PART II

BILL MOYERS: The State Department is contracting out huge construction projects in Iraq as well. One such contractor - called First Kuwaiti - has a reputation that is hair raising.

BILL MOYERS: It is true that the State Department in Iraq hired a Kuwaiti company that's under investigation for kickbacks and bribery as well as using slave labor?

REP. HENRY WAXMAN: It's true. And they had information about it or-- and should have known about it. And yet, they went ahead with a contract anyway. And that's the company that did such a terrible job on building this new embassy in Baghdad.

BILL MOYERS: With no competitive bidding, the State Department gave First Kuwaiti $600 million dollars to build the U.S. embassy in Baghdad - the largest and most expensive embassy in the world. this American fortress is now behind schedule and over budget - to the tune of an additional $144 million dollars. But that seems almost mundane compared to the testimony of Rory Mayberry an American medic hired by First Kuwaiti.

RORY MAYBERRY: I believe I am one of only a few Americans that have recently worked on the site of the new embassy in Baghdad. My impressions about how the construction was being managed left me incredibly disturbed.

BILL MOYERS: Mayberry described how he boarded a plane in Kuwait City along with 51 Filipino laborers - who thought they were heading for hotel jobs in Dubai.

RORY MAYBERRY: Mr. Chairman, when the airplane took off and the captain announced that we were heading to Baghdad, all you-know-what broke out on the airplane. The men started shouting, it wasn't until the security guy working for First Kuwaiti waved an MP5 in the air that the men settled down. They realized that they had no other choice but to go to Baghdad. Let me spell it out clearly: I believe these men were kidnapped by First Kuwaiti to work at the US Embassy. They had no IDs, no passports, and were being smuggled past U.S. security forces. I had a trailer all to myself on the Green Zone. But they were packed 25 to 30 a trailer, and every day they went out to work on the construction of the embassy without proper safety equipment. I saw guys without shoes, without gloves, no safety harnesses, and on scaffolding 30 feet off the ground, their toes wrapped around the rebar like a bunch of birds.

BILL MOYERS: Despite being paid half a billion dollars in U.S. funds First Kuwaiti refused to send an official to testify.

REP. HENRY WAXMAN: Mr. Krongard we want to welcome you to our hearing today

BILL MOYERS: Howard "Cookie" Krongard was The State Department's own Inspector General-- the person Secretary of State Rice trusted to expose serious problems. Krongard was called before the committee after his own staff complained he wasn't rigorously pursuing a growing mountain of complaints from shoddy construction, to human trafficking to Blackwater.

REP. CUMMINGS: Your role as inspector-general is to investigate waste, fraud/abuse in the State Department. But your office has not completed any investigations into Blackwater activities.

BILL MOYERS: Cookie Krongard's failure to investigate Blackwater really tripped him up. The Oversight Committee uncovered a bizarre situation involving Krongard's brother, Buzzy.

REP. CUMMINGS: I'm trying to understand why you are so resistant about investigating Blackwater. I would like to show you a letter the committee obtained and ask you to comment on it. This letter was sent from Eric Prince, the CEO and founder of Blackwater. He issued that letter on July 26, 2007. Mr. Prince sent this letter to Alvin, "Buzzy" Krongard, your brother. The letter invites him to serve on Blackwater's Worldwide Advisory Board. My question is this: did you know that your brother, Buzzy Krongard is on Blackwater's advisory board.

MR. KRONGARD: Sir, I dispute that. As far as I know that is not correct. There is nothing in here that suggests that my brother accepted this July 26th invitation.

REP. HENRY WAXMAN: He thought he could just get away with saying, "No, it's not true." His brother's not on the board of Blackwater. And that would be it. But the members of our committee were ready. And one member asked him-- here's-- "See, this e-mail from Eric Prince, who's the head of Blackwater to your brothers, thanking him for joining the board."

REP. CUMMINGS: Let me try to ask you this, Mr. Krongard, did you know where your brother is this week? Do you know?

MR. KRONGARD: No, sir, I don't.

REP. CUMMINGS: According to this e-mail, Mr. Prince invited your brother to be at a board meeting to discuss strategic planning, and this meeting is taking place right now in Williamsburg, Virginia, this week as we speak. Staff contacted the hotel to speak to your brother and the hotel confirmed that he was scheduled to be there. And did you know that?

MR. KRONGARD: No, sir, I did not.

REP. HENRY WAXMAN: And then we broke.

REP. HENRY WAXMAN: Mr. Krongard we are going to recess until 12:10. I think we will be ready at that point to reconvene the hearing. So we are going to stand and recess

REP. HENRY WAXMAN: And then when we came back, he claimed to have this call that he finally decided to make to his brother to find out what was really going on.

MR. KRONGARD: During the break I did contact my bother. I reached him at home. He is not at the hotel. But I learned that he had been at the advisory board meeting yesterday. I had not been aware of that. And I want to state on the record right now that I hereby recuse myself from any matters having to do with Blackwater.

BILL MOYERS: What when through your mind as you watched that performance unfold before your eyes?

