'Wall Street Journal' Reporters Rebecca Smith and John R. Emshwiller

DATE August 6, 2003 ACCOUNT NUMBER N/A
TIME 12:00 Noon-1:00 PM AUDIENCE N/A
NETWORK NPR
PROGRAM Fresh Air

Interview: Rebecca Smith and John Emshwiller discuss their
investigating of the Enron scandal as told in their book "24 Days"
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

My guests are two Wall Street Journal reporters who broke significant parts of
the Enron story. John Emshwiller and Rebecca Smith have written a book that
chronicles the collapse of Enron and describes their experiences investigating
the story. The book is called "24 Days." That's a reference to the time
between October 16th, 2001, when Enron released its third-quarter report which
showed a $618 million loss, and November 8th, when Enron filed its own report
with the SEC laying out an array of misdeeds, hidden deals and bogus
accounting.

Emshwiller and Smith were ahead of the story. They'd started investigating
Enron in mid-August after the surprise resignation of Enron's CEO, Jeff
Skilling. The reporters uncovered shady partnerships that helped explain
Enron's massive losses. They published the first of their investigative
articles October 17th, the day after Enron's disastrous earnings report was
released.

You started working on the Enron story after the sudden resignation of the
CEO, Jeff Skilling. Why wasn't his resignation just business as usual? `CEO
resigns.' Big deal, another CEO resigning.

Ms. REBECCA SMITH (The Wall Street Journal): Well, it wasn't business as
usual, Terry, because Jeff Skilling was not your average CEO. We're talking
about a man who was at the head of a company that had been an absolute
juggernaut in corporate America. And he had worked his way to the top--some
might say clawed his way to the top--over a 10-year period, and yet here
suddenly in August of 2001, he suddenly and inexplicably quits, citing
personal reasons. No one knew of any personal reasons, so that raised
questions immediately.

GROSS: Well, you called the publicist for Enron, who kind of said, `Yeah,
personal reasons,' and then you got an interview with Skilling himself. What
did he tell you that raised more doubts in your mind?

Mr. JOHN EMSHWILLER (The Wall Street Journal): Yeah. Well, I did the
interview the day after he quit, and it was the strangest interview I've ever
done, probably, as a reporter, with a senior executive of a major company. It
wasn't as much what he said; it was sort of how he said it. He sounded like a
depressed man who was given to long, sort of rambling, sentences, almost
speaking to himself. I was barely asking any questions.

And instead of talking about personal reasons, which he sort of started with,
he starts talking, again, almost to himself, about the stock price of Enron's
stock, which had been falling, like much of the stock market for the past 12
months or so. And, you know, he kept sort of saying, `Well, if the stock
price had only stayed up, it would be OK,' you know, `I could still'--I mean,
at one point he said, `I could still be there. It would be all right.' I
sort of stopped him and said, `Excuse me, Mr. Skilling, are you saying that
if the stock price hadn't fallen, you wouldn't have resigned?' And there was
this kind of pause, and he said, in really almost like a little boy's voice,
he said, `Yeah, I guess so. I guess so.'

And we're thinking, `Oh, God, we got a story here.' If nothing else, the
man's contradicted the official line from the day before. So as I say, it was
a very strange interview that raised some questions at least about what was
going on with Skilling, and maybe something--then, you know, the question
would be, going on at Enron. And that same day we made a second discovery
that sort of also whetted our interest about the company and what was going on
inside.

GROSS: And what was that discovery?

Mr. EMSHWILLER: Well, that was when as I was sort of preparing for the
interview with Skilling--what we often do at The Journal is you go back and
read, like, a recent filing the company made with the Securities and Exchange
Commission, which all big public companies have to periodically file with the
SEC about their financial results and what's been going on at the company.
And as I read their most recent filing, I came across a section that's always
there called `related party transactions,' which usually is about deals that
company executives or directors have with the company itself; sort of the
dirty laundry list sometimes about, you know, the director has a consulting
contract, or the nephew of the chairman has a vice presidential post. They've
got to put that in related party transactions.

And the ones for Enron, I'd never seen anything like it before, and I've been
reading these things for a fairly long time as a Journal reporter. And they
were talking about these unnamed partnerships run by some unnamed senior
executive officer that seemed to be doing hundreds of millions of dollars of
business with Enron. You couldn't quite tell from the gobbledygook they put
out in this footnote what, exactly, the deals--what impact they're having on
Enron, but it seemed, obviously, very suspicious. Here you had some senior
official, you had big amounts of business and these partnerships. So the
first thing I did that day was to call the head of PR for Enron, because my
first assumption was, `Well, maybe that's Jeff Skilling they're talking about.
Maybe that's why he resigned.'

GROSS: But you found out that it wasn't Jeff Skilling who was...

Mr. EMSHWILLER: Right.

GROSS: ...running these partnerships. It was actually...

Mr. EMSHWILLER: It was Andy Fastow.

GROSS: ...Andy Fastow, who was the chief financial officer of Enron. What
were the clues that you found that revealed that it was Fastow?

