIA source and a CIA report in June of '01 that Khalid Sheik Mohammed was planning attacks in the U.S. and was spending operatives to the U.S. Why do you think that didn't make its way up the chain of command and in fact to the president in that famous daily briefing of Aug. 6, '01?

THOMAS KEAN: Well, you know, I'll say my personal opinion. That is that both presidents, both Clinton and Bush, were not well served by the intelligence they received. We had all the information somewhere, other in one intelligence agency or another to link Osama bin Laden and al-Qaida with this whole series of attacks. I mean, as Commissioner Kerry said today, if we had known in Mogadishu that Blackhawk Down was about al-Qaida, if we had recognized all these other attacks up through the Cole were really al-Qaida -- if we had read what Osama bin Laden said which basically is every Arab has a duty to kill Americans, every Muslim -- if we had put all that together plus with the kind of information you just said, plus the tidbits that were coming in from one area of the world or another, we had all the information but we never put it together. Connecting the dots is the word people use. We never put all that information together. And therefore we were taken unawares. We were asleep.

MARGARET WARNER: Congressman Hamilton, a couple of the people who testified before you today, CIA and an FBI official said since 9/11 some attacks have been thwarted including aviation attacks. Have you all developed independent, perhaps classified evidence, to support that?

LEE HAMILTON: I think we accept that as a commission. We've heard it many times in the course of the 1100 witnesses or more that we have interviewed. It's hard to prove a negative, of course. But we do have a lot of leads and have had a lot of leads. We've had a lot of people under surveillance monitoring them quite carefully. We have a pretty good understanding now of how this vast network of al-Qaida operates.

MARGARET WARNER: But I mean, if I can interrupt you, do you all see things that we don't hear about publicly that actually persuade you that there's been... there have been solid... there's solid information that there were attacks in the works?

LEE HAMILTON: Well, I can't point to any specific thing where we blocked it except the ones that are publicly very well known: Like the attack on the Los Angeles Airport and some others. But I think there isn't any doubt in our mind that we have in fact blocked some of these attacks. We have, after all, a remarkable record since 9/11. There have been no attacks in the United States now since that date. And we're exceedingly fortunate there. And I think part of that can be attributed to our increased awareness, our increased preparedness in thwarting a terrorist attack.

MARGARET WARNER: Gov. Kean, you asked a number of questions today of some of the witnesses about whether there are still al-Qaida cells operating in the U.S., the likelihood of a big attack. What conclusion did you draw from the answers you got?

THOMAS KEAN: Well, I never got a straight answer on whether people identified al-Qaida cells although the suspicion obviously was that there are al-Qaida cells operating out there. What every witness we've seen not only at this hearing but at previous hearings, every knowledgeable witness says there is another major attack being planned as we speak, and there is another one coming. And nobody seems to know obviously where or when. But this is an enemy who is determined to do another major attack, who is determined to kill Americans and we've got to keep our guard up. We've got to be vigilant because it's coming.

MARGARET WARNER: Chairman, your report is, of course, due next month. There have been a couple of news accounts concerning a couple of matters that I'd like to ask you about. One is that perhaps despite your desire to have it be a unanimous report that it may not be.

THOMAS KEAN: Well, it's hard to tell yet. I think every commissioner would like it to be unanimous. I think every commissioner would work toward that end. Now whether as we go through a whole series of very complicated recommendations some commissioner finds in conscience that they can't vote for that recommendation that's possible. But I think we're working very well together. Five Republicans and five Democrats don't usually work very well together in this town. But we're working well together. We'd like to make it unanimous. We're going to do our best to do that.

MARGARET WARNER: Congressman Hamilton, do you think it will be unanimous?

LEE HAMILTON: Well, that's our goal. We have had remarkable leadership under Chairman Kean. I don't have any doubt at all that the commissioners want it to be solid unanimous. We all understand that if our recommendations are going to have any currency in this town that it cannot be recommendations that break along party lines. We're either going to have to have a unanimous report or something very close to it. I would make the prediction, however, that I think most of our recommendations will be unanimously supported.

MARGARET WARNER: And Chairman Kean, one final question to you. You were quoted in the wall street journal this week as having concerns that the classified information on which this report is based will not be released. What's the status of that?

