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Puerto Rico Power Deal under Review; Funding for Opioid Crisis; Mattis at DMZ; Two Women Rescued at Sea. Aired 9:30-10a ET

Aired October 27, 2017 - 09:30   ET



[09:34:02] POPPY HARLOW, CNN ANCHOR: Seventy-four percent of Puerto Rico is still without power. Lawmakers from both parties want to know, how did one tiny energy company in Montana land a huge $300 million contract to help restore electricity there. the company is in Whitefish, Montana. That is also the hometown of the interior secretary, Ryan Zinke. Both Zinke and the CEO of the company, they know each other. They acknowledge that. There are a lot of questions about this. The House Energy and Commerce Committee wants answers. They have penned a letter. These are all the other committees, by the way, on your screen -- House Natural Resources, DHS, Senate Energy and Natural Resources Committee -- that want answers. The Government Accountability Office. It's not just this one committee. They want answers into how did they landed this contract. Was there any sort of foul play here because the CEO knows the interior secretary?

Let's go to our Martin Savidge. He is following all of this for us in San Juan, Puerto Rico.

What do we know?


Well, there is just huge skepticism here on the island, especially amongst residents, as to whether this company can even deliver on the promises that it has made and they -- many people certainly believe it didn't get this contract without some kind of heavy, political influence.

[09:35:10] That said, FEMA is now saying that it has significant concerns. This is what it's told CNN. With PREPA, that's the power authority here, how they procured the contract. Same thing the people on the street are wondering about this one.

And then on top of that, the governor here, that's Governor Rossello, h continues to get hammered over this issue. And the question, he says, is that there has to be audits. So he has launched -- or requested at least two audits, one of which is being done by the state government here. He wants answers today.

I asked him, well, what will happen after that? Here's what he told me.

(BEGIN VIDEO CLIP) GOV. RICARDO ROSSELLO, PUERTO RICO: If there is wrong doing, you know, in this process or in any process, there will be hell to pay. That is my consideration and what we're doing is a responsible action to make sure that we understand exactly what went through the process and that everything is clear.


SAVIDGE: I have spoken to the head of PREPA, the man who negotiated the deal with Whitefish. He says that he still believes it's a good deal. He would have done it again. And he says right now Whitefish is doing a great job.


HARLOW: The numbers will tell that. You still have 74 percent, as you know, you're there, of this island, of American citizens, with no power.

Marty Savidge, thank you.

One of the congressman raising questions about all of this is Democratic Congressman of New Jersey Frank Pallone Jr. H is one of the bipartisan groups of senators, and congressmen, that have signed this letter. He joins me now.

Thank you for being here.

You have called on the executives from Whitefish to come before your committee to testify by November 9th. Do you know if they will?

REP. FRANK PALLONE JR. (D), NEW JERSEY: We don't know yet. But, I mean, Poppy, this contract really smells, frankly, from what we're hearing so far. I just saw the governor say that they want to audit this situation, but apparently "The Hill" this morning, you know, one of the papers in Washington, actually released part of the contract --

HARLOW: I have it all here.

PALLONE: And it says it can't -- and it --

HARLOW: And I think I know what you're getting to. They can't.

PALLONE: It says they can't audit it.

HARLOW: So let me read this to you. Here is -- this is the middle of the contract, page 27 of this 34 page contract. It says in no event shall PREPA, the power authority in Puerto Rico, the Commonwealth of Puerto Rico, FEMA, the comptroller general of the United States or any authorized representative have the right to audit or review the costs and profit elements specified herein.

Here's why the cost matters. Let's look at these numbers. OK, pull them up on the screen, guys. Here is how much these folks are making. $330 an hour for a site supervisor, $227 for a journeyman lineman. And if you use subcontractors, which are the bulk of those workers employed by Whitefish now in Puerto Rico, $462 an hour for a subcontractor supervisor, $319 for a subcontractor journeyman.

PALLONE: i mean the thing is that I think this contract should be cancelled. When I saw that clause, I've never seen a contract that specifically says that no government entity can view it or audit it.

HARLOW: But the government entity signed it. PREPA signed it with the CEO. You can't cancel it.

PALLONE: I understand. I -- well, I think that the real question here is, do they have the capacity to do this? I mean I -- we'll talk about whether it should be cancelled or not. I think it should be cancelled just on that clause alone.