Mr. EMSHWILLER: Well, the funny thing, of course, is that he was unnamed in
that report, but if you went back to earlier footnotes in earlier reports,
every so often, under the law, they had to name the related party, and once a
year at Enron they did. They also--when you called them, Enron said, `Oh,
yeah, that was Andy Fastow,' because, you know, I was thinking it was Jeff
Skilling, and they wanted to, you know, disabuse me of that notion. And so we
find out it's Fastow; they say, `Oh, these are perfectly legitimate. They've
been going on for two years. Nothing to worry about.'

But we thought there was something to worry about. We thought they were at
least strange and that they were at least worth mentioning in the paper, which
we subsequently did--make a mention of these partnerships in the paper--and
then that led to a phone call that Rebecca got.

GROSS: Rebecca, before we talk about the phone call, why were you so
concerned about the partnership? Why was the idea that this CFO was running
these partnerships a conflict of interest, in your mind?

Ms. SMITH: Well, because Andy Fastow, as the CFO, had a sworn fiduciary duty
to put the interests of investors ahead of his own interests. And yet, here
he was running partnerships that were conducting vast sums of business with
the company, and it appeared to John and I that he was making millions of
dollars off of this relationship. And, in fact, you know, the sort of thing
that you would have expected the Enron board to have said, `No way. You
cannot do that. That's a volition of your fiduciary duty.'

GROSS: So these partnerships were separate businesses that he was profiting
from that might not have been in the best interests...

Mr. EMSHWILLER: Yeah. What we knew...

GROSS: ...of the stockholders?

Mr. EMSHWILLER: Yeah. What we knew at the beginning was, as Becky mentioned,
is that, you know, you have these separate entities, and Andy Fastow was
running them and, according to the SEC filing, had a part ownership interest
in them. And they were doing lots of business with Enron, where he was the
CFO. So, you know, if you have a business transaction between two sides, you
know, the two sides are always trying to get the most they can for their side.
The problem is you had Andy Fastow on one side as the head of the partnership
and Andy Fastow on the other side as the CFO of Enron, and he couldn't get the
best deal for both of them. Somebody's interest had to get lost in that--you
know, somebody might come out better in the negotiations because you had Andy
on both sides. So he had a situation where, like, it was just a built-in
conflict.

Ms. SMITH: Except that early on, in the period that you're talking about
here, Terry, we didn't actually know what was being done with these
partnerships exactly. All we knew was that there was something going on that
looked nefarious and looked like a violation of what are considered just
basic, bedrock conflict-of-interest rules.

GROSS: Well, Rebecca, let's go back to that call that you got that gave you
more clues.

Ms. SMITH: Right. Well, we put what we knew in a story that ran in The
Journal, which is called Heard on the Street, and we really didn't know very
much about these partnerships. We actually quoted from one of the Securities
and Exchange Commission filings to show how convoluted and arcane and
gobbledygookish was Enron's explanation. And we were hoping that it might
shake loose some additional information, which it did, because right after
that column ran, I received a phone call from someone say, `Hey, the story was
good, but basically, you don't know the half of it. Call me if you would like
to learn a little bit more.' And I did, and had several conversations with
that person, who turned out to be a treasure trove of information because this
person had internal documents that really mapped out for us what it was that
Andy Fastow was doing with these partnerships and how he was putting his own
interests and the interests of his separate investors ahead of that of Enron.

Mr. EMSHWILLER: And the irony, in a way, is that, you know, we were--if it
hadn't been for that call, Rebecca and I made this one story and put out--just
mentioned that these partnerships--thinking at the very least it was worth
putting on the record in the newspaper like The Journal. But I think both of
us were planning, if we didn't get much reaction, we'd just go on and go on to
other stories, because we didn't have any other place to go with the
information that we had about the partnerships. And Fastow had resigned from
the partnerships two weeks earlier, again for unexplained reasons, so this
call was really critical, because otherwise, you know, we might have just let
the story go and moved on and dropped it.

Ms. SMITH: Because we...

GROSS: What did these partnerships do? What kind of businesses were they?

Mr. EMSHWILLER: Well, basically, there were two partnerships, both of them
called LJM; they came to be known as LJM1 and LJM2. And as we learned later,
the LJM were the initials of Fastow's wife and two sons. And basically, what
they were done is they were set up to protect Enron from having to report
losses in its various investments that were going sour. And so what Andy
Fastow would do is he'd go out and get outside investors. He'd get usually
big institutions that did business with Enron and, therefore, had some reason
to want to keep Enron happy.

Ms. SMITH: Oftentimes, banks.

Mr. EMSHWILLER: Banks, or investment banks that did business with Enron.
They'd put in money in the LJM2 partnership. They'd put in close to $400
million. And that money would then be used to help set up various
transactions with Enron. They'd set up, like, a third entity. So Enron would
be there, LJM2, they'd set up another entity and they'd stuff basically
Enron's stock into the entity and then they'd stuff Enron's bad investments
into the entity and basically use the value of the stock to hide the losses in
the other investments through some complex accounting transaction. But you
needed that outside party like LJM2 to make the accountants satisfied that
this really could be taken off of Enron's books.

