we, the american people for all the reasons we've heard today must finally keep our promise. we must do it and we must do it now. thank you very much. [applause] >> i don't think that ambassador robert joseph wants to follow that, but he's going to have to. professor dershowitz, what a transparent argument for all of those of both legal mind but good conscience as can follow. what a fantastic outline of what

we are facing and bringing get back to the most essential element, and then she once again for the was very powerful remarks. we have with us a distinguished diplomat and ambassador who has led the cause of protecting the world from the terror of nuclear weapons. he has been united states special envoy for the nuclear proliferation under secretary for arms control and international security and has worked his whole life to coordinate the prevention and deterrence and defending the united states and the rest of the world from weapons of mass destruction. he is here today to talk to us about the fact that not only have the mek committee pmi bin an indispensable help to his

effort in intelligence gathering on the nuclear program in iran, but he's here to talk about why he is in solidarity with the threat of terrorism posed by iran not only on the camp ashraf, but on all people of the world. let's give a great round of applause to the investor ronald joseph. [applause] >> thank you very much, and good afternoon. i tell you it is a hard act to follow. it would be hard act to follow any of the speakers today, but that is my task. so first i would like to death our sponsors for the opportunity to present to you today my thoughts on a fee iranian nuclear program. the american community of northern california and association with other groups

that help to promote a space and secular republic in iran has on a believe a very important role to play and ultimately determining the outcome of the nuclear issue. having worked for the past ten years on trying to stop kuran's committed quest for a nuclear weapons capability at the white house, at the state department, and now other government, i am convinced that until the current repressive regime in tehran is replaced through the resistance of the iranian people, we will not permanently succeed in ending the nuclear program. there are of course a number of approaches that the united states and other countries are pursuing. economic sanctions through the united nations come even more sweeping financial measures under our own international law and covert activities such as the reported attack on the computers that operate iran's nuclear complex. in the future, and i will talk

about this as well, there's also the possibility of the use of military force against the known nuclear facilities. but at the end of today, while all of these measures have and will likely continue to slow down the nuclear program, and while bodying time can be strategically important, they will not in the program. they will not persuade or compel the current leaders in iran to reverse course. only true internal political change can we achieve that outcome. so having already given you my bottom line, let me back up and try to explain how i've come to this conclusion. i will start with an overview of iran's nuclear program, highlighting what are the most disturbing aspects of the latest on aiea report which received worldwide attention from the media after its release last week. following that, i will try to put the nuclear program in context. what does it mean for u.s.

security? what does it mean for the security of the gulf region? why does iran want nuclear weapons, and how would such weapons effective regime's policies and ambitions? finally, i would like to talk about alternative policy options including the use of force. for each of these i will try to identify the strengths and weaknesses, the benefits cut costs and risks. so to begin, let me briefly summarize the iaea report, which is based on what the agency says is credible evidence gathered on the ground in iran as well as information from ten other states. the report is rather technical, so i will translate the findings and to lay terms on here on's and richmond activity, the report can emphasize its continued progress in the key areas including operating more centrifuges than ever before and nearing the start of production the previously secret facility

producing low-enriched uranium twice as fast as before in 2010, and 2 million now a stockpile of enriched uranium which could provide enough fissile material for the nuclear weapons, and to plan the production of enriched uranium for the 20% level that would shorten the time to reach weapons-grade level with additional processing. while these assessments of enrichment are of concern, the most alarming judgments contained in the report deal with what the agency describes as research development and testing activities the would be useful in designing a nuclear weapon. in other words, iran is working on the building blocks for making atomic bombs. the report does not complain that iran or claim that iran has constructed a nuclear weapon or even that it has overcome all of the technological hurdles the would be required. it does not speculate on how long it will take iran to build

a nuclear weapon is but what it does do is for the very first time lay out what it calls strong indicators of possible weapons development. for an agency as cautious as the iaea is. that is a major step forward. these indicators include creating computer models of nuclear explosions and work involving the neutron initiation, triggering systems and implosion exclusions the iaea also states that it has acquired documentation suggesting that iran has been provided presumably through the a.q. khan at work with nuclear explosive design information and that its work on experiments with conventional explosives to compress metal into a mass suitable to initiate chain reaction. finally, the report points to evidence that indicates a bond has been pursuing a number of

weapons for a warhead to deliver a nuclear weapon hitting such a war had on its longer range. unlike the 2007 u.s. intelligence estimate, that iran stopped work on a nuclear weapon in 2003 the iaea found that significant work of the military dimension has been conducted since that time including some work recently. ..

>> iran moved forward in a way to achieve a nuclear weapons capability. whether or not a final decision cannot proved or disproved, but they will in the near future have the option available to it if it so chooses. why do we care, or why should we care both the development? both president obama and president bush said the united states can want and will not permit iran to acquire nuclear weapons. there's many reasons for this. let me mention just a few. a nuclear armed iran could promote ambitions in and outside the region more aggressively whether in afghanistan, iraq, or in the gulf or beyond. this could take the form of

support of terrorism or fermenting political unrest to overthrow leaders supportive of the united states. this would threaten stability and the security of u.s. friends and allies in a vital region of interest. a nuclear armed iran is a direct threat to u.s. forces and allies in the gulf as well as the greatest middle east, europe, and eventually to the united states itself. the likelihood of iran using military and other means of force would, i believe, increase if teheran believed its nuclear capability protected it from retaliation. iran would seek to use the possession of nuclear weapons as a powerful tool of intimidation and blackmail. a nuclear armed iran could lead to the end of the nuclear non proliferation views as we know it because countries responding to what they see as a great threat that must be detoured by

their own possession of nuclear weapons and that include saudi arabia, turkey, egypt, and others. along a with a nuclear armed israel, this is a reason for a global disaster. nuclear armed iran is at the nexus of weapons of mass destruction and terrorism. pursuing nuclear weapons and supporting terrorism. if iran has these weapons and fits all material, the likelihood of their transfer to third parties would increase by design or diversion. finally, a nuclear armed iran would feel more secure from foreign, outside interference and more confident that it could act without concern of repercussions to repress its own people, those who are, in fact, the greatest threat to the regime's survival. in other words, if iran achieves its goal of nuclear weapons, it's a true game changer. just imagine if it seems

difficult today to deal with the current iranian regime. what would it be like if those leaders had nuclear weapons? what do we do to stop it? as i mentioned, and as all of you know, we sought to apply economic and financial sanctions against the regime, especially individuals associated with the nuclear program and entities like the revolutionary guards. since twx, there have been four u.n. security solutions imposing cost penalties on iran for its activities, but these penalties have always been less than what the u.s. sought. they've always been negotiated down by russia and china who have been reluctant to impose harsh measures for political and commercial regions. the united states working with other willing countries in europe and in asia have also added sanctions through national laws. our congress has been and remains very supportive of these

measures, and together, international and national sanctions have reportedly had a significant impact on iran's government and on its economy. president obama recently stated that the sanctions were taking a severe toll on iran. the problem is causing economic pain through sanctions has not stopped the process or the march to acquire a nuclear weapon. what do we do? one course is to impose more sanctions, something we're trying to do on the international level as we speak. however, as before, russia and china say no even now as the release of the iaea report last week. that leaves us with additional national sanctions, but that seems a self-imposed limit as recent discussions regard possible sanctions against the bank of iran. after raising prospects of

sanctions on the central bank on the oil sales globally, u.s. officials seem to move away from such action out of fear it could be too disruptive economically if it rose energy prices at home. there's apparently a price we're not willing to pay economically. as for covert action, there have been press reports of u.s. and israeli efforts to disrupt want program through computer attacks and other means of sabotage, but while the attempts have likely caused operational disruption like sanctions, they have not accomplished their goal, and the iaea report makes that clear. we can do more sanctions and presumably more coverse actions, and we should, but given our experiences over the past five years we should not, i believe, expect them to work to end the program. time is running out. whether we have one year or two

years, we can't be confident an incremental policy of more of the same would be successful. one has to conclude based on our experience to date that we will fail in our task if we don't take an alternative path. put bluntly, we're at a critical juncture faced with very hard choices and huge risks. because we are now at the cross roads, we have to consider the benefits, cost, and risks of using force. not an invasion or large scale bombing of cities and plants, but attacks to destroy known facilities or at least the main known facilities of the program. no unwants to have to use force, but it's a challenge in which there's no easy policy choices. this is a very sensitive issue, and it should be. i can already hear the chorus that we need to give time for sanctions and covert activities. my reading of the iaea report is

that we're out of time. this is no longer a viable option. we can decide not to use force and stick with the current policy, but if we do, we have to face up to the fact we're likely accepting a nuclear armed iran, and this may be acceptable to some, and we're already from a number of quarters in and out of government that instead of using force, we have to adopt a policy of detouring and containing a nuclear armed iran, a policy i argue is fraught with risks. while the obama administration has stated that all options are on the table, it is also made clear that it does not want to use force. former secretary of defense, bob gates said the use of force against iran would be, in his word, insane, and i'm confident that almost other every country would prefer a diplomatic peaceful outcome. the problem is there's no reason to believe that the regime would ever abandon the nuclear program

with one possible exception -- that it believed that force would be used against it. this was the case with libya, and this is the case with iran. for those who might be willing to use force, it would, as it should be, an act of last resort. in this context, consider the likely costs and benefits if cost is used, most likely not by the united states, but by ease real, a country that perceives weapons of mass corruption as an existential threat to its very existence, but have no doubt, if israel used force, the united states would be blamed and also be a target of retaliation. the cost could be substantial. iran has many avenues to strike back through ballistic missiles or the use of terrorism worldwide oh there are its proxies in iraq and afghanistan and can create economic or political disruptions an unrest, but there's limits to what iran can do and what it's willing to risk.

