The NewsHour with Jim Lehrer

JIM LEHRER: Good evening. I'm Jim Lehrer. On the NewsHour tonight: A summary of today's news; excerpts from President Bush's news conference; a report, and analysis of a Congressional hearing on the WorldCom collapse; and an update from the International AIDS conference in Barcelona.

NEWS SUMMARY

JIM LEHRER: President Bush warned today Americans could lose confidence in the free enterprise system over corporate corruption. At a White House news conference he said business leaders must show a new sense of responsibility. He plans a major speech on that issue tomorrow. The President also rejected criticism of his own past business dealings as old style politics. We'll have more on the President's remarks in just a moment. The former chief executive of WorldCom refused to answer questions at a House hearing today. The focus was on the company's failure to list nearly $4 billion in expenses. Bernard Ebbers invoked his Fifth Amendment right not to incriminate himself. He did say he had nothing to hide. The company's former chief financial officer, Scott Sullivan, also refused to testify. WorldCom's current chairman blamed the scandal on the company's former auditors, Arthur Andersen. A former Andersen official blamed WorldCom managers. We'll have more on this story later in the program. Merck and Company recorded more than $12 billion in revenue over three years that it never collected. The world's third largest drug company announced that today, but said there was no net effect on earnings. It said the revenue was offset in financial statements. Two major business groups went on the offensive today against corporate corruption. The Business Roundtable issued a statement and ran full-page ads in major newspapers, speaking for the CEO's of leading companies. The group said executives should have to return ill-gotten gains from accounting fraud, among other things. In Washington, the head of the U.S. Chamber of Commerce, Thomas Donahue, called for sending wrong-doers to jail, but he warned against overstating the problem.

THOMAS DONAHUE: Government and the media must refrain from painting the entire corporate community with the same negative brush that has been given to them by a handful of corrupt executives and accountants. That's not fair, that's not right, and that's not smart, considering what we need from our economy.

JIM LEHRER: In other developments, the Senate opened debate on imposing tighter oversight on the accounting industry. And there were new calls for Harvey Pitt to resign as head of the Securities and Exchange Commission. In a column in "The New York Times," Republican Senator John McCain of Arizona said Pitt had appeared "slow and tepid" in dealing with accounting abuses. The President today rejected the criticism. The international peacekeeping force in Afghanistan agreed today to help find the killers of the country's Vice President. Abdul Qadir was gunned down Saturday, as he left his office in Kabul. The two gunmen escaped and no one has claimed responsibility for the attack. The Turkish general commanding the peacekeepers called it a "terrible crime." Three Pakistanis were charged today with setting off a car bomb outside the U.S. Consulate in Karachi, last month. Police brought two of them to a news conference after their arrest. They said they had meant to kill Pakistan's President Musharraf, in April, but their car bomb didn't go off. They used the same car in the consulate bombing, June 14. The blast killed 12 Pakistanis. Flood waters receded today in south-central Texas, after chasing thousands of people from their homes. More than 30 inches of rain fell in the region last week, sending rivers as much as 28 feet over flood stage. The water damaged nearly 50,000 homes and killed at least eight people. Governor Rick Perry outlined the damage as he toured homes around San Antonio.

GOVERNOR RICK PERRY: The carpet s going to be pulled out, the floors are cupping; they re going to have to replace substantial amounts of infrastructure in a home like this. They're going to have to move out for some period of time as those repairs are made. All of that we knew was there, you can't see it from the air. You can't see the damage like yesterday, this horrific twisted metal, twisted homes, highways gone, infrastructure gone from the standpoint of transportation. All of that was so obvious yesterday from the air.

JIM LEHRER: President Bush has designated 13 Texas counties as federal disaster areas, the total could rise to 30. Governor Perry said the total cost of the flood could top $1 billion. A study of AIDS awareness among young gay men raised new questions today. The Centers for Disease Control and Prevention studied more than 5,700 gay and bisexual men in American cities. Nearly 600 tested positive for HIV, the AIDS virus, but more than three-quarters of those were unaware they were infected. The findings were released at an international conference in Barcelona, Spain. And we'll have more on the fight against AIDS later in the program. More than million emergency and health care workers could get smallpox vaccinations this fall. The Department of Health and Human Services confirmed that today. A spokesman said there could be a final recommendation by the end of the month. An advisory committee had suggested only so-called first- responders be inoculated. Hospitals pressed for a broader program in case of a bio-terror attack using smallpox. And that's it for the News Summary tonight. Now it's on to the President's news conference, WorldCom in the spotlight, and the latest on the spread of AIDS.

FOCUS TAKING QUESTIONS

JIM LEHRER: President Bush fielded questions from reporters for more than 30 minutes late this afternoon in the White House press room. Many of the questions focused on his reporting of stock sales in the early 1990s. At the time he was a member of the board of directors of Harken Energy, a Texas oil company.

