'Countdown with Keith Olbermann' for Nov. 14

Guests: Richard Wolffe, Joel McHale

KEITH OLBERMANN, HOST (voice over): Which of these stories will you be talking about tomorrow? The nexus of FOX News and Giuliani, the juicy Judith Regan tapes of meetings, of phone calls, of pressure from FOX on its fired book publishing Star to lie to investigators, she says, betting her ex-lover Bernard Kerik for the Homeland Security job. Pressure to lie, to protect the presidential candidacy of Rudy Giuliani.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, (R) PRESIDENTIAL CANDIDATE: I think that's a gossip column story. Last thing in the world when you want to do when you are running for president is respond to gossip column sad stories.

(END VIDEO CLIP)

OLBERMANN: So, it that a no? The full picture of how Roger Ailes turned FOX News into an advertising agency for Giuliani. That would be Roger on the right, back to you. Giuliani in trouble in Iowa, campaigning just hard enough to make a third place finish looked like a disaster and that's where he used now. Mike Huckabee passes him for second. Disaster for John McCain. One of his supporters uses an offensive term to describe Hillary Clinton and McCain laughs.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: How do we beat the bitch?

(LAUGHTER)

SEN. JOHN MCCAIN, (D) PRESIDENTIAL CANDIDATE: Can I give the translation?

(LAUGHTER)

(END VIDEO CLIP)

OLBERMANN: He laughed. Blackwater and the Bush administration:

it's worse and sleazier than anybody could have guessed. The inspector general blocking investigations of Blackwater is Howard Krongard, the former executive director of CIA who got Blackwater its contract there is Buzzy Krongard and brother Howard, did you know brother Buzzy has just joined the board of Blackwater.

(BEGIN VIDEO CLIP)

HOWARD KRONGARD, INSPECTOR GENERAL: I can tell you very frankly, I am not aware of any financial interest or position he has with respect to Blackwater.

(END VIDEO CLIP)

OLBERMANN: Nevertheless, less than two hours later -

(BEGIN VIDEO CLIP)

HOWARD KRONGARD: During the break, did I contact my brother. I learned that he had been at the advisory board meeting yesterday.

(END VIDEO CLIP)

OLBERMANN: You meant that brother Buzzy. And Britney Spears gives back - parenting advice to Heidi Klum.

(BEGIN VIDEO CLIP)

HEIDI KLUM: She complained to me a lot of things about diapers that I didn't know.

UNIDENTIFIED FEMALE: Really?

KLUM: You know the sticky things on the side; I didn't know they were there.

(END VIDEO CLIP)

OLBERMANN: Why did you think they were post-its? All that and more now, on Countdown.

OLBERMANN (on camera): Good evening. This is Wednesday, November 14th, 356 days until the 2008 presidential election. At which time apparently if FOX News has anything to say about the outcome, Rudolf Giuliani will be the next president of the United States. Our fifth story on the Countdown that FOX Noise Channel will be pulling for the Republican nominee, whoever that might be is a given. That executives at News Corporation have allegedly been working to suborn perjury to protect the candidacy of one individual, Mr. Giuliani, a close friend of Roger Ailes, the head of FOX News would be monumentally inappropriate, even for FOX. David Shuster and Giuliani biographer Wayne Barrett in a moment. Day two of the Judith Regan lawsuit in which the former News Corps publishing executive and former FOX News host says a senior executive at News Corps encouraged her to lie to federal investigators about her affair with Bernard Kerik, then the Homeland Security Secretary nominee in order to protect the presidential aspirations of his mentor, Mr. Giuliani. Her lawyers telling the "New York Times" yesterday that Ms. Regan has proof. Would secret tapes of her phone calls and meetings be enough of those smoking gun? "New York Daily" news columnist George Rush and Joanna Malloy having reported back in July that Ms. Regan had secret tape recordings of her conversations with FOX executives, tapes that could quote, "Not only bolster her position against News Corps but may proved damning to more than a few FOX executives." According to one source, who characterized the tapes as juicy. The suit itself does not name any executives or offer details to support Ms. Regan's claims but the civil complaint, 75 pages in all, filed in the state Supreme Court in Manhattan yesterday is a fact, the other that she is seeking compensatory damages of no less $100 million not easily dismissed. The story given added weight by breaking last on the Web site of the paper of record, the "New York Times," before being published on its front page this morning. But, on the campaign trail in Iowa this morning, instead of addressing any of the facts in the story, candidate Giuliani was hoping to dismiss the entire thing as nothing more than small talk.

(BEGIN VIDEO CLIP)

GIULIANI: I don't respond to the story at all. I have - I don't know anything about it. And, it sounds to me like kind of a gossip column story more than a real story.

UNDENTIFIED FEMALE: Last question. Last question.

GIULIANI: Again, I think that's a gossip column story. Last thing in the world you want to do when you're running for president is respond to gossip column sad stories.

UNIDENTIFIED FEMALE: Thank you all very much.

GIULIANI: Thank you.