THOMAS KEAN: Well, it's a question of when it will be released. If it's classified, it's not up to us. The commission can do very little about that. That has to be declassified by the White House and I would hope a lot of it would be. I think all of us on the commission would recommend that a lot of it be declassified but that's not something we have control over. We'll suggest it. But somebody else has got to make that decision.

MARGARET WARNER: Thank you, Mr. Kean, and Mr. Hamilton.

LEE HAMILTON: Thank you.

GWEN IFILL: Still to come on the NewsHour tonight: The oil for food scandal at the United Nations, and an update on the uninsured.

FOCUS - OIL FOR FOOD

GWEN IFILL: The United Nations story begins with some background from Spencer Michels.

SPENCER MICHELS: After the United Nations imposed economic sanctions on Iraq for invading Kuwait in 1990, the country's economy shrank dramatically and its citizens suffered from lack of food and medicines. In 1995, in an effort to ease the sanctions, the U.N. Security Council authorized the oil-for- food program. The idea was to create a swap: Saddam Hussein's government could use oil revenue only to buy humanitarian supplies. From 1996, when the program went into effect, until Nov. 2003, when it ended, Iraqis exported 3.4 billion barrels of oil worth about $65 billion. ( Applause ) But now, seven separate investigations are underway into allegations that Hussein smuggled oil, paid kickbacks and skimmed more than $10 billion from the oil-for-food program. The bribes allegedly went to politicians and companies in 52 countries, including all five permanent members of the Security Council. U.N. staffers, including the administrator of the program, Benon Sevan, reportedly profited from kickbacks, as well. All have denied wrongdoing.

SPOKESPERSON: Raise your right hand. Do you solemnly swear...

SPENCER MICHELS: Three of the investigations are underway in Congress.

REP. TOM DAVIS: I'll be blunt. This scandal threatens the U.N.'s reputation and effectiveness and raises serious questions for those who portray the world body as a ready, willing and able route of retreat for U.S. forces.

SEN. RICHARD LUGAR: The U.N. mechanisms for controlling oil-for-food contracts were inadequate. Transparency went by the wayside and effective internal review of the program did not occur.

SPENCER MICHELS: Secretary General Kofi Annan has come under fire, as has his son who worked for a Swiss company involved in the program. Annan said neither he nor his son had anything to do with the contract, and he defended the program.

KOFI ANNAN: We had no mandate to stop oil smuggling. There was a maritime task force that was supposed to do that. They were driving the trucks through northern Iraq to Turkey. The U.S. and the British had planes in the air. We were not there. Why is all this being dumped on the U.N.?

SPENCER MICHELS: In April, with the Security Council's approval, Annan named the U.N.'S own investigative commission, appointing former U.S. Reserve Chairman Paul Volcker, a longtime economist, as its chairman.

GWEN IFILL: Paul Volcker joins us now.

PAUL VOLCKER: Thank you.

GWEN IFILL: At this stage in your investigation, it's early yet, what is it that you would like to know? What is it that you do know and what don't you know?

PAUL VOLCKER: We don't know a lot. We know a lot of accusations and allegations have been made. We want to chase down those allegations. You refer... the program referred to a lot of investigations. We'd like to think that our investigation is "the" investigation. We want to find out what went on in this program from beginning to end and give as complete a story as you can as to what went wrong and what went right if something went right.

GWEN IFILL: How would you describe the scope of the alleged fraud that you're trying to investigate?

PAUL VOLCKER: We will make some estimates of that at the end of the day. But from all informal reports, not at a result of our investigation, there was a considerable amount of fraud, kickbacks, overcharges, undercharges involved both in the oil sales and problems with humanitarian, so-called humanitarian purchases that were made with the proceeds of the oil money. We want to look at all of that. We want to look at, first of all, as a matter of priority is what happened with the U.N. management. What kind of a job did they do? There are actual allegations of corruption within the U.N. and that's a priority for us.

GWEN IFILL: There were audits that the U.N. Has been conducting of the program over the years. I'm assuming you'll be scrutinizing those audits.

PAUL VOLCKER: We certainly will.

GWEN IFILL: If there were audits every year or every few months of this program how did so much of

this happen under the radar?

PAUL VOLCKER: We're not so sure how far below the radar it was and why there was no response to the blips that may appear on the radar. That is the core of the questions we have to answer in this investigation.