But the fact of the matter is, do they really have the capacity to do this? They had -- they started out with two employees. You know, you see the problem in Puerto Rico, which is massive. Seventy-five percent of the people without power. And this should be some way to review this, or even before it was done, as well as now, to see whether they even have the ability to do it.

HARLOW: OK. OK. So Puerto Rico is bankrupt. Puerto Rico is $70 billion in debt. This company, you know, PREPA, the power authority, is $9 billion in debt. Can you tell me, congressman, who's paying for all these costs?

PALLONE: It's not clear at all to me who's paying for it. Apparently the other thing the governor said was that, well, since they didn't have any money, they relied on this group because they had some kind of equity backup. But then we found out that the equity backup company is actually a major contributor to the Trump administration.

HARLOW: Who? Who?

PALLONE: In other words, they're --

HARLOW: Who is the equity backup company?

PALLONE: I don't know the --

HARLOW: You've got to substantiate that claim, congressman.

PALLONE: I don't -- I don't know the name of it. It's HBC Investments or something like that.

HARLOW: All right. But if you're going to come on this program and say that they're a supporter, you've got to back that up.


HARLOW: So please send that to us or tweet it out for our viewers, if you would.

PALLONE: Sure. Sure.

HARLOW: OK. So today at 11:00 a.m., the president is meeting with the interior secretary, Ryan Zinke. Zinke is from this town, Whitefish, Montana. He says, yes, you know, I knew thee CEO of this company in passing. We weren't best friends or anything like that. What questions do you hope the president asks Zinke about this?

PALLONE: Well, we want to see -- first of all, we need the contract. We'd like to see what subcontracts are out there. We'd like to see, you know, exactly what work is specified and where they're actually supposed to be going to be improve, you know, this actual power grid. Those are the types of things that we've been asking for with the Energy and Commerce Committee.

HARLOW: What number -- well, two -- two questions. What numbers will tell you they're getting the job here done? It's 74 percent without power now.

[09:40:02] PALLONE: I mean I think you -- you can't -- you won't be able to tell that probably for a few weeks to see if actually the grid comes back. But I just think that the nature of this contract is highly suspect.

HARLOW: And I would assume that you would be willing to subpoena them to testify if they won't come voluntarily?

PALLONE: Well, our letter, Poppy, went out on a bipartisan basis with the chairman of the committee and me as the ranking member. So, if necessary, I'm sure we could exercise subpoena power, sure.

HARLOW: Because you've been very vocal in the wake of the president's different topic here, opioid crisis, sort of announcement move yesterday, he did deem it a public health crisis, which does open up some different roots for funding to help those addicted and in recovery. It does not tap in FEMA funding or additional funding.

Now, Chris Christie, the Republican governor of your state, New Jersey, who headed the opioid commission was asked, did the president go far enough by not calling this a national emergency? Here's what he said.


GOV. CHRIS CHRISTIE (R), NEW JERSEY: We really believe this is a health crisis and that Health and Human Services has to be the agency that's coordinating the response. So the president did exactly what we asked him to do yesterday. And now it's up to Congress to step up and put funds into the public health emergency fund, which will give the president the maximum flexibility to distribute these funds to the states and get the money on the ground to start fighting this fight.


HARLOW: That's interesting, he's saying that the president did exactly what the commission wanted, even though he didn't call it a national emergency. And he says it's on you guys, it's on Congress to appropriate more funds. Should Congress?

PALLONE: Of course we should. I mean we should probably be appropriating maybe ten times what we've appropriated in the last couple years. But, again, the Republicans are in charge. They're the majority.

But I think that's what the president should have done. I mean this issue of national emergency, public emergency, I don't think is as important with the fact that the president actually ask for the money. As you know, if the president says I want, you know, $10 billion over the next few years, you know, for this emergency, that would put some pressure on the Republican majority.

HARLOW: Are you willing to put forward legislation on this to call for that?

PALLONE: Oh, absolutely. We did pass legislation a couple of years ago, about half a billion for the last two years, but that will run out at the end of this year.

HARLOW: Well, you have 59,000 -- 59,000 Americans who have died this year alone as a result of opioids.

PALLONE: Right. A lot more money is needed.

HARLOW: Thank you, congressman, we appreciate it very much.

PALLONE: Thank you.