GROSS: Let me quote the kind of report that you had to read in order to
figure out what the heck was happening. Here's one of the Enron reports, and
you quote from this in your book. It's an earnings report that referred to
$544 million in, quote, "related losses associated with certain investments,
principally Enron's interest in the new power company, broadband technology
investments and early termination during the third quarter of certain
structured finance arrangements with a previously disclosed entity." What?
"Certain structured finance arrangements with a previous disclosed entity"? I
mean, what does that mean?

Ms. SMITH: You see, this is why you're in a black box, and that's what these
so-called disclosures showed. There's no way reading that to know what on
Earth they're talking about. We didn't know. The equities analysts didn't
know. And this is why it really required documents from the inside to explain
what are these transactions and what are these entities, because it was very
complicated.

Mr. EMSHWILLER: Yeah. Essentially, what those entities were--we learned they
were talking there about four entities that all went under the name `the
Raptors.' And those entities were essentially used to help produce, on paper
for Enron, over a billion dollars of pretax income in, like, a two-year
period, roughly--nearly half of all their reported income they had for that
period. And you wouldn't know that until you got deep into Enron what was
going on.

So they just had these kind of, like, meaningless code words that they could
say--their lawyers would tell them, `OK, that satisfies your disclosure
requirement. You've said something even though it doesn't mean anything to
the average investor or even the very sophisticated investor on the outside.'
But that's sort of what Enron had evolved into, that it was sort of kind of
meet the letter of the law as interpreted by themselves, their lawyers and
their accountants without ever giving any sense of what was really happening
at the company.

GROSS: My guests are Wall Street Journal reporters John Emshwiller and
Rebecca Smith, authors of the new book "24 Days," about their experiences
investigating the Enron story.

We'll talk more after a break. This is FRESH AIR.

(Soundbite of music)

GROSS: If you're just joining us, my guests are Rebecca Smith and John
Emshwiller. They're the authors of the new book "24 Days." They both report
for The Wall Street Journal, and they broke several key parts of the Enron
story.

At some point during your investigation, you decided you needed to speak to
the people at the top of Enron. So you talked to Enron's PR guy, and he told
you that he wanted your questions written in advance and then he would submit
the questions and they would decide what to do. And you complied. You wrote
21, you know, pretty tough questions. Why did you comply with that? You
know, you could have said, `Sorry, we don't do that. We don't give questions
in advance. We want the interview. We're not going to tell you what the
questions are.'

Ms. SMITH: Well, this is something actually John and I debated some because
we had a difference of opinion. I felt that in the questions we submitted we
tipped our hand too much. I felt we showed too much of what we had. But an
argument could be made--and it was a strong one that John made--that they're
going to know everything we have in the end anyway. We might as well tell it
to them now, let them respond now. My fear was that this would then--they
would be less inclined to respond because they would be sort of frightened of
the amount of information that appeared that had come to us.

GROSS: And that seems to be what happened; they didn't give you the
interview.

Mr. EMSHWILLER: Well, yeah, they didn't give us the interview. And I still
don't think it was a mistake because I think, you know, as Becky said, `We're
going to have to give them the questions anyway.' It has become a much more
common tactic in corporate America to ask for questions in advance. I've
never felt constrained to, you know, wanting to give them all my questions or
to--you know, you adjust to the questions you get.

I also found that, you know, in some ways, their silence was more eloquent
than if they had given us interviews, because Enron had this reputation for
being very confident almost to the point of being cocky in dealing with the
press, that they were always available, that they were always--you know,
because they thought they had such a great story and a great ability to tell
the story that they were happy to bring in reporters and just overwhelm them
with information and certitude. When they actually came back and refused to
talk to us, that, as much perhaps as anything, told me that there was
something much bigger inside of Enron about these partnerships.

GROSS: Would you have handled this episode differently in retrospect? You
know, if you could do it over again, would you have submitted those questions
in advance?

Mr. EMSHWILLER: Yeah. I don't actually think it made much difference. I
don't think Enron, as I look back on it, was going to talk.

Ms. SMITH: Well, I think that we made a tactical error in submitting such
detailed questions. Would it have made a difference in the end? Probably
not. But I do think that we might have elicited a little more information on
the LJM partnerships early on. But again, in the long run, I don't think it
would have mattered.

GROSS: Are there any Enron executives that have yet faced any punishment?

Ms. SMITH: No one has--I mean, several people have been charged with crimes.
A couple have pleaded guilty. No one has actually had to stand trial yet.

Mr. EMSHWILLER: But that's not so unusual really because, you know, big,
complex especially white-collar crime investigations can take years. I think,
you know, it was three years-plus before the Justice Department, Rudy
Giuliani and the SEC brought their case and closed it out against Mike Milken
back in the 1980s and, you know, the great insider trading scandals of Wall
Street. And in some ways, Enron is far more complex than what, you know,
Drexel and the other big firms were doing back in the '80s. So, I mean,
it's going to take them awhile.