REPORTER: Mr. President the war on terrorism; you made it very clear that it's not just a matter of seeking justice for offenders but also preventing another act of terrorism against our country. So when it comes to corporate corruption, beyond calling for tough penalties, what can you say to investors around the country about what this administration will do to prevent these abuses from occurring in the future?

PRESIDENT GEORGE W. BUSH: Well, let me start by telling you that I think by far the vast majority of CEO's in America are good, honorable, honest people who have nothing to hide and are willing to let the true facts speak for themselves. It's the few that have stained, that have created the stains that we must deal with. And tomorrow I'm going to talk about some specifics, I'll save those for tomorrow. But let me just put it to you this way. We'll vigorously pursue people who break the law, and I think that will help restore confidence to the American people.

Well, David, there is a, listen, there has been a period of time when everything seemed easy. Markets were roaring, capital was everywhere. And people forgot their responsibilities. And as you know, you've had to suffer through many of my speeches, but I have been calling for a renewed sense of responsibility in America. And that includes corporate responsibility, because I'm very worried about a country that has, could conceivably lose confidence in the free enterprise system.

REPORTER: Mr. President, the Democrats have signaled that they are going to make your behavior while director at Harkin an election year issue, there s an ad out today, which is relatively new. I know you've said this before, and I've heard that, but would you take on the charge that you were eight months late with an $850,000 stock sale report?

PRESIDENT GEORGE W. BUSH: First, let me take on the notion that people love to play politics. You know, you say the Democrats are going to attack me based upon Harkin. That's nothing new, that happened in 1994, can't remember if it happened in 1998 or not. It happened in 2000. I mean this is recycled stuff. (Laughter) Thank you. When I made the decision to sell, I filed what's called a Form 144, I think you all have copies of the Form 144, it's an intention to sell and I did sell. But you said, this has been fully vetted. It has been looked at by the S E C, you've got the document; you've got the finding, which says there is no case here. And the way I view it is, it's old style politics, and I guess that's the way it's going to be.

REPORTER: On the question that the Form 4 was eight months late, why was it?

PRESIDENT GEORGE W. BUSH: You know, the important document was the 144, the intention to sell, that was the important document. I think you got a copy of it, if you don't we'll be glad to get you one that showed the intention to sell. As to why the Form 4 was late, I still have to haven't figured it out completely. But nevertheless the S E C fully looked into the matter, it looked at all aspects of it and they did so in a very thorough way, and the people that looked into it said that there is no case. And that was the case in the early 90s, it was the case in the '94 campaign, it was the case in the '98 campaign, same thing happened in the 2000 campaign. I guess we're going to have to go through this again in the 2002 campaign. But nothing has changed. And the nothing that changed was the fact that this was fully looked into by the S E C and there's no there there. Helen. Working my way around.

REPORTER: The Senator is suggesting that you ask for the resignation of Harvey Pitt, and says that he is inept and has had to recuse himself so many times in all these cases. What do you think, and are you 1,000% behind him?

PRESIDENT GEORGE W. BUSH: Very tricky. I support Harvey Pitt. Harvey Pitt has been fast to act. He's been in office less than twelve months, I think. We sent him up to the Senate, and was unanimously approved. I'm not exactly sure when the vote was, I guess it was about a year ago, and every Senator said aye on Harvey Pitt, meaning they thought he was the right man for the job, and I still think he is. He is -- in a quick period of time he has taken 30 CEO's and directors to task by not allowing them to serve again on a board or serve in a CEO capacity of a company. He's encouraged what they call disgorgement, which is if somebody has profited based on malicious reporting or whatever the lawyers call it, obviously trying to scam somebody, they have to give the money back. And he's been very active on that, so I think Pitt s doing a fine job.

REPORTER: Mr. President, we continue to see reports on the state of planning to get rid of Saddam Hussein in Iraq. I know it's unlikely that you'll share any details with us, but we'd be delighted to hear them.

PRESIDENT GEORGE W. BUSH: Somebody else thinks they are.

REPORTER: But I wonder, Mr. President, regardless of when or how, is it your firm intention to get rid of Saddam Hussein in Iraq?

PRESIDENT GEORGE W. BUSH: Yes.

REPORTER: And how hard do you think it will be?

PRESIDENT GEORGE W. BUSH: It s the stated policy of this government to have a regime change. And it hasn't changed, and we'll use all tools at our disposal to do so. I actually didn't read the whole story about somebody down there at level 5 flexing some know-how muscle. But there's all, listen, I recognize there's speculation out there. But people shouldn't speculate about the desire of the government to have a regime change, and there's different ways to do it.

JIM LEHRER: The President also asked Congress to approve funding for the war against terrorism and for security at the nation's airports.

FOCUS FALLEN GIANT - WORLDCOM

JIM LEHRER: The WorldCom scandal came to Washington today. Kwame Holman begins our report.

KWAME HOLMAN: Two former top executives of WorldCom, an Arthur Andersen auditor, and a Salomon Smith Barney stock analyst sat quietly this afternoon as members of the House Financial Services Committee took turns beating up on them.

