updated 10/29/2004 11:34:02 AM ET 2004-10-29T15:34:02

Guest: Stephen Kohn, Adam Zagorin, James Hoffa, Vaughn Ververs, Stephen Hayes, Frank Rich

CHRIS MATTHEWS, HOST:  News late today that the FBI is investigating Vice President Cheney‘s former company, Halliburton.  And both campaigns barnstorm the battleground states.  President George Bush hits four rallies in Michigan, Ohio and Pennsylvania.  And Bruce Springsteen stumps for John Kerry.

Let‘s play HARDBALL.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  I will never relent in defending America...

SEN. JOHN KERRY (D-MA), PRESIDENTIAL NOMINEE:  For America, the hope is here, the sun is rising.  Our best days are still to come!

BUSH:  We are on the path to the future, and we‘re not turning back!

(END VIDEO CLIP)

MATTHEWS:  Good evening.  I‘m Chris Matthews.  Five days left until the election day, and the FBI has opened an investigation into whether the Pentagon improperly awarded no-bid contracts to Halliburton, the company Vice President Cheney led before joining the White House.

Stephen Kohn is the attorney for Bunnatine Greenhouse, the Army Corps of Engineers chief contracting officer, who went public last weekend with allegations that her agency unfairly awarded a Halliburton subsidiary no-bid contracts in Iraq.

Steve, thank you very much for joining us.  Tell us about the role your client plays in this whole matter.

STEPHEN KOHN, HALLIBURTON WHISTLEBLOWER LAWYER:  Bunny Greenhouse is the highest-ranking government—federal employee bureaucrat with sign-off authority on contracts, or one of the highest-ranking.  She‘s not political at all.

MATTHEWS:  Now, what does she assert is being done wrongly here?  What was wrong about this contract that was let to Halliburton?

KOHN:  Well, the allegations concern the length of the contract, the fact that it was for five years.  It concerns the renewal of the contracts.  It concerns the integrity of the Army‘s contracting process.

And let me tell you what was happening there.  Bunny‘s job was to make sure that small businesses and minority-owned businesses could compete for contracts.  When she would see problems in terms of the award of a contract, failure to follow regulations, things that may appear to be a bias or improprieties, it was her job to question it.

She did that, and she reported it on the contracting documents, where she would raise her concerns.  She was ordered not to disclose that information on the contracting documents.  If she didn‘t put it on those contracting documents as they went up the chain of command, no one would know about the problems.  As a federal employee...

MATTHEWS:  Who gave her that order, Steve?KOHN:  Pardon?

MATTHEWS:  Who gave her that order Steve, who in the Defense Department?

KOHN:  Her supervisor.  I don‘t want to mention names, but that was—the supervision said, You are not to write on the contracting documents.

MATTHEWS:  Was the person who gave her that order not to provide that information, which you believe relevant to the decision making by the Pentagon -- - was that person a political appointee?

KOHN:  I can‘t answer that question.

MATTHEWS:  Let me ask you, the defense of the administration with regard to Halliburton and these huge contracts that it gets let, is that the jobs are so big, they require such economies of scale, that it would be simply a process—it wouldn‘t serve any useful purpose to have a bidding procedure because no other company‘s as big as Halliburton and could actually compete with it.  What do you say to that?

KOHN:  Well, again, without responding on the merits, I will say Bunny‘s job was to ensure that the regulations and rules were followed and that there was fair competition.

MATTHEWS:  OK.

KOHN:  And she made disclosures that they weren‘t being followed.  And she was told...

MATTHEWS:  Why do you believe...

KOHN:  ... not to document that.

MATTHEWS:  Why do you believe the FBI is acting on this allegation and beginning this investigation so—right now, this week before a presidential election?

KOHN:  Well, I...

MATTHEWS:  Why are they acting now?

KOHN:  I would certainly hope it‘s for the very reason why Bunny raised her concerns when she did.  It doesn‘t matter.  When you‘re a federal civil servant, you do your job.  If it‘s a day before the election or four years or three years before an election, that should not enter the equation at all.  You have...

MATTHEWS:  Is it your...

KOHN:  ... a job to do, and you do it.

MATTHEWS:  All right, speaking of that job to do, does the FBI office responsible for this investigation—were they—are they operating at this moment under the direction of the FBI director, Mr. Mueller, or did they take this on their own?

KOHN:  I have absolutely no idea.  Bunny Greenhouse, when she wrote to the secretary of the Army, asked for a full investigation into her allegations.  And we welcome the involvement of the FBI.  We also think there should be a bipartisan congressional inquiry into this Army contracting and all the problems.  It should be aboveboard, open and aggressive.

And so we welcome this as a positive first step, but we don‘t think it should be something that‘s just done privately in a criminal investigation.  I think the American people have a right to know how their taxpayers dollars were spent and how contracting has been done in critical places like the Balkans or Iraq.

MATTHEWS:  Do you have any political interest in this matter?

KOHN:  Absolutely not.  My—just so you know, when it was time to represent Linda Tripp, when her rights as a Department of Defense employee were violated, when they went into her files illegally, we more than were glad and proud to represent her.  She was viewed as a partisan.  She was viewed as someone hurting a Democrat.  It did not matter.  Linda Tripp had rights...