GROSS: I know some skeptics think that the reason why it's taking a long time
is because Kenneth Lay has close connections with President Bush and because
all the execs at Enron were so wealthy that maybe they could buy a more
favorable form of justice for themselves.

Mr. EMSHWILLER: Well, they can certainly hire expensive lawyers, and to the
degree that helps them, you know, manipulate the process. I guess the same is
true for all rich people. I actually think that at this point, Ken Lay's
connection to the Bushs works against him because he's now in the worst of all
positions in a way. George Bush can no longer take campaign donations from
Ken Lay. So in that sense, Ken Lay's useless to George Bush the politician.

And at the same time, I don't think Bush wants to have to take the heat for
saying, `Oh, yeah, we couldn't find a case against my old friend Ken Lay.' If
anything, I would suspect, you know, the Justice Department folks, if they
were told anything by the White House, would be, `Well, if you turned over
all the rocks on Ken Lay, turn them over again to make sure before we have to
make the admission we're not going to make the case against Ken.'

Ms. SMITH: But I think the main thing that's helping Ken Lay and Jeff
Skilling and others right now is the sheer complexity of the financial
structure that was developed, because a prosecutor knows that if they bring a
case, they've got to be able to explain it to a jury. And, you know, they
went after Arthur Andersen for obstruction of justice and very nearly lost
that case and it was, in comparison, child's play. It was such a simple case
in comparison with what we're talking about with these other transactions.

Mr. EMSHWILLER: And in retrospect, and one of the more astonishing things
about the Enron saga might turn out to be how little of it was illegal,
because, you know, one of the things that prosecutors were running up against
in Enron is that so many of these transactions, these off-balance sheet deals
that look so scummy, had been approved by Arthur Andersen, the outside
auditor, and the attorneys that looked over them. And that's a very potent
defense in a criminal case. If an executive can say, `Well, my outside
experts told me it was OK to do,' it's very hard for a prosecutor to get over
that.

GROSS: What are the legal charges against the Enron executives now?

Mr. EMSHWILLER: Well, there's a variety of charges, mostly related to fraud,
conspiracy, money laundering, obstruction of justice.

Ms. SMITH: Wire fraud.

Mr. EMSHWILLER: Yeah. So, you know, they use these various, you know, sort
of categories of crimes to then, you know, discuss the specific acts of
individuals. Andy Fastow, so far, has the largest array of charges against
him. I think his superceding indictment now includes 109 counts. Now some of
those are, you know, repeat crimes, they repeat different counts with the same
kind of crime, say, money laundering. But basically, those kinds of things.
So it runs a fairly wide gamut and...

Ms. SMITH: There are some who've been accused of wrongful acts in connection
with these partnerships and others with wrongful acts related to the
California energy crisis and trading-type infractions. So...

Mr. EMSHWILLER: And then there's a kind of--right, the partnerships, the
trading and then there's a sort of a third group now emerging where
they've--related to Enron's broadband operation, where they're basically
charging senior executives of that unit with having lied to the public about
the financial condition and business prospects of that unit while making large
amounts of money selling Enron's stock, their own stock. So you've got these
three different areas they're kind of mining, the federal government, and
there may well be others as they start looking at other senior executives, as
well--of course, the two most senior executives still out there would be Lay
and Skilling.

GROSS: John Emshwiller and Rebecca Smith are the authors of the new book "24
Days." They write for The Wall Street Journal. They'll be back in the second
half of the show.

I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

(Announcements)

GROSS: Coming up, we talk with Bill Maher about politics, comedy and his HBO
series "Real Time." And we continue our conversation about the collapse of
Enron with Wall Street Journal reporters Rebecca Smith and John Emshwiller.

(Soundbite of music)

GROSS: This is FRESH AIR. I'm Terry Gross, back with Wall Street Journal
reporters John Emshwiller and Rebecca Smith. They broke the story of Enron's
shady partnerships, which helped lead to the collapse of Enron. In their new
book "24 Days," Emshwiller and Smith chronicle their experiences investigating
the Enron story.

How would you say Enron relates, if at all, to the movement to recall Governor
Gray Davis in California?

Ms. SMITH: I think that, you know, one of the things that Gray Davis is
accused of was flubbing the energy crisis. And there's no question but that
earlier intervention by his administration might have made the crisis less
severe, but he did what government officials and bureaucrats often do with
something unfamiliar. They decide they're going to study it and study it, and
he studied it to death. Meanwhile, it was spinning out of control. So from
that standpoint, I think there is some culpability.

But in a larger sense, what we now know is that there was a flawed market
structure in California that was exacerbated tremendously by entities like
Enron and other traders that were trying to exploit every opening that they
could find. And certainly Gray Davis is not responsible for the fact that
they didn't care how much money they were able to suck out of the system,
they were going to go for it, and they didn't care if, in the end, it ruined
a market.