REP. MAXINE WATERS: The founder, Mr. Ebbers, the board of directors and certain think auditor of record, the now infamous Arthur Andersen should have known and should be held responsible. Mr. Sullivan simply committed the simplest most easily detectable accounting fraud. He lied about operating costs, hid debt and is still trying to justify operating costs as capital costs.

KWAME HOLMAN: Members also beat up on currently accepted accounting practices and regulations.

REP. JOHN LaFALCE: The safeguards we have relied upon to protect investors have failed at every level. Auditors, audit committees, and boards of directors have not been able to provide the protections to which shareholders are entitled.

KWAME HOLMAN: And committee members beat up on each other as well.

REP. BERNARD SANDERS: It is no secret to any American that the wealthy and powerful because of their campaign contributions have enormous influence over the political process and what goes on here. So number one, Mr. Chairman, before we lecture those guys, let us have the honesty to do the right thing and to call for real campaign finance reform so that this institution does not get swamped with money that come from the wealthy and the powerful.

KWAME HOLMAN: Committee Chairman Michael Oxley called the hearing in the wake of WorldCom's disclosure that it had improperly reported $3.8 billion in operating expenses as profits.

REP. MICHAEL OXLEY: If these charges are proven, WorldCom executives who participated in the fraud should have to return any profits from stock sales made during the five quarters of misreported earnings. It would be simply wrong to allow them to profit from criminal behavior. The stock has plummeted from a high of nearly $65 a share just a few years back. This betrayal to the spirit of the 4th of July by senior WorldCom managers is so immense that it could cost tens of thousands of workers and average citizens their livelihood and life savings. How could something like this have happened and what can be done to prevent a recurrence? To get the answers we've invited a number of individuals here today who know or should have known what happened. They owe this committee and the public a thorough explanation.

KWAME HOLMAN: But Bernard Ebbers and Scott Sullivan, WorldCom's former chief executive and chief financial officer, weren't prepared to provide answers the committee wanted today.

SCOTT SULLIVAN: Based upon the advice of counsel, I respectfully will not answer questions based upon my Fifth Amendment right to the United States Constitution.

SPOKESMAN: Mr. Ebbers?

BERNARD EBBERS: Good afternoon, Mr. Chairman. Members of the committee. I served as CEO of WorldCom for 17 years. During that time, I helped a small company rise to one of America's largest corporations. I am proud of the work that I did at WorldCom. And I believe that despite its recent problems, WorldCom continues to be a valuable company that provides important services to many Americans and to the United States government. Although I would like more than you know to answer the questions that you and your colleagues have about WorldCom, I've been instructed by my counsel not to testify based on my Fifth Amendment constitutional rights.

After careful consideration, I have decided to follow my counsel's instruction, even though I do not believe I have anything to hide in these or any other proceedings. I hope the committee will not draw a negative inference based on my assertion of these constitutional protections on the instruction of my counsel. Or attempt to subject me to ridicule by asking inflammatory questions knowing I that I will not answer them. I do not believe I should be subject to legal harm as a result of my exercise of a basic constitutional protection found in the Bill of Rights.

When all of the activities at WorldCom are fully aired, and when I get the opportunity, and I'm very much looking forward to it, to explain my actions in a setting that will not compromise my ability to defend myself in the legal proceedings arising out of the recent events, I believe that no one will conclude that I engaged in any criminal or fraud you lent conduct during my tenure at WorldCom. Until that time, however, I must respectfully decline to answer the questions of this committee on the basis of my Fifth Amendment privilege. Thank you, Mr. Chairman.

KWAME HOLMAN: That lengthy statement by Bernard Ebbers prompted some on the committee to challenge whether he had in fact waived his Fifth Amendment protection.

REP. MAX SANDLIN: To come up here and say that he has engaged in no criminal activity and to set forth his affirmative statements in his defense and then to refuse to testify is an outrage; it's not in conjunction with the United States Constitution, I suggest that he consult with his attorneys and then that we hold him in contempt until such time as he elects to go along with the subpoena the committee and testify before us.

KWAME HOLMAN: Committee members argued back and forth for several minutes over whether Ebbers could be compelled to testify. Finally, Chairman Oxley said he would consider the issue, while Ebbers was asked to remain in the room. The two other witnesses however volunteered to testify. Melvin Dick was the Arthur Andersen auditor in charge of reviewing WorldCom's finances.

MELVIN DICK: The fundamental premise of financial reporting is that the financial statements of the company, in this case WorldCom, are the responsibility of the company's management, not its outside auditors. WorldCom management is responsible for managing its business, supervising its operational accounting personnel, and preparing accurate financial statements. It is the responsibility of management to keep track of capital projects and expenditures under its supervision. If the reports are true that Mr. Sullivan and others at WorldCom improperly transferred line costs to capital accounts so as to misstate the company's actual performance, I'm deeply troubled by this conduct.

REP. PAUL KANJORSKI: You're indicating that you just checked the mathematics of whatever management gives you and that's what you consider an audit?

