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CNN "The Situation Room" - Transcript: New Jersey Hurricane Sandy Relief Fund Ads

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BLITZER: Interesting stuff. Thanks very much, Chris Frates, with his good reporting.

Let's dig a little bit deeper right now. Democratic congressman, Frank Pallone, of New Jersey is a longtime Christie critic. He's the one who asked for the federal probe into how taxpayer money was spent on this tourism marketing. The congressman is joining us here in THE SITUATION ROOM. Congressman, thanks very much for coming in.

PALLONE: Thank you.

BLITZER: Anything potentially illegal going on here?

PALLONE: Well, I think the question is how was this contract drawn up or, you know, how was it manipulated, and that's what we don't know. (INAUDIBLE) which is the daily in my district, down at the Jersey Shore, basically did this investigation, and they compared the contracts between the two bids.

And they basically said that the lower bid was not willing to put Christie in the ad. And that was the one that was $2.5 million. And then when the higher bid at 4.7, that firm said that they would put him and his family in the ad, they were chosen. So, I mean, the question is, you know, how was that process going about.

BLITZER: And you think for political reasons in part because he was up for re-election?

PALLONE: I mean, I think that's clearly my concern. I mean, keep in mind, as I think you pointed out, or Chris pointed out, that Christie's whole campaign was that he saved the shore. And so, if you look at those tourism ads that were basically saying that versus his campaign ads, there really wasn't that much --

BLITZER: There were a lot of people in New Jersey think he did do a good job after the superstorm Sandy, right?

PALLONE: Well, I don't think that's the issue. I mean, look, we all worked hard to try to restore the shore. There's still a lot more to be done. But keep in mind that this was a block grant. This money could have been used for, you know, Sandy relief for homeowners, for businesses. And we're still not getting that money. A lot of that money has still not come through.

So, some people said, $2 million. Well, $2 million is a lot of money, and I'm concerned about it. And I think the fact that the inspector general has now said they're going to conduct a full-scale investigation is significant. Let them see what they come up with.

BLITZER: The ad agency that created this ad issued a statement just a little while ago. I'll put it up on the screen. "MWW's proposal," that's the ad agency, "included no mention or suggestion of using the governor in the paid advertising campaign. The decision to include the governor was arrived at after the contract was awarded based on timing, availability, and federal expenditure rules. Assertions to the contrary are simply incorrect. " What's your response?

PALLONE: Well, I think that's rather significant. In other words, if they initially did not suggest that the governor was going to be in the ads, what happened in that period of time when they met with the governor's staff and the other people that chose the contract. You know, there were --one of the things that was in the ad -- was the statement that some of his advisers perhaps were insisting that he'd be in the ad. So, I mean, again, the question is, that needs to be investigated, to what extent was that the case.

BLITZER: What's wrong with the governor appearing in an ad like this, saying we beat back Sandy, it's time to come back, visit the Jersey Shore, spend money here, let's help our economy.

PALLONE: Well, again, I think it goes back -- let me make a comparison. In the case of New York, there was a similar ad campaign that did not use Governor Cuomo. They used Billy Joel and other celebrities. OK? In the case of New Jersey, the governor opted to do that. And we don't know exactly how that came about. The fact of the matter is, he was running for re-election and his re-election was very much linked to his success in Sandy.

And so, these ads were, you know, basically adding another $20 million to promote him. Very close to the election.

BLITZER: Christie's office sent the present e-mail saying they find it, quote, "amazing," in their words, amazing that the inspector general's investigation has now been leaked to the news media. What's your reaction to that? In the aftermath of the traffic scandal, if you will, all of a sudden, this issue comes up?

PALLONE: Well, about six months ago in August, I asked the inspector general to look into this. They did a preliminary investigation that took, I guess, about six months. They just told me within the last few days that now they have decided to do the full fledge audit and investigation. It's just a coincidence that it occurred at the same time. There's an independent agency.

BLITZER: You believe the governor told the truth last week when he denied any knowledge of all of this?

PALLONE: I don't think the issue really is whether he told the truth or not. I think the issue is he created this atmosphere around him. It's a bullying atmosphere. It's an atmosphere take no prisoners which I think, you know, essentially encouraged his staff to threaten mayors and to do whatever was necessary to get elected. And I think that they went too far and it's pretty deplorable.

BLITZER: There's no smoking gun as far as I know directly linking him to the plot, if you will.

PALLONE: I don't know whether he was involved in the plot. I wasn't there. But I will say this, that the atmosphere in that administration is always -- has always been one of, you know, threats and bullying and basically, you know, saying, look, if you don't do this, then we're not going to be too pleased.

BLITZER: Is there evidence at all that he was involved in so-called cover-up?

PALLONE: I have no indication of that. I can't comment on his direct involvement, Wolf.

BLITZER: So, potentially, he could survive this.

PALLONE: Well, again, he's the governor. He was duly elected. To me, the issue isn't whether he survive. The issue is that we need -- we shouldn't have this type of atmosphere, and you know, around the governor's office.

BLITZER: What else do you want to hear from him?

PALLONE: I want to know exactly what happened, particularly, --

BLITZER: He spent two hours answering questions the other day.

PALLONE: Well, no, I'm talking now in terms with the Sandy relief. I'm very concerned because I think this extra money that was spent on the ads to put him on the air during the campaign, you know, that's money that we fought hard for that could be used for other purposes for Sandy relief.

I mean, I still have homeowners that haven't gotten their checks to rebuild their homes or businesses that haven't been repaid for their inventory that was lost during the storm. So, you know, this is federal dollars, taxpayer dollars. And we need to be concerned about it.

BLITZER: And very quickly, what else do you want to hear about the traffic scandal? What question would you ask him that he hasn't yet answered?

PALLONE: Well, I think that there's a lot of unanswered questions --

BLITZER: Like what?

PALLONE: -- about exactly how this occurred. In other words, to what extent was his administration involved and who was involved. I mean, we have some preliminary information on that, but I think this investigation by the assembly will take it further. It needs to be looked at.

BLITZER: Congressman Pallone, thanks very much for coming in.

PALLONE: Thank you.

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