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ERIN BURNETT OUTFRONT

Second General Caught In Petraeus Scandal; White House Puts General's Nomination On Hold; Jill Kelley's Link To The Scandal; The Scandal's Impact On Military

Aired November 13, 2012 - 19:00   ET

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


ERIN BURNETT, CNN ANCHOR: OUTFRONT next, a new twist in the David Petraeus scandal. Tonight, General John Allen, the top U.S. commander in Afghanistan, part of the story.

And just who is the woman who seems to be at the center of it right now? Jill Kelley, her complaints about harassing e-mails ultimately led to Petraeus' resignation. Now we're learning of, quote, flirtatious e-mails she allegedly sent General Allen.

And the latest on the FBI investigation that stumbled upon Petraeus' affair with his biographer, Paula Broadwell. Tonight, two experts from the Fbi on why President Obama didn't learn of the investigation for six months. Let's go OUTFRONT.

I'm Erin Burnett. Good evening. OUTFRONT tonight, a scandal turns more bizarre, new details tonight on the Petraeus scandal. The White House, forced to take a stand. Not on David Petraeus, but on another four-star general, John Allen, America's top commander in Afghanistan.

He was set to become the NATO supreme commander, until the president put that nomination on hold today. Like Petraeus, Allen is at the top of the American military. He's a four-star general, one of only four four-star generals in the entire U.S. Marine Corps.

Officials are investigating General John Allen after finding allegedly inappropriate e-mails between General Allen and Jill Kelley. The same Jill Kelley who had contacted the FBI about receiving harassing e-mails from Petraeus biographer and former mistress, Paula Broadwell.

Allen, who once worked for Petraeus at the U.S. Central Command, denies any wrongdoing as investigators look through 20,000 to 30,000 pages of documents.

Now, I want to make it clear what we know at this time is that it's not clear how many of those documents may include potentially inappropriate communication. But the new allegations have raised serious questions tonight about the culture of relationships in the military, and we're going to have more on that in a moment.

But first, we go to our Pentagon correspondent, Barbara Starr. She has more on this developing story, breaking headline after headline today. Barbara, where is General Allen right now? What is his reaction to these allegations of potentially inappropriate e- mails?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Erin, General Allen is said to be here in Washington. In fact, he flew here from Afghanistan because on Thursday he was supposed to have that Senate confirmation hearing to become the military head of NATO, all of that now on hold.

Sources close to General Allen have told our own Nick Paton Walsh that Allen says he did not have an affair with Jill Kelley, a Pentagon official has also said directly that General Allen denies any affair, any extra marital involvement with Jill Kelley.

But look, Erin, the reality here is, Defense Secretary Leon Panetta ordered up a full-blown inspector general investigation, and a lot of people around the Pentagon say Leon Panetta wouldn't have done that unless there was something that needed to be looked into.

BURNETT: And Barbara, what's your understanding about General Allen and if he's heading back to Afghanistan, as we had heard he might be?

STARR: Well, he might, in fact, head back, we're told, in the next couple days to Afghanistan, because frankly, there's nothing for him to do here in Washington. He is still in command of that war, but that may be very short.

The man who is supposed to replace him, his confirmation hearing is expected to go forward. He'll take command probably rather quickly. We don't know exactly when.

But the big issue, of course, for the military right now is there is no real designated military head of NATO on the books about to take over. America's most important security aligns, Allen is on hold. Nobody knows what's going to happen.

BURNETT: All right, thank you very much, Barbara Starr. So just who is Jill Kelley? The answer to that actually depends who you ask. Some say she is a rich socialite who throws lavish parties. Yet the "Tampa Tribune" reports she has had financial problems.

Others say she volunteered as a military honorary ambassador, but what exactly does that mean? A lot of what we have heard about her doesn't seem to add up. So we have been digging on this part of the story all day.

And our Ed Lavandera is in Tampa tonight, outside the MacDill Air Force Base where Kelley is said to be a volunteer and of course, where Allen and Petraeus were both stationed. Ed, what have you learned about Jill Kelley and what she does?

ED LAVANDERA, CNN CORRESPONDENT: Well, it's a confusing picture, as you were alluding to off the top, Erin, and trying to piece together Jill Kelley's role in all of this.

We've learned from sources today it was a conversation she had with an FBI friend that spurred a lot of these investigations when she was talking about these e-mails she had been receiving and then the FBI investigator took over from there.

But Jill Kelley, we know spent the last six months or so volunteering with group called the National Council for International Visitors. And over the course of several years here in the Tampa area, hosted various events at her home.

We're actually in front of the house here where we have seen her coming and going throughout the day today, but she has not spoken with reporters.