GROSS: A lot of people--a lot of readers of The Wall Street Journal feel like
the investigative staff of the paper reveals things in its investigations that
contradict the position of the editorial page.

Ms. SMITH: We hope so.

GROSS: So I wonder where you think Enron fits into that. I mean, you helped
uncover this incredibly corrupt, really large organization that--you know,
shareholders lost money, people who worked for Enron lost money. It reveals
the really ugly side of capitalism...

Ms. SMITH: Well...

GROSS: ...capitalism gone really astray. So what's the difference, do you
think, between what you saw in your investigation and what the editorial pages
ended up saying or what they had said before?

Mr. EMSHWILLER: Well, I think the editorial pages--you know, they're
very--they're obviously great champions of American capitalism and great, you
know, disparagers of government regulation of American capitalism. But to
give them their due, I think they were fairly hard when Enron came down. They
were especially hard, for instance, on the banks that they thought were these
kind of corrupt enablers, as I read some of our editorials, because they
think--you know, their feeling would be, at least stated is, that, `Well, you
know, capitalism's a great thing, but when bad things happen the market has to
correct it,' or the market has to, you know, wreak its sort of justice on the
wrongdoers. And so I would assume they think, you know, Enron should be
punished, but it doesn't say something more fundamental about the system of
the marketplace, whereas other people look at it and might say, `Well, yeah,
it says something about the marketplace and why we need to regulate the
marketplace in certain ways in order to restrain the, you know, sort of--the
more cowboy parts of capitalism.'

Ms. SMITH: But one of the tenets, of course, of market capitalists from Adam
Smith in "The Wealth of Nations" on down, of course, is that in order for a
market to operate, it has to have information. And, of course, Enron is the
anti-information. Enron--the information it puts out is incorrect, it's
misleading. So there was no defense on the part of the editorial board of
The Wall Street Journal for duplicity and corruption and financial chicanery,
because markets cannot operate, they cannot self-correct unless they know what
it is that's going on.

GROSS: What's left of Enron? It still exists?

Ms. SMITH: Oh, it's still very much a functioning company. I mean, it's been
in bankruptcy for more than a year now. But it still owns utilities,
pipelines, power plants, many, many hard assets, although it's no longer in
the energy trading business. It still has a book of contracts from that
business. So there's a lot of it still there trying to refashion itself into
something that will survive, but with a new name.

Mr. EMSHWILLER: Yeah. The funny thing about Enron may be in that, you know,
after the whole era of Skilling and the creation of the new--the modern Enron,
what re-merges from bankruptcy as the eventual company may look very much more
like the little kind of old, staid natural pipeline gas company that the
company was back in the early 1980s, before the great transformation began.
So it's almost like "Back to the Future," or future to the back or...

Ms. SMITH: Or ashes to ashes, dust to dust.

Mr. EMSHWILLER: Yeah, right. But, I mean, it's--you know, after tooling up
this company that was going to be one of the great paradigms for the 21st
century business, it may just get back to being, you know, kind of a staid
old natural gas pipeline company.

GROSS: Well, thank you so much for talking with us.

Ms. SMITH: Thank you.

Mr. EMSHWILLER: Thank you. It was great.

GROSS: John Emshwiller and Rebecca Smith are the authors of the new book "24
Days." They write for The Wall Street Journal.

Coming up, political satirist Bill Maher. This is FRESH AIR.

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

Interview: Bill Maher on his HBO show "Real Time with Bill Maher"
TERRY GROSS, host:

My guest is political satirist Bill Maher. His HBO series is back on the air.
It's called "Real Time with Bill Maher." And like his former ABC series
"Politically Incorrect," it features comics, actors and political experts
talking about the issues of the day. It also features an opening monologue by
Maher and an interview with a political newsmaker. Friday night on this
week's edition, Maher will interview California Governor Gray Davis about the
movement to recall him. Maher's book, "When You Ride Alone, You Ride With Bin
Laden," will be published in paperback next month.

Bill Maher, welcome back to FRESH AIR. Let's start with your state and the
movement to recall Governor Gray Davis. You've said that, you know, one of
your new rules is no do-overs. Why are you so opposed to the idea of the
recall movement?

Mr. BILL MAHER ("Real Time with Bill Maher"): First of all, when did it
become my state?

GROSS: You live there.

Mr. MAHER: I'm not going to take responsibility for everything that goes on
in California. Come on.

GROSS: I didn't say you owned it.

Mr. MAHER: I know. Well, you know, as I said in the editorial that ran in
our local paper, my local paper, the LA Times, basically what happened was the
economy turned, so we're getting rid of the governor, and that just doesn't
seem fair. I mean, he may not be the greatest governor in the world, but, you
know, this precedent of replacing a governor with a recall when things don't
go exactly as you like, I think, is pretty dangerous for our country and our
democracy. I mean, if he ran off with public funds or he got caught with
kiddy porn, I can understand having a recall. But what happened out here was
the dot-com bubble burst, the airline industry went south, we fought a couple
of wars overseas, and Dick Cheney and his pals in the energy industry helped
Enron gain the energy market out here, and that cost the state billions of
dollars. None of that do I attribute directly to Gray Davis. So how by
replacing him with God knows who, because on this recall ballot it could be
anyone--how that's going to actually solve the problems that we have here in
California I don't know.