if we were to accelerate further in response to their actions. moreover, the program would not likely will ended by the use of force, as we saw after the 1982 strike against the reactor in iraq. instead, the program would almost surely go further underground, but minute use of force would likely by time. one year, perhaps up to three years. the key question is whether and how that time could be used strategically to fundamentally change the political conditions in iran. some argue that if force is used, all iranians will rally around the regime as a nationalistic impulse. others challenge that wisdom noting the limited use of force would not alter the deep am -- animosity towards any or all of the regime. i don't know the answer, so let me leave you with that question for you to answer. allow me to make just two

concluding thoughts. the first briefly as i said at the outset is the only sustainable solution to the iranian nuclear threat the is emergence of the free and democratic iran. second, and this is more of a personal note, i was asked here today to talk to you about iran's nuclear program, and i hope my remarks have been informative, but i want to say over the past few days as i prepared my comments, and today, as i have listened to the other speakers, i have learned a great deal about the mek, which i had known before only as a source, perhaps the best source of information on iran's nuclear program, and i can now say une qif click i'm not only a supporter of delistening, but also of the other steps that governor ridge and others on the panel put forth. thank you very much. [applause] >> fantastic. [applause] thank you.

[applause] >> thank you, ambassador joseph. [applause] we are very grateful to you and your leadership and not only for our country, but for all the world as these nuclear weapons pose a threat to all humanity, and it's so -- we're all so grateful for your service and also today to make such a transparent outline doesn't is sound familiar? all of these denials by the iranian regime on weapons of mass destruction, doesn't it sound familiar? violating international law over and over again with respect to weapons of mass destruction, and at the same time, violating international law with respect to human rights.

this is not a good group that's running iran. they threaten international security with weapons of mass destruction and the creation of a nuclear bomb. at the same time, they threat our very principles and human rights with their attacks against innocent, unarmed people. you said it over and over again that we do not need more of the same policies of acquiescence and appeasement. that's what's gotten us this far with very few results of the this regime whether it's their suspension of pursuing nuclear weapons or suspension on their own people. this is a pattern. we've seen it over and over

again as alan said, so perhaps now it is a good segue to introduce an individual who spent his career uncovering patterns of corruption and immorality, not only as richard has been on the commission to investigate one of the greatest crimes against the united states, the 9/11 attacks, but he distinguished himself as the lead period of time on the watergate task force investigating corruption at the highest levels of government in our own country, and he has been tasked with the job of investigating the historic record in world war ii towards

germany and japan and war crimes of that era, so this is a gentleman who has seen patterns of behavior whether it was the holocaust or whether it was japan with the imperialist regime or our own country or the 9/11 commission. we have someone who can speak to patterns of behavior of those who are corrupt throughout not only american history, but history of the world. it's my honor to introduce to you richard ben-venesi. [applause] >> good afternoon, and thank you

very much for that introduction, patrick kennedy. the bipartisan national commission on terrorist acts against the united states, better known as the 9/11 commission made a number of recommendations to congress and to the president as part of our final report. among the most significant from a security standpoint was the recognition to maximize counter proliferation efforts targeting weapons of mass destruction, expanding the proliferation security initiative and supporting the cooperative threat reduction program. in another important recommendation, the commission called upon america to stand up for its values aggressively and define itself in the islamic

world. both of those recommendations are central to my remarks today. the arab spring movement provided america with the opportunity to allow our values to define us in the middle east. for two long, we have followed a simple short sided goal of expediency in dealing with autocratic repressive regimes rather than trusting that the principles upon which our nation was founded and on which it has flourished as a beacon for all freedom loving people to see. could this replace the demagogues and dictators and regimes that have long ruled those countries? let no one jurpt estimate the long slog ahead.

debt pias our natural enthusiasm for those in the world who through off the yolk of oppression, there's little reason to believe that democracy or even stability will take root, much less flourish in the short term. this will be a discouraging period in my view fraught with a variety of challenges to security as various factions vow for power or vie for power rather in countries where tyrants rule for decades. armed conflict, riots, and civil unrest will be fueled by political, civil, tribal, religious, and criminal elements while jihaddists of various stripes attempt to exploit the chaos for their own benefit. by the way, i commend to those

who have not seen it, the cogent testimony on this subject by brian jacobs. rand corporation earlier this month before the house armed services subcommittee on emerging threats and capabilities. al-qaeda quickly attempted to align itself in uprising suiting events to its own narrative as defeats of u.s.-backed tyrants like mubarak, gadhafi, and salah. at least they will be deprived of that argument when they fall in syria, and the mulahs are eventually turned down in iran which brings us to the second topic of my remarks, the far more vexing state of affairs

that iran's bo -- belligerent actions brought into sharp focus. two events form my view of strong coalition action of the united states and our allies must be applied to condemn the reckless and reprehenceble activities of the iranian regime. the first, obviously, is the report released on november 8, 20 #11 -- 2011 by the iaea to the board of governors and u.n. security counsel. the report plainly puts to the lie to the consistent denials by the regime of any interest, much less action in developing nuclear weapons. to the contrary. the report details a well structured and carefully organized nuclear weapons

programs specifying there's indications that iran is preparing to produce weapons grade material some point in the future, that iran has the technology to prepare such material to use in a weapon, that iran also is acquiring or has already acquired the specialized detonators and technology needed for a weapon, that iran may now be able to fully integrate those technologies into a bomb, that iran may be conducting simultaneous simulations of key aspects of nuclear weapons development, that new data indicate that iran is moving towards modeling weapons designs, that there now is further evidence that iran is developing neutron initiators

needed to sustain a fissle reactions and form a high yield, that iran seems to be actively developing nuclear missile warheads, and that in a new development the iaea reports that iran may be reporting for future testing. the second recent development regarding and warranting reassessment of the situation is the alleged plot to assassinate the saudi saudi arabia ambassador here in the united states under circumstances that would also involve the loss of american lives. obviously, i'm not privy to classified intelligence on the

subject, but it appears the plot was real begging the question of how high up in the iranian regime planning, support, and authority was provided. was this a rogue operation sanctioned by the faction of the revolutionary guard, or was this is a plot authorized by higher ups in the regime? either way, a very disquieting indication of criminal activity by a would be be nuclear power. there is no disputing the regimes long history of profound disrespect for the norms of international law and human rights. it's president ahmadinejad, half crown, half thug, denies the holocaust from one side of his

mouth while pledging to wipe israel off the map from the other. at the same time, iranians, including ahmadinejad, have engaged in apock littic end of times rhetoric making reference to the return of the 12th emaum and the like. what should we ask of our staunch ally the state of israel? for a nation founded in part on the very painful lesson learned never again, how much fore bear can we reasonably ask as iran moves towards the development of nuclear weapons and overtly threatens the very existence of israel?

the prospect of a nuclear bully in the middle east willing to engage in criminal and reckless behavior is reflected in the saudi ambassador assassination plot, talking up apocalypse and suicidal end of times rhetoric resets the level of bellicosity on all sides. it may well be in ahmadinejad's short term parochial interest to spew the kind of rhetoric for which he has become infamous, but he, and those who truly make the decisions in iran today, such as iatola, must be made to understand the danger of playing a half court game in a full court world. in my view, the only kind of

sanctions that truly jeopardize the regime will have a chance of success in curbing iran's nuclear weapons ambitions. no option, including a military option should be off the table. our allies must understand that iran should not be allowed to delay and barricade until it's achieved its quest for a fissle device. while iran now does not provide a threat to america, it could one day provide such to a small neighboring nation like israel, and there is no doubt that israel would respond to such an attack with a countervalue attack against iran, not just

against its military and nuclear facilities, but essentially destroying the country and its entirety. it is in our interest, in the interest of our planet, to avoid such a horrendous scenario, by taking strong purposeful action to curb the bellicosity and tamp down the ambitions of the iranian regime. sanctions and boycotts of refined gasoline sold in europe accounting for significant hard cirn sigh should be employed -- currency should be employed. certainly french satellite transmissions relied upon by iran can be denied given president car cozy's view that an iranian nuclear bomb is the single greatest threat to world