But she had been hosting these events, had been very involved with these high-level dignitaries and officials that had come through the military bases here in the Tampa area.

BURNETT: Of course, there were pictures of her today through the window in her house watching coverage about the situation and herself, which was rather strange.

A local columnist there, Ed, who covers the socialite scene says she's not heard of Jill Kelley. There was reporting she was linked to the Wounded Warrior Foundation, but when we contacted them, they said they hadn't heard of her.

What is her link to the U.S. military, and why would she have been so friendly with General Allen and General Petraeus?

LAVANDERA: That's the confusing part here, quite frankly, is trying to figure that aspect of this story out. How someone through this organization, this volunteer organization that she was going through and hosting events at her house, was that enough to gain her access?

It also got her access on a very personal nature. General Petraeus and General Allen both wrote letters on her sister's behalf. Her sister was going through a divorce and child custody battle.

Both generals wrote letters on her behalf, saying she was a good mother, and that her child custody situation should be relooked at. That was to a judge in the Washington, D.C. area.

So this is simply much more than just a very superficial relationship. It would seem like. That there was something very -- you know, a much deeper friendship or relationship going on here.

BURNETT: Right. Let me ask you a little bit about that because, you know, some people might say, well, look, if General Petraeus' e-mail was hacked, the FBI should have known about that. But they didn't seem to, at least our understanding is.

The whole way they stumbled into General Allen, General Petraeus, was actually through Jill Kelley telling a friend of hers, an FBI agent, sort of casually she was receiving harassing e-mails and he said as a favor I'll look into it. What can you tell us about the relationship between her and this FBI agent? LAVANDERA: Well, that's a good question as to what extent what was going on there. We don't know, quite frankly. But those e-mails were also sent to General Allen and then General Allen, from what we under, forwarded them back to Jill Kelley, as well.

And that's what a lot of this was spurred on by. And that's essentially what blew the cover on the affair that General Petraeus was carrying on with his biographer.

But just -- the extent of that relationship, as Barbara reported, General Allen and those around him strongly denying there was any kind of affair or any situation like that going on.

But much beyond that, just how these friendships have developed here in Tampa, we haven't been able to I think get a good sense of just how all of that has happened in the last few years.

BURNETT: Ed Lavandera, thank you very much. He is on the ground trying to report more on, as we said, what is becoming a bizarre at this point quadrangle.

The growing scandal though is much more than something salacious. This is about the top echelon of America's military and America's spy agency, the two most powerful military and spy agencies in the world.

Senator Bob Casey is a senior Democratic member of the Foreign Relations Committee and he's OUTFRONT tonight. Senator Casey, good to see you.

SENATOR BOB CASEY (D), PENNSYLVANIA: Thanks, Erin.

BURNETT: Bizarre seems a fair word to me to use to describe this. What is your understanding as to -- I mean, if this is going to be -- continue to spread or what have you been told?

CASEY: Well, Erin, we don't know the extent of it yet, but I'd say in both instances, you have remarkably effective leaders, Director Petraeus and General Allen.

The important thing, though, for people to realize tonight is that even as this plays out, and I'm sure there will be more events that we'll hear about or more facts that will be developed in the next couple days.

In both instances, both the CIA itself and our command in Afghanistan, I think both are going to be in good shape. We're going to have a good leadership at the CIA to get the intelligence we need to ensure a national security.

And we'll have a General Dunford, when he is confirmed, a strong leader in Afghanistan. So I think in both instances, our security is going to be in good shape. But obviously, there are still a lot of questions to be answered here.

BURNETT: Well, when did you find out about this investigation? I mean, are you angry, shocked, I don't know what the word would be. Police tell me that they were looking into whether the CIA director's e-mail had been hacked six months ago and neither you nor anyone in the Congress or the president of the United States was told until after the election.

CASEY: Well, some of those questions I think, Erin, will be answered when there is a review of the process here. Obviously, in the Senate, at least, members of the Intelligence Committee have access to and are briefed on matters that sometimes the whole Senate -- I'm a member of the Foreign Relations Committee -- may not be briefed on.

We'll see what happens when that plays out. The important thing now, though, is to make sure that in either instance, we don't allow these -- they're important issues, and there are a lot of questions.

But we don't allow these to be such a distraction that in any way it undermines our national security. I think we can be assured if we stay focused that that won't happen because we have good leadership.

BURNETT: Let me ask you, though, General Allen could be headed back to Afghanistan. You heard our Barbara Starr reporting that could be possible. Obviously, we're in the midst of trying to withdraw from that country.