GWEN IFILL: You say you're an independent commission but you're appointed by Kofi Annan. Is there a conflict there?

PAUL VOLCKER: I don't think so. We are really pretty independent minded people. My two associate committee members have had experience in investigations. They are not carrying any banner for the U.N. or against the U.N. I think we will be quite independent.

GWEN IFILL: If the first thing you want to do is look inside the U.N. To see if there's any culpability there, who would be the first folks you'd want to talk to?

PAUL VOLCKER: Well, we will talk to a lot of the staff at the U.N., and I would say here, we invite anybody that has some information, some allegations, some complaints, to talk to us. We need people to talk to us. We will reach out obviously and talk to those people but we're ready, willing and able to respond in confidence to people that come in and want to talk to us.

GWEN IFILL: The gentleman who ran the oil-for-food has said as part of his defense that he only did what the member states allowed. That's pointing the finger right back at the Security Council. What do you say to that?

PAUL VOLCKER: Well the Security Council had oversight of this program to - and exercise it through something called a 661 committee which is made up of members of the Security Council, the deputies. One of the focuses of our investigation will be what kind of reports did they get, how did they respond. Was Mr. Sevan and his people giving them accurate reports. To what extent did they know what was going on? What was the response? What was the implementation?

GWEN IFILL: Did they ever say at any point along the way hey, wait a minute this isn't adding up, any of these member states.

PAUL VOLCKER: I will answer that question at the end of the investigation.

GWEN IFILL: Do you have access as well to Iraqi records assuming that....

PAUL VOLCKER: Well, Iraqi records are a big potential problem for us. There are a lot of records in Iraq. We want to off obviously if not take control of the records understand what's going on. We have an agreement with the coalition authorities, which obviously is still there but they're not going to be there forever, and maybe more importantly with the supreme auditor of Iraq who has been given the authority to get these records together to preserve them with the help and really administration of Ernst & Young, a major auditing firm. We have had I think a lot of talks with them. The atmosphere is very cooperative. It is very important that it remain cooperative when the changeover takes place. We've had some limited contacts with the new government people; so far, so good. They indicate cooperation. We want to see that in practice.

GWEN IFILL: But it sounds like a fairly complicated paper trail that you're trying to knit together. You have the Iraqi records and the U.N. records.

PAUL VOLCKER: Everyone is up against each other. It is a very big paper trail. It is a very big job to get those records together. In Baghdad that may be the most expensive single part of this investigation, but massive records within the U.N. Too.

GWEN IFILL: At what point with so many other organizations... so many other investigations going on on this very same issue do you all begin to overlap and trip over each other?

PAUL VOLCKER: Well, there is that danger. We would like to maintain to the extent possible control over the U.N. records. We consider those our records. A lot of that is eventually going to become public but it should be at the pace that our investigation... consistent with our investigation. You can't have too many cooks in this particular....

GWEN IFILL: Say congressional committees will not be immediately getting access to U.N. records?

PAUL VOLCKER: Well they will have access perhaps to some records but not to the U.N. records. We want to maintain our ability to examine those records and do a proper investigation without it leaking out in bits and pieces and undermining what may be the success of the investigation.

GWEN IFILL: Have you been in conversation with members of Congress about that?

PAUL VOLCKER: We have, yes.

GWEN IFILL: And you've come up with an agreement?

PAUL VOLCKER: Well, we have no formal agreement with them but the members of the Congress I've talked to, the main chairmen of the committees involved have indicated a willing... they have an interest in seeing us succeed. I believe they have an interest in seeing us succeed. They say they have an interest. And I hope that they will help create the conditions that makes that possible.

GWEN IFILL: Do you report to Kofi Annan on this or is he strictly hands off?

PAUL VOLCKER: He's hands off. We will be obviously interviewing him along with a lot of his subordinates about what wept wrong with the program.

GWEN IFILL: So you report to who?

PAUL VOLCKER: We report to ourselves. I mean we are independent. We'll submit our report to Kofi Annan. He will submit it to the Security Council -- but the report is going to be public in the end.

GWEN IFILL: Is there anyway to explain to the American people -- we talked earlier about the scope of the fraud but I guess the scope of the lost opportunity for Iraqi people who are counting on this program to give them food and medicines - Is there any way to gauge that at this stage?