security certainly the covert campaign of sabotage against iran's nuclear weapon development program like targeted violence can and should be rached up. finally, the iranian banking system and iran's i believe to conduct international business can be targeted at our disposal. the key in the use of harsh sanctions is to project to the iranian people who are not our enemies, that there's clear reasons for these sanctions, reasons entirely the result of the leaders' threatening activities. they must guard against resuscitating a failed resolution by inspiring a call

to national unity. this will require skill and strong determination. failure here is not an option. the obama administration has welcomed the iaea findings and has declined the hypocrisy and outright lies of the regimes continuing denials. in my view, we must support the continuing efforts to ratchet up sanctions and building consensus while walking the difficult line created by the harsh economic circumstances that confront us all today and how those circumstances may be exacerbated by new sanctions. this process will require great skill and judgment, but in the

end, we must not waiver from using the great power that we possess to achieve the just ends we seek. thank you very much. [applause] [applause] >> general john kean is someone who, throughout his life, has worn the uniform of the american soldier. when it comes to implementing policy, whether that policy, as richard said, is the policy of expediency or the policy of principle, we've always been fortunate in our country to have

people who richard talked about in the 9/11 commission to have people willing to stand up for american values, aggressively. jack kean, as a retired four-star general and vice chief of staff to the united states army, among his many duties and litany of accomplishments, i think we only need to name two. the recipient of the silver star and the bronze star for heroism under fire. this is a man who doesn't just talk the talk, but he walks the walk, and that's why it's so appropriate that we have him here today. please give him a great round of applause and welcome him to the podium. [applause]

>> thank you. [applause] thank you very much, for that warm reception. i know you are probably getting weary and want to jump around a little bit. my sympathies to you. i'll be brief as i can, but let me associate my remarks with my distinguished colleagues here in terms of your issue, the challenges that you face, and also how well they outline the solutions. my contribution today is an attempt -- in attempt to be brief is to focus on iran and united states policy because if we can resolve that issue, many of the other problems in the middle east can be resolved to include the mek. the iranian bungled operation to use proxies to assassinate the

saudi arabia ambassador to the united states and to purposely plan the operation in the united states is a stopping rebuke to the obama administration's policy of negotiation and isolation with the iranians. i provided the remarks you're about to here to congress two weeks ago in a combined committee dealing with our issues with iran. indeed, republican and democratic administrations, since 1980, have failed to deal effectively with the harsh reality that iran is our number one strategic enemy in the world m frankly, the iranian stated as much in 1980 that the united states was the enemy of the islamic revolution, and there intent was to drive the united states out of the region. therefore, they have been the systematically killing us for over 30 years.

in 1983, their proxies, the hezbollah, blew up the u.s. embassy and the annex a following year with a total of almost 500 lives lost. we only had no response to this tramming di, but we -- tragedy, but we pulled our troops out of lebanon. in 1983, the iranian backed extremist group blew up the united states embassy in kuwait and attacked a residential area killing and wounding over 80. in 1984, the station chief in lebanon wastured and eventually killed, which was the beginning of an iranian backed campaign to take high profile hostages over a ten year period that led to the poorly conceived and ill-fated operation by the reagan administration to exchange arms for hostages with the iranians. in 1985, twa flight 847 was

seized on a route to rome, forced to land in beirut, leading to the killing of a u.s. navy diver and dumping his body, and eventually the hostages taming -- were released. in 1996, the u.s. air force towers and barracks in saudi saudi arabia was blown up by hezbollah killing 19 and wounding almost 400. again, although our intelligence apparatus identified the culprits as iranian backed hezbollah, we had no response, and we eventually shut down the united states military bases in saudi arabia. since 2003, in iraq, the iranians have provided rockets, mortars, improved explosive devices and money to the shia militia directly involved in

killing u.s. troops in iraq. moreover, the iraq sheer militia were trained by the iranian special operation force the quds force, and while they were defeated in 2009, the president's recent decide to withdraw all troops from iraq puts our hard fought gains in iraq at risk and plays into the hands of the iranians. malawki as we speak is underminding his political opponents driving key sunni leaders out of the military, and he's consolidating his power base. the attack on camp is part of the strategy, and with the iranian finger prints all over it. several iranians are supporting the taliban in afghanistan with money and am knew in addition.

the action arm for iran state sponsorship of terrorism outside their border is led by general kasime who's been in charge for over 15 years. general has no military or political boss. he answers to only one perp, the supreme -- person, the supreme leader in iran. we must conclude that for this general, the plan and operation inside the united states that would result in americans being killed, surely the supreme leader at a minimum approves that and may have erected it. why did they want to do such a thing? well, simply because they can. not only that, but they believe we are weak and they would frankly get away with it moreover, we must ask ourselves

has the united states policy with respect to iran been working? we appear to have a policy of rhetorical condemnation when iran behaves in behavior adverse to the united states interest and we engage in efforts that are on again and off again while iran can continues to pursue nuclear weapons. we have some isolations on them in the world which has best as we can tell also has had no impalgt on their pursuit of nuclear weapons or sponsorship of terrorism. we also must admit that the iranians are not without their own challenges. having two fledging democracies on their border in iraq and afghanistan is a huge geothreat to the preservation of the regime. the arab spring is a repudiation of radical islam. indeed the people in the streets are seeking political reform,

social justice, and economic opportunities which are the pain stream of western democracies. suddenly, iranians are taking advantage of the opportunities, the social unrest that the arab spring provides, but no one demonstrated on behalf of their flawed values. losing a state sponsored terrorist like gadhafi is a set back as is the upheaval in syria, the thurm one al -- number one ally in the region. all that said, it is time to review our strategy for iran against the harsh reality despite res rick, attempts to negotiate, isolate, and sanction, the fact is the iranians continue to use their proxy against the united states interest and continue to pursue nuclear weapons. therefore, one must conclude the obvious, that our policy has failed, and it has failed miserably. what can we do?

first and foremost, begin to treat iran as the stray teemingic enemy they truly are, and that our strategic objective is regime change. therefore, use all elements of national power against them and as such, develop a stray strategic competitive frame work that counters every major interest the iranian regem engages in, and, yes, of course, seek international support and cooperation, but regardless of the amount of support we receive from the ic, we must act. for example, just to name a few -- seize the financial interest that are outside of iran. as many of you know, when the mullas took over in iran, they seized the shah's interests and

are now operating thm and are multibillionaires now as a result of it. we know where the interests are, and we can seize them as we have successfully done with the al-qaeda's financial interest around the world. limit their ability to trade by denying their ships entry to ports around the world. stop the refining operation that others in the world are assisting the iranians with, limit the ability of the central bank to operate effectively. we have the number of one cyberattack capability in the world, and nobody's close to it. conduct cyber campaign, conduct covert operations led by the central intelligence agency in cooperation with other agencies to target the quds force and frox sighs and -- proxies and certainly to pursue

nuclear weapons and to provide encouragement that leaders in iran use the population to put pressure on the regime. one lost opportunity we had in the summer of 2009, the persian spring, when we did not speak up and support what the people of iran were doing. in my view, these measures have some chance to compel a behavior change or possibly even the regime to fall because you want these sanctions and targeted operations to have a major impact on the people. this much i do know -- if we continue the half measures of the past, the iranians will continue to kill us, will continue to sponsor terrorism, and use their proxies against our interest and will continue to pursue nuclear weapons. the next nightmare for the world

is around the corner, an unchecked iran with nuclear weapons. this will lead to a nuclear arms race in the middle east, and as my fellow defense policy board member, henry kissinger stated publicly, it is inevitable there will be a nuclear exchange in the middle east, and the world will change forever. this is unacceptable. if all of the measures that i mentioned and they are just a few of what can be done, if all of those measures fail to stop the iranian pursuit of nuclear weapons, then we must attack that capability militarily, to shut is down, and delay the program and buy time for the iranian people. what other choice do we have? what other choice do we have? to attempt to contain a nuclear iran? i think not. that risk is far too great for

the world. thank you very much. [applause] >> thank you, general. [applause] >> thank you very much k -- thank you very much, general. as we conclude today, as i introduce our final speaker, what should we do, the general says? when we listen to our final speaker, we have someone who was worked to develop u.s. policy with respect to another per rye ya internationally, and that's north korea, so christian is somebody at the u.s. department of state who led the efforts to develop a strategic review of u.s. foreign policy as it related to north korea, also who was pursuing nuclear weaponed

and so today, he gives us a very unique perspective in how and what lessons we can take from the way we treated north creigh, ya whether we pursue policies from negotiation which was done, isolation or sanction, and how the policies shall be pursued with a number of one strategic eenmy of the united states -- enemy of the united states as the regime said, iran, and now to give us this commentary is christian wyden, former u.s. director on u.s. policy at the department of state. [applause] >> thank you, thank you. , well thank you, congressman kennedy, for that introduction, and it's an honor to be here with distinguished company to talk about really one of the most severe and serious threats facing the united states which, of course, is the government iran and its proxies and the