MELVIN DICK: No. The, let me just reemphasize again that the preparation, the actual financial statements themselves are prepared by management. The auditors' responsibility is to perform an audit on those statements to make sure they're free of --

REP. PAUL KANJORSKI: Just the statements, not the underlying material that those statements are based on?

MELVIN DICK: When we performed our audit, we did specific testing.

REP. PAUL KANJORSKI: Right, okay. Now, this wasn't off balance sheet material, was it? The 3 million we just recorded in the wrong area was recorded as a capital investment as opposed to a normal expense?

MELVIN DICK: I have not seen specifically what they've done. But based on what I have read he

REP. PAUL KANJORSKI: You mean you certified this, you didn't look at it before you came here today?

MELVIN DICK: With regard to the 3.8 billion that's been --

REP. PAUL KANJORSKI: You mean you weren't curious to know how these guys snookered your outfit to certify, you didn't figure out what they did yet?

MELVIN DICK: Congressman, that information has not been provided to me.

KWAME HOLMAN: Jack Grubman is the Salomon Smith Barney analyst who continued to recommend WorldCom stock even as its financial problems were coming to light.

JACK GRUBMAN, Salomon Smith Barney: I am aware that there is speculation that I had advance knowledge of this fraud. That speculation is categorically false. I had no advance knowledge what so ever of this fraud.

REP. GARY ACKERMAN: You've testified today that you've done a job based on information and communications that you've received from the two gentlemen setting in between you among others. Have they deceived you? Have they lied to you? Have they committed any crimes? Mr. Dick?

MELVIN DICK: I don't know if they committed any crimes. I can tell thaw when we did our audits we asked for the journal entries that had been --

REP. GARY ACKERMAN: Stop giving us these happy horse feathers. You still feel the need to cover up for these guys? I thought you were off the job.

Mr. Grubman, did they lie to you? Did they deceive you? Did they commit any crimes? Thank you very much.

JACK GRUBMAN: I can't answer the last question about the crimes because I'm not qualified. But what was state as true, then I was deceived by the company reports.

REP. GARY ACKERMAN: So you believe they lied to you?

JACK GRUBMAN: If what is allegated is true, because I don't want to say anything that's not true, if what is alleged is true, then for at least the last five quarters of what we know, I and others were lied to.

KWAME HOLMAN: As these investigative hearings continue, many members of Congress are demanding legislation this session aimed at preventing corporate corruption.

JIM LEHRER: Ray Suarez takes it from there.

RAY SUAREZ: For more on today's hearing and what went wrong at WorldCom, we're joined by Blair Levin, a telecommunications analyst at Legg Mason, a financial services company. He is a former chief of staff at the federal communications commission. And Julia Grant, professor of accounting at the Weatherhead School of Management at Case Western Reserve University. Well, Professor Grant, looking at today's testimony, did we learn much more about how money moved around WorldCom and how things were recorded there?

JULIA GRANT: You know, unfortunately we didn't learn a lot from that testimony. Nobody's really talking. The auditors are assuring us that they didn't know. And WorldCom hasn't yet given us all the detail, as the auditor just indicated. So I certainly don't feel like I know how Arthur Andersen got fooled on this one yet.

RAY SUAREZ: And Professor, when you heard Melvin Dick sort of define accounting for the Congressional panel, as basically taking the numbers that are generated by the responsible departments in the company and then sort of adding them, providing the report, was that accurate?

JULIA GRANT: Well, he was defining auditing, not accounting. And the Congressman interrupted him when he said it was their job to test. What auditors do is statistically pick some transactions to check. So in theory it's certainly possible to miss all the fraudulent transactions and test only thegood ones. It's also possible that if someone high up enough in the company wants to commit fraud, they can hide things from an auditor too, it's possible to just blatantly lie in the records, and we don't yet know whether that happened in WorldCom or whether Arthur Andersen simply missed some calls.

RAY SUAREZ: When you say possible, possible even at that scale, 3.8 billion dollars?

JULIA GRANT: The interesting thing about the WorldCom situation is their particular tack was probably to spread those things throughout a number of accounts. So I would doubt that there is one single $3 billion chunk that we would say, yeah, Andersen should have seen that $3 billion chunk. I imagine that is broken up into lots of smaller amounts, spread across lots of different assets that makes it harder for an auditor to find.

RAY SUAREZ: Blair Levin what did you see when you watched the hearings?

BLAIR LEVIN: I think we saw what we had seen before with the Enron hearings, which is when all the people come before Congress there's a lot of this, everyone is pointing in other directions, the company is blaming the auditors, the auditors are blaming the company. The analyst is blaming the company, and the auditors. And the Congressmen are blaming the company, the analyst and the auditors. But I don't think we've learned what it is that as a matter of public policy we need to do to make sure it doesn't happen again.

RAY SUAREZ: Was there any aha moment for you where someone said something intentionally or less so that provided some insight into the way this company was running?