MATTHEWS:  Let me ask you about...

KOHN:  ... and Bunny Greenhouse has rights.

MATTHEWS:  Does Bunny Greenhouse have any interest in the defeat of this president, President Bush?

KOHN:  Absolutely not.  She‘s a federal civil servant.  She is not a political appointee.  Absolutely none.

MATTHEWS:  Steve, you‘ve been familiar with this case for how many weeks now?  When did you first come into this case as counsel to Bunny Greenhouse?

KOHN:  A number of months ago.

MATTHEWS:  You‘ve had time to think about it.  What is its public policy implications?  I mean, think big right now.  There‘s a lot of people watching right now and listening to your voice.  Explain to them why this is a significant matter for the country.

KOHN:  It‘s a significant matter because you have a whistleblower with the courage to step forward and give the American people information they need.  I hope that people put down their partisanship and say, Thank you for giving us that information.  And let everyone evaluate it how they will, investigate it how they will, but whistleblowers need protection.

MATTHEWS:  Let me ask you, Steve, you talked about renewal of contracts.  You talked about lengths of contracts, the integrity of the Army Corps of Engineers contracting processing.  What does that mean to the average taxpayer?

KOHN:  This is billions of dollars, but it‘s also, I think, an issue of ethics.  If you‘re a small business, you have the right to compete and you have the right to know that large contracts that the Army or any other government agency is handing out, that your interests will be protected.  That was Bunny‘s—one of her main jobs.  So it‘s...

MATTHEWS:  Is she still employed...

(CROSSTALK)

MATTHEWS:  We have to go right now.  I‘m sorry, Steve.

KOHN:  Sure.

MATTHEWS:  Your client, Bunnatine Greenhouse, is she still the chief contracting officer of the Army Corps?

KOHN:  To the Army‘s credit, we asked that she not being removed during the pendency of this investigation, and they have agreed.  She still maintains that position, and we will do everything in our power to make sure that she does maintain that position because if she‘s removed, the American people will never know the truth.  There will be chilling effect.  No witness will come forward, and the truth will never get out.

MATTHEWS:  Thank you very much, Stephen Kohn, who‘s counsel for the whistleblower Bunnatine Greenhouse, who‘s chief contracting officer for the Army corps of engineers.

We‘re going to come right back with HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Adam Zagorin broke the Halliburton whistleblower story for “Time” magazine this week.  Adam, thanks for joining us on short notice.  This FBI investigation, what‘s it about?

ADAM ZAGORIN, “TIME” MAGAZINE:  I think they‘re looking into the contract—it‘s called Restore Iraqi Oil.  It was worth up to $7 billion.  It was for the Halliburton company exclusively, without competitive bidding, to rebuild Iraq‘s oil infrastructure after the U.S. invasion.  And it was given to Halliburton in secret, for reasons of war planning, just prior to the U.S. invasion of Iraq.

MATTHEWS:  Now, what‘s this FBI investigation looking into?  What particularly may have been done wrong in letting this huge contract to Halliburton?

ZAGORIN:  Well, the part that relates to the whistleblower is that the FBI has requested, as I understand it, formally to speak to Bunny, or Bunnatine Greenhouse, who is the top contracting official in the U.S. Army Corps of Engineers.  And she has alleged in a letter that was sent to the Army and that is subject to a Department of Defense investigation as we speak, and in that letter, she says—she raises a number of points about the huge contract which she found very troubling.  And I can tell what those are, one, two, three.

MATTHEWS:  Go through it because people want to know what was done wrong, if anything was done wring.

ZAGORIN:  Right.  Well, she first attended a meeting in—a secret meeting at the Pentagon, where a lot of people were present to finalize the financial and other details of the contract.  And partway into that meeting, she became distressed that the conversation about the financial dealings was taking place in the presence of Halliburton personnel who were in the meeting.  She went up and whispered, according to her letter to the Department of Defense, to the Army, asking the commanding general of that - - who was presiding at the meeting, to ask the Halliburton personnel to leave the meeting so that they wouldn‘t be privy to these kinds of details...

MATTHEWS:  Right.

ZAGORIN:  ... that she felt was inappropriate.  The commanding general

asked them to leave the meeting.  They did.  The next day, she signed an

approval for the contract.  And she had been making the point verbally with

her superiors in all these meetings, according to her, that the contract

should be for one year only and not for five years.  And they overrode her

on that.  So when she signed the approval for the contract, she wrote on it

·         she signed her name, and then beneath that, she wrote that this contract should not be for five years, it should be for one year because of the interest of competition.  That was the point that she made.

She has other objections.  The letter that she sent to the military is 11 pages long, so you can imagine.  And I can tell you more points, if you‘re interested.

MATTHEWS:  In other words, the charge she‘s making, the allegation of malfeasance or improper behavior, unethical behavior, is to award big contract of $7 billion to one company without any competition for that contract, and then foreclosing any competition down the road over the next four years after this year.