work they do throughout the world. it's certainly by a busy couple of months for the tyrants who govern iran. as we heard from a number of people, and as you are all too familiar, you know, we see what iran's doing with the mek. you also know, and we heard from ambassador joseph and others that last week the iaea reported that iran continued to work on a nuclear weapons program, and their findings are unambiguous and reflected a dramatic turn for the iaea of which no one can credibly say teheran is not pursuing a nuclear weaponing capability, and we were reminded a month earlier, the u.s. exposed a plot by iranian agents to kill an ambassador, a credit to the united states, right here in the washington, d.c., a plot involving hiring operatives of mexican drug cartels to strike us here, and a plot that would

have possibly included the collateral death of congressmen and other notables. there was a litany of other egregious offenses against americans by this government. these activities probably come as no surprise to those who gathered here. more than 30 years after the past power, the teheran regime uses terrorists as instruments of national policy. than spend tireless and seeking to expand influence around the world and continues to be the primary adversary of freedom in the middle east. teheran is also been particularly effective at waging political warfare, and that's why i want to focus my remarks on lessoned learned from north korea and other places where we seek to help those seeking freedom. political warfare is the spectrum of national power tools that fall between diplomacy and outright war with the idea to get a political outcome to get

what a government wants to achieve somewhere beyond its border and do so by using means more effective than just talking as diplomats do but less costly than going to war involving financial, military, intelligence related, information related activities. teheran understands this. it understands political warfare. it's been using this more or less since the inception of the islamic republic. it's the main nation state of the islamist ideology, the iranian government is interested in the export of islamism and supporting governments friendly to the many no fair yows ambitions abroad. it's an important element to grasp p for policymakers in the united states. by necessity here, analysts focus most of their attention on the iranian nuclear program. it's obviously an issue of extreme concern, and it's a national security challenge for which neither the current administration in the white house nor its predecessor has

developed adequate policy, but i believe from the per perspective of u.s. disiewrt,s grattest likely threat is no a possible iranian first strike or the proliferation of a nuclear weapon to a terrorist network either of which would be suicidal to the regime of teheran, but frankly, a greater thet or more significant one is in the added impunity that a nuclear arsenal provides the regime to engage in subversion and the other activities at which it's proven itself so adapt. fortunately for us, a nuclear breakout would be, i think, a wind fall for the teheran regime at a time they should be feeling insecure about its future. outside of iran, arab spring shows the clerical rule practiced inside the republic expoing the lie that residents of the middle east did not desire freedom and accountable government in the same way we do in the west and should signal

policymakers in washington, and capitals that in the middle east there's not just a choice between dictator on the one hand and islamists on the other. in fact, there's a wide body of reformers, liberals, moderates, call them what you like, that constitute the more liberal alternative to what we have seen per vail in so many parts of the middle east these last several decades. then, of course, there's the movement inside iran which you know represents a new and broader level of intensity in the opposition to the incumbent government. together, they constitute building blocks that could roll back teheran's regime and rot it from within. history now provided us with an opportunity to take friends away from the iranian regem and expedite its decline here at home. it would be iraq ironic if they should be fearing for their longevity and this gives them a

lease on life allowing them to do more what it already does, but without impunity. there's been a preview already. you all know this. through various means, the alis managed to use political transitions in the dawning of democracy in various places to undermind democracy. recent exarchals include government's compromised be hamas and the authority and soughter block in iraq. they have done work in using democracy to poisen democracy. in that will not be the end if they intimidate the allies and have a new lease on life at home, expect teheran to attempt repeat performances as other political transformations occur, and seminal elections are on the horizon in egypt and libya, just occurred, and the battle between

reformers and islamists is taking place and likely to be the major political feature of this decade. it's my, suggestion, of course, that free nations fight back, counter political warfare with political warfare. we should push back on teheran using peaceful means, in football, in order to advance the national interest in expediting the internal decay of the regime as well as helping those in iran who share our values and desire for a civilized order. this is something in which the u.s. used to excel. during the cold war, we helped indigenous political movements and voices appeal to their countrymen or free captive nations. the bad guys helped their friends. so american presidents of both parties thought it important to help ours. perhaps most active was the democratic president at the beginning of the cold war and the republican president near the end, ronald reagan. what would be peaceful,

political warfare against the current iranian regime? some features -- there's been good ideas, but features could include first helping disdense inside iran and free iranians outside iran such as yourselves with communication tools and other resources critical to any political movement or link them with others who dealt with political organization and repressive situations before, like the eastern block behind the iron curtain in the 1970s. secondly, apply stronger financial actions against banks and companies doing business with the regime including the fatal blow of fencing the banks off. actions like this put a crimp on north korea's money operation, and they were turned off, but extremely effective while they existed. third, we can make the disruption of telecommunications

work for those who are actually seeking freedom rather than those who are working against it. it's almost certain, general keane eluded, they have cyber war fearp against us, and the free world could return the favorly empowering the friendlies to turn activities like this back on the regime at moments of democratic opportunity when political turbulence erupts. fourth, let's take similar non-violent steps to help syria opposition with our turkey and jordan allies who have been very good on this. a free syria denies teheran, best ally, and deeply impair communications with hezbollah and other islamists. the last point and while it's nonviability warfare, it's augmented our undermind by military posturing. they are undoubtedly pleased they part neighboring iraq by the end of the weir and look for

ways to offset the ability to teheran is no better off. i note in closing that many of the capabilities i described today. tools of the information are long gone, the intelligence agencies are out of business of kerning themselveses with foreign political out comes or influencing the outcomes. the cia is on the way to being a secondary force, and the instruments originally meant to support liberal ideas in government like the endowment for democracy do little today to support front line like those working for freedom inside iran. especially as the efforts of the current and past administration to talk around at the program and founder amid the demand on display in the middle east, there's an opportunity to reconsider our approach, and improve our policy. just as we have the opportunity now to reconsider our policy towards the mek and the camp.

as winston churchill said, "americans can be counted on to do the right thing after they've exhausted all other possibilities. now is the time for us to do the right thing on iran policy, so with that, i thank you very much. thank you for having me today. [applause] >> thank you, all, once again for being here today. perhaps it's time for us to review a few of the things that we've heard today and recommit ourselves to changing our response. malawki, the head of the iraqi government is coming to the united states on december 12th.

he's under investigation for war crimes he has disenvowed the united nations law that says they must allow to do their job in order to ensure those at camp can be processed as refugees and resettled. the message today has been clear. the united nations policy of relocation and dispersal in iraq of those residents of the camp is a tenamount to a death warrant. [applause] so before he can come to this country, he must make clear that

the deadline for camp should be rejected, and the u.n. should be allowed to do their job. [applause] that he makes sure that not only are those residents treated with dignity and respect, but hop norredded the international law that applies to them. the other message today is what culpability the united states of america has in all of this, and as we've heard from not only generals, the former u.s. secretaries, and leaders of both military and public policy in our country state so clearly,

and that is u.s. credibility is also on the line here. it's not simply important that malawki honor international law, but it's important that the united states, which has been on the side of human rights and justice around the world on so many occasions continue to stand up for its principles and also to stand against those that threaten world peace like the mullahs in teheran. this december 12th is a moment for the united states to set clear for the rest of the world where it stands on iran's

proliferation of weapons of mass destruction and its terrorism throughout the world and its terrorism of the people. through its proxy malawki. time is running out. the time for talking is over. the time for action is now. [applause] ..

[applause] and as our friends, not only should the united states appoint a special on way to make sure that they have resettled if resettled they must be, around the world in friendly countries. but those countries ought to include our own country. [applause]

they are not only witnesses to crimes that tehran and ultimately could be witnesses in an actual international court tribunal that the leaders of iran, they said they are important to all human beings who care about the respect and dignity of human rights. we are to be doing everything we can to protect those who have been there to protect us by one and ask him if i peter nehr to testify against our mortal enemies, the iranian regime. this should not even be a close call for the department of state. this is the time for action. this is a time for the united states to stand up for what it stands for and justice and human rights in the protection of

liberties for all peoples, no matter where they may live. and so, i want all of you. [applause] and most of all, once again, thank our distinguished panelists who once again have spoken so eloquently today. thank you all very, very much. [applause] [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] angel.