(END VIDEO CLIP)

OLBERMANN: So that was a yes? No? Let's turn now to our Washington correspondent David Shuster who we mentioned in the interest of full disclosure used to work for FOX News. David, good evening.

DAVID SHUSTER, MSNBC - WASHINGTON D.C.: Good evening, Keith.

OLBERMANN: The indictment of Bernard Kerik that would soon obviously lead to the trial of Bernard Kerik. Regan's lawyer says she has evidence to back up her claims. What could be those you know, juicy tapes of her conversation with FOX executives if not evidence of what she's claiming? Giuliani here tries to dismiss the story as gossip today. Didn't deny it, didn't address any component of it. Is that his best strategy right now?

SHUSTER: Well, it may be in the short-term, Keith. But in the long term and again, we're talking maybe just a matter of weeks as Judith Regan releases more information and releases details from these tapes, as the hearings start, as the depositions begin, we're going to learn a lot more about Bernie Kerik's affair with Judy Regan. We're going to learn a lot more about Bernie Kerik's shady financial deals. We're going to learn more about his business partnership with Giuliani. And all of this is going to serve to add more pressure on Giuliani to give a yes or no answer. What did you know? Did you know about the affair that Bernie Kerik was having with Judith Regan or not? It was not a gossip story when Giuliani chose to make Bernie Kerik the commissioner of the New York City Police Department. It was not a gossip story when he chose to go into business partnership with Kerik. It was not a gossip story when he decided that Bernie Kerik ought to be the Homeland Security director and he pushed the White House to do that. And because of all of these, Keith, and because of drips and draps they are going to keep coming out, the questions are going to keep coming.

OLBERMANN: I think we see the time line on this, David that "New York Daily News" mentioned in the gossip columns in July was it the shot across the bough from Regan to News Corps. They didn't settle with her. So, she goes public yesterday. She's not likely to go away. And even if they were to settle this thing now those allegations might linger and if there are any doubts about that ask Bill O'Reilly about Andrea Macrus (ph). Is there any way to assess whether this story will actually impact the Giuliani campaign?

SHUSTER: Well, listening to Giuliani campaign supporters, it has already had an impact. With the supporter expressing great frustration to us tonight, Keith that now you have the second news cycle in a week in which voters are being reminded that the guy that Rudy Giuliani recommended be the director of National Homeland Security, this is the guy who allegedly hid $500,000 from the IRS, allegedly concealed the links of a company to the mob, allegedly lied to investigators and now with Regan's lawsuit, voters are reminded, that this is the same guy, Bernie Kerik who is carrying on an affair at an apartment in Lower Manhattan that was supposed to be reserved for 9/11 rescue workers who needed a break from the pit. And the big problem Giuliani has, as far as the impact, is that this story now is in the hands of Judith Regan who's an expert when it comes to getting publicity out there. And that means she controls the story right now. Not Rudy Giuliani, not Bernie Kerik, and certainly not News Corporation and not FOX News.

OLBERMANN: And the danger, ultimately, I suppose, in trying to analyze this, David, for Rudy Giuliani, is this all could track back to the Giuliani issue, which is judgment and leadership, and even 9/11. But he didn't have the slightest idea what was going on in the criminal or personal lives of his prot'g' Bernard Kerik. Trace that line for me how that get back to Giuliani?

SHUSTER: The heart of Giuliani's candidacy, Keith, and we saw that again today in the first television ad that he's running in campaign is that he wants to promote the theme that because of 9/11, Rudy Giuliani has demonstrated the sort of leadership and judgment to defend America against terrorism. And there's no more important post administration aside from the president in terms of defending America from terrorism than the director of Homeland Security. And, yet, there was Rudy Giuliani urging the White House to nominate Bernie Kerik, who now stands alleged as a crook. And that's the kind of judgment that certainly contradicts the main theme that Rudy Giuliani is trying to push forward. And to the extent that voters see Rudy Giuliani as somebody who puts cronyism over competence - that certainly is going to be a problem for the Giuliani campaign.

OLBERMANN: MSNBC's David Shuster. As always, David, great thanks.

SHUSTER: Thanks, Keith.

OLBERMANN: Were it not for Rudolf Giuliani there might not be a FOX News Channel. In September of 1996, as Roger Ailes was preparing to launch that news station, Time Warner Cable was refusing to carry FOX News in New York City saying it had enough news channels, thank you. Since the long term prospect doesn't does not have any viewers in the nation's largest media market are never very good. Mr. Ailes asked his friend, Mayor Giuliani to intervene which he did. After those efforts failed, the Giuliani administration announced it would broadcast FOX News on a city-run station until a federal judge blocked that plan calling it special advocacy to reward a friend and to further a particular viewpoint. FOX News and Time Warner Cable eventually agreed to terms the following year. Some might now wonder if FOX News is paying Rudy Giuliani back. The close, special relationship has continued, Mr. Giuliani attending the White House correspondents' dinner this year, as a guest of the News Corporation. There he is with the CEO Rupert Murdock on the left. And here he at the same event with Mr. Ailes or as you see, in the lower right hand of your screen the back of Ailes' head as the table was seated. Let's turn now to Giuliani biographer, Wayne Barrett, author of "Grand Illusion:

The untold story of Giuliani and 9/11," also a senior editor at the "Village Voice." Thanks for coming in tonight, Wayne.