HARLOW: Defense Secretary James Mattis in -- on the peninsula, on the Korean peninsula right now, says the U.S. is trying to avoid war, but North Korea is obsessed, in his words, with its weapons program. Next, we will take you there.


[09:46:58] HARLOW: This morning, Defense Secretary James Mattis says among the threats to the United States and South Korea is North Korea's obsession with its weapons program. Earlier, Mattis visited the DMZ, the Demilitarized Zone. You see him right there with U.S. service members. And he emphasized the U.S. is still trying to avoid war.

Let's go straight to our Will Ripley. He is inside of North Korea, in Pyongyang, with more.


WILL RIPLEY, CNN CORRESPONDENT: Poppy, the sense I get from discussions with North Korean officials here in Pyongyang, Secretary of Defense James Mattis didn't really say anything at the Demilitarized Zone today that would further enflame the situation in this region. Yes, he said that North Korea is obsessed with weapons, that they pose a threat to this region and to the world. But that is something that the North Koreans are used to hearing from the United States.

They also took notice of the fact that Secretary Mattis still talked about a diplomatic path. But the problem, they say, is that the United States wants total denuclearization of the Korean peninsula and the North Koreans continue to insist that their nuclear arsenal is simply not on the table for discussion. In fact, they think they are very close to perfecting their capability of having an intercontinental ballistic missile capable of reaching the mainland U.S. and they may have to do just a few more tests to full prove that they have that capability.

It's a terrifying prospect for many people in the outside world, but the North Korea mind-set about nuclear weapons is very different. They think that if they build up an arsenal like the U.S., like Russia, like China, that they will be safe from invasion and that that will lead to peace and stability in the region, even as many point out that a provocative test could push the Trump administration to take steps that could push this entire region down a path from which there would be no return.

The North Koreans also watching very closely the president's upcoming trip to Asia. He arrives in the region next week. He'll be visiting Japan, South Korea, China and the Philippians. And the North Koreans want to know if the president will go to the Demilitarized Zone that separates the North and the South. If the president is at the DMZ and says something inflammatory, that certainly has the potential to really make the situation go downhill quickly. The White House indicating, at least right now, it's unlikely that the president will go. But, as always, he is leaving that up for speculation about whether or not he will make that trip. Everyone wondering what he'll say.


HARLOW: Of course. Of course. Every word counts, especially there.

Will Ripley, thank you for the reporting inside of North Korea.

Ahead, a failed engine, a broken mast, drifting aimlessly in the Pacific Ocean. The nightmare for two American women. They were just rescued, though. This is a good news story. Look, along with their dogs, after, can you believe it, five months stranded at sea. Their incredible journey, next.


[09:53:59] HARLOW: An amazing rescue this morning. Two American women and their dogs found alive after being stranded at sea for five months. American Navy Sailors rescued them thousands of miles off the coast of Tahiti in the Pacific Ocean. They were headed for Tahiti from Hawaii, but their engine failed along the way.

Let's go to the Pentagon. Our Ryan Browne is there.

Incredible good news story this Friday.

RYAN BROWNE, CNN PENTAGON REPORTER: It is. It is a great news story, Poppy. And, you know, this crew aboard the USS Ashland, a U.S. Navy amphibious vessel, was able to aid the rescue and recovery of these two people and their two dogs after they encountered some serious trouble five months ago. They lost their engine. And we got to hear from one of those -- the rescued party, Jennifer Appel, who described some of the challenges they faced before being rescued 900 miles off the coast of Japan.


JENNIFER APPEL, RESCUED AT SEA: We made some modifications in order to proceed, but we could not go more than about four to five knots. So we had limited capability to maneuver. We probably had less than 24 hours before our boat sank. It was incredibly emotional and it was -- it was so satisfying to know the men and women that serve our country would come and assist us.


[09:55:22] BROWNE: Now they were -- fortunately they had stockpiled a lot of food aboard their vessel. That's how they were able to be out there for five months before being rescued and found by a Taiwanese fishing vessel actually. So a very good news story out there in the Pacific Ocean. These two folks and their two dogs being rescued by the U.S. Navy.


HARLOW: Five months. Five months' worth of food, enough for them and their dogs. That's incredible. Thank goodness.

Ryan Browne, thank you for that.

Ahead, a rare move by the White House. President Trump himself calling in a request, asking, supporting a request for a gag order to be lifted on a confidential FBI informant. Why is that so significant? Ahead.