[inaudible conversations] [inaudible conversations]

>> folks come to thank you so much for coming this afternoon to this event. i'm very excited about this. we have two very distinguished panelists here. of course 2011 is an incredibly opportune an appropriate time to talk about corporate america and corporate collapse and we have a very important lesson which we can look at here, which is in fact exactly 10 years old. so it's kind of sign to some of us tenures have transpired since enron's collapse. certainly a lot of lessons for us to learn from not collapse into apply today. we've got two people here who are really kind of front row protagonists in enron's collapse from two different perspectives. john emshwiller is an investigative reporter at "the wall street journal" who documented a lot of the issues that led to some of the investigations are bad and wrong and did a lot of reporting that brought to light some of the

practices, the accounting practices at enron. karen denne isn't an annenberg graduate and a former adjunct professor here as well with the vice president of public relations at enron and saw this transpire from a completely different perspectives. so we are here today to contrast these two points and look at the same event two different angles. i just want to very quickly review details of enron because i realized that the tenures might seem like a blink of an eye for some of us, for some of you it isn't quite as prominent in your memory. so enron was really corporate darling for so long. got tremendous press coverage and had this amazing growth. it was formed in 1985 by a merger of two other companies in may 2010 over 22,000 employees pikers and row fortune magazine rated as the most innovative come in america and acclaimed

revenue of over 100. in 2000 at market value if in 10 billion in 1995 to around 70 billion in 2000. and that ended very quickly. as john will tell you about. and its stock went from $90 very briefly $90 to potentially nothing in one year. any of the major executives are doing time for completed their sentences now. one of them cheated jail by dying and it also guide to the dissolution of arthur andersen among other things. it led to new legislation. and some of the reporting on an outcome which i think just you wait for so long quickly turned and john was one of the people who post them in the early

stories that really questioned the accounting at enron. and of course this was some of the final chat is that the press wrote about enron. so we are going to have time for questions at about 45 minutes after the hour. but i first want to just ask karen who worked at enron for seven years. it must've been a wonderful place to work for so many years. at that wonderful news stories one after the other. or was it like to work there in the beginning? >> i can say it was a great place to work. i absolutely loved it and even knowing how things turned out, i would do the entire experience again in a heartbeat. it was incredible energy at the company. there were the smartest people i ever had the good fortune of working with. incredibly dedicated, hard-working, talented. it was amazing.

it was a lot of fun. when i started i was at enron from 1997 to 2004. so when i started at the company, no one had really heard about enron. i was originally from southern town and started as a newspaper writer and i was recruited to enron and the corporate generalist. and when i took the job and moved to houston, all of my friends at enron, what's that? no one even knew what the energy come he was. and the media coverage at the time is contained to industry stories. it is a megawatt daily and electricity daily. it wasn't really a company covered in the mainstream press. as the company took off in the revenues increased, as the stock price grew and as we expand into new lines of business like internet trading, like rod fan, like weather derivatives in free trading, the media coverage in the media interest in the

increased. and because the media department of public relations department and the whole company with some metric driven and result oriented we have to quantify the work that we did. by 2000 it generated so many positive stories about enron took all those cover stories. it wasn't just enough to generate a positive story. we want to cover stories and we are able to deliver on that, too. in 2000, 2001, the sequence of events started. >> to want to talk about the first on that it occurred to something what a riot? >> to be honest it was when i filed for bankruptcy. i was in such denial. what you have to realize is the enron crisis have been 10 years ago, long before any of the wall street sins that have since permeated the news pages. i mean at the time it is absolutely unheard of at the seventh largest country in america could virtually evaporate, that they could fall

precipitously at the company would just go out of business. it was unheard of. said the internal perspective we're trying desperately to save the company. we are trying to turn the company around and put together a merger with the rival energy company down the street. so until we finally filed for bankruptcy, we thought we could look it. >> i do want to mention that while john and karen worked at cross purposes in many respects, the merchant has experience with a lot of mutual respect and care neither mr. john is a reference when she was applying for her current job. and despite that she got the job. john, can you tell us about your -- this is not your primary beat at the time. you kind of got stuck into this story because of the number of sort of strange coincidences. but can you tell us your kind of first interaction with enron and

the story that later led to the bankruptcy? >> well, you are right. i did not cover enron and i had a few experiences in the middle of 2001. i have been sort of crooned into covering the california energy crisis, which is an eating you might remember. i've had dealings with enron, calling them up about various controversies, dealing with that because enron and the other traitors, but to take, particularly enron was being blamed by many in the state for either causing or contributing to the electricity shortages that were ravaging large parts of california. that was my basic experience with enron. they were very friendly and basically open to talking at that point about this. so i'm fairly positive you can run to the degree that they were at least a talkative corporation . and as you mentioned i got sort of pulled and in august of

12,001 when an event happened that essentially change the future of enron i think. jeff skilling, the president cheap architecture and the architect of enron stanley cup and quit after just six months or so is the chief executive and at the time he was in his late 40s. the people thought he would be better than run for the next decade or more. and suddenly he quits, gives the reason is family -- family reasons, which of course no reporter ever believes in the chief resigns for family reasons. we had no other alternative explanation. i was out of town that day. becky smith, the regular enron reporter was on vacation for the week. so when i got into town the next day, day after the announcement make a order to do a follow-up story, which of course reporters hate to do follow-up stories when there is nothing to say. so i called mark palmer and said

can i have an interview with scaling. if you still there? he said i'll try to set it up because enron to their credit almost always got you on the line with top executives if you wanted to talk to them. in fact i sometimes almost pushed todd executives to talk to you, very different from many corporations. in preparation with this interview with skilling, i did a quick search of the most recent sec filing because they literally knew very little about the corporation and its operations beyond the california electricity stuff. and it just so happened the day before in the day he quit, enron filed it quarterly report with the sec for the second quarter. so you know i've been taught by other older, wiser journalists how to quickly read and sec report we don't have a lot of time. one of the places you go to something called the related party transaction section, where they have two lists all the possible dealings that corporate

executives had with the company outside of their regular job. so this is where you get the kind of little conflict of interest like the chairman's nephew was made of vice president of fingerpainting for $250,000 he might have to report that to the public. so i went to the enron section and i found eastern actions involving hundreds of millions of dollars to dealings between enron and i'm named entities that were being run by some on ames senior executive, which i immediately thought with skilling your ipod okay here is what he quit. i caught a palmer and he tells me now, it was andy asked how. he tells me he was the chief financial officer of our company, which made me feel like something of an, but i didn't know. but that was our first moment when i started thinking, this sounds like an incredible conflict of interest.

do not discover set us off on digging deeper into what turned out to be the so-called bulgy partnerships that andy fast at was running on behalf of himself and doing deals with enron, which later turned out are basically hating hundreds of millions of dollars of losses and cut me that otherwise would've had to report in 2,092,001. in that report and intrigued as i took asserted that to the crisis and helped trigger the crisis. >> there's many similar roman inserted the end story of enron, but one was the night before the earnings were released not over. i believe it's october 16. can you tell us about what was happening? this is basically become me i don't think it ever reported a loss. it'd been a tale of steady growth in on this day they reported a loss of several hundred $9, which i think

shocked everyone. >> let me explain how corporate earnings release to place that enron. and when i started at the company, the quarterly earnings press release is generated by the pr department and we would get the numbers from financer investor relations. we released before the opening of the markets that we would have a core pr team that would stay late the night before. we would get hotel rooms. there was a hotel adjacent to the enron building. we would basically stay up late into the night. we would like the earnings release and then we beat the next morning for it to go out on the wires. about a year before this happened, the earnings release process shifted to investor relations that we were no longer response will pour the contents of the press release. all we did was put it out on the wire. it was really a blessing in disguise because the two top investor relations executive served time.

[laughter] >> could've been you. >> hopefully not. the night before that release we checked in the hotel, changed her clothes and went back to the office. and we were in the 49th floor. actually the 47 for an executive focus on the 50th recently heard were trickle-down for the 50th floor that there is a problem with the numbers. so every hour would check, where are we on numbers? would really like to get two or three hours of sleep tonight. and finally working down at the accountants were having trouble signing off in the numbers. i think it was around 2:00 or 3:00 in the morning we started talking about what would happen if we just didn't have the numbers to release before the market. finally the numbers came down. none of us into the hotel, none of us had any say. we literally put the release on the wider and i think we got its moments for before the 5:00 or

5:30 release. and i remember at the time they were sections in the press release that it makes sense that i had questions about. again my back on us as a newspaper reporter said there were phrases that were red flags, things get questions about that didn't make sense. as reassured, everything is fine. don't worry about that. and they were indeed the very quotes and phrases that john and rebecca picked up on. >> go ahead, john. >> the funny thing is to report this huge lies because they took credit for what turned out to be these lousy assets at the partnerships have been hiding through various hedging transactions they had done. so it came out as a huge loss. but enron spun it in the sense that they reported one surging operating profit which is a classic corporate way of dealing with bad news. you find some part that is good news and then see the other stuff is just one time event.

and the press basically on the day they announce the earnings on it. the stock price actually went to the day they announce a $600 million loss. some of the stories actually even mention the 600 odd right off. and ken lay when on all these talk shows on cnbc and staff being great quarter, you know, we are set for the future. everything is going to be great. they're heading towards $200 million lottery revenue to report for 2001. so everybody seemed to be very happy on the face of what seemed to be terrible news, which in part says something about the company's position at that time in the corporate firmament and something about the press' view of the world in 2001 still. and the fact is people just were questioning what's this all

about. and wall street wasn't. we called wall street analysts because they announced it has a loss is a quake triggered us to push what we have discovered into the paper apparently on the assumption that somebody else in the press company or times or somebody was going to say gee, we better start doing something about enron. we didn't want to get beat and we've been working steadily since that is trying to dig into various aspects of the partnerships, talking to people coming to enough documents without waylaid by 9/11 are basically in american journalism for two or three weeks is writing about nothing but terrorism. remember the day, the earnings story. i was writing i would come out the next day. there is mining a couple other people on the possibility of terrorist setting up nuclear weapons in the united states. it was kind of a busy day.