The Taliban has been resurgent. There have been acts of Afghan against NATO and U.S. forces of violence. Should he be going back while this investigation is under way? Does that take our troops' eye off the ball?

CASEY: Well, that's his job. He's a soldier. And as someone who spent some time with him in 2011 when he gave us a very good briefing on the situation as it was in August of 2011, he is someone who is very capable, and I think someone who takes very seriously the obligation he has to finish the job.

What's going to happen now, though, is that his replacement will go through the hearing process here in the Senate. I think that will -- I think that will proceed pretty expeditiously and we can have a new commander in place. And I think that's the most important thing right now.

BURNETT: Senator, I want to turn to Benghazi, an issue that obviously is very central to the entire Petraeus scandal. I want to get to that, but I know you were just briefed on the investigation in Benghazi today. I want to get your sense of it, but I want to tell you what John McCain said right before his meeting today. Here it is.

(BEGIN VIDEO CLIP)

SENATOR JOHN MCCAIN (R), ARIZONA: My focus is on four dead Americans, all of them brave, unnecessarily, and what is clearly of all the earmarks of a cover-up.

(END VIDEO CLIP)

BURNETT: Was there a cover-up? CASEY: Well, Erin, there is still an awful lot of questions to be answered. Of course, there's an investigation being undertaken now by Admiral Mullen, former head of our Joint Chiefs of Staff, as well.

And when that process plays out, we're going to have a lot more answers to questions about what happened. The key thing right now, though, I think -- and I think Senator McCain would agree with this that we need to make sure we do everything possible to bring to justice those who committed these acts that led to the death of four Americans.

That's the most important thing right now, in addition to making sure that every embassy, every consulate, every -- every installation where we have our diplomats who are very brave Americans on the ground doing important work.

That we do everything we can to secure them. But I think that we're going to have more answers when we go through the process of the investigation.

BURNETT: All right, Senator Casey, thank you very much. And still to come, what is next for General Petraeus? A man who worked closely with him, a friend, and has spoken with him since the scandal broke at length joins us on the program.

Plus, why did months go by before the FBI notified the president that was investigating the director of the CIA? Former assistant director of the FBI OUTFRONT.

And General Petraeus and General Allen, not the only scandals within the American military, there are more. An OUTFRONT investigation.

(COMMERCIAL BREAK)

BURNETT: Our second story OUTFRONT, cracks in a culture that values honor and discipline. A spectacular down fall of General David Petraeus and the new allegations against General John Allen have raised questions about what exactly can is going on in the top ranks of the U.S. military.

Pentagon correspondent Chris Lawrence is OUTFRONT investigating.

(BEGIN VIDEOTAPE)

CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT (voice-over): They are the elite few, the generals and admirals who rose to the highest ranks of the military.

UNIDENTIFIED MALE: I will do my utmost to serve.

LAWRENCE: But the shine is off the stars and it goes beyond retired General David Petraeus.

UNIDENTIFIED MALE: I can think of no better role, no more noble task -- LAWRENCE: The defense secretary just demoted four-star General Kip Ward and ordered him to repay the government over $80,000. Investigators found he used his rank to shuttle his wife on shopping sprees, enjoyed a lavish beach front trip, and once accepted a defense contractor's gift of going backstage to meet Denzel Washington.

UNIDENTIFIED MALE: We're going to roll it, OK?

UNIDENTIFIED MALE: What do you mean, roll it?

UNIDENTIFIED MALE: Got to do something to stop this.

LAWRENCE: Brigadier General Jeffrey Sinclaire is now being court martial for sodomy and other crimes at Fort Bragg. The military says when subordinates called him out on his attitude towards women, he allegedly said, quote, "I'm a general. I'll do whatever the bleep I want."

It makes General McChrystal's comments about his boss pale in comparison, words in "Rolling Stone" that cost him his job in 2010.

UNIDENTIFIED MALE: The problem is, there is a cascade of these right now.

LAWRENCE: Retired General Spider Marks says, as an officer moves through the ranks, there are mechanisms in place that reinforce the military's values. But at the top, a lot of those checks and balances have fallen by the wayside isolating the flag officer.

GENERAL JAMES "SPIDER" MARKS, U.S. ARMY (RETIRED): It's a thing called hubris. I mean, at some point you think the rules don't apply to you.

LAWRENCE: Military experts say that sense of entitlement sense a dangerous precedent for younger troops.

UNIDENTIFIED MALE: If we have a military that doesn't have a firm basis in understanding how important moral, ethical behavior and decision-making are to their daily actions and in terms of leadership, then that's -- that kind of puts everything in question.

MARKS: These are truly aberrations.