GROSS: You know, your new rule is no do-overs. Do you see the recall of Gray
Davis as being part of a larger pattern of trying to get people out of office
or change the results of elections?

Mr. MAHER: Well, I was saying that the other night on my show to Alec Baldwin
and Christopher Hitchens, that between impeachment of Bill Clinton and the
Florida 2000 election, it does look like the Republicans sometimes will do
anything to win except get the most votes. So I'm not saying directly that
there's a conspiracy going on here--I don't think there is--but I do think
that they take pride in winning at all costs. And, you know, it is a rough
game, politics, but it is also how you play the game, and this is not the way
to play it.

GROSS: It's been reported that your good friend Arianna Huffington, who's
also a frequent guest on your show...

Mr. MAHER: Right.

GROSS: ...said that she would consider running. Now her ex-husband, Michael
Huffington, has already filed to be in the recall election. So are you trying
to convince her to run?

Mr. MAHER: I think I did.

GROSS: Oh, she's going...

Mr. MAHER: I talked to her the other day. She'd been trying to get ahold of
me, she was traveling, and, you know, the first thing I said was, `Hello,
Governor,' because we--what we talked about mostly was that even if she
doesn't win, it's just too good an opportunity to present the platform. I was
on "Larry King...

GROSS: Oh, and to sell her book. Excuse me.

Mr. MAHER: Well...

GROSS: Excuse me for the cynicism. Sorry.

Mr. MAHER: Right. Like Hillary Clinton.

GROSS: OK.

Mr. MAHER: Come on. I mean, it's all over, selling things. I'm sure I'm
selling something.

But I think that just as she did very well with her shadow convention a couple
of years ago--and if folks don't remember what that was, she came up with a
brilliant idea in 2000, which was to have shadow conventions in both of the
cities--I think it was Philadelphia for the Republicans and it was out here
for the other party. OK. So she had a shadow convention, which was the
convention where people were talking about those issues that neither party
would touch.

And I said to her, you know, `Just the way the shadow convention was for the
campaign for the presidency, this could be the same thing for presenting a
platform of issues in the governor's race. And even if you don't win, people
will hear it.' And I think we agreed on what the platform is generally. I
said it the other day on "Larry King." He asked about which candidates I
favored and I said, `I'm not crazy about any of them because none of them are
espousing what I would consider to be an attractive political platform, which
would be repealing that huge tax cut for rich people so we can get the economy
back in order, ending the drug war, getting real about the environment,
getting real about homeland security, the way the Israelis do, and ending
corporate welfare.' And I think that's about the platform she's going to run
on.

So it'll be interesting to see if you can run a campaign that's sort of the
anti-campaign to the way the rest of the clowns do it.

GROSS: Will it be a little bit bizarre for her to run against her ex-husband?

Mr. MAHER: I hope we can persuade him to leave the race because, let's face
it, he wasn't able to get much traction when he had $30 million behind him in
the Senate race almost 10 years ago. I don't see that as anything but sort of
a vanity exercise. And I know if he's in it, it's more likely that Arianna
will not be in it and, you know, she's much more serious about politics, I
think, than he ever was. Even when he was the front man, everyone knew she
was behind it.

GROSS: If you're just joining us, my guest is Bill Maher. And his show,
"Real Time with Bill Maher," is on HBO Friday nights. And his book, "When You
Ride Alone, You Ride With Bin Laden," is going to be published in paperback in
September.

Last week on your show you did an interview with Barney Frank, the Democratic
congressman who is gay and out of the closet, and former Boston Mayor Ray
Flynn, who now runs a Catholic Web site. And the subject was gay marriage.
It was a very interesting interview. I'm wondering why you think President
Bush has taken this time to take a stand on gay marriage and to announce that
he's opposed to it and he'd like to see legislation that made it impossible.
Why now, do you think?

Mr. MAHER: Well, he's a master of catering to his base, and this is a good
red-meat issue for Republicans and his base. And I don't think he has much to
lose. I don't think he figures that he was going to get a large percentage of
the gay vote anyway. I think people pretty much knew where he stood on this
to begin with. I guess what he said the other day in his press conference was
more specific. But when I heard it, I--maybe I hadn't heard him say those
exact words before, but I certainly wasn't surprised. I didn't go like, `Oh,
my gosh! George Bush is against gay marriage? Wow! It just--boy, knock me
over with a feather. I would never have guessed it. He just seems like the
kind of guy who wants everything to be fabulous.' No.

So, you know, he's a very traditional guy, and this is, I guess, his way of
signaling to that base that he has not his marbles, even though the Supreme
Court has made a couple of liberal decisions lately and maybe he's done a few
things that move to the center. This is an easy way for him politically to
corral the people who he more than anything wants in his camp, because I think
paramount in his mind is the memory of his father losing that base and then
losing the election.