ZAGORIN:  Well, that‘s right.  Now, she was more willing to go along with giving it to them without competition for one year because it was being done in secret.  And if you do a big bidding process, you can ruin the secrecy aspect.  But she never saw the point of having it last for five years.  Why not put it out to bid to many companies, as per the law, after one year?

MATTHEWS:  Let‘s talk about...

ZAGORIN:  That was her point.

MATTHEWS:  ... the whistleblower here because she‘s going to be quite famous in days ahead, I can tell you, based upon the heat of the story here.  Bunny Greenhouse—she‘s 62 years old.  She‘s a long-term employee, a person who worked up through ranks of the civilian part of the Defense Department.

ZAGORIN:  That‘s right.  And she ended up being the head of the contracting division in the Army Corps of Engineers.  That‘s a division of the Army that does a lot of work around this country and lets a lot of foreign contracts.  It has 35,000 people in it, roughly.  So this is not a middle-ranking person, this is a top-ranking person who knows—has a very considerable grasp of detail.

MATTHEWS:  People watching this from both sides of the argument, you know, for or against the president on this, or the vice president, will ask, was this person a stickler, the woman who blew the whistle, who simply wanted everything to follow form and follow the book, or is she a person who really smelled a rat, who smelled some special favoritism towards this giant corporation which was recently headed by the vice president?

ZAGORIN:  Well, I think what happened to her was that she raised these very particular objections that I just mentioned to you, and others.  She never went on a political tangent, saying, What about the vice president or what about politics?  She stuck to these details.  What happened then was, according to her letter, she was called in by a superior, a major general, who gave her a performance evaluation in which he told her, according to her, You stop writing on those contracts.  If you don‘t stop writing, we‘re going to downgrade you.

So when that happened, that upset her, is my understanding, because she felt that she was being silenced, and in her lawyer‘s words, coerced.

MATTHEWS:  Her job as top bureaucrat in the Pentagon is to make sure everything‘s done right.

ZAGORIN:  That‘s correct.  And by the way, her position is created by Congress.  It‘s under statute and regulations that she should have independent hand in doing—in what...

MATTHEWS:  And she‘s not Democrat.  She‘s not operating here as partisan, as far as you know.

ZAGORIN:  I‘m not aware of what political party she—and her letter to the military has no mention of politics...

MATTHEWS:  OK.

ZAGORIN:  ... at all.  It‘s very technical letter.

MATTHEWS:  Well, I can‘t think of a hotter issue, so let‘s talk about the Democrats involvement in this.  You know, because you told me before we went on tonight, Frank Lautenberg, the senator from New Jersey—what was his role in this?  Because he‘s clearly a partisan Democrat.  What‘s his role here?

ZAGORIN:  Well, he has been following the Halliburton issue for months now.  And he apparently, as I understand it, you know, apprised himself of this matter involving Bunny Greenhouse, the whistleblower.  And he wrote a letter dated today to the vice president of the United States, Dick Cheney.  And in that letter, which is a one-page letter, he asked that the vice president and his office cooperate fully with this criminal investigation.

MATTHEWS:  But did he give the vice president a chance to respond to the letter, or he simply leaked it to the press, Senator Lautenberg?

ZAGORIN:  My impression...

MATTHEWS:  That‘s the way people do things in Washington.  They get a Xerox out to the press before the other guy even gets the letter!

ZAGORIN:  Absolutely.  People do operate that way.  And I think that Senator Lautenberg has some credibility, in the sense that he has been speaking out about the Halliburton issue...

MATTHEWS:  Right.

ZAGORIN:  ... in good times and bad, when it was a boring topic that people didn‘t want to hear about, and when it was more interesting.

MATTHEWS:  Adam, is this a front page story tomorrow?

ZAGORIN:  Well, as a person who works for a magazine, I hate to tell newspapers what to do, but I think it might be of some interest, yes.

MATTHEWS:  OK.  Well understated.  Thank you, the guy who wrote the story last week for “Time” magazine, Adam Zagorin.

Up next, Teamsters president James Hoffa, the importance of the labor vote for both campaigns.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Joining me now is Teamsters president James Hoffa.  Mr. Hoffa, thanks for joining us.  You know, I was talking the other day.  I haven‘t seen a lot of union leader presence on television the last couple of months.  What‘s that about?

JAMES HOFFA, INTERNATIONAL BROTHERHOOD OF TEAMSTERS:  I don‘t know.  They were all at the rally we had in Las Vegas.  We had a number of labor leaders there.  We had a big rally, 15,000 people, you know, so it‘s important we get out and talk about the issues, talk about the middle class, talking about jobs in the United States and talk about electing John Kerry president.

MATTHEWS:  Well, let me ask you about the Kerry issue.  Is he the kind of guy you can get your members revved up about?

HOFFA:  Well, these guys are revved up for him right now.  They‘re getting ready to vote for him.  The overwhelming number of Teamsters here in Minneapolis—and I‘ve been all over that, and I‘ve been to over eight states in the last eight days.  The sense is, they‘re all voting for John Kerry, or the overwhelming number.

MATTHEWS:  What will Kerry do that Bush hasn‘t for labor?