WAYNE BARRETT, GIULIANI BIOGRAPHER: Glad to be here.

OLBERMANN: All right. Giuliani doesn't talk about this. Ailes goes into reprisal mode if you mentioned it. As anything more than a casual relationship, what do you know on the exact relationship between Giuliani and roger Ailes?

BARRETT: They stayed extremely close for 20 years. I mean, Roger Ailes was the campaign manager for his first mayoral campaign in 1989. So, this is a very deep, deep relationship. But I think you really laid out, I mean, sure, Rudy performed Roger Ailes marriage. Sure, there's all kind of indications of a close, personal relationship. But, as with everything in the Rupert Empire, business is what counts. And it was a - the federal judge that you just referred to was once a prosecutor that worked for Rudy Giuliani. And she ruled against FOX and against the city. So what did Rudy do? He basically threatened Time Warner you're not going to keep your franchise, which was up for renewal or you're going to have to handle all kinds of burdensome regulations from the city of New York unless you allow FOX to have this channel. Now, the incredible thing about this is the head of Time Warner was also a dear friend of Rudy Giuliani's. Richard Parsons was his finance chair for the mayoral campaign. So, he had to choose between two very good friends. He had, in fact, made Dick parsons the chairman of the Economic Development Corporation of the city of New York. So, he had to choose between two friends and he came down solidly on Roger Ailes side even to the extent of really ignoring a Federal Court decision and working out his own deal with Time Warner. Parsons winds up resigning as the EDC chair. I think his relationship - and they went way back. They were in the same law firm together in the1970s. So, he certainly is tied totally to Roger Ailes. It is a very deep relationship that's lasted many years. The funny thing about Judith Regan's complaint is that she doesn't refer to Roger Ailes by name for the first 16 pages, right? She refers to the senior executive of the company who insisted that she not come clean on things that might affect Bernie Kerik and Rudy Giuliani. And she doesn't refer to him by name but when she first refers to him, she doesn't even give him a title. She just says Roger Ailes, whereas when she first introduces Rupert Murdock it's CEO of News Corporation. But Roger Ailes is so clearly part from page one of this complaint. He is clearly the person she is referring to as this senior executive who made all these suggestions to her that she not come clean on Bernie.

OLBERMANN: All right. So that secret's out. But here's this - why would they want her to lie to investigators about an affair with Kerik to protect Giuliani? Certainly as we've seen, Kerik has done much worse than this.

BARRETT: Well, he was having two affairs at the same time in the same apartment overlooking Ground Zero when one discovered the love letter of the other and everything blew up in his face. But I don't think it has anything to do with the affair. It has everything to do with what she learned as a very smart woman who was in Bernie's company for a very long period of time. All you have to do is look at the indictment. There are counts in the indictment of Bernie Kerik that appeared to come from Judith Regan. I mean, there is this count in the indictment of $75,000 that he took from the forward for a book that she edited that was supposed to be given to charities. The Widows Fund for Police and Fire that, instead, he deposited in a secret account, a company that nobody knew about. But she had to know about it because that's how the checks came back as deposited in that account.

OLBERMANN: Speaking of knowing about it and I'm almost out of time so be as brief as you can on this, if people in the Murdock empire tried to keep her quiet on Giuliani's behalf, would Giuliani have known that or is it possible that in this equation he is an innocent bystander in this?

BARRETT: Well, I wouldn't say he's an innocent bystander but I certainly don't think there is any evidence that he knew concretely what they were doing. I think that if the relationship was so close that he may well have had some awareness that Judith was a problem. He certainly had to know of her relationship with Bernie Kerik. But I don't think there is any indication that if perjury was suborn that he was knowledgeable about that.

OLBERMANN: If he weren't running for president what a fun story this would be to discuss. Wayne Barrett, the author of the too sentimental works on Rudy Giuliani, the most recent of which, "Grand Illusion: The untold of Rudy Giuliani and 9/11." Great thanks for coming, sir.

BARRETT: Thanks, Keith.

OLBERMANN: Giuliani is not alone in his misery. Tonight, John McCain is asked about Hillary Clinton, quote, "How do we beat the bitch?" unquote. McCain laughed and is now trying to raise money off the use of the term. And they are not laughing at Blackwater tonight, after Justice Department official investigating the mercenaries flat out denies that his own brother is on Blackwater board then has to admit that he is. Oops. Just say oops and get out. You are watching Countdown on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: John McCain has asked how to beat, quote, "The bitch." McCain laughs and calls it an excellent question. Giuliani slips to third in Iowa. The Blackwater scandal now has a new angle to it, one brother investigating the mercenaries, another brother on the board of the mercenaries. And Brent Bozell and a writer who claims we should be proud of waterboarding battling it out on worse persons. All ahead, here on Countdown.

