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Greece Submits New Reform Plan To Europe; Financial Crisis Hits Greece's Wine Industry; Chinese Stocks Rebound For A Second Day; South Carolina Governor Signs Bill For Removal; Pope Criticizes "New Colonialism"; Republicans Distance Themselves From Trump; Executions Using Bizarre, Vicious Methods; Schwarzenegger Silent On Controversial Commutation; Drought-Shaming Hits Hollywood Heavyweight; Williams, Muguruza to Wimbledon Women's Final. Aired 3-4a ET

Aired July 9, 2015 - 03:00   ET

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


(COMMERCIAL BREAK)

GEORGE HOWELL, CNN ANCHOR: Deal or no deal, we go live to Athens, Greece where there is optimism inside parliament. Lawmakers there prepare to debate a last ditch proposal to prevent bankruptcy.

NATALIE ALLEN, CNN ANCHOR: The confederate flag will fly no more in South Carolina. The state now just hours away from lowering one of the most controversial symbols in American history.

HOWELL: And tone it down. What the Republican Party boss told Donald Trump on his hard line stance on immigration.

Hello and welcome to our viewers here in the United States and around the world. I'm George Howell.

ALLEN: I'm Natalie Allen. Thank you for being with us. You're watching CNN NEWSROOM.

HOWELL: Good day to you. We begin this hour in Athens, Greece. CNN is learning new details of the government's plan to save the country from bankruptcy and it apparently means a return to unpopular austerity measures.

ALLEN: Athens is hoping to get a third bailout loan from European creditors in exchange it is proposing tax hikes on restaurants, hotels, and TV advertising, changing its pension system and a push for privatization of Greek airports, rail ways and ports.

HOWELL: There were huge crowds demonstrating outside parliament in Athens on Thursday. Banks there have been closed for nearly two weeks and people are limited to 60 euro daily withdrawals from ATMs.

Let's go now to CNN's Isa Soares. Good day to you, Isa. Good to have you with us. As we learn more about this proposal, what are you hearing from the Greek government?

ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Good morning, George. Good morning to you, Natalie. We have just got our hands on the proposal from the Greek government, many, many pages of reading. Let me talk you through some of the major points, which include a pension reforms, also spending cuts, and what you said, more austerity, which is something the Greek people did not want.

We know that the Greeks want a three-year bailout package. Now in the proposal, it doesn't say how much they are requesting, but we know from Greek media they are requesting a package of roughly around 53 billion euros, which is roughly what the IMF if you remember said that Greece needed to get by given the situation has deteriorated so much.

Let me talk you through some of the proposal, which has some major red lines, Alexis Tsipras was not prepared to budge on. Now let's start off with reforms to VAT or increase in VAT.

Now they want to make spending cuts of 13 billion euros. That's how much they are promising. So they increase VAT on certain things. You mentioned a couple of them there, but mostly restaurant, 23 percent increase on VAT in restaurants.

We will see also increases in electricity, books and many other areas. Now, one other key area there that was a major red line, which was abolishing lower rates VAT, special rate to islands, what they are saying now is the rich island, most popular tourist island, they will get rid of that.

There is no need for that they say, but the poorer island will keep that VAT. Now this is crucial because all along for the six months or so they've been in negotiations, Greeks have said no way, we're not going to budge. This is a red line.

So it seems that they are making a compromise with the rich island. Also making huge concessions it seems to pensions, which we know, we've discussed, is a huge red line for them. They are saying that solidarity payments, which is payments to poorer pensioners, that will be phased out by the year 2019.

They have agreed also to raise the retirement age to 67 by 2022. They are raising corporation tax, which is a must from the European Union. That has been raised to 28 percent, cutting military spending. All in all, they are reforming.

They say they will reform the tax system and fight tax evasion. So we are going back to austerity measures that Greeks said that they voted on Sunday for that referendum. They said no more. So it will be interesting to see today how it is received by the Greeks.

We are expecting, though, these measures to pass later on in parliament because if you remember only yesterday, Alexis Tsipras, joined pretty much all of the opposition parties and talked them through proposals and it seems they have his backing.

HOWELL: Isa, you know, obviously Greece says no to austerity, but now we are seeing this new proposal that certainly introduces more austerity. Again, what is the mood among people with this new plan that certainly does then to more austerity in years ahead? [03:05:03] SOARES: Yes, very good question, very good question, George because I think it won't be very well received. Already I had a very heated discussion this morning with a taxi driver who said these are shocking proposals.