HOFFA:  Well, he‘s going to fight for American jobs, No. 1.  He‘s going to make sure we stop exporting good jobs.  He‘s going to fight for the middle class.  George Bush has forgotten the middle class.  He‘s not out fighting for us.  He‘s the one that‘s encouraging the exodus of good jobs out of America.

Right now, I‘m at Super Value (ph).  We got a thousand people working here, good-paying jobs with health care and pension, the kind of jobs we need in America.  John Kerry will fight for those jobs.  And on the other hand, George Bush wants to push those jobs out of the country because he believes that we‘re going to make all that stuff go out, and he has the guts to tell you that that‘s good for America.  He‘s forgotten the middle class.  He‘s forgot working people.  And we‘ve got to turn this around.  John Kerry wins, I think.

MATTHEWS:  Well, let‘s talk about a fellow or a man—or a woman who‘s making average American income, say $30,000, $35,000 a year, maybe a little bit more, maybe a little less.  They got a family of two or three kids.  They‘re thinking about taking a second overnight job, working for 7 bucks an hour overnight, going to work exhausted the next day.  That‘s the reality of a lot of people.  They‘re just working as hard and as long as they can, and they get any overtime they can get their hands on.

Tell me, a year after Kerry‘s elected, how will that be different, or two years after he gets elected?

HOFFA:  Well, No. 1, we‘re going to have a better economy.  We‘re going to have more security, more job opportunities.  Maybe she can upgrade that job.  I know people like what you‘re talking about.  I know people like that in Iowa and Michigan that have lost their job or have a job and are fighting to survive.  What do you think the $2 gasoline is doing to her?  What do you want to think that maybe her overtime is being taken away because of George Bush taking overtime away from six million people?

The middle class is working harder and harder to get ahead, and they‘re going backwards because of the lack of health care, the lack of overtime, and all the other attacks that we‘re having.  Right now, health care costs are going up by 15 percent.  Who can keep up with that?  And what if she‘s got co-pay?

What I‘m talking about is, when we bring John Kerry into the White House and when he wins, he‘s going to have national health care.  He‘s going to be talking about protecting overtime.  He‘s going to be talking about all the things we need.  But most of all, we need new jobs in America.  Remember the era, just, you know, 10 years ago, with bill Clinton, when we had...

MATTHEWS:  Right.

HOFFA:  ... a booming economy, we had people being hired.  And that‘s important.

MATTHEWS:  What did you make of the president‘s campaign bringing Arnold Schwarzenegger into their campaign in Ohio this week?  Do you think that‘s going to bring working guys or working women into the Republican column?

HOFFA:  Absolutely not.  I think Arnold Schwarzenegger is really a prop, and it really shows how desperate they are.  And I know they‘re going to lose Ohio.  They‘re going to carry, I believe, Minnesota very strongly.  There‘s a tremendous support up here in Minnesota for John Kerry.  I don‘t think bringing a prop in is going to help a failed president who has been a disaster with regard to the economy, a disaster with regard to foreign policy.  I just don‘t see how you can sell four years of disaster and going backwards to the American people at this late date.

MATTHEWS:  Do you think a working person who‘s a traditional person on values, who looks at things the way their parents did, their grandparents, and they want their kids to have the same values, is turned off on the issue of gay marriage, on issues like a guy for gun control, on abortion rights?  Do you think those help the Republicans against the working people‘s economic interests, perhaps?

HOFFA:  Well, I think we all know those are wedge issues.  They‘re using those to try and cut into the solidarity of the middle class and working people.  They know that jobs are the most important thing.  Without a job, you don‘t have dignity in this country.  You cannot survive.  You can‘t take care of your family.  It‘s all about jobs.  Three issues: jobs, jobs, jobs.  We‘ve got to make sure we have opportunities in this country, we keep good jobs here, and we make sure that people invest in this country and make this country strong again.

MATTHEWS:  OK.  It‘s great having you on.  Thank you very much, James Hoffa, president of the Teamsters union.

Up next, a look at how the story about the missing explosives in Iraq grew over time and how it has played out big-time in this campaign.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL.

Those missing Iraqi explosives continue to dominate the campaign trail.  And it‘s a campaign at the end that has become as misleading as it is nasty. 

HARDBALL election David Shuster reports.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, NBC ELECTION CORRESPONDENT (voice-over):  Under fire for the disappearing explosives in Iraq, President Bush in Michigan today counterpunched hard. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  This week, Senator Kerry is again attacking the actions of our military in Iraq with complete disregard for the facts. 

SHUSTER:  But that is not true.  The International Atomic Energy Agency, as Kerry has stated, warned the Bush administration before the war the Iraqi weapons site was important and needed protection. 

And when it comes to blame for the missing explosives, it‘s actually a Bush campaign surrogate, not the Kerry campaign, blaming U.S. forces. 

(BEGIN VIDEO CLIP, “THE TODAY SHOW”) 

RUDOLPH GIULIANI ®, FORMER MAYOR OF NEW YORK:  The actual responsibility for it really would be for the troops that were there.  Did they search carefully enough?  Didn‘t they search carefully enough? 