(COMMERCIAL BREAK)

OLBERMANN: Only 50 days now until voters gather to caucus in Iowa. And the Kerik-FOX-Regan controversy could hardly have come at a worse time for Rudy Giuliani especially as he's currently placing third in Iowa. On our fourth story on the Countdown: All eyes on the Hawkeye State, after seemingly being destined for all so ram (ph) position, the former Arkansas governor, Mike Huckabee is now beating Giuliani and nipping at Mitt Romney's heels in Iowa. A "New York Times" - CBS Poll finding that 27 percent of Republican caucus goers say they will support Romney, 21 percent Huckabee, 15 percent Giuliani. Giuliani slips even lower in a Zogby Poll from last week, that only 11 percent to Huckabee's 15 to Romney's overwhelming 31. As for the front frontrunner, Senator McCain currently languishing in fifth place in both polls. He is he trying to defend the indefensible after a voter in South Carolina called Hillary Clinton an extremely disrespectful epithet. An epithet that he through lacked of censure appeared to support.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: How do we beat the bitch?

(LAUGHTER)]

MCCAIN: May I get the translation?

UNIDENTIFIED MALE: I thought she was talking about my ex-wife.

(LAUGHTER)

MCCAIN: Well, that's an excellent question. You might know that there was a poll yesterday, a Rasmussen Poll identified that shows me three points ahead of Senator Clinton in a head-to-head match up.

(APPLAUSE)

MCCAIN: I respect Senator Clinton. I respect anyone who gets the nomination of the Democrat party.

(END VIDEO CLIP)

OLBERMANN: In response to criticism of that reaction, his campaign retorted that, quote:

"Senator McCain has expressed his utmost respect for Senator Clinton numerous times on the campaign trail as he did at Monday's event in Hilton head."

Neglecting the fact, that as you just heard, before expressing that alleged respect, the senator first laughed and then rift on the foul comment before calling it an excellent question, not to mention disrespecting Clinton's Democratic Party by referring to it as the democrat party. Let's just the drop the last letter of the Senator McCain's party to balance out the republica party. Even more egregious (ph) late this evening, the McCain campaign used the incident try to raise money, campaign manager, Rick Davis emailing supporters asking them to help McCain fight against his media critics with cash. Quote:

"Please make your most generous contribution from $25 up to the maximum limit of $2,300 to the only candidate who can defeat Hillary Clinton."

At least they left the "B" word off of that. Let's turn to our reporter Dana Milbank, our political commentator and analysts, national political reporter for the "Washington Post." Dana, good evening.

DANA MILBANK, WASHINGTON POST: Good evening, Keith.

OLBERMANN: Let's start with McCain's response here, he respects her but he didn't respect her enough to suggest to the idiot in the restaurant that the term is inappropriate in a public place, right?

MILBANK: Well, let's be clear. John McCain is not campaigning for some knighthood and some order of chivalrously here. Is he campaigning for the Republican presidential nomination and he knows darn well that it would be absolute suicide to get up there and quarrel with this particular phraseology and indeed I'm not all surprised that he's trying to raise money on it. I wouldn't surprised if we find out that lady was a planted question.

OLBERMANN: Well, also, given the fact that it did change the topic a little bit, the plant might have been coming from Mrs. Clinton's campaign, too. That's another, I mean, that's a thousand to one shot but it would be really genius politics. But the McCain response to this now, to attack CNN for covering it, tonight ABC covered it; it was a big deal on World News. Everybody else has covered it in between. It sounds as if the lessons of McCaca (ph) were not really learned else. If its on-tape don't defend it just apologize it goes away, right? I mean, if he just said afterwards, it was inappropriate to use that terminology in this context, wouldn't this have gone away?

MILBANK: I don't think he wants it to go away. I think that's the important part here. And if George Allen were campaigning, as he had hoped to be doing for the republican presidential nomination, I don't think McCaca (ph) would have knocked him off course there either. This is a tough crowd that he's competing for right now. He is competing for a very hard core of voters in the Republican Party who have a lot of history of distrust of him, not the time to be defending Hilary Clinton.

OLBERMANN: So why is it OK though if Democrat X used this about female Republican Y? Wouldn't there have been a storm of protest?

MILBANK: If - had a Democratic candidate said it? Absolutely. Playing to that base, a bit of sexism would be a lot less appealing. But, we should point out that we haven't heard a whole lot of bitching shall we say from Hillary Clinton's campaign because it helps to distract her from all sorts of unpleasant issues, such as the planted questions.

OLBERMANN: One thing about the Republican race in Iowa that has nothing to do with Mr. McCain, our friend Craig Crawford had an interesting point that Rudy Giuliani appears to put himself in the wrong spot, that he campaigned just hard enough there to guarantee he will not be perceived as ignoring Iowa but did he not campaign hard enough or frequently enough to do better than second or maybe third. Did he put himself in this lose-lose?