PAUL VOLCKER: I think we will make some attempt to review whatever evidence there is. I don't think the core of our investigation is to decide precisely how many calories were diverted and how many calories went to feed Iraqis and so forth. But I think we will reach some judgment on that on the basis of what evidence exists. We are interested in following the people who were corrupt in the process or simply mal- administering the program. I think there was something of both.

GWEN IFILL: Given all the tasks you have just explained to us here, laid out for yourself, how long is it going to take before we start to see some results? Will there be interim reports along the way?

PAUL VOLCKER: Well, we will have interim reports. We will have an interim report this summer. It's not going to be conclusive by any means unless I am very surprised that some evidence suddenly falls in our lap that would permit a conclusion in some part of this report but we will have an interim report. I would like to see a definitive report on the U.N.'s administration of the program I said in six to eight months. I hope that's possible. I don't know whether it is yet. But then there's a whole part of the report, what happened to... what happened in Iraq? What happened to all the contractors that had the money? What happened to all the kickbacks? What happened to the overcharges and undercharges? Tracing that down to individuals and individual company s is going to take time.

GWEN IFILL: And individual countries as well.

PAUL VOLCKER: Individual countries, absolutely.

GWEN IFILL: Okay. Paul Volcker, thank you very much for help us out.

PAUL VOLCKER: Thank you. It's nice being here.

FOCUS - THE UNINSURED

GWEN IFILL: Now, a new look at the ranks of the uninsured and to Ray Suarez.

RAY SUAREZ: A new report findsthat the problem of the uninsured is both larger and affects more of the middle-class in America than is typically discussed. Each year, the Census Bureau reports the number of people who have no health insurance over the course of an entire year. In 2002, that was more 43 million. But a new study of census data by the private group, Families USA, shows a larger percentage of people who lack coverage at some point during a given year. The report found that nearly 82 million people lacked coverage at some point over the last two years. Here to help fill us in on the study and the larger issue is our health correspondent, Susan Dentzer.

Well, Susan, how do we get from that often used figure of 43-plus million people that's part of the political debate over the lack of insurance in the country to that truly eye- popping 82 million number? Did Families USA measure something different, ask a different question in essence?

SUSAN DENTZER: Families USA, Ray, asked a private estimating group to go back and look at various sources of census data and basically take a look not just over a one-year period, as you said, the widely recognized statistic of almost 44 million uninsured pertains to one year. It's thought to represent people who are uninsured over one year, the previous year. They decided to look at a two- year figure basically 2002 and 2003 and to set not the standard that people had to be uninsured for that full year but that they had to be uninsured for at least a month. If you look at those two factors-- you're uninsured for at least a month and sometime over the course of 2002 and 2003 combined -- that's what gets up to this, as you say, rather astounding figure of nearly 82 million people in America, nearly one out of three of those in America, who are below the age of 65. Those 65 and over of course as we know are typically covered under Medicare.

RAY SUAREZ: By widening the frame to include both 2002 and 2003, do you also capture some of the fluid nature of the uninsured population?

SUSAN DENTZER: There's no question about that as well as setting the standard of one month or more. There's been longstanding debate over what these numbers really mean. And basically what is the extent and duration of the un-insurance problem in America? Is it a kind of a short-term episodic situation where people are moving in and out of jobs, moving in and out of insurance coverage, they may go through a spell of un-insurance but they will soon become covered again as they go to work for an employer who offers coverage. Is it that or is it more a case where people are without coverage for a very long period of time? This kind of study in effect says all of the above. All of those things are occurring. That makes it a complex problem. For example, 14 million people were found to be uninsured for the full two-year period. And if they were uninsured for the full two-year period, one can surmise they're probably going to be uninsured for longer than that. That's 5 percent essentially of the non-elderly U.S. population. So that's a significant chunk of people who were uninsured. And overall, two-thirds of this 82 million people were uninsured for six months or more. So again that's not necessarily a permanent spell or even a particularly long- lasting spell of un-insurance but it's still long enough that it's going to cause a lot of agony for families and one can again imagine that there are going to be preventive services that go undone, mammograms that don't get taken, maybe doctor's visits for earaches for children that don't occur during that period that that family or those individuals have gone without health insurance.