(END VIDEO CLIP)

SHUSTER:  Today, Senator Kerry answered the question about the troops with this. 

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE:  They are getting their job done.  The commander in chief is not getting his job done. 

SHUSTER:  The debate over the missing explosives began Monday morning.  “The New York Times” reported that 380 tons of explosives crucial to helping detonate nuclear weapons were missing from Iraqi munitions site. 

KERRY:  This is one of the great blunders of Iraq. 

SHUSTER:  At first, presidential Press Secretary Scott McClellan said, “You might want to direct questions like these to the coalition forces and to the Pentagon.”

On Monday evening, NBC News‘ Pentagon correspondent reported that U.S.  forces had been to the site early in the war, and by Tuesday the Bush-Cheney campaign was using that report to state:

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES:  But it is not at all clear that those explosives were even at the weapons facility when our troops arrived in the area of Baghdad. 

SHUSTER:  But later that Tuesday evening, on NBC‘s “Nightly News,” Tom Brokaw said:

TOM BROKAW, NBC ANCHOR:  Last night, on this broadcast, we reported that the 101st Airborne never found the nearly 380 tons of HMX and RDX explosives.  We did not conclude the explosives were missing or had vanished, nor did we say they missed the explosives.  We simply reported that the 101st did not find them. 

SHUSTER:  On Wednesday morning, the commander of the 101st Airborne was quoted in newspapers saying: “‘I didn‘t know what the place was supposed to be.  It was not our mission.  It was not our focus.  We were just stopping there on our way to Baghdad.”

KERRY:  What we‘re seeing is a White House that is dodging and bobbing and weaving in their usual efforts to avoid responsibility.

SHUSTER:  On Wednesday afternoon, President Bush accused Kerry of being reckless. 

BUSH:  And a political candidate who jumps to conclusions without knowing the facts is not a person you want as your commander in chief. 

SHUSTER:  Today, John Kerry said the facts about the Bush administration and the explosives are clear. 

KERRY:  You were warned to guard them.  You didn‘t guard them.  They are not secure.  And guess what?  According to George Bush‘s own words, he shouldn‘t be our commander in chief.  And I couldn‘t agree more. 

(END VIDEOTAPE)

SHUSTER:  What has been so surprising this week is not that John Kerry would try to jump on a story and try to damage the Bush administration.  Kerry has done that before.  But this is the first time in a long time the Bush campaign for several days in a row has found itself cornered and on the defensive—Chris.

MATTHEWS:  It‘s the first time. 

They‘re very adept politically, this White House.  And whatever you think of Karl Rove, he is good and he is tough.  Why do you think Scott McClellan offered that response, check with the coalition authorities or the armed forces?  This is the bucks-stop-here country right before an election.  Why do you think they dodged the question, the press secretary? 

SHUSTER:  Well, Chris, it simply seemed to be mass confusion. 

The White House wasn‘t entirely sure what time period they were talking about.  At the very beginning, McClellan said this seems to have happened just in the last few days.  Well, no, Condoleezza Rice was told about it in mid-October.  And then it turns out that this was incident early in April of 2003, but it was moving target. 

MATTHEWS:  Second question.  They didn‘t get talking points to Mayor Giuliani.  Giuliani blamed the troops, when the administration has been telling us that this is something that happened before the troops got there. 

Why would Giuliani step on this and say, no, blame the troops?  This is in complete contradiction to what the White House has said about culpability here. 

SHUSTER:  Well, and, Chris, the problem the White House is dealing with now is, there are two sets of facts that are in play here.  The set of facts the White House is trying to focus on is that perhaps the weapons were never there to begin with, that perhaps the weapons were taken before the U.S. troops got there. 

The set of facts the Kerry campaign is focusing on and that a lot of the media has been focusing on is, it doesn‘t matter.  The troops that were there never got the word that the IAEA wanted them to check the site.  And for Kerry, that makes the argument that this has been mismanaged, that the information was not passed along to the troops, and, therefore, an aspect of how we went into Iraq was mishandled. 

MATTHEWS:  This is really serendipitous for Kerry, to have these two stories, the one involving the vice president today, that Halliburton and the Army are involved in an investigation by the president‘s own FBI, and of course this question about these explosives being missing.  What would Kerry be talking about if these two incidents hadn‘t occurred in the last couple of days? 

SHUSTER:  Well, if they hadn‘t occurred, Kerry was prepared to simply talk about his vision, about the economy, about health care, but some Democrats weren‘t sure that would be a winner at the end. 

(CROSSTALK)

MATTHEWS:  Well, I think he is lucky to have a news story to cover.  We have got several days left in this campaign, but it‘s about breaking news, it seems, this campaign, not about paid ads. 

SHUSTER:  That

MATTHEWS:  Anyway, thank you, David Shuster.

Up next, NBC News Pentagon correspondent Jim Miklaszewski with more on those missing explosives in Iraq.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, “The New York Times”‘ Frank Rich,  “The Weekly Standard”‘s Stephen Hayes and “The Hotline”‘s Vaughn Ververs on the Halliburton investigation and the battle for White House.