BLAIR LEVIN: I think my favorite moment of the hearing was when Congress Congressman Frank said at least we've established, and I'm not quoting him as wittily as he said it, but at least we've established a degree of humility on the part of analysts and accountants. I think everyone is a resident more humble about what their jobs and by what they do.

RAY SUAREZ: Well, you are an analyst.

BLAIR LEVIN: That's correct.

RAY SUAREZ: Was that discipline on trial in a sense today, a man who created a lot of wealth historically by recommending companies in public was now under oath in front of Congress.

BLAIR LEVIN: I think all of Wall Street in some sense is on trial. And really has been ever since the Enron scandal first broke. I think there are a couple of different issues here. One is the issue of how you pick stocks, which is a very difficult thing, and I think myself and everyone else who is in that business has to be humble about it. We have to recognize what it is we can know, but also what it is we can't know. But the second is the question of structurally, do we allow analysts to engage also in what you might think of as investment banking, and that was certainly a major issue today, because of Mr. Grubman's involvement, and his firm's involvement with a lot of investment banking for companies he was recommending.

RAY SUAREZ: Professor, is there a legislative answer? Here we are in front of a House committee talking about shortcomings in auditing and accounting. Is there a legislative answer to some of the problems we heard about today?

JULIA GRANT: Well, what we need to, do we know what public policy we want. I think that a legislative answer is one piece. I do not think there is a one-dimension answer, because we need to be clear. Corporate failures happen. Fraud occurs. And this has happened across time in our economy. This is not the first time. So we know these things occur. How do you keep people from being unethical? That's really the issue. And I agree with the analyst. The fact is all of Wall Street and all of the functions that lead to what is our capital markets are currently under fire in some sense. So what's the public policy solution? It's multiple, it's multi dimensional. We have to shore up all aspects of this so that we can rebuild our confidence, so that the average investor believes that he or she is playing a fair game. They don't believe they're playing a fair game now. That takes work by Congress, it takes work by the SEC for regulations, by the stockbrokers, and their organizations, for ethical reform on their part if they need it. The auditing profession, absolutely, has some work to do. We can't look at Congress passing one law and that will fix everything. We've got to be going at this on multiple fronts.

RAY SUAREZ: Well, maybe as an analyst now, you can give me a little bit of a ledger sheet on the up sides and down sides for the economy, for the company, for the sector, on either punishing WorldCom or trying to preserve its value based on what you saw today at the hearing.

BLAIR LEVIN: I think what we see or what we're going to see is a very interesting case where you have several governmental agendas. If I were Harvey Pitt and I was watching the hearing I would definitely say hey, we need to send a very clear message to the investing public, we're going to protect you, we're not going to allow conflicts of interest, we want our markets, or we want our accounting statements to represent accurately what the real financial state of the company is. And you would probably say in order to do that we need to punish both individuals and the company. But from the communications perspective we have a different agenda. What we have to worry about is a company like WorldCom, which is very important to the sector, their ability to, a, continue to operate their networks, b, continue to invest in their networks so that we have good performance, good service, and c, you want WorldCom to survive as a competitor in the marketplace. Over the history of WorldCom as such and the history of MCI, which they bought, they have played an enormous role in lowering long distance prices, for example, they've played an enormous role in making the Internet a very, a terrific economic vehicle for this country -- a huge amount of economic growth, not just in the beginning of that sector but throughout the economy, gain versus been driven by the low cost transmission of data. And WorldCom plays an important part in that. On the one hand you may want to punish them for certain of these accounting problems, on the other hand we don't want to lose some of the benefits that they brought to the communication sector.

RAY SUAREZ: Professor Grant, go ahead.

JULIA GRANT: I was going to say, I think we do have to rely on the analysts who know that sector well to tell us whether WorldCom is in fact a viable business. Is there something there that is important to keep? You can contrast that to Enron, when the unraveling was done with Enron, there just wasn't much there there. But with WorldCom we need to analysts to know the industry to tell us, does this firm have an intrinsic value that should in fact be supported. If it does, investors will buy WorldCom stock. If it doesn't, they won't. That's how those decisions will get made.

RAY SUAREZ: Well --

BLAIR LEVIN: It's not quite that easy because a lot of the value of the stock depends on things which are, for example, in the government's control. If the SEC is going to go after the company, it doesn't matter whether there's an intrinsic value of the customers and the Internet pipes and all the other hard assets they have. Nobody is going to want to essentially buy that. There's a lot of brand erosion now, there may be customer erosion. So it's difficult to tell exactly right now what the ongoing value is. But there's a lot of things that are outside the control of the CEO, which will determine what its long-term value is.

RAY SUAREZ: Well Bernie Ebbers doesn't say much today, but he did say that WorldCom continues to be a valuable company.

BLAIR LEVIN: No question bit, it carries 70% of the e-mail traffic in the United States, 50% of the Internet traffic, it serves tens of millions of Americans with long distance. It's starting to serve a lot of, over a million Americans I believe now, local phone service. So it serves thousands of businesses. This is a real company which provides a real service. Whether it is in the long term viable given their financial structure and given the damage to the brand that's occurred, that's the question.