ovonic to get in while the customer started getting conflicting answers from enron for mark palmer about how much of the $600 million loss was due to this right off was due to ljm. enron came up -- i think mark was honestly trying to give me a straight answer because i don't think he had the answer. but he gave me one number and then he came back with a much lower number. as it turned out later we found out essentially the entire 60 million right off with the ljm and the number i gave up on the record, that much, much lower number had to do with a termination fee. this is a classic corporate thing. it is also classic summers but enron, especially if they would give you very precise answers

that were completely misleading. but they would say, okay company now this is precisely, you know, i remember one guy told me what things are really starting to go bad, one of the analysts called the head hired bankruptcy counsel. the guy said no, we have been hired counsel. it shows in both kirksey council and hadn't signed the agreement. they haven't hired bankruptcy counsel yet that they were going to. >> from the internal date, we had employees that were trying to communicate with. we were putting together a merger. there were huge confidentiality issues they really precluded us from going beyond the black and white. for instance, had we been asked the question as she met with a kirksey council, we never gave an answer that we knew was not

accurate. however, we didn't open the kimono and say yet, we met with them unless they can retain them in the paperwork is not signed, but go ahead and put that in the paper and we'll see how the merger goes through. >> they probably like to mark about the extent of the right off. >> palmer to have this at one point shot off match we were in the film literally screaming at each other because he was a liar. he said i never lied, i never implied, but i think somebody did like to mark. somebody who wrote the sec filings for two years enron had aired an sec filing for the partnerships and some of the wording was exquisitely precise and misleading. >> can you give a brief description of what the ljm partnership is that we understand. >> the biggest was ljm two. ljm was itiaof the first letter of the first names of the

wife and two sons, some legacy to leave them. so basically the idea was that fast dow, while he remained the cfo would become a part owner and managing part or, which could be treated as separate entities for accounting purposes so that is enron wanted to have some affect they had -- another is to protect the value of it, they could go to a third-party who would then take on the risk theoretically of the asset. the only maker to goldman sachs and morgan stanley, someone with real money on their own. instead they went to ljm and ljm have money because andy fastow strong-armed a lot of big vendors to an estimate particularly in ljm said they had this pool of capitals. but then enron also worked a

very complicated deals in which essentially enron was hedging the value of some of their asset as power plants or power deals with their own stock. so if enron -- the value of their assets in town, ljm quitted sword as losses could essentially be using enron stock to absorb the losses, which is one of the reasons the stock price became so critical to the company because of enron stock price was 50 or 60 or $70 they could absorb the losses that were set 35 or $36 a share, which he was in october of 2001 at a time the crisis started. and that started putting enormous pressure on the ljm deal. they were set up in some group partner. entities called the rat druce, which enron had all kinds of -- in the fastow had these weird names for things. one of the partnerships is called to go name after

chewbacca. >> it was definitely an extraterrestrial beast. caring, what about the relationship between the press office and the executives. i know that you've never sort of felt that you are purposely misleading reporters, but what about your relationship with senior management you're getting from them? how did that change quite >> we worked closely with top management, both before the crisis and throughout the crisis. i think this quarter's earnings were released that access and free floating or they should. in part because there is internal chaos and upper management did know what was going on. grammar for one moment where no one could answer the question how much debt is then run out. and that was a pivotal moment that the chief financial officer are the chief accounting 30 now.

at one point in this is further on in the crisis. quote lawyer to, steve kane who is our chief of staff knew that we really -- we had tried very hard to have strong media relations. the one thing i do say if it is important to establish solid relation ships to the good access accessibility long before there is a crisis. it will really pay off in spades. and we had trouble getting information internally and everything had to be guided by a lawyer. so steep that a lawyer and said you're going to sit on the 47th floor. it was a big open room and he did nothing but sit there and that every state that we were able to release. the guidance we were given as anything you say to the media you have to be able to answer the question, what was the basis for that statement? they were incredibly cautious. they have describe everything that we were able to tell the

media. but it's frustrating internally because we were so used to having a lot of accessibility. we really prided ourselves on and able to get back to reporters quickly and with answers that really helping them do their jobs. it was frustrating and we need there is a lot going on, but they were such internal chaos that we were stopped. i will tell you that the one moment that physically made me stick to my stomach was i had really done a lot -- edna mccown in a spokesperson for the california energy crisis and we had been assured they are treating teens, a top management that we had done nothing wrong with the california electricity market. when i heard the tapes of the traders manipulating the market, it made me sick -- >> can you give a few details? >> basically was burn baby burn, or am i you don't need any electricity tonight.

they have manipulated power outages, taking equipment down and caused rolling blackouts, which jacked up energy prices and again if they are treating megawatt hours and they were able to manipulate the trading process. so that was just -- it was sickening to realize that we had been on the front lines saying there nothing wrong when clearly there is egregious behavior. >> with senior executives at one point there's a lot of pressure in the cfo was, and her fastow who basically makes the decision. how does that play out? >> tan my hide a conference call with analysts and i think media was fun as well, basically saying i have full confidence in the. he has done nothing wrong. everything is fine. and the next day he was put on leave. so again, from a company

perspective you got to have credibility. you have to have reaction match what you are saying. i think one of the further problem set and he was put on leave. it took the board six months to actually fire him. >> the company anything didn't know and partly didn't know because they didn't try to know some of the key things about the ljm partnerships. the board of directors and top management approved what you need in a corporate relationship in the history of american corporations. i once did as part of days, went through the sec filings of fortune iphone to come in a spirit all 500 just to see if there is anything like it. essentially there was nothing comparable to the ljm partnerships. so they had this incredible conflict of interest and then seemingly ignored it for two years and let it roll along. and he is doing and he is doing, and losses and cut ran a period

and then we start writing about these partnerships. and suddenly they said we better find out about what's going on here. as of the board of directors and board of directors we request a meeting with andy, which i thought was incredible when the directors have to request a meeting with the cfo who works for them. so he arranged to meet with them. they asked him, how much money have been introduced to partnerships in the last two years because supposedly and he wasn't going to spend a lot of time in these partnerships. it is going to be maybe add-on money and compensation form to add to his paycheck. so he tells them, and made $42 million. that was on the afternoon of tank after ken lay had given his bearhug of support to andy fast fastow in front of the world. he set a may $32 million. they saw their times. i think that's probably what pushed andy out. but they kept finding out these timebombs that they should've

known. any competent responsible board of directors -- first of all in my humble opinion would've approved the ljm partnership. but if they had come somebody should have been on it like everyday finding out what are you doing? is the enron shall rueter getting shafted or not? they let it roll along. it was one of the most response whelping figures in the board of directors do. >> how much of this was apparent u.s. was unfolding? he said before he felt it would be some kind of future for and run until the very and. fastow was put on leave -- >> it started about 36 on the day they jumped up to 37 on the day they announced their earnings. we started writing our stories of the next 10 straight trading days. by november it is the day they were toast. that's when when they came out with their final and basically

said you can't rely on our last two years of financial statements because we made all these mistakes. >> in the readjusted earnings by six -- >> what they basically renounced their previous financial statements. they had to write off things for this shoe co. partnership. >> said karen come as the company has basically been announced for the previous five-year -- six years inferring information which he sat there helped produce and disseminate key be relied upon, how did that impact your job and how did you kind of communicate that to the investing public? >> keep in mind we were in the eye of the storm. this is 10 years ago before any company just collapsed in the blink of an eye. and so we really didn't have any sense of the magnitude of what we were in the midst of. what did happen was the number of media calls escalated. a business crisis takes much longer to catch on publicly. ii think the journal was on a

first before anyone and it really took a long time for it to escalate you but by the time he filed for bankruptcy are feeling upwards of 300, 400 media calls a day. there were four of us into assistance. we just couldn't keep up with the young lot. >> is also interested in the question of dealing with the media for companies like enron. part of their media openness i think i think kerry will probably agree with that large measure reflection of the personality of jeff skilling and his approach to corporate affairs. jeff is a very self-confident man in anyways and believed almost with regis fervor. so he was always open much to his credit even after the crisis had been certainly suffer him about talking to the reporters. and when he left, i think there was a change at the top.