HARDBALL is back after this.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

The issue of missing explosives in Iraq continues to dominate the campaign trail and has even made the NBC News‘ “Nightly News” a centerpiece of the story. 

Jim Miklaszewski is the NBC News chief Pentagon correspondent. 

Let‘s take a look right now, Jim, before we get started, as to what Rudy Giuliani had to say on this very hot subject on “The Today Show” just this morning. 

(BEGIN VIDEO CLIP, “THE TODAY SHOW”) 

GIULIANI:  No matter how you try to blame it on the president, the actual responsibility for it really would be for the troops that were there.  Did they search carefully enough?  Didn‘t they search carefully enough? 

(END VIDEO CLIP)

MATTHEWS:  Well, is that the right political statement for this campaign, blame it on the troops, Jim? 

JIM MIKLASZEWSKI, NBC PENTAGON CORRESPONDENT:  Probably not.  And I don‘t think you will hear the White House saying that, or certainly anybody here at the Pentagon. 

MATTHEWS:  Well, start from the beginning.  How did this story develop?  Start with “The New York Times” story and how that‘s developed through your reporting and others.

MIKLASZEWSKI:  Well, it was on Monday that “The New York Times” first reported that there was a letter from the Ministry of Science there in Iraq stating that there were some 380 tons of high explosives, HMX and RDX, that were unaccounted for. 

Now, in this letter—and it‘s a mystery to everybody, including members of the International Atomic Energy Agency, that official, Dr.  Mohammed Abbas, also said that those materials went missing from the Al-Qaqaa weapons depot there south of Baghdad sometime after April 9.  But everybody is at a loss to explain how he could have known that or why he said that. 

MATTHEWS:  Why has “The Times” and others, all the media, focused on George Bush, the president‘s responsibility in this case?  Why is it focused on the commander in chief, this, what would seem to be a battlefield decision? 

MIKLASZEWSKI:  Well, you know, in the grand scheme of things, 380 tons of missing explosives in Iraq is considered pretty much a drop in the bucket. 

There are hundreds of thousands of tons of weapons and explosives that are still really unaccounted for.  And nobody knows the true baseline of how many weapons and explosives there were in Iraq before the U.S. military got there.  And I think the reason that John Kerry is zeroing in on this, because it really is a very easy thing for people to understand when Kerry tries to make the claim that the Bush administration went into this war blindly, was not well prepared to first fight the war and then, second of all, to win the peace.  And that is a theme that he has been trying to hammer away at throughout his campaign.

And finally, they were handed this issue just a week and a few days before the election itself, and they think it‘s a very easy way for the average person to—now I get it.  Now I understand why they weren‘t prepared, because these troops went into this weapons depot, the first couple of groups of troops, the 101st and the 3rd Infantry Division, not even knowing that this HMX and RDX were there.  They didn‘t even know to look for it.

And then by, May 8, when the exploitation teams finally arrived, they opened up those bunkers and discovered these explosives were missing. 

MATTHEWS:  You know, it‘s interesting when you try to figure out how both sides try to deal with this politically.  Obviously, the Kerry campaign has ran with this like a bandit.  They love this issue because it shows mismanagement of the war and helps them win the votes of people who supported the war in principle.

But isn‘t it odd that the mayor, the former mayor of New York, the hero, the Winston Churchill of 9/11, should blame the troops, when the administration said it wasn‘t the troops‘ fault, it wasn‘t anyone‘s fault because the explosives were moved before the troops got there? 

MIKLASZEWSKI:  Well, you know, to take you back just a little bit, in January of 2003, the International Atomic Energy Agency went there and verified that this 380 tons of high explosives was there.  They put a little over half of it in bunkers, sealed it. 

The other was not sealed.  They came back in March and only inspected the bunkers.  They did not open those seals, look inside the bunkers to make sure those explosives were still inside.  And this is what many in the Bush administration are using as a possible loophole to say that the IAEA didn‘t know for certain on March 8 that, in fact, those explosives were in that bunker and that they could have been moved. 

MATTHEWS:  Right. 

MIKLASZEWSKI:  They say it‘s only a possibility.  They don‘t have proof, that those explosives could have been moved, dispersed, hidden by the Saddam regime before the first shot of the war was fired. 

MATTHEWS:  We have a lot of highly politicized Defense Department with a lot of ideologues in it, a lot of people who have supported the war, very much very strong voices within the administration, usually very adept at having political reactions to hot stories. 

Why has it taken the president in this case so many days earlier in the week to respond to this hot issue? 

MIKLASZEWSKI:  Well, you know, that‘s one of the things that I asked around in this building.

And it was in part because nobody had any clear answers. 

MATTHEWS:  I see.

MIKLASZEWSKI:  And even people in the Kerry campaign acknowledge that they can‘t even say for certain where these weapons are, what happened to them. 

The IAEA, when we talk to them, say we have no idea.  All we know is those weapons were there the last time they had eyes on them in January, and then by the time troops arrived and opened the doors, they were gone.  There was also quite a bit of looting at this site, but Pentagon and military officials say they don‘t think that, once the war started, there would have been an opportunity for anybody to bring in the kind of huge trucks and haul that stuff out, because the place was crawling with U.S.  troops for several weeks. 