LAWRENCE: Despite the lapses of judgment, Spider Marks believes military culture is still sound.

MARKS: Look at the hundreds, the thousands of very senior officers at multiple levels who have served with incredible dignity.

(END VIDEOTAPE)

BURNETT: Chris, you talk about -- obviously Spider saying this is just a few people, and it's not everywhere. You talk, though, about a sense of entitlement. What's your sense of how deep the problem is?

LAWRENCE: You get a sense that early on, at the lower ranks, that that spirit and that ethos is still there, Erin. But as they climb up the ranks, there is something that sort of isolates them from those checks and balances, like they said.

Look, there are 1.4 million troops, but the flag officers, fewer than 950. I mean, they are the tiniest fraction of a tiny fraction in the military.

So even if you're only talking seven, eight, nine who have shown real lapses in judgment, you look at how small that group is, that's a bigger percentage than you might initially think.

BURNETT: Wow. Certainly gives some perspective to it. Thank you very much to Chris Lawrence.

Still OUTFRONT, today the president met with labor leaders to talk about the fiscal cliff. Jessica Yellin live from the White House on what concession the president could make.

And new details tonight about the last time the FBI questioned the woman at the center of the Petraeus affair.

(COMMERCIAL BREAK)

BURNETT: Our third story, OUTFRONT, the fiscal cliff blame game. There is so much skepticism as to whether Washington can avoid the year-end combination of spending cuts and tax increases.

A new poll shows that 38 percent of the people in this country say yes, there will be a deal. More than half of the people say no. Here's what's even more interesting. Who do the American people blame if there's no deal, 53 percent say Congress, and 29 percent say the president.

And the reason for that, well, it's because it's party lines. 85 percent of Democrats blame only Congress. Only 12 percent of Republicans agree. Republicans, 68 percent of them blame only the president and only 7 percent of Democrats say the president is at fault.

So you can see the party lines split extends to all of us. So if everyone in Washington proves the public wrong, how would a deal get done?

Jessica Yellin is our chief White House correspondent. The president has been meeting with people the past few days and trying to figure out what concessions he would make. What do you think is reasonable? What's he thinking, Jessica?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Hi, Erin. Well, in terms of what the Democrats are willing to offer, there would be some willingness to alter entitlements and the packages that are offered to the wealthiest Americans in Medicare, for example.

But in terms of revenue, they are looking for Republicans to make the concessions. The president just met with progressives here at the White House today and reiterated his position that families making $250,000 and more must see their taxes go up.

He told the group, according to multiple people I talked to inside that meeting he couldn't have been clearer on the campaign trail, that Americans want to see this change, and that he's not going to move off that position.

So when it comes to changing the revenue formula, it seems like Democrats are really looking for Republicans to give right now.

BURNETT: All right, thank you very much, Jessica. That means Democrats looking for Republicans, Republicans looking for Democrats, no. We still are optimistic, though.

Still OUTFRONT, two men with expert knowledge of the FBI explain how an investigation into the CIA could oh have taken months and been going on for up to six months without the president of the United States being informed.

Plus, a Texas-sized criticism of the federal government that even Rick Perry thinks goes way too far.

(COMMERCIAL BREAK)

BURNETT: Welcome back. We start the second half of our show with stories we care about where we focus on our own reporting from the frontlines. First, a spokesperson for the Mayo Clinic says Representative Jesse Jackson Jr. is no longer being treated there. Jackson had returned to the center for a second time last month after being treated for bipolar depression over the summer. And the congressman from Illinois, he was re-elected to the House last week amid separate investigations by the FBI and the House Ethics Committee. He's been on a leave of absence since June. He didn't campaign. It remains unclear when he'll return.

Well, an Army prosecutor said at a preliminary military hearing today that Staff Sergeant Robert Bales should face a court martial and eventually the death penalty. Bales is accused of killing 16 Afghan villagers in an early-morning rampage in March. The prosecution believes he acted -- and I use their words here -- with chilling premeditation.

But his family says there are other factors at play. In a statement to OUTFRONT today, they said, "Much of the testimony was painful, even heartbreaking but we're not convinced the government has shown us the truth, the whole truth, and nothing but the truth about what happened that night."

The hearing ended today, and it will determine if his case goes to trial.

Well, it was a week ago today that voters went to the polls and for those who remain unhappy with the country's direction, they're making their voices heard another way, calling for their state's secession from the United States. Among the states petitioning online, Utah, Mississippi, Arizona, Michigan and New York? Come on, New York. You voted for the guy.

Well, anyway, the state that got the most signatures, Texas, that may not surprise you. More than 80,000 -- which is more than the minimum need for the White House to review it and provide a response.