MILBANK: I'm not sure he put himself in this lose-lose position. But, he is in what appears to be a losing situation. And that he is counting on everybody roughing each other up and waiting all the way until February 5th in the big super duper Tuesday primary here. But this is all along been a rather dicey issue. And he's back to double digits in the two most important places.

OLBERMANN: Well, maybe is he can salvage it by calling Judith Regan a "B". Dana Milbank of the "Washington Post" and MSNBC. Great thanks, Dana.

MILBANK: Thanks, Keith.

OLBERMANN: And they're calling them the Dixie chicks of the United States Bridge Federation. They explained simply this way - they didn't vote for Bush. They're now facing a year's suspension from professional bridge. Did we change the name of this country at some point to Soviet America? And that's either a blue ghost there at pump number three or someone just let one go. That's next. This is Countdown.

(COMMERCIAL BREAK)

OLBERMANN: On this date 99 the years ago was born a man who lied about his combat record in the Second World War, was improperly awarded the Distinguished Flying Cross based on the letter of recommendation which later proved he written himself. Who'd illegally ran for office while still serving in the marines. Who got elected into office by smearing a virulent anti-communist incumbent who then consistently and repeatedly made up stories about communists at every level of government, forever changing the number of communists who exists since he said he could prove and ultimately neither did he identify one communist but his approval ratings in the Gallup Poll also never exceeded 50 percent. It is the birthday of Senator Joe McCarty of Wisconsin. A culture celebrates actual Americans do not. Let's play Oddball.

We begin in Parma, Ohio. And, a ghost hanging around the self-serve island at a gas station. So says the owner anyway. Security camera footage showing a blue cloud floating around, taking off, and disappearing for a time. The owner says the ghost hung around for about an hour and a half but not all convinced that it's an actual phantom. Some think the blue blur is a plastic bag. Others say it's an angel. Some people think it might just be a customer who's been wearing a blue streak.

We in Oddball though have enhanced the video and gotten to the bottom of this of ourselves. As you will see it's Boo Berry. It's Boo Berry, everybody's favorite blue cereal ghost, and he is pissed off about the price of gas going through the freaken roof. Hopefully OPEC will get the message and produce more crude oil. Thanks, Boo Berry.

Let's head to the moon and another blue visage in the distance. It's wicked, cool HD footage of the Earth setting over the moon, shot by Japan's lunar probe. The Japanese Space Agency says these are the first HD images of the Earth shot from the moon. The quality is great. In fact, if you squint, you can see Bill O'Reilly's ego right there. That's Australia and Asia disappearing over the horizon.

The probe also shot the Earth rising over the moon, but that's all the tape they got because Alan Shepherd's golf ball, at this point, came whizzing by and smashed the camera lens.

Were the Blackwater disaster not bad enough, now it turns out the guy supposed to be investigating it for the Justice Department has a brother on the board of Blackwater. It's dumber than Heidi Klum turning to Britney Spears for parenting advice. Diaper dandies indeed. These stories ahead, but first time for Countdown's top three best persons.

Number three, best escape, eight cows in the back of a trailer in West Haven, Utah. The driver pulled up to stop for some food. As if they knew where they were, that's when the cows bolted. It took two hours to herd them back into the truck. Where had the driver stopped? McDonald's.

Number two, best marketing, Yang Chung-Chi, restaurateur in Taipai, Taiwan. All 100 seats in the place he owns made from toilet bowls. There are faucet sinks all over the place, signs reading water closet, and instead of napkins, rolls of toilet papers hang above the table. The name of the place, McDonald's - I'm sorry, Modern Toilet Restaurant.

Number one, truly best person, an anonymous benefactor, no idea if they are living or dead; but he or she saw the plight of Erie, Pennsylvania, so they donated to 46 charities in town. A physical therapy center for kids gets two million dollars. The homeless shelter, the largest donation it had ever previously gotten was 25 grand. It gets two million dollars. The smallest amount the other 44 charities will get is one million each.

Somebody gave the charities of Erie, Pennsylvania a total of 100 million dollars anonymously. Wow!

(COMMERCIAL BREAK)

OLBERMANN: This morning, the "New York Times" reported that the FBI believes Blackwater mercenaries were unjustified and violating security guidelines when they shot and killed 14 Iraqis in Baghdad in September. But in our third story tonight, the day's other Blackwater news may shed light on how the company got into Iraq and how it gets to stay there. It began at a House hearing about the State Department's ethics watchdog, Inspect General Howard Krongard. His own staff and members of the Justice Department claim he impeded investigations of contractors, including Blackwater.

Republicans ripped Democrats for the accusation. Inspector General Krongard responded to the ugly rumor that his brother Buzzy sits on Blackwater's advisory board, a meeting this week at a Virginia hotel.