MATTHEWS:  Mik, a big story has just moved this evening, which is, the

FBI is undertaking an investigation of Halliburton for being—actually,

the Pentagon for awarding, perhaps improperly, contracts to that huge

corporation for work in Iraq, I believe, that obviously was recently headed

by the vice president of the United States, Dick Cheney. 

What is that going to mean politically on the eve of this election? 

MIKLASZEWSKI:  You know, I couldn‘t tell you.  I couldn‘t tell you how that will play politically. 

All I can tell you is that officials here at the Pentagon continue to contend that those contracts were let legally at the time, and they will point out that when there were missteps or overcharging by Halliburton, that the Pentagon went at them full bore and retrieved whatever moneys, whatever taxpayer money was due them. 

MATTHEWS:  Is it true that some contracts are so big that you can‘t really have a bidding process because only one company, in this case, Halliburton, has the economies of scale, the hugeness to be able to take the contract, so it would be a mere formality to have a bidding process? 

MIKLASZEWSKI:  Yes.  And I think part of the reason, too, was the expediency of it all.  They had to get these systems up and these materiels up and running and en route as quickly as possible. 

MATTHEWS:  Right. 

So they couldn‘t dither around with having a process of bidding, when they know full well at the Pentagon there‘s only one company that can probably do the job. 

MIKLASZEWSKI:  And it just happened to be coincidental that that company was once headed by the vice president. 

MATTHEWS:  Well, that coincidence will cause a lot of stir in the next three days.  Thank you very much, Jim Miklaszewski, NBC‘s chief Pentagon correspondent.

Up next, Frank Rich, Stephen Hayes and Vaughn Ververs on the media‘s role in the story about the missing explosives in Iraq and, of course, more on this Halliburton story. 

And don‘t forget, sign up for HARDBALL‘s daily e-mail briefing.  Just log on to our Web site, HARDBALL.MSNBC.com.

(COMMERCIAL BREAK)

MATTHEWS:  Joining me now are Frank Rich of “The New York Times,” Stephen Hayes of “The Weekly Standard” and Vaughn Ververs of “The Hotline.”

Gentlemen, earlier this week, there was a lot of talk about the discovery that perhaps a large cache of explosives, perhaps up to 400 tons, were allowed to be taken away out of our control during the time of the United States occupation of Iraq.  Now a bigger story emerges tonight, late this afternoon, AP, the Associated Press ran a story that the FBI has begun investigation of the Pentagon for its handling of a no-bid contract for Halliburton. 

Frank Rich, this opens up an old scab, doesn‘t it? 

FRANK RICH, ASSOCIATE EDITOR, “THE NEW YORK TIMES”:  It does, but I would argue that these are both part of the same story. 

They are both about Iraq.  They are both about accusations of mismanagement by this administration of Iraq, and so there‘s sort of synergy between these two stories, whichever one may in the end prove more important than the other. 

MATTHEWS:  Tell me about synergism.  You‘re not talking about NBC and Universal here.  What are you talking about?

RICH:  I am talking about, if Kerry as the opponent to the administration is talking about constantly, as he is, about mismanagement of Iraq, about failing of commander in chief to do the job, both these stories hit that point.

In addition, Halliburton brings in another issue, which is the charges on the economic front made by the Democrats that this administration rewards its wealthy friend.  Halliburton is a wealthy friend, whether there was a strict conflict of interests for Cheney in this or not. 

MATTHEWS:  Well, and the question of Dick Cheney—once again, we get to the question Dick Cheney.  He is a target, right? 

VAUGHN VERVERS, EDITOR, “THE HOTLINE”:  Oh, absolutely a target. 

He is one of the most—he is the most unpopular member of the four men on the ticket in many quarters of the countries, loved by the Republican base.  But what did we hear all the way up until the Republican Convention, rumors about dropping Dick Cheney off the ticket; he was a liability to this president because of this Halliburton stuff.  The president very loyal.  The Republican base probably would have revolted had they done that in the first place.

But the president is very loyal.  He thinks that Dick Cheney brings a lot of strength to the ticket.  It‘s a question of what the swing voters think.  Is this going to be—there does come a moment in the campaign where these things kind of crystallize and voters say, aha, they are right.  This isn‘t a mismanagement of the war.

“The New York Times” story earlier this week seemed to be that.  I don‘t think it turned out to be that.  I am not sure that this one is going to be either. 

MATTHEWS:  But the question, Stephen, of course, is, was this a cheap shot to begin with, where they were just going after the guy because he once headed a company.  He doesn‘t have any deal with them now, except the golden parachute he still has.  Is this fair game? 

STEPHEN HAYES, “THE WEEKLY STANDARD”:  Well, look, all Dick Cheney gets is his retirement package. 

He has nothing to do with Halliburton anymore.  And nobody has ever produced one shred of credible of evidence that he had anything whatsoever to do with the letting of these contracts.  And I think, look, we saw I think the first attempt by the Kerry campaign.  Frank is quite right.  There is this synergy.  This is exactly the kind of thing, the perfect political storm, the perfect last week attack that we have seen. 