RAY SUAREZ: We often associate lack of insurance with work force problems, people who have spells of unemployment, but the Families USA report found that an awful lot of the uninsured work.

SUSAN DENTZER: Well, in fact, it's been known for a long time that the preponderance of those without health insurance are people in families where at least one person is either working fulltime or where there is a strong attachment to the labor force. Even if somebody is unemployed they're actively looking for work. This study does reaffirm that -- that four out of five of the uninsured again are either working or looking actively for work if they're unemployed in which case they're still counted as being in the labor force. So that's been an important reiteration of earlier findings.

RAY SUAREZ: And it would seem earning middle class median level income earnings as well. Not in the lowest quintile of the population, the lowest fifth of the work force.

SUSAN DENTZER: Very much so. In fact another somewhat surprising finding is reaffirming the fact that many families are rather far up the income scale. Essentially nearly a quarter of the uninsured are in families or were in families in 2002 or 2003, people who had spells of un-insurance were earning between three and four times the federal poverty level. In 2003 that was for a family of four incomes between $56,000 and $75,000. If you look at just those earning more than $75,000, there were 14 million people in that category who were without health insurance again for some period of time. That's probably mostly explainable by people becoming unemployed, having high incomes for the year that suddenly disappeared when a job was lost but because of the extremely high cost of health insurance particularly for people who have no employer picking up some share of the tab, that becomes unaffordable and people are sometimes inclined to drop coverage.

RAY SUAREZ: We also saw a very different outlook for different population groups inside the country, racial and ethnic.

SUSAN DENTZER: Absolutely. In essence nearly 60 percent of Hispanics or Latinos emerge from this survey as going without health insurance again over the course of this 2002-2003 period. It continues to be true that the largest single ethnic group of those without health insurance are white; 48 percent. But your disposition or your predisposition to become uninsured is much, much higher if you're a Latino and not that much lower, in other words, still high if you're African-American. So this tends to be a problem which really for Latinos in particular are very, very at risk for. Interestingly enough, that tends to equate to where those elements of the population tend to be distributed. We think of Latinos as being a heavy presence in the population in southwest. That's exactly where the heart of America's un-insurance problem is. Highest proportion of uninsured in Texas, followed by New Mexico and then California, and several other states again in the Southwest or the South. That is really again the preponderance of America's health insurance problem -- again another very interesting way to slice this whole issue.

RAY SUAREZ: A lot of the political energy around un-insurance as an issue focus odd children both at the state level and at the federal level. Yet it seems that there is still an awful lot of uninsured children for all those efforts being made at various levels of government.

SUSAN DENTZER: No question about it and at today's Families USA news conference, Families USA by the way tends to be a group that is mainly aligned with democrats and not surprisingly today three Democratic governors were on hand at the news conference to talk about the effect in their states. What the governors said in particular was they're extremely worried about just the situation you described; children in part because of the heavy pressures on Medicaid. We've taken extraordinary strides in this country in the last several years to both expand Medicaid and create and expand a program called the Children's Health Insurance Program, which has indeed done a lot to reduce the ranks of uninsured children. Nonetheless, as you say, 27 million children emerged as having been uninsured at some period of time in 2002-2003. That's 37 percent of American kids going through a spell of un-insurance. If you put that together with another phenomenal statistic which is that basically four out of ten births in this country are now paid for by Medicaid what it means is lots of kids are being brought into the world with Medicaid paying the bill and somehow then they disappear from the protections of Medicaid and the Children's Health Insurance Program. And the governors pointed out that this is a particular issue now as states continue to dig out from under their fiscal problems, possibly face some cutbacks in Medicaid and already six states have frozen enrollment in those programs, Medicaid over the last couple of years. They're worried that that may be the shape of things to come.

RAY SUAREZ: Susan Dentzer, thanks a lot.

SUSAN DENTZER: Thanks, Ray.

RECAP

GWEN IFILL: Again, the major developments of the day: A preliminary 9/11 Commission report has concluded there was "no credible evidence" Saddam Hussein helped al-Qaida target and attack the U.S. A second day of pipeline sabotage cut off oil exports from the southern Iraqi port of Basra. And OPEC said it will ask major oil producing countries, including non-members, to increase output to cover Iraq's shortfall. We'll see you online, and again here tomorrow evening. I'm Gwen Ifill. Thank you and good night.