(BEGIN VIDEO CLIP)

HOWARD KRONGARD, STATE DEPT. INSPECTOR GENERAL: I can tell you very frankly, I am not aware of any financial interest or position he has with respect to Blackwater. I - it couldn't possibly have affected anything I have done because I don't believe it. When these ugly rumors started recently, I specifically asked him. I do not believe it is true that he is a member of the advisory board that you stated. And that's something I think I need to say.

When these things surfaced, I called him, and I asked him directly. He has told me he does not have any involvement. He does not have any financial interest. If you are telling me that he does, absolutely, I would recuse myself.

UNIDENTIFIED MALE: You will recuse yourself?

KRONGARD: Absolutely.

UNIDENTIFIED MALE: Immediately?

KRONGARD: Absolutely.

(END VIDEO CLIP)

OLBERMANN: Mr. Krongard even testified he saw no evidence of his brother's board membership in an email from Blackwater to Buzzy that began "Dear Board Member," and then this happened.

(BEGIN VIDEO CLIP)

KRONGARD: During the break, I did contact my brother. 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.

(END VIDEO CLIP)

OLBERMANN: Too late. On March 1st, IG Krongard's office began investigating Blackwater's gun running in Iraq. By June 10th, as this email shows, Blackwater CEO Erik Prince decided to create an advisory board with brother Buzzy on it. By September 5th, Brother Buzzy had accepted. Eleven days later, Blackwater mercenaries killed those Iraqis in Baghdad and the State Department gave them immunity for anything in their statements.

The Justice Department, now impeded by the inability to use those statements, and as of Friday still waiting for the IG Krongard's help investigating the gun running charge. Blackwater's CEO not only a far-right Bush ally, he also got one of the first secret CIA contracts back in 2002, reportedly after having placed a call to the agency's number three man at the time, Brother Buzzy Krongard.

Brother Buzzy tonight telling TPMMuckRaker.com that Prince knew his brother was the IG when he asked Buzzy to join the board. PS, brother Buzzy says he did tell his other brother all about his membership on the board two or three weeks ago.

Let's turn to MSNBC political analyst Richard Wolffe, also "Newsweek's" senior White House correspondent. Richard, good evening.

RICHARD WOLFFE, "NEWSWEEK": Good evening, Keith.

OLBERMANN: Most of the scandals we wade through here on a regular basis are relatively subtle. This one looks like old fashioned graft. How does the Bush administration try to wriggle out of this one, when it appears to be the definition of that term, conflict of interest?

WOLFFE: Well, the easy answer for them is to say, this is a legal issue. And therefore, no comment until anything is resolved. And, of course, when it's resolved, then it's on appeal and they can't comment then. The tougher problem here is, what does it say about the inspector general's investigative abilities that he needed to call his brother? And he hadn't called his brother.

I mean, it just doesn't pass the smell test. And moving forward here, this is not only - I mean, it would be funny if it didn't involve the loss of so many civilian lives here. There has to be an appearance of propriety with an inspector general. And, clearly, that isn't here.

OLBERMANN: Howard Krongard also said at the end of this thing that he had never met President Bush, Mr. Rove, any of the central figures of the kleptocracy. No one told him to intervene, to the point where Congressman Issa of California volunteered to bring him into meet the president. But he failed to complete even one of these many investigations his office was responsible for of Blackwater.

Is the problem that we are dealing with - perhaps that he did not need to be told that he and others in the administration simply don't believe in the mission of holding private companies accountable for anything?

WOLFFE: Well, there is a huge black hole here. It's been built by design. First of all, the State Department didn't have the capability to do its own work here in protecting its own officials. Secondly, there is clearly a lot of fear inside the State Department. People didn't want to be in Iraq. They still don't want to go to Iraq, which says a huge amount about this administration's commitment to Iraq. You know, Condi Rice is actually forcing people to go there.

But, whatever contact the IG had with officials, in terms of - in terms of the politics here, there is a clear public diplomacy need for this administration to get out ahead of this, and say this isn't what they represent. They haven't done it yet. How long will it take?

OLBERMANN: Is that an opportunity that might fall under the new attorney general, or is that too much to hope for.

WOLFFE: Listen, we have been assured by people like Senator Schumer, Senator Feinstein that this is an independent-minded judge, who has acted independently on the bench. Now is the time for him to show some chops here and actually prove his independence. He could do it if he wanted to. You know, the IG at the State Department is not the ultimate ruler on what is the law of this country. The Justice Department should do that.

OLBERMANN: Brother Buzzy would seem to be a poster child for how to improve an administration very quickly. Richard Wolffe with "Newsweek" and MSNBC. As always, Richard, great thanks.

WOLFFE: Thank you, Keith.

OLBERMANN: Four and a half years after this country humiliated itself over Dixie Chicks, we are still punishing people for publicly questioning George W. Bush. This time the members of this country's top bridge playing team.

And the columnist who does not think water boarding is a necessary evil, but rather something Americans should be, quote, proud of. Worst persons in the world ahead on Countdown.