ken lay was much less open to talking, especially about critical. so when we put in a call because we started digging up stuff we thought was fairly serious questions and allegations. so we called enron to have an interview with way and fastow and the chief accounting officer in any wealthy would be available could've expected he would make every beauty available like they always did. instead i got a callback from mark palmer that sits in a sinister written questions. in my experience in becky's experience in any other journalist, no one at enron had ever asked for a list of written questions. that would thought. so we put together a very extensive list of the questions and there is apparently a large debate within enron and later found out about how to respond. andy fastow was against talking about and labor and along with

that. so they sent us back a one paragraph very bland, basically restated that we haven't done anything wrong. in some ways that was my first real sense that we might be onto something big. >> out assertively here is a match where the treasure is buried response. >> they would tell us anything about it but by not talking suddenly they gave us a sense that there must be some really seriously wrong here that they are not wanting to talk about it. >> this is still fairly early on. >> this is like late september. >> before they even announced their loss. >> a basically shut us down and it's interesting because the list of questions came back to haunt particularly ken lay because when the company collapsed in the federal justice department came in and basically scooped up every document in enron, one of the documents they speak to with a list of

questions. so cuddly at the trial in 2006 basically was trying to tell understand and basically claimed i didn't notice thn had made publicly, which the government said he was lying about because of his knowledge. he says i did know that then. but they brought this list of questions and the things he didn't know about were being asked by us in late september and the prosecution user list of questions they insisted on giving and helping to basically under cut credibility. >> to remember this question that john sent quite >> mark palmer was on the frontline dealing with upper management on that, but i knew that there were problems. and we're pushing because we had such an open relationship with reporters in the past. we were of the belief that any time there is negative news, get

it all at once and be as upfront as possible. and there is a lot of hesitancy. again from upper management because they really didn't know what was going on. they didn't know the extent -- >> some of them did. >> a day after the eight k. when earnings were restated, kenley declared we have a pr problem. what the team knew was that this was in a pr problem. that's a far deeper, but he did believe until his dying day that the collapse of the company was caused by "the wall street journal." >> that was their defense at the trial. there is that there is nothing wrong with the company. >> at the stock price not cannot -- >> always thought mr. lay and mr. skilling were modest about their own contributions to the collapse. >> they are not in hot deal he

says. police just isn't. >> can you talk about managing the shape of the media, we had been open and then all of a sudden the access you had two euros senior management disappears. but the select to confront the press with his new face of enron? >> we tried to be -- we had gone relationship with a lot of reporters and we were honest. we can say you know what, i don't know. i can't get straight answers internally. and when we did get answers, were always able to couch then it's my understanding that her what i am told is because i think we've realized that at some point we could necessarily trust the answers we were getting internally or they would change from day to day as mark found out was the amount of the ljm letdown. >> what do you think reporters picked up on but the tone of your answers in the time changes in your certainty also changes. >> they definitely knew something was going on.

reporters are reporters for a reason. they ask questions that they know something is not ready. >> john, at a certain point it started to get a decent amount of information from us and enron. people started getting the tip clues about where to look for things. how did that change your reporting? >> well, we had an initial break very early on after we wrote our first story mentioning these ljm partnerships briefly. we got a call from a source reduction of rates in effect, but was very helpful and time as there is a lot more in putting us to send documents you were hoping to start delineate the ljm relationship inactivity. but you know, we were still in the dark a lot. we didn't have a lot of ideas because enron was a complicated company. if you read their sec disclosures, they were almost

indecipherable. it was like somebody got paid to make them as unintelligible as possible, especially regarding the ljm partnerships. they're almost laughable. at one point he pushed the paper early on to put an entire section from sec filing which i would never do because it's so boring, but just to show that these things make no sense to an outside reader. even analysts. the incredible thing is many analysts who cover enron did know about the partnerships until we wrote about them. even that they did the sec filings. there for two years. here are guys getting paid half a million a year to do their jobs and they don't even bother to read the entire sec filing of one of the biggest come needs the cover. i'm thinking i was getting underpaid. [laughter] >> you actually brought up a good point, which again another one of the frustrations

internally was the media had no information that we have. as more sources came forward and shared information with the journal and other reporters and they would call us, we think what is this? out of left field team to go chirico and jedi and other raptures. we looked at each other and said -- >> you have to be making these things up, right? >> early on there was clearly -- >> but he still believed in the company is a year ago -- 10 years ago today that the deal from energy was announced that its going to essentially buy enron and in a much smaller competitor basically. when that happened, one that came about, how did that change your perception of the seriousness of the problem quite >> is the saving grace in what would get us out of the crisis. dynegy was going to reject enron and i was going to shore up our

their balance sheets and everything would be fine. i'm sure can't wait that we would split again or he would be head of the new enron. and so the focus became would have to say the company and this is how we do it. so he focused on internal and put together packages of internal communications. are we going to convince them this is a good name? and how are we going to communicate externally? >> so you think that can mai tais with him however much from this impact. this is what we saw in 2008 in 2009 but wall street type this still believed that they somehow were going to get by no matter what. lehman brothers, jimmy kane at bear stearns, et cetera. you tell me, both of you, that what your impression of what kenley was thinking in how he was doing this at this time. >> i work closely with kenley and skilling and ken was really

the father figure of the company. everyone loved him. he was very well respected. he had a tremendous civic identity. he was very philanthropic. and from this sense, jeff was the trader mentality. as he got to know both of them, people tended to like just more than 10 months. he was very concerned with how things looked. there were rumors that he at one point had been a cabinet position in the white house. he was politically connected and at what point he tried to get the government to step in and out the company. >> uses 10 years too early. >> 10 years too early and alone. i don't think the bush administration could have saved them, but to kannada wasn't

about the political cost of george bush to try to save a dying company run by a political crony orwell is viewed as a political crony. >> it is the one before too big to fail. again is a founder -- this is his identity. he had created this company with the merger of two pipeline companies and he was going to save it. he just wasn't going to have his reputation of the company's reputation tarnished. >> let's talk about the very end here and will have an opportunity, but the dynegy deal and then fairly quickly falls apart. >> said the dynegy thanksgiving weekend was falling apart and that was that. and so it was a sunday night angst giving weekend we filed for bankruptcy in delaware and also sued dynegy for the failure

of the merger and at that point all broke loose inside the company because employees turn on the tv, so the company was bankrupt. traders brought in case of and started partying. a lot of other employee simply started taking furniture is that they wield their chairs at the front door, took the potted plants, loaded up anything they could and headed out the front door. i think half a dozen or satellite tracks and it was absolutely surreal. it continued going long after that. >> do you expect bankruptcy to be the way this story was going to end. >> we started this story is a corporate conflict of interest story back in august, september 2119 okay, and he

someone found a way to make an extra buck. we never foresaw. i don't think they were toast until november 8 sec filing what they basically renounced but they were porting for the financial for the past two years. they probably were going to survive as an independent entity. though it have to merger somebody on their servers are they going around they were looking for somebody. and the next day they had somebody. or they couldn't get somebody and end up in bankruptcy court because their trading operations is starting to go into vapor lock because as your stock price collapses, confidence collapses, trading partners which was the heart of enron or asking for more and more collateral cash up front. and they were caches like a sponge.

they took down their entire credit line one day and used it in a week. i think they got another billion from dynegy. they used that up like nothing. and so they out of cash. so without cash coming out of many alternatives to the corporation. so by early november is clear they were going to be enron anymore. it wasn't quite clear whether they would be tying run -- >> do you remember your last day of enron? did you work past the bankruptcy? >> is actually part of the restructuring team sizer came to an half years after the bankruptcy. >> and what was that like working for essentially a carcass? >> it was much slower pace [laughter] in our messaging entries change. i mean, we are then working for the creditors. so our job became preserving value for creditors. we have made a strategic decision not to do any broadcast

interviews because we didn't have confidence in the answers or information we were given and we were going to put ourselves or anyone on the pier team in a position to stand in front of a television camera and not half acceptable answers. after the bankruptcy -- [inaudible] and the fbi confiscating. but after the bankruptcy, i guess a year and a half, two years after the bankruptcy again because we were working for the creditors, we were going to auction off the surplus item. the big e. in front of the building, access computers, boardroom furniture. at that time we made the decision that it made sense to do a broadcast interview. it was an online auction without well, will generate as much interest in that. so i went on the today show to talk about the option and missing as they aired the number of optimized out her phone lines they have for the auction at the

circuit. so it just completely exceeded capacity. >> so it should've been in the business. john, you want to write a book with becky smith 24 days, which is still taught in this school and elsewhere in a secret account still available. and you continue to follow the enron story for years afterward. the court cases, jeffrey skilling appeal which went to the supreme court. is there one big lesson you took away from this whole experience? >> i don't know. it was self-evidently i suppose it's better to be honest than to lie. and it's worse to lie and be caught in july. so i don't know. enron in some ways -- jeff skilling is to fail the time that enron was caught in a perfect storm. and oddly enough in some degrees he was right.

when enron collapsed, there is still lots of things that we didn't know about the inner workings of enron that would come out through this gigantic, you know, federal investigation which i think was the largest federal investigation of a single corporation. they created the task force that is unprecedented. of course one question people could have his there have been relatively few indictments out of the 2008, 2009 meltdown of top corporate officials. and that's maybe because there's just not the evidence they are what they are so widespread. but i suspect there was not a single corporation out of that was investigated the way enron. they had a dozen federal prosecutors cannot probably 20 to 25 fbi irs and sec investigators working full-time for four years. you know, going through every note creamy of that company. i suspect if you did that with

any other corporation you'd probably find something. so you know -- [inaudible] >> ernie edwards is serving time, yes, it might not be. and so, enron i think -- they did some outrageous things, you know, over the more outrageous than some of the other things that one on? i am not sure. some of the mortgage-backed securities these countries were peddling were just astonishingly bad. and so i don't know. i'm not sure what lessons to draw from that, the certainly enron at the right kind of attention. >> karen, you said it was the next morning and -- going back 10 years now, what comes to mind? what is your take away from the whole chapter?