But not everyone wants to leave the Union. Not even Governor Rick Perry. He has alluded and says he believes in the greatness of our Union. And because this is a true democracy, there is, of course, a competing petition to deport everyone who signed the petition.

All right. In an interview with "Reuters", the head of the Energy Information Association says the United States -- this is amazing -- could be a net exporter of natural gas in as few as four years. Natural gas is plentiful in this country and while many American companies want to export it, shipping outside the country is a hard thing to do. If the country you want to ship to doesn't have a free trade agreement with the United States, the Energy Department has to determine whether the exports serve the public interest.

We found those decisions are pretty much all being shelved because of ongoing delays with an agency. So if we want to export it and make a lot of money, help that debt problem, we've got a lot more work to do.

Speaking of which, it's been 467 days since the U.S. lost its top credit rating. What are we doing to get it back?

Well, we're one month into the new fiscal year and we started on a bad foot. U.S. budget deficit was up 22 percent in October from a year ago.

And our fourth story OUTFRONT: FBI failure. The FBI investigated the Petraeus affair beginning with fears the CIA's director's e-mail had been hacked at the beginning of the summer. Yet lawmakers and the president were not told about it for six months, until after the election.

Under growing pressure and criticism, the FBI will be testifying on its handling of the Petraeus scandal. On Capitol Hill, FBI officials will go behind closed doors with members of the House Intelligence Committee who are demanding to who knew what and when they knew it.

OUTFRONT tonight, our intelligence correspondent Suzanne Kelley.

Suzanne, what are lawmakers going to find out?

SUZANNE KELLY, CNN INTELLIGENCE CORRESPONDENT: Well, they're going to have some meetings tomorrow on the Hill that are going to come before hearings open on Thursday. And Michael Morell, who's acting director of the CIA, and Sean Joyce, deputy director of the FBI, are going to be involved in these meetings. They're going to be asked a lot of questions about what they knew about the Petraeus investigation, when they knew it, and why they didn't come forward.

A couple things at play here, Erin. One is, keep in mind, the FBI itself has said very little about this case so far, publicly. A lot of information has been leaked out here and there.

Two big questions: was there ever a security concern, a national security concern? If there was, if the FBI felt that their national security was at any time put at risk, they were obligated to inform members of the intelligence community, the chairs of the intelligence community.

That didn't happen, of course. We have heard their complaints all week, that they didn't hear about this until it came out in the media on Friday.

If there was not a national security threat that they had stumbled across, why was it then that they went to Petraeus' boss, the director of national intelligence, James Clapper?

So you can imagine, there's going to be some pretty tough questions tomorrow in these closed meetings.

BURNETT: And certainly there will. And among them, I'm sure, will be this one, which is Jill Kelley, the woman in Tampa, who was receiving harassing e-mails from Paula Broadwell, she told a friend of hers who was an FBI agent about them. And he said, I guess, sort of -- we've heard it as a favor. He'd look into it.

What can you can tell us about him?

KELLY: Well, a U.S. official confirms that agent you've talked about did sent shirtless photos of himself to Kelley. But he said that that happened (AUDIO GAP) took her original concerns to when she got those e-mails. The official we spoke with tells us this agent never actually worked the case, though, but instead passed that information that Kelley gave him on to special agents in another department, the cyber unit, and that it was that department that took up the investigation that eventually stumbled on to this affair, Erin.

BURNETT: All right. Suzanne Kelly, thank you very much.

And I want to bring in two men who know the FBI inside and out. John Miller, former assistant director of the FBI and senior correspondent for CBS News. And Ron Kessler, chief Washington correspondent of Newsmax.com and author of "The Secrets of the FBI."

John, let me start with you. What more can you tell us about this FBI agent who originally got the complaint, I guess, is the right word, from Jill Kelley about the e-mails?

JOHN MILLER, SENIOR CORRESPONDENT, CBS NEWS: So as this picture unfolds, Erin, what we learn about Jill Kelley is she is very adept at making connections with people, networking those connections and hanging on to those people and figuring out how they might come in handy later. This is a case like that.

So she goes as a class member in the FBI's Citizens Academy at the Tampa field office. This is a thing where you're hand-selected to be a member of the class among community leaders. It goes on for eight or ten weeks, and you go twice a week, and they give you briefings on all of the FBI programs, and this agent gives one of the briefings for his squad and she chats with him after they exchange cards. And they stay in touch.

When she starts getting the weird e-mails, she calls him up and says, I'm getting these strange e-mails, I want to know who is sending them. You know, I want this person to get this trouble, what can we do?