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OLBERMANN: We look back now at Freedom Fries with the same mix of horror and humor with which our grandparents look back at calling the Cincinnati Reds baseball team the Red Legs during the Cold War or calling Sauerkraut Victory Cabbage during World War I. There is, however, less laughter when we think back to the attacks on the group Dixie Chicks for having merely explained to a foreign audience that though they were from Texas, they did not support President Bush and were, in fact, ashamed of him.

The lack of any humor about that may owe in part to the stark fact that many in this country are still being punished for the mildest of dissent against a government that long ago chose might over right. Our number two story, as ludicrous as it sounds, America's top international contract bridge team - Bridge, as in the card game - faces a one year suspension because the players held up a small sign saying for whom they did not vote.

The Venice Cup Team, seven players from this country at an international tournament at Shanghai in China, similar to this one, battered by emails from other bridge players accusing them of, quote, treason and sedition because of this, a hand lettered sign reading, we did not vote for Bush. One of the women telling the "New York Times" the sign was a spur of the moment decision written on the back of a menu because of so much anti-Bush sentiment among players from the other countries. They simply wanted their friends and colleagues to know that he is not their fault.

Other contestants noting that war related statements are commonplace among bridge players, who regularly wear pins during tournaments bearing every sentiment from support the troops to 01/20/09, and everything in between. Jan Martel of the United States Bridge Federation wants a one year suspension for four of the women, who play Bridge for money, for a living. But there is more. The USBF wants the four to miss the World Bridge Olympiad. It wants a further year probation. It wants 200 hours of community service promoting the interest of organized Bridge. It wants the four to sign an apology written by a federation lawyer. And it wants them to write and sign a confession. "Failure to comply," its lawyers says, "will result in harsher penalties."

Martel tells the "New York Times," quote, "this isn't a free speech issue. There isn't any question that private organizations can control the speech of people who represent them." Slippery slope there, a private organization assuming for itself the right to represent this country and use the name United States without adhering to the rights of the citizen's of this country. On whose authority, it might well be asked, does the, quote, United States Bridge Federation exist?

We begin tonight's briefest of celebrity updates with O.J. Simpson; and the judge's ruling is in. He will stand trial on charges of armed kidnapping and robbery. The decision coming after a final day of hearings. Simpson's attorneys arguing that the charges should have been dropped. But the judge deciding that the stories of witnesses are so conflicted that a jury is needed to sort them out. For example, today's testimony by memorabilia dealer Alfred Beardsley (ph), who had called 911 to report Simpson had robbed him at gun point, today telling the judge that wasn't exactly true, because Simpson himself wasn't holding a gun.

All together, Simpson and five others were arrested in a hotel room invasion last September. Three defendants settling for plea bargains, two others and Simpson now facing trial and possible life in prison.

Britney Spears teaches Heidi Klum about diaper hinges. And a celebrity news world still in mourning after the whole Paris Hilton drunken elephant story proved to be false. Joel McHale of "The Soup" ahead. But first, time for Countdown's worst persons in the world.

The bronze to your Office of Homeland Security. Its representatives at the U.S.-Canada border at Rouse's Point (ph), New York, volunteer firefighters in Champlain, New York had a massive blaze on their hands and called for help from neighboring towns, even the ones in Canada. One of the fire trucks from Quebec was held up at the border for eight minutes; eight minutes while they checked the IDs of all the volunteer firemen and ran the plates on the Canadian truck.

You know who is behind this, don't you? Lou Dobbs. He will get us all killed eventually. You watch.

Runner-up, Deroy Murdock, contributing editor of the "National Review," writes a piece calling for, quote,k President Bush to reinstate water boarding proudly and publicly so America can get the information we need to prevent Muslim fanatic mass murder and win the war on terror. Water boarding," he concludes, "is something of which every American should be proud."

Let me go through this again briefly. Setting aside the ethics for a second, Mr. Murdock, when people are being tortured, they tend to make stuff up. Much of the bull crap intel that has gotten 4,000 of our kids killed in Iraq came from a guy we tortured. So I will make you a deal, since you are obviously a sadist, Mr. Murdock, you show us a torture that only gets the truth out of these people and we will let you do it to them yourself.

But our winner, Brent Bozell (ph), Media Research Council. Goes on the Hannity and Colmes Fiction Hour, again, to announce about Senator Clinton, quote, now we know and we know - we knew that she was in the middle of things. We knew she was behind the whole FBI-Gate.

Yes, in 2000, the last Whitewater independent council, Robert Ray, wrapped up six years of investigations and announced that, quote, no senior White House official or first lady Hillary Rodham Clinton engaged in criminal conduct to obtain through fraudulent means derogatory information about former White House staff. No senior White House official or Mrs. Clinton was involved in requesting FBI background reports for improper partisan advantage.

Independent council Robert W. Ray was a Republican. And Brent Bozell is a guy who makes stuff up. Brent Bozell, today's Worst Person in the World.