I think we saw the first attempt at that was Monday.  I think that story has not, if not crumbled, certainly lost some of its momentum.  And I think this is just another shot.  I wouldn‘t be surprised frankly if we see a couple more.  We had the DUI story in last days of the 2000 campaign.  I think we will see a few more attempts. 

(CROSSTALK)

MATTHEWS:  But they always get to something—Frank, let‘s come back to your point. 

These targeted issues that seem to just pop up right before elections generally make a point.  Obviously, the president of the United States, before he was president, in his early years, was a reckless young guy, and that was part of his myth.  And it didn‘t really hurt him.  I always wondered why people would change their mind about a 30-year-old DUI, by the way.  It wasn‘t DWI.  It was DUI.  It wasn‘t that serious an offense.

It was obviously a problem for him.  But to change your mind about a vote 30 years later would seem to be odd.  But here is the question.  Why is this relevant now to Cheney?  What does it say about the administration that‘s really new? 

RICH:  I don‘t think it says anything that is new about Cheney. 

But here‘s what‘s relevant about it and here‘s why it is different from both the DUI story and from “The Times” story about the weapons in Iraq.  It can‘t be blamed on the news media.  The idea is always to blame the messenger, so it‘s “The New York Times”‘ fault or that newspaper in New England‘s fault or CBS‘ fault.

This is the FBI mounting a criminal investigation, an FBI of this administration.  So that is a real problem.  And it‘s just a symbol really of another part of Kerry‘s message, which is not just about Iraq, but about economic unfairness. 

(CROSSTALK)

MATTHEWS:  Would Bobby Kennedy have investigated Lyndon Johnson? 

HAYES:  I don‘t think so. 

(LAUGHTER)

MATTHEWS:  Well, maybe he would have, actually. 

(LAUGHTER)

(CROSSTALK)

MATTHEWS:  But this is like that.  You have the president‘s attorney general, or the FBI into that man.  You have got Mueller, Robert Mueller, a presidential appointee.  His agency investigating is the chief presidential appointee, Dick Cheney. 

(CROSSTALK)

RICH:  Where is Louis Freeh now that they need him? 

HAYES:  I think Frank is right in that this is harder for the Bush campaign to pin on the media and I think to rightly pin on the media, frankly. 

(CROSSTALK)

MATTHEWS:  Well, how would you do it?  Try it. 

HAYES:  Well, no.  With this one, with this one, I think it‘s a bit different, in that it does come from the FBI.

But there‘s important point to make.  And that is that there are thousands of investigations going on right now at the FBI.  The fact that we are learning about this one four days before the election, some people may think that‘s coincidence.  I think it‘s...

(CROSSTALK)

MATTHEWS:  This lawyer is loaded for bear we talked to tonight, Mr.  Kohn.  He clearly wants to make this into a big noise-making operation.  He wants to hit the Pentagon hard.  He‘s going to available to the newspapers over the weekend.  And his client is going to be spoken for. 

VERVERS:  Well, you can tell he was ready for that question from you.  He was ready to respond.  No, this is not about politics.  He had that down almost before you got the question out of your mouth.  He was ready for that one.

And, Steve, is it unfair to tie Dick Cheney to Halliburton right now?  Maybe.  But it‘s no more unfair than tying John Edwards to all the trial lawyers in the country.  This is what politics is about. 

(CROSSTALK)

HAYES:  I don‘t disagree with that point, but the problem here is, it seems to me we have two separate issues. 

On the one hand, we have a Pentagon contracting issue.  On the other hand, we have Dick Cheney, who happened to serve as the CEO of this company.  Unless somebody can come up with a link between the two, these are separate issues and shouldn‘t be relevant. 

(CROSSTALK)

MATTHEWS:  Frank, your thought.  Is this going to be John Kerry‘s horse to ride through Monday? 

RICH:  Oh, who knows?  Monday is so far away.  We could have more thrills by then.  I don‘t know.

MATTHEWS:  Well, this looks like most likely Pony Express opportunity for the Democratic candidate this weekend. 

(CROSSTALK)

VERVERS:  This gets added into the stump line, but it doesn‘t become as big of a punching bag as the... 

(CROSSTALK)

MATTHEWS:  Here‘s my thought, my father, a lifelong Republican, although I don‘t know what he is doing this year, has always said the one problem in the Republican Party, his party, was, it‘s in bed with big corporations.

It‘s always been, the Democrats are in bed with the trial lawyers and people like that and unions and all.  This one is a weakness in the Republican Party, it looks like.  And it will be used obviously with full vigor. 

Anyway, thank you very much, Frank Rich of “The New York Times,” Stephen Hayes of “The Weekly Standard,” Vaughn Ververs of “The Hotline.”

(CROSSTALK)

MATTHEWS:  Join us again tomorrow night at 7:00 Eastern for THE HORSERACE, our Friday roundup of all the week‘s electioneering. 

And congratulations to all the fans of the Boston Red Sox.  Babe Ruth, rest in peace. 

Right now, it‘s time for “SCARBOROUGH COUNTRY.”

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END   

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