And he says, well, that's not my department, and brings her to the cyber squad in Tampa and says, do we have enough here to open a harassment case under the federal statute? And they say you know, no real threat here, but it's border line, but we can certainly look into it.

BURNETT: Right.

MILLER: So they open a cyber matter as a possible stalking case. And that's how it starts.

BURNETT: And the threat unravels.

Ron, let me ask you. Everything reported on this from the FBI, their involvement sort of leaves me confused because you're left with sort of two bad scenarios, right? One, the FBI didn't know Petraeus had an external security risk, right? Because apparently, from what we know, they found out from this FBI agent, from Jill Kelley getting harassing e-mails. Or two, that the FBI found out -- spent a whole lot of time investigating something that I guess at the moment would have seemed like it was nothing.

RON KESSLER, AUTHOR, "THE SECRETS OF THE FBI": Well, you know, to me, the one important point is that on October 10th, I received a call from a long-time FBI source telling me about this case, telling me that nothing is going to happen until after the election, and even mentioning that a high-level -- additional high-level military person will be involved. Now, that tells me that rather than proceeding as the facts unfold, there was a political decision to hold this off until after the election. And that, of course, is exactly what happened.

The second point is, during this time when this investigation was going on, which is at least five months, the CIA director was in a position where he could have been compromised. He could have been blackmailed by anybody who picked up this information. This is exactly the way the Russian foreign intelligence service would work to get secrets, and, of course, very few people in the government know as many secrets as Petraeus.

So that is the problem. And I was told by a high-ranking FBI official, if this had happened with an FBI executive, he would be out the door the same day. He would not be allowed to remain in office for four or five months, regardless of what was going on with the e- mail investigation, which was a separate matter, a criminal investigation.

The issue is, here we have the CIA director in a situation where it could have been compromised for at least five months.

BURNETT: Let me ask you a follow-up on that, John.

MILLER: Sure.

BURNETT: Is it possible -- I mean, so they investigate these e- mails that Jill Kelley was getting. That leads them to the fact that the top spy in the United States was ostensibly having his e-mail hacked. It turns out it was by Paula Broadwell, he was having an affair with her.

But, I mean -- is it frightening that we might not have ever found out about it if it weren't for Jill Kelley?

MILLER: Well, yes, if that were it.

BURNETT: Right.

MILLER: But I mean, I think we get carried away with our own story.

BURNETT: Right.

MILLER: When you get down to it, what do we really have here? We have a stalking case, not an espionage case. What we have an affair with a CIA director, not with a Russian agent, but with a military intelligence officer, who is a major in the reserves and has top secret clearances.

So it's not like it's the spy case of the century.

BURNETT: Yes.

MILLER: So what we have here, really, and I don't want to oversimplify it, but it's an overblown personnel issue, which is the boss shouldn't probably be having this relationship, and there's a leadership issue here.

So that is sent over to the director of national intelligence to say -- well, he's down your chain of command, what do you want to do with this?

BURNETT: All right. So tell me what you know --

MILLER: But I mean, when we say hacked into his computer, it turns out it wasn't hacked into. Those e-mails had come from him, and she had cut and pasted them and it wasn't his classified computer, it was his unclass computer and --

BURNETT: So we're assuming if this was different or more of a threat, they might have known about it from other channels. But --

MILLER: I would -- I would say that --

BURNETT: Yes?

MILLER: -- that had a foreign power hacked into the classified computer and this came to the FBI's attention --

BURNETT: You think we would know.

MILLER: We might not have never heard about it, but all kinds of notifications would have gone out.

BURNETT: Ron, let -- tell me why you think that they waited so long? It's things like this, I always find it hard to believe in a cover-up, just because there are so many people involved they're not capable of executing a cover-up. So if took them six months to tell the president, almost six months to tell Eric Cantor, which is another strange angle to this whole story that someone went to him from the FBI, told him about this, because they were worried the case wasn't moving ahead.

Why did it take so long?

KESSLER: I don't think there's any good explanation. I think, again, the fact that I was told on October 10th --

BURNETT: Yes.

KESSLER: -- that this would not -- that no action would be taken until after the election is the bottom line about what the timing was. There was not -- based on the investigation, it was based on politics.

And secondly, it doesn't take five months to investigate a simple case of threatening e-mails. You know, if the FBI takes five months to do that, we're in big trouble, because let's say there's going to be a terrorist who is going to drop a nuclear weapon on us tomorrow, we better find out right away.