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OLBERMANN: You have to wonder if, perhaps, Britney Spears is tonight actually looking forward to the next looming hearing on the custody of her kids. A wry smile planted on her face because this time she has hard evidence that she has parenting skills. Our number one story on the Countdown, she has, in fact, given parenting advice. The recipient of Spears' sage council expressing her sincere gratitude. Setting, "The Ellen Degeneres Show." No dogs were hurt in the making of this television program. With the guest "Project Runway's" Heidi Klum. She said that Miss Spears had crashed her Halloween party - actually she says clashed, but that she didn't mind.

The two talked about their babies with Spears offering this bit of hidden wisdom.

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HEIDI KLUM, "PROJECT RUNWAY": She explained to me a lot of things about diapers that I didn't know.

ELLEN DEGENERES, "ELLEN": Really?

KLUM: You know these sticky things on the side? I never knew that they were there. Close them in the front? I was always putting string around. I had no idea.

(END VIDEO CLIP)

OLBERMANN: Wow! A dumb supermodel? Who knew? Miss Klum added, it's very clever; I learned a lot of things. As for this Friday's court hearing, it was requested by Kevin Federline's lawyer after Spears was videotaped running a red light. Mr. Federline is really peeved, according to "Life and Style Magazine," because their two kids, while under Spears' care got pink eye from the dog.

On that note, let's turn to the host of the pop culture show of record, E Entertainment's "The Soup." Here is Joel McHale. Joel, good evening.

JOEL MCHALE, "THE SOUP": Thank you for having me.

OLBERMANN: So Britney Spears is spreading the word, disposable diapers have sticky things on the side. And what other parenting advice does she have up her sleeve?

MCHALE: Well, always burp your kids after they have beer. No beef jerky if they don't have teeth. And finally, cigarettes are not pacifiers.

OLBERMANN: The diaper stuff; how did Ms. Spears know about this? Who told her?

MCHALE: Oh, well that was accidental because she needed something to get the Cheeto dust off her fingers.

OLBERMANN: This actually gives us some insight into what celebrity diva chit-chat might be like. Luckily for Miss Klum, who is happily married to the singer Seal, making her Heidi Klum-Seal, she didn't need any marriage advice from Spears, right?

MCHALE: No, no. She didn't get any marriage advice, but Spears did show her how to skin a possum.

OLBERMANN: Never know when it might be necessary. There is this hearing the day after tomorrow, because she ran a red light with her kids in the car. She is yet to get to the point that it did on the "Arrested Development" plot line with the actor Thomas Jane saying basically nothing but, I just want my kids back. But she is getting close here. How much further can this devolve?

MCHALE: Well, Keith, you have seen the movie "Seven?" What's in the box? What's in the box? I'm sorry.

OLBERMANN: One more Spears item before we move on.

MCHALE: Yes.

OLBERMANN: The pink eye came from the dog. Now, we're going to have like a dog monitor appointed for Britney Spears, in addition to the kid monitor? Do we have to have like - I don't know - whoever worked with Ellen Degeneres has to move over to work with Britney Spears' dog?

MCHALE: Yes, and there is no way Britney Spears' dog is going to pass the drug test. Can you imagine what he is eating off the floor in that kitchen?

OLBERMANN: That's not coconut dust. There are also these reports that say that she passed several drug tests, but there was one supposed positive result, and her people reportedly called it a false positive caused by her inhaler. Does that make any sense to you, judge?

MCHALE: It actually - it makes complete sense, because she has nasal asthma and her inhaler is a rolled up 20 dollar bill.

OLBERMANN: Let's quickly switch over to the Jolie-Pitt news.

MCHALE: Why?

OLBERMANN: They bought an island in the shape of Ethiopia, man made island off the coast of Dubai. Why did they do that, Joel?

MCHALE: Well, I don't know how you train your army of children, but if you can't do it in private, then what's the point, really?

OLBERMANN: So, it's in the shape of Ethiopia so they will know the terrain when they get to the real one or what?

MCHALE: Exactly. You have got to take time when you are teaching kids to fight.

OLBERMANN: Last point here is more on a personal level, are all your staffers OK? When that story that Paris Hilton was taking up the cause of drunken elephants in India turned up to be inaccurate, I can only imagine the disappointment inside Soup world headquarters.

MCHALE: You know what, we take things in stride. We calmly took the pre-produced footage of Paris with the elephant and put it right next to the pre-produced footage of Paris with the donkey, the pre-produced footage of Paris with the Lemur and the pre-produced footage of Paris with Todd Bridges. We don't know when we're going to use this footage, Keith, but it will have its day in the sun.

OLBERMANN: That day will come. Joel McHale of "The Soup" on E with new episodes now on Fridays and Mondays. And moving up in the world, appearing tonight on ABC's "Pushing Daisies." Congratulations and great thanks, as always, sir.

MCHALE: Thank for saying that, man.

OLBERMANN: That's Countdown for this the 1,659th day since the declaration of mission accomplished in Iraq. From New York, I'm Keith Olbermann, good night and good luck.

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