RAY SUAREZ: Blair Levin, Professor Grant, thank you both.

JIM LEHRER: Still to come tonight, JIM LEHRER: Still to come on the NewsHour tonight an AIDS update, and a Richard Rodriguez essay.

FOCUS SPREADING SCOURGE

JIM LEHRER: Susan Dentzer of our health unit begins our AIDS report. The unit is a partnership with the Henry J. Kaiser Family Foundation.

SUSAN DENTZER: As this year's international AIDS conference opened in Barcelona this weekend, grim news awaited the 15,000 delegates in attendance. More than two decades after the first case reports of AIDS, it now appears that the pandemic is only in its earliest stages, and that the worst of its devastation lies ahead. As of today, an estimated 40 million people around the world are infected with HIV, the virus that causes AIDS. About 13 million more have already died. But new estimates from UNAIDS, the United Nations' coordinating group on the disease, indicate that another 68 million people will die from AIDS by the year 2020. The group said the only way to avert that catastrophe was for countries to sharply increase their efforts and spending on prevention and treatment. As protesters pushed yesterday to give developing countries more access to anti-AIDS drugs, UNAIDS officials said the new projections far exceed earlier estimates. The worst damage is in sub-Saharan Africa, where more than 28 million people have HIV or AIDS. There were approximately 3.5 million new infections in the region in 2001.

DR. NEFF WALKER, Senior Epidemiologist, UNAIDS: I think we had hoped that it was slowing down or being contained, but this is not the case. In Africa, which has been the hardest hit area, and even in the countries in southern Africa where prevalence is above 20%, it continues to rise.

SUSAN DENTZER: As the disease takes its toll on the young and middle-aged, the average life expectancy in 11 countries in sub-Saharan Africa could drop to below 40 years of age by 2010. Elsewhere, HIV Infection and AIDS is spreading even faster. In Russia and Eastern Europe, HIV is moving from drug users into the wider population. And in China, varying estimates put the HIV infection rate at anywhere from one million to as high as six million people. Although the situation in the United States pales in comparison to the global AIDS threat, officials with the U.S. Centers for Disease Control and Prevention warned of some disturbing trends. Overall, the rate of new infections appears to be stable, with an estimated 40,000 Americans contracting HIV annually. But at least one study showed alarming rates among African- Americans, and especially among heterosexual black women. Another CDC study shows that more than three in four young gay and bisexual men who are infected with HIV don't know it, and are at risk of spreading the virus to their sexual partners.

DR. RONALD VALDISERRI, CESARE DE CARLO:: Americans overall and even some persons of high ongoing risk for infections don't seem to have the same sense of urgency that characterized the early years of the epidemic.

SUSAN DENTZER: The AIDS conference will continue in Barcelona through Friday.

JIM LEHRER: And to Gwen Ifill.

GWEN IFILL: Are people hearing the same old messages or surprisingly new bad news? Here to elaborate on the latest findings on the AIDS pandemic, are two experts attending the Barcelona conference. Peter Piot, the executive director of UNAIDS, the joint United Nations program on HIV-AIDS, and Sandra Thurman, president of the International AIDS Trust. Miss Thurman was also the U.S. AIDS czar during the Clinton administration. Dr. Piot, among the findings that you are publicizing this week in Barcelona is that there could be as many as 68 million new AIDS deaths by the year 2020. What's the reason for this explosion?

DR. PETER PIOT, Executive Director, UNAIDS: Well, the report that we issued just before the beginning of the Barcelona conference showed clearly that we haven't reached yet the peak of the epidemic. HIV Continues to expand, certainly in Africa, even in the worst affected regions. Think of Botswana, the worst affected country in the world-- nearly 40% of the adults are now HIV positive, and HIV is spreading very fast in the former Soviet Union, in China, in India, and the reason that that's happening is, I believe, because we've waited so long, we've wasted so much time, and because of a lack of leadership in these countries, and in the West, in response against HIV. And we could have prevented millions and millions of deaths if we would have started acting-- ten years ago, 15 years ago-- as many countries are now doing.

GWEN IFILL: In Botswana it's also a question-- and countries like that-- it's also a question of life expectancy which has been affected by this pandemic.

DR. PETER PIOT: Yeah, and the worst affected countries like Botswana or in South Africa, life expectancy at birth is collapsing. What does that mean? That means that someone today, who is born today, will live on the average for 40 years, as compared to 60 years without AIDS. A boy of 16 who lives in one of these countries in Southern Africa is like a 60% probability to die from AIDS in his lifetime. And whole economies are on the verge of collapse. And AIDS is really having a major devastating impact. Just think of the fact that last year alone, one million African kids lost their teachers because these teachers died from AIDS. That's another facet of the AIDS epidemic.

GWEN IFILL: Ms. Thurman, in another facet of the AIDS epidemic, it was described by another UN Official is that it seems to be disproportionately affecting people we wouldn't necessarily expect-- in this case, women.