GROSS: At the same time, I'm sure you've been observing the Democratic
hopefuls trying to deal with the issue. What do you make of how they're
handling it?

Mr. MAHER: Lamely, probably, as always. You know, the Democrats' problem on
issues like this is more that they tend to appear to be pandering to special
interests, and they shouldn't. But if I was, again, someone who could make
policy and make a speech in a political race, I would keep it real and say,
`This is such a non-issue, because the only reason we're arguing about whether
gay people have the right to be like everybody else is because of what it says
in the Bible. And the last time I checked, we had separation of church and
state, so it really shouldn't matter what it says in the Bible.'

And everybody quotes it. Ray Flynn did the other night and the president did,
`It says in Scripture.' Well, I don't happen to believe in Scripture. It
shouldn't even be brought up in this discussion. It's the year 2003. Anyone
who thinks gay people are somehow faking it or choosing it, that's just
brainwashing from their religious upbringing.

GROSS: Now some people who have strong beliefs, as you inarguably do, like to
stick with people who share their beliefs. And you're making a career out of
having guests on your show who really disagree with you, as well as guests who
agree with you, but a lot of them really disagree with you.

Mr. MAHER: Yeah.

GROSS: So you're kind of setting yourself up for, you know, political
aggravation every time you do a show.

Mr. MAHER: Right.

GROSS: So, I mean, does that get to you? You're setting yourself up for a
fight every time you go on the air.

Mr. MAHER: Well, sure. I mean, or otherwise the show would not be that
interesting. But it is only an hour a week. I mean, that's fine with me.
What I don't like is when people think outside the realm of the television
studio that I always want to do what I'm doing on the air, and lots of people
think that. Lots of people think, `Oh, good, there's Bill Maher. I betcha he
wants to have a political discussion.' And I tell them, `No. I'm having a
drink in a bar and I don't.'

GROSS: Well, I think we should talk more about politics. On the other hand,
I really want to know what you think of "Queer Eye for the Straight Guy."

Mr. MAHER: Well, I actually think it's a good trend, because American men,
heterosexual American men in general, do need a massive makeover. You know,
sometimes somebody will ask me, `What's your secret with women?' and I always
say, `Other men,' because just look at them. You know? They're wearing
Dockers and polo shirts in a nightclub, and they're wondering why they're
going home alone. You know, they just--at a certain point, men in this
country just--they did, they lost a huge sense of style. I mean, I really
don't know what it was like in other eras, but I just have a feeling that
people in the '40s and the '50s and so forth, men used to wear hats and ties,
and they just had more of a sense of style.

It just seems that men completely gave up. You either became gay, in which
you had all the style, or you were straight and you had none. You didn't mind
going out in the shirt that was--you know, had a spaghetti stain on it, that
were just watching the football game in, and that as sort of badge of honor.
It sort of meant you were a man, `Nothing gay about me. I dress like an idiot
and a slob.'

So, yes, men--you know, the regular average guy in this country does need a
makeover by gay guys, so I think it's good.

GROSS: My guest is satirist Bill Maher. His show "Real Time with Bill Maher"
is shown Friday nights on HBO. We'll talk more after a break. This is FRESH
AIR.

(Soundbite of music)

GROSS: My guest is satirist Bill Maher. His series "Real Time" is shown
Friday nights on HBO.

Now on your show you've been functioning as...

Mr. MAHER: Thank you.

GROSS: ...a journalist as well as a comic, 'cause in each show, on Friday
nights, you open up with an interview, usually with somebody in politics.

Mr. MAHER: Right.

GROSS: You know, recently you've had on, you know, Barney Frank, Ray Flynn...

Mr. MAHER: Right. Bob Graham.

GROSS: Bob Graham. And, you know, you ask them questions and, you know,
you're funny when you're asking questions, but still you're asking sometimes
tough questions that they have to respond to. I thought I'd play a little
excerpt of your interview with Bob Graham and then talk with you about how
this worked. Now Bob Graham is former chair of the Senate Select Committee on
Intelligence and he was head of the committee while the report on intelligence
was being issued, the report on 9/11.

Mr. MAHER: Right.

GROSS: So you were talking to him about that report and about how much of it
was blacked out.

Mr. MAHER: Right.

GROSS: So let's play an excerpt of that interview.

Mr. MAHER: OK.

(Soundbite of "Real Time with Bill Maher")

Mr. MAHER: Well--and look, we are thrilled to have you, because you are the
man on today's front page of every paper. This is your report from your
committee. Now a lot of it was censored, a lot of it was blacked out. I
know how that feels. I used to work at ABC.

(Soundbite of laughter and applause)

Mr. MAHER: But the parts of the report where somebody went through it with a
black Sharpie (makes popping noise) and blacked it out--now come on, it's just
you and me. What's in the blackouts?