And I know from writing the book, "The Secrets of the FBI," which Bob Mueller gave approval for to give me incredible access to how they penetrate communications, how they wiretap, how they bug, I know that these e-mails can be traced within a half hour. The FBI just plugs into the carriers, into the servers, into the providers, everything is set up electronically. It doesn't take any five months to do this kind of work.

MILLER: I think Ron is conflating a FISA counter-espionage terrorism matter with a stalking case, where you go get subpoenas, you give them to the carrier, they dump tens of thousands of e-mails, because you get the first year and then you go back another year, and now, they're sorting e-mails from multiple accounts so now there's more and more, and you're looking at cryptic messages, messages between people, accounts where it's apparent who it is, accounts where it's opaque, who it really belongs to, draft e-mails being left in draft folders, and that takes a long time.

And when you're looking at a stalking case that isn't the crime of the century, you know, you're going to not shut down the Tampa office and say all hands on this. You're going to go through it in time.

The only thing that was unusual here was the high-level person that it involved, and that it fairly quickly turned out to look like a personal matter.

BURNETT: A personal matter that is now, as I say, a --

MILLER: It's a house of cards.

BURNETT: A quad -- whatever it might be. Anyway.

MILLER: A love square.

BURNETT: A love square.

All right. Thanks to all. We appreciate it.

Well, OUTFRONT next, a retired Army colonel who worked alongside Petraeus in the battlefield and just spoke with him at length about the scandal. He'll be our guest.

Plus, why a radical cleric with links to Al Qaeda has been set free.

(COMMERCIAL BREAK)

BURNETT: We're back with tonight's "Outer Circle" where we reach out to our sources around the world and begin tonight in Britain where a radical cleric accused of funding al Qaeda and other terror groups has been released from jail.

Abu Qatada won an appeal today that allows him to stay in the U.K. instead of facing terror charges in Jordan. British authorities have been trying to deport him for years.

Nic Robertson is in London tonight and I asked him about Abu Qatada's release and the fallout.

(BEGIN VIDEO CLIP)

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Erin, well, Abu Qatada is out of jail, back home. He wasted no time getting out of the prison vehicle and entering his house just a few steps being dropped off there by the police. He is under very strict bail conditions. He is under a 16-hour curfew, only allowed out of his house between 8:00 a.m. and 4:00 p.m. during the day.

This is a huge embarrassment for the British government. They wanted to deport him to Jordan, but the especially Immigration Appeals Commission has essentially ruled that they don't trust the Jordanian government when they say that Abu Qatada would not face a trial back in Jordan that would not be affected by previous testimony allegedly given under torture by witnesses for crimes he has already been convicted of in absentia.

That's what the story turns on, a big embarrassment from the British government, not being able to send him to Jordan -- Erin.

(END VIDEO CLIP)

BURNETT: Thanks very much to Nic.

And now our fifth story OUTFRONT: risking it all. The Petraeus affair has raised so many questions about the four-star general's conduct.

Here's House Minority Leader Nancy Pelosi on David Petraeus.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), HOUSE MINORITY LEADER: I think that it's really important to note that this was a personal indiscretion as far as we know. Why somebody would be personally indiscreet is their own problem. Why they would do it in e-mails is beyond my imagination. But in any event, the honorable thing was done. The general has resigned.

(END VIDEO CLIP)

BURNETT: Just how difficult was it for Petraeus to do what the, quote-unquote, "honorable thing", and what's next for him?

OUTFRONT tonight, a man who knows Petraeus well, retired Army General, Peterman Mansoor was Petraeus' right-hand man in Iraq from 2006 to 2008. He's also a close friend and he spoke with the former CIA director yesterday.

Colonel, thanks very much for taking the time. Really appreciate it. When you have the conversation with General Petraeus yesterday, what's he say?

COL. PETER MANSOOR (RET.), EXECUTIVE OFFICER TO PETRAEUS IN IRAQ: You know, he was -- expressed deep regret for what happened. The damage he had done and the pain he had caused his family. He called his action morally reprehensible, and said in his words, "I screwed up big-time." And, boy, did he ever.

You know, he really enjoyed his job at the CIA. It was the best job in the world, as far as he was concerned. And he had a good relationship with the president and national security team, and he threw that all away for -- due to a personal failing. And he is very, very down right now, as he should be.

BURNETT: Did he feel like he had a choice? I mean, you know, just looking at the timeline of things, obviously while the affair was going on, he wasn't stepping down and when he was taking questions from the FBI, he wasn't stepping down. So would he have stayed had this not become public, had Jim Clapper not called him and said step aside?

MANSOOR: Well, it's just speculation because I didn't ask him directly. But you're right, he didn't resign until the DNI asked him to, so I'm just speculating that he probably would have remained in his position if the affair had not become public knowledge.