SANDRA THURMAN, International AIDS Trust: Oh, I think that's the story that's not yet been told in the fight against HIV and AIDS. This is an epidemic that is disproportionately affecting women and children. Over 50% of all people infected in Africa, which has the most cases of HIV Infection in the world, are women. And in many regions, young girls are six times more likely than boys their same age to become infected by HIV. This is clearly a gender issue, and if we're going to really fight AIDS, we're going to have to address these issues of gender and equity.

GWEN IFILL: Ms. Thurman, one of the things which is also remarkable that we saw in the first report from the conference is that among the U.S. numbers-- domestic United States numbers-- the amount of ignorance among people who didn't realize they had HIV-- many of them young, gay, and bisexual men.

SANDRA THURMAN: Well, I think that's what's so frightening. The epidemic of the United States has leveled off at about 40,000 new cases a year in the last decade, but we see a dramatic increase in numbers of young people, of women, and of young, bisexual men -- particularly young, gay, and bisexual men of color. In many urban areas we have as many as one-third of all young gay men of color infected with HIV, which parallels what we see in many African nations. We have a Holocaust happening in our own inner cities and we aren't even recognizing it. So it's reason for us to really focus again not only on the epidemic domestically, but redouble our efforts in the epidemic internationally.

GWEN IFILL: Do you have any answers to why this epidemic seems to be so... to be galloping at such a pace in the urban community, why black women are so disproportionately affected, for instance, in the increase?

SANDRA THURMAN: Again I think it goes back to the beginning of the epidemic, that in the early days of the epidemic, people all around the world thought this was an epidemic of gay, white men, and prostitutes for the most part, and that stuck in our minds. And that was actually never the case. So that's the perception that people have taken, and to this part of the epidemic with them, and people don't think they're at risk. Young people don't think they're at risk, women don't think they're at risk, women of color don't think they're at risk. And so we really have to focus on our prevention messages targeting all of those separate groups of people, and get the message out there that everyone is at risk for HIV infection. HIV Infection doesn't discriminate and we need to make sure that people understand that.

GWEN IFILL: Dr. Piot, I think many people, including folks who have followed this pretty closely, have been led to believe over the past several years that, in fact, there was a plateau that which had occurred worldwide, but as much as in the U.S. Was that not the case?

DR. PETER PIOT: Experts have predicted several times since the '80s that we had reached or that we were close to reaching a plateau of new infections, and unfortunately they've always been wrong. Every year we've got the report on AIDS that more people are being infected, and the virus is now spreading in about every single country in the world, and it's simple: This is the worst epidemic in human history and we don't know yet where this will end.

GWEN IFILL: So, Dr. Piot, if we know-- at least we have an idea about what the parameters are of this epidemic, of this pandemic-- what is the cost to arrest it in your opinion?

DR. PETER PIOT: Well, last year in UNAIDS we estimated that the poor countries need about $10 billion per year to make sure that prevention programs are being organized everywhere, from Africa to Asia to the Caribbean. Secondly, that most people who need it and who are infected will get access to treatment, and then also to take care of the millions of orphans, to give them food, a roof, and education. That's where it goes, and where are we today? We're at about one-third of that $10 billion mark. There's about $3 billion available to fight AIDS this year, and so we needto make sure that that gap is filled. And how can that gap be filled -- by the governments in the affected countries themselves, after all, it's about their survival-- it's an issue of national security for all of them-- but also by the richer countries who need to invest in AIDS prevention, in AIDS treatment, in these countries. Not only as a matter of our helping poor nations out of solidarity, but also because it's in our enlightened self- interest. In today's globalized world, you know, when a whole continent is destabilized, that is going to have implications for the rest of the world and thousands of miles from where the real major epidemic is.

GWEN IFILL: Ms. Thurman, I wanted to expand on what Dr. Piot was just saying about what happens in poor countries where the cost for the treatment, the cost for the actual drugs, can seem so prohibitive. Today there was talk of a new drug which shows great promise: T-20. Talk a little bit about that and about the whole notion of whether it's possible for poor countries without these mass distribution systems that we have in the United States to actually do something about people who... for people who have contracted the disease.

SANDRA THURMAN: Well, with T-20 and other drugs, we certainly have some promise on the horizon, but the fact is that these drugs are very, very expensive for poor countries, and even though the drug companies are trying very hard to reduce prices... to reduce them by 90% or even 95% in some cases, the fact of the matter is the majority of the people who are infected with HIV are living on less than a dollar a day. And in countries that live... or spend five dollars per capita on health care across the board, there's just no opportunity for them to purchase these drugs. If we take Africa, for instance, where we have 26 million people infected with HIV, only 36,000 people have access to the triple combination therapies that people in the United States and in Europe and other wealthy nations have access to all the time. So that's 36,000 out of 26 million people who are infected. That gap is just enormous. So, what I think we have to do is several things. The first is to face, to focus on getting basic drugs to people, drugs that treat opportunistic infections like tuberculosis and other infections that are very inexpensive and fairly easy to treat. I think that's the first thing we need to do. We need to look at getting the drug that prevents-- the drugs-- that prevent mother to child transmission of the virus to pregnant mothers in Africa. That would prevent 600,000 new infections each year in Africa alone. So there's some basics that we know how to do that are very cost-effective, and I think that's the first step we have to take. Then we have to look at building the infrastructure and finding some way to reach some middle ground so we can get these drugs to people, the more complicated drugs, to people who need them. I mean, you know, when we look at the fact that we live in a global society, if the promise of science doesn't have application to all people who live in a global society in the same global economy, then there's something wrong with that. And I think after September 11, there's a much greater understanding in the United States and around the world that we are connected in ways that we didn't understand before, and that what happens to poor people in Afghanistan or what happens to poor people in Botswana affects all of us, not just indirectly, but directly. So these are the challenges that I think we have to face in the future.