REP. HENRY WAXMAN: The man was absolutely lying. His brother claimed that he informed him well in advance that he was on board of Blackwater. When he was asked after our hearing, the brother made that statement publicly. And we even threatened to bring both brothers in, put them under oath and see who was telling the truth and who was not.

BILL MOYERS: Why didn't you do that?

REP. HENRY WAXMAN: Well, we were set to do it, but we heard from Mr. Krongard at the-- inspector general of the state department, offering to quit rather than have that hearing. And in my view, it was better to have him leave that job than to go through a hearing that would've been embarrassing. But at least we got the result that seems is the best interest of the American people.

BILL MOYERS: What does the failure of the inspector general's office at the state department and that episode say about oversight in Iraq today?

REP. HENRY WAXMAN: Here the watchdog, the Inspector General for the State Department was impeding the work of doing the investigations to keep the State Department honest. Nobody was keeping them honest.

SEN. LEAHY: Jennings, do you solemnly swear the testimony you are giving is the truth the whole truth

BILL MOYERS: Remember Scott Jennings? Karl Rove's deputy from the White House Office of Political Affairs -- the same fellow who gave that power point presentation to Lurita Doan and her staff explaining how the non-partisan GSA could help elect Republican candidates. Jennings also testified before the Senate Judiciary Committee last year in the US Attorney investigation. Henry Waxman's ears perked up when he heard Jennings admit to conducting official White House Business - U.S. government business - on an email account that belonged to the Republican National Committee .

SEN. LEAHY: How frequently did you use this e-mail address?

MR. JENNINGS: It -- I believe I've seen published accounts that have several thousand e-mails on an active server at the RNC, so it's fair to say that I used it daily.

SEN. LEAHY: And would the "thousands" that are referred to, would you think those are correct?

MR. JENNINGS: Yes, sir. I have no reason to believe it's not.

BILL MOYERS: Jennings wasn't the only one. Waxman's Committee found that at least 88 white house staff members were conducting business on the partisan server. Waxman has been trying to get those email for months.

REP. HENRY WAXMAN: We want to know on what basis some of these decisions were made in this administration. Well you would expect that government email would be available to Congress. Were they trying to keep the information off the government email sites because they didn't want anybody to know about it? Were they trying to undermine the Presidential Records Act?

BILL MOYERS: The 1978 Presidential Records Act was passed in the aftermath of Watergate when President Nixon tried to prevent access to his taped discussions when 18 and half minutes of those tapes went missing -- Nixon's secretary Rose Mary Woods demonstrated how she accidentally erased the information while answering the phone and transcribing at the same time. An explanation that became known as the "Rose Mary Woods Stretch." Now, the minute a White House document is created - by law it must be preserved. By law it belongs to the public. But along with the records of the Republican National Committee, millions of White House email messages have gone missing as well. Just the other day Waxman disclosed that the White House, itself, told his investigators that they had no archived email from certain White House offices for hundreds of days between 2003 and 2005.

This would include email related to some of the biggest controversies of the Bush Administration: The destruction of the CIA's interrogation tapes, the leak by Karl Rove and others of a CIA agent's identity, and many other unsolved mysteries.

BILL MOYERS: On the basis of unfinished business, what do you-- what's the question you want to ask about spending in Iraq?

REP. HENRY WAXMAN: If we're going to spend money in Iraq, are we doing any good? Are we rebuilding the country? Or are we just throwing money down a rat hole? And if contractors are hired to do the work, we've got to make sure that they compete for the jobs, so we can get the one who can do the job best through competition. And they need to be scrutinized constantly to be sure we're getting our money's worth.

BILL MOYERS: What are the questions you want to know about Blackwater?

REP. HENRY WAXMAN: I want to know, are we getting our money's worth? Do we need Blackwater? Are they doing harm to our mission in Iraq? And can-- if they break the law, are they going to be held accountable, the way a U.S. military personnel person would be held accountable for any violations of the law?

BILL MOYERS: What do you want to know from Condoleezza Rice?

REP. HENRY WAXMAN: Well, I want a lot from Condoleezza Rice. I want to know, as secretary of state, that she's supervising the money that's being spent by the Department of State in Iraq. That she's making sure that we're not supporting a government that can't rally its own people because it's so corrupt. The second thing, and most important thing I want to know from Condoleezza Rice, is what did she know about the false claim of Saddam Hussein having potential nuclear weapons? And did she participate in a conspiracy with people in this administration the lie to the American people to get us into a war? She's the one, I think, along with the president, has to be held accountable. Because she was the one who was supposed to work with the president to be sure he had the right information, and had the truth before those decisions were made.

BILL MOYERS: Do you regret your vote for that resolution?

REP. HENRY WAXMAN: I certainly do regret my vote. I would not have cast that vote had I known that they were lying.

BILL MOYERS: Do you get frustrated? Do you feel the administration has really been held accountable?

REP. HENRY WAXMAN: Oh, I get frustrated. And I think this administration is doing a lot, maybe all it can, to keep from being held accountable.

BILL MOYERS: Congressman Waxman, thank you very much for your time.

REP. HENRY WAXMAN: Thank you so much.