(Soundbite of laughter)

Mr. MAHER: What does the blacked-out part say?

Senator BOB GRAHAM (Democrat, Florida; Presidential Candidate): Well, first,
Bill, I am running for president of the United States. I don't want to take a
detour to the federal penitentiary.

(Soundbite of laughter)

Sen. GRAHAM: What--the parts that were blacked out have primarily a focus on
a foreign government that was providing direct assistance to some of the
hijackers. And I think the administration felt it would be too embarrassing
to our relationship with this foreign government, even though they had been
part of a conspiracy that ended up with 3,000 Americans killed. There also
are some references to federal agencies and people in those agencies which
would have been embarrassing. And finally, by keeping these pages blanked
out, the American people won't be able to ask the kind of probing questions
that they should...

Mr. MAHER: Right.

Sen. GRAHAM: ...of how this administration and our intelligence community has
handled its responsibilities to secure the people of America.

Mr. MAHER: Well--all right. So we cannot name this country, but it is, we
can assume, a veritable `mecca'...

(Soundbite of laughter and applause)

Mr. MAHER: ...of terrorist activity.

GROSS: That's Bill Maher with Senator Bob Graham from Bill Maher's show "Real
Time" on HBO. And that was the first episode of this part of the season,
which was broadcast on July 25th.

So, Bill Maher, what's it like for you to talk to, you know, Senator Graham
about this? He knows that you know that he's talking about Saudi Arabia in
this report. You know that he knows that you know, and yet, you know that
you're not going to get him to tell you that, `Yes, it's Saudi Arabia.' So
there's a little dance that's going on. You all know the steps, but you have
to do that dance anyways.

Mr. MAHER: Well, that particular interview, because of what you just
described, the silly fandango we were doing about Saudi Arabia, was perfect
for a comedy show. I can't think of a better scenario for a comedian to be
interviewing a politician than this silly, silly exercise that he was forced
to go through where he can't say the name of the country. It was like an
"Abbott and Costello" sketch. I mean, you can't write stuff like that.
That's just a gift, you know, when you're given a gift like that. But I hope
that--even though we were mocking it, and it certainly deserved to be mocked,
I hope people who were not that up on the news and haven't been following the
story got the basic idea of what was going on here, that a report had been
commissioned on 9/11, and when it came out, the stuff on the key country,
Saudi Arabia, was blacked out and basically so was the man's voice. I mean,
he literally couldn't say it. I mean, nothing to me makes the point better
than that about our sad and sorry state of being beholden to this country
which is responsible more than any other for 9/11 and terrorist activity in
general, I believe.

GROSS: Janeane Garofalo, who I think is a friend of yours...

Mr. MAHER: Yeah.

GROSS: ...who's a comic and was one of the people from the entertainment
world who weighed in on the war with Iraq before the war started--she strongly
opposed the war--she became a real target for people on the right who thought
that, you know, not only was she politically wrong, but, `Where does she get
off?' You know, `Isn't it ridiculous for, you know, someone from show biz to
be having a forceful opinion like this?' What was it like for you to watch
her being attacked in the way that she was? And I think she was really
singled out for attack.

Mr. MAHER: Right. Well, any of us who were against the war, and myself
included, were called traitors by certain people. I saw my picture and name
in certain scurrilous tabloidy type places, along with pictures of Janeane and
Martin Sheen and Tim Robbins and--you know, the people who, as I like to say,
cannot mentally walk and chew gum at the same time, who could not get it
through their very thick skull that being against the war did not mean you
were for Saddam.

But Janeane, who, by the way, I think will be on our show Friday--I think it's
Janeane and Donna Brazile are there Friday--she had a certitude about the
folly of going to war that I personally did not possess at all. I to this day
think the jury is out on whether it was a good idea to go into a country that
was not involved with terrorism to fight a war on terror. However, I did make
the point over and over again that I was 60/40 on the situation. I don't
know, maybe it will work. And now that we've done it, I keep telling people
over and over again, you know, `You gotta root for the plan.' It may have
been Bush's war, but it's America's peace, and people should not root against
it. But neither should they have castigated Janeane and people like her for
basically just having a disagreement on the technique of fighting the war on
terror.

GROSS: One last question. And we only have a few seconds left, so I need a
kind of quick answer to this one.

Mr. MAHER: OK.

GROSS: What does it say to you that Hillary Clinton and your good friend and
frequent guest Ann Coulter are both on the best-seller list?

Mr. MAHER: That we live in a diverse country and these are diverse times.

GROSS: OK.

Mr. MAHER: You said quick.

GROSS: You could say a couple of seconds more than that if you had a...

Mr. MAHER: People love blondes?

GROSS: OK. Bill Maher, thank you so much.

Mr. MAHER: Thank you, Terry. It's always a pleasure.

GROSS: Bill Maher's HBO series "Real Time" is shown Friday nights. His book,
"When You Ride Alone, You Ride With Bin Laden," will be published in paperback
next month.

(Credits)

GROSS: I'm Terry Gross.
Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.