GWEN IFILL: SandraThurman and Peter Piot, thank you very much for joining us.

ESSAY DESERT RELIGIONS

JIM LEHRER: Finally tonight essayist Richard Rodriguez of the Pacific News Service considers the current state of Christianity, Judaism and Islam.

RICHARD RODRIGUEZ: The Catholic priest is under arrest, accused of raping altar boys. The Muslim shouts out the name of Allah as the jetliner plows into the skyscraper. The Jewish settler's biblical claim to build on the West Bank is supported by fundamentalist Protestants who dream of the last days. These have been months of shame and violence among the three great desert religions-- Judaism, Christianity, and Islam-- the religions to which most Americans adhere. These desert religions are sister religions in fact, but more commonly they have been brother religions, united and divided by a masculine sense of faith. Mullahs, priests, rabbis-- the business of religion was traditionally the males. It was the male's task to understand how God exists in our lives. Judaism grave Christianity and Islam a notion both astonishing and radical, the notion that God acts in history. The desert religions became, in response to this idea, activist religions, ennobled at times by a sense of holy purpose, but also filled with a violence fed by the assumption that God is on my side and not yours. The history of the desert religions oft repeated by old men to boys, got told through stories of battles and crusades, sultans and emperors.

But within the three great desert faiths there was a feminine impulse, less strong but ever present, the tradition of absorption rather than assertion, assertive rather than authority of play rather than rather than dogmatic servitude. Think of the delicate poetry of the song of songs or the delicacy of the celebration of the maternal represented by the Renaissance Madonna or the architectural lines of the medieval mosques of Spain, light as music. And yet the louder, more persistent tradition has been male concerned with power and blood and dogmatic points.

Now on the evening news, diplomats come and go speaking of truces and terrorists to the price of oil. In truth, we are watching a religious war, Muslim versus Jew -- a war disguised by the language of diplomacy. In decades and centuries past there have been Holocausts and crusades and violence as fierce among the leaders of a single religion, for example, Catholics contending with Protestant and Eastern Orthodox over heresies and questions of authority. Yahweh, God, Allah, the desert Deity rarely expressed a feminine aspect as in Hinduism. The men who interpreted the bible for Koran rarely allowed themselves a sense of unknowing or paradox as in Buddhism. And not coincidentally I know many Americans who are turning away from the desert religions or are seeking to moderate the mass unity of the desert religions by turning to the contemplative physics of yoga and the play of the Zen Colen.

Meanwhile, in my own Catholic Church, there is the squalor of sexual scandal-- men forcing themselves on boys. One hears conservative Catholics who speak of ridding the seminaries and the rectors of homosexuals. As one gay Catholic, a single man in this vast world, I tell you pedophilia is no more an expression of homosexuality than rape is an expression of heterosexuality. Pedophilia and rape are assertions of power. Polls indicate that a majority of American Catholics are more forgiving of the fallen priests than they are forgiving of the bishops and cardinals who have treated us like children, with their secret meetings and their clutch on power, apologizing but assuming no penance.

Polls indicate also that Catholics continue to go to church. We go to church because of the sacramental consolation our religion gives. All of us now in our churches and synagogues and mosques, what knowledge unites us now in this terrible season? Are we watching the male face of the desert religion merely reassert itself? Or are we watching the collapse of the tradition and the birth of-- what? I think of the women of America who have become priests and rabbis. I think of the women of Afghanistan who came to the school door the first morning after the Taliban had disappeared. I think of Mother Teresa whose name will be remembered long after we have forgotten the names of the cardinals in their silk robes. I think that we may be at the beginning of a feminine moment in the history of the desert religions, even while the tanks rumble and the priest is arrested and the girl, unblinking, straps explosives onto her body. I'm Richard Rodriguez.

RECAP

JIM LEHRER: Again, the major developments of this day: President Bush warned Americans could lose confidence in the free-enterprise system over corporate corruption. He also rejected criticism of his own past business practices. And the former chief executive and chief financial officers at WorldCom refused to answer questions at a House hearing. The focus was on the company's failure to list nearly $4 billion in expenses. We'll see you online, and again here tomorrow evening. I'm Jim Lehrer. Thank you and good night.