But once it did become public knowledge, he felt it was the honorable thing to do to resign. He did not want to drag the agency through the media firestorm that he knew would ensue, and indeed, it has.

Now, my view is that the president didn't have to accept that resignation. He could easily have said well, General Petraeus, take a couple months, repair your family and you know, we'll see you back at the turn of the year, and we'll have you back at work. But the president decided to accept his resignation and we can't fault him for that decision.

BURNETT: Was Director Petraeus -- General Petraeus hopeful that the president would have taken a different choice and said thank you for this, but I don't accept it, let's set these other terms?

MANSOOR: No, I think he fully expected the president to accept the resignation and indeed, I think the president took 24 hours to make the decision. He didn't accept it right away. So there was some deliberation there in the White House.

BURNETT: And, Colonel, I know you met Paula Broadwell for the first time I believe in the summer of 2009, correct me if I'm wrong.

MANSOOR: That's correct.

BURNETT: What were your thoughts about her? What were your thoughts about it when General Petraeus came to you and said, I have chosen her to write my biography?

MANSOOR: Well, she struck me as a supremely confident, fairly attractive, physically fit woman with a huge agenda. She was, you know, had a fairly ambitious project which was at that time a PhD dissertation describing General Petraeus' leadership and his impact on the military. She asked me to help with that. I offered to do an interview.

But, you know, she used that as entree into General Petraeus' inner circle. And once she decided that she was sitting on a gold mine of information and that she would contract with an agent and sell this story to the highest bidder and turn it into a book, at that point, she crossed over the line from being a mentoree of General Petraeus and being a PhD candidate to being a journalist.

And I thought it very strange that General Petraeus at that point didn't distance himself from her, because we had a couple of rules in Iraq and one was no extended imbeds for reporters with General Petraeus and no personality profiles. And that's exactly what she ended up doing, and I think to his detriment.

So I asked him about that, I said why did you allow this to occur? And he said that it wasn't clear to him right away that it was going to be a biography. He thought it was going to be a book on the Afghan war, that Paula had done a lot of time in the field with various units and so forth, and it wasn't clear until well into the project that it was a biography. And by that time, he said it was too late to back off and I thought I had to help her with the project.

BURNETT: I know that he's told you the affair began after he started at the CIA. Obviously, legally, that is significant, right, if it happened while he was in the military, it could be very serious for him. Do you know for a fact when the affair began?

MANSOOR: He said it began a couple of months after he got to the CIA. And I talked to him about the difficulty that I had with my transition to civilian life, that you leave behind your comrades in arms, the brotherhood and sisterhood of the closed fight, people with shared bonds and experiences, and you miss soldiers.

And he indicated that was exactly what was going on in his life at that time. And unfortunately, he found the wrong person to find solace with. You know, Paula made herself available to go running with him and so forth, and I think he reached out to the wrong person in his time of need. He felt a void in his life.

BURNETT: Colonel Mansoor, thank you so much.

MANSOOR: Thank you.

BURNETT: And next, parents gone wild. A new idea that a lot of people, us, think is nuts.

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BURNETT: Modern parenting has gone a little nuts. Take, for example, Donna Giustizia. She's a woman in Ontario, Canada, who formally petitioned the city to remove all of the oak trees around her children's school because she's worried about the acorns. Now, according to Canadian media, Donna is head of the school's allergy committee and she believes the oak trees and the acorns that fall off them are -- I'll quote her -- "not only presenting a risk to the tree nut allergic students but also becoming a great cause of anxiety amongst all students with nut allergies."

Now, look, we're a kid-friendly show. Our staff has children. We got nieces and nephews. We want them all to be safe.

But it is hard to believe the city is actually taking this seriously. Allergists agree that you have to actually ingest the acorn for it to be truly dangerous like that little guy with the hairy tail.

And we're not sure it's fair to clear cut an entire species of tree just because a tiny percentage of the students, quote, "mistake the acorns for hazelnuts as they look similar."

Look, why are Canadian kids eating any nuts off the ground? I mean, Canada, I know supposedly you guys are close to perfect, right? Your dirt is probably perfect. But is everything you find on the ground in Canada really safe to put in your mouth?

And then it dawned on me, maybe that's why all those Republicans said they were going to move to Canada when the president was reelected. I mean, we already know how the GOP feels about ACORN. They want to get rid of the nuts, too.

Oh, not so fast, angry Republicans. This is exactly the kind of nanny state conservatives claim to hate. And really, who wants to move to Canada if it means leaving your nuts at home?

Thanks for joining us. "A.C. 360" starts right now.