>> is a couple of lessons. again it was -- the career with an experience in a very short period of time, but i would've done it again. it was such an amazing experience it would've taken notes and written a book and i would've exercised my stock options and wouldn't have been -- my four okay was 100% nonstop. >> one point on this, looking back now, do sort of see red flags you have it hard? what were those? >> yes, there are red flags long before john and rebecca started writing the stories. there were a lot of input stock sales >> significantly enough they had to be reported. when we gathered questions they they're always good answers. they're getting a divorce. or they're buying a new house. there always explanations so that was one concern. anytime you have have odd executive behaviors as jeff skilling calls and analysts an expletive on an analyst call,

that was turning. ken lay called the pr department said the hold music is to update. could we change the hold music. like that. >> for while their hold music with tina turner singing simply the best. that was during the better days. >> they were the best at something. >> with a number of business units and the ceos were gradually dropping off is leaving the company. >> at this point i would like to open up the opportunity for members to ask our panelists about this experience and i hope there's some questions here. let me look through. i seek not share surprisingly has first question. last night and remember, it is a question. no, i'm just kidding.ç >> what we are talking about is a criminalç enterprise.óóó defined as such. and as you say, you are happy.

they were smart. you would go back and do it again. no remorse. i don't quite get it if this was a mafia enterprise even on a much lower level there'd be som soul-searching. what is the damage, who got h for people lost their savings. and then we have the idea that it's not unique to enron. the others may be even worse found corruption. and my question first of all is when you had this question with the media. yes, it is very cozy. we have deregulation including the modernization was just the enron loophole push through phil graham, the husband of wendy graham who is the head of your audit committee. it was very cozy. the question is, it was there

corruption in the media. they didn't have anything to do with campaign contributions. there's a larger story of the enabling of enron and things of value that manipulated. this is not the old industrial american dream of henry ford. do you feel that you are essentially part of something that was strong in the best part of america? >> you've got a lot of questions in there. [inaudible] >> absolutely. despite that i could still say it was a tremendous professional experience. the pr team that i worked with were among the best in the industry. they were fantastic. they were great people. as the company was collapsing and they knew they were going to lose their jobs, they slept at the office, worked around the

clock. to me that's a tremendous professional. what people hurt by the company? absolutely. i was one of them. my 401(k) was 100% and ronstadt. i lost all of it. i am not here to defend the company. what i'm here to do is tell you about the experience and insight about what it was like from a pr perspective. ..

in the five years that separated the precipitation of the collapse of the criminal findings in the case could hurt if it gives market and drew even bigger, and it seemed like the development was missed by financial reporters. what explains the identification of the risk posed by a derivative instruments with world, and others, what sort of created that. did people get so captivated by that hubris represented by the ceo like dennis kozlowski that they got so fixated on the individuals and didn't really dig into the systemic questions that were being posed by these instruments that in the up

leading to the 07 and 08 collapse. just a thought on what was going on with the investigative reporting on derivatives during that first half of the decade. >> i think most reporters probably don't understand derivatives so we tend to shy away from what you don't understand which is not a good excuse for reporters but it happens. its reality. frankly i think a lot of regulators didn't understand derivatives and tended to shy away from them and politicians basically didn't care about them because everybody seemed happy. i think people convince themselves that enron, world,, some of the others were world office. worldcom put their books on accounting. kozlowski spend money like there was no tomorrow. there was a certain amount of

that problem is fixed the congress passed in law, but then there's this whole other world over here that was similar connected in a sense with things like the mortgage-backed securities market, but in the 2000 time period the indicated to the collapse there was a huge amount of momentum pushing the market forward. president of the united states for everybody should own a home, congress with republicans and democrats were happily saying yeah let's make it easier to own homes and let's not to kill gatt how it's happening whether people can afford it and whether they are lying on their loan applications. the system got, in that area, got almost laughably control and nobody seemed to care. there were some stories that raised some red flags but it was such a huge tidal wave of

activity and optimism that i don't know maybe journalists could have stopped, but there was a certain systemic large number of people involved in that that didn't stop until they couldn't get to the merry go round going anymore. >> yes. >> first of all thank you for coming and speaking with us. one of my classmates today said when all of this was going on ten years ago a lot of us were young and we had no idea what was going on. all we sold was the commercial from cnn and where our parents were just telling us physically. and i shouldn't say kids come to go into corporate america,

corporate company or any company out there when they start to feel something is going on in the company at what point do they say i need to leave something doesn't feel right so they can avoid having to questions such as these were just looking back saying i really shouldn't have worked with him, at what point should they feel something is wrong within the company? >> actually the right point to raise and need to ask why and ask questions, and if you don't get satisfactory answers you keep asking and if you have reason to not trust your executives or the people you work for you got a decision to make whether to leave or stay. it's a very difficult question but you really do particularly

post enron where that is a possibility but something that you can believe separate you do have to have confidence in the people you work for. you want to trust the man to believe them. you don't want to come to work every day and represent a company that you don't believe in. so you do have to ask those questions. estimate other questions here from the audience. >> i'm trying to understand why you decided to do things to this day when all of the store is the congressman stayed out you state for two and a half years, i mean wasn't there a point you were like you just said before in your talk you were not sure what they were saying was the truth and how do you continue to stay like how can your conscience let you do that? >> once the file for bankruptcy it became a different company. it was owned by the creditors. we had a cheap restructuring officer brought in and new management team brought in.

it was under the law is of the bankruptcy court, and it became a completely different company. our job was to cooperate with investigations to maximize value for creditors and preserve jobs. we still had a number of employees. the pipeline companies were really the only asset driven companies and they have and those employees get their job. they continue working so there was still viable business was part of the bankruptcy. >> the enron that everybody wrote about and cared about was no more. it was a ghost, a corpse. i don't know if this is karen's case that there's a number of people that set partly because they wanted to get a paycheck. they wanted the job. having in rahm on your resume wasn't exactly getting recruiters knocking on your

door. so that was i suppose another issue for some people but as a different entity. i wasn't going to be borrowing more money from people are selling more stock. it wasn't going to be giving anything it did in that incredible run it has recently 15 years. >> 15 being part of the relations and the broadcast interviews, how has in your view public relations change with something like this? because in terms of actions come into play and public companies and now with the media everybody can do videos and it's not just in your control anymore. islamic the change the evidence of social media and when this happens there were not so many, there wasn't facebook, there wasn't the social media.

the field with which anything happens is much faster now. >> are there companies being more cautious because legal repercussions and you have things like the social media that can come back and back fire a lot more quickly? >> i would say there's certainly more legal guidelines, but if you look back since 2008 companies still have questionable process these and that's really continued. >> some of my colleagues to cover corporations on an ongoing basis more than i do have told me they've been told sort of, you know, by the occasional person corporations now carry much less about the publications

like "the wall street journal," "the new york times" and focus more on social media because they feel that it's much easier to get the message of and kind of an uncensored way and i guess they think it is easier to manipulate the social media than it is the press picture given how easy it is to manipulate the press that's quite a statement. but i do think that is, you know, those kind of sources are diminishing the power and importance and a lot of corporations by the traditional media. >> i think we have time for one more question here, yes. said mickey made the point are you were not involved, you were not the one doing the numbers and you shouldn't be blamed and you add that because the fact you don't feel blamed you were not a part of the people of the individuals that were causing this entire problem. but how about for the people

that caused the current economic crisis and that work feeling of the questionable practices they are not the one serving jail time. there is no repercussion on that and i want to hear your opinion on that. >> i think it is unfortunate. i mean enron was the first and really to john's played the onslaught of the government investigations and scrutiny was unique. i don't think the wall street firms, the financial houses at the same scrutiny. i think the government was willing to step in and bail them out. and it's, again, jeff is the one in the jail cell. >> de want to comment on that?

>> is it 24 years? >> they still got his appeal, although it's getting grimmer and grimmer. he's not due to be released at center court decision until ten or 15 years maybe. this coming december he will be in five years. >> and andy got very lucky. he cut a deal with the government to cooperate after waiting a while long enough to get his wife indicted and put into prison for year. he got a deal and basically took a ten year prison sentence but was supposedly not reducible. then he got a judge that felt sorry for him, felt that indy 500 had been kind of badly

treated and so he gave him six years and for in the i think now he is in a halfway house which usually after the last six months in a federal prison in a halfway house is to kind of transition back into the community. so, andy was never talked as well as on a ho-hum to anybody in the press. and all what the plans are. i think that he's still married. >> i think that he knows the enron people in jail. as the mckibben to death the panelists and everyone for coming. [applause]