Why are we going back to the cycle of austerity? They've had enough. We cannot take any more basically he said to me. What is important to point out here is that you know, in the proposals, it does not spell out they want debt relief.

Nowhere does it say debt relief or debt restructuring. But we know that Alexis Tsipras has put in a formal request for debt relief and debt restructuring.

Now if he gets that some sort of debt restructuring or some sort of debt relief, it will be a major win for them and I think probably Greeks will be prepared to make more sacrifice for the next three years if they get that.

But if they don't, let's just say, things could turn very nasty indeed -- George, Natalie?

ALLEN: Absolutely. We keep hearing the words catastrophe and certainly there has to be a solution at some point. Isa Soares waking up and bringing us the latest, thank you.

Well, there is a lot riding on the success of the Greek proposal, including the country's future in the Eurozone.

HOWELL: The Greek's wine industry is one of many sectors feeling the squeeze from the financial crisis. Our Phil Black has more.

(BEGIN VIDEOTAPE)

PHIL BLACK, CNN CORRESPONDENT (voice-over): This is one of the world's most agent wine regions. The hills are named for the ancient Greek god who is said to have taught the people the skills of wine production thousands of years ago. This family planted their grapes more recently.

UNIDENTIFIED MALE: In the '70s.

BLACK: They and the broader wine industry have endured this country's financial crisis simply because the Greek people love wine.

UNIDENTIFIED MALE: It gives you the happiness and the ability to talk without to be drunk.

UNIDENTIFIED FEMALE: And part of the diet and culture for over 4,000 years. It is part of life.

BLACK: While the volume of consumption has remained stable. Ann and George say taste have changed with the national economy.

ANNE KOKOTOU, KOKOTOU ESTATE VINEYARD: The medium priced wines have really suffered and people are moving to cheaper wine even bulk wine or bag and box.

BLACK: On the scale of human suffering, we have witnessed in Greece in recent days, the trouble of local wine trade doesn't feature too highly, but this ancient Greek industry considered a key influence in the development of European culture and civilization is now crippled by the possibility that its business relationship with modern Europe is about to change dramatically.

This winery has received no new orders for the last week as Greek banks stayed closed and the owners don't know what currency they will be using next week to run the business, the euro or a much weaker drachma. The consequences of a Grexit could be huge for an industry that relies on European supplies.

ANNE KOKOTOU: Bottles are imported direct. Paper for labels and cartons is all imported.

BLACK: As well as oak barrels, machinery and spare parts, filter paper, yeast, all of it comes from outside Greece and is likely to be significantly more expensive if this country runs out of euros.

These grapes ripening in the powerful Greek sun are still months from harvest. They will be turned to wine and enjoyed well after Greece has set its course either as a recovering member of the Eurozone or a nation struggling alone with perhaps the greatest financial crisis in its long history. Phil Black, CNN, Greece.

(END VIDEOTAPE)

ALLEN: George was just saying, a beautiful place that is facing such tough times. European markets are waking up and reacting, let's take a look at the numbers as they are coming in. You can see many of them already up today as the European markets respond to this potential perhaps breakthrough if it happens in Greece.

HOWELL: China's markets have just closed and for a second straight day there was another rebound.

ALLEN: Yes, let's look at them. The Shanghai Composite closing up 4.67. Shenzhen Composite is up just over 4. CNN's Andrew Stevens reports on the ups and downs that the China markets have seen in recent weeks.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN CORRESPONDENT: China's stock markets are on the up. It feels a little bit like a carnival. Everyone is a winner especially the small retail investor, the punter. They make up a whopping 85 percent of all investors in China's stock markets.

(voice-over): But it could also be a little unreal buying stocks in China doesn't necessarily involve research, understanding, your company. What it does is also a lot of rumor and speculation.

[03:10:09] Plus there isn't much of a choice for investors. Property prices have been falling for some time and bank deposit rates are miniscule. So you put all this together and you end up with a monster rally.

But it all ended on June 12th. Things suddenly got ugly, for many, downright scary, almost a house of horrors. Three weeks of wild volatility and growing fear slashed 30 percent of the value of stocks in China. That equals a paper loss of some $3 trillion. Now that really is scary.

But to talk about China's stock markets, you have to talk about the elephant in the room and that is and that is the Chinese government. They actively encourage the bull run, but they've been even more involved when the markets started to tank trying to staunch those losses.

Just in recent days, they've cut interest rates. They've ordered the brokerage houses and the state-run pension funds to buy the market. They banned new IPOs, and they've also eased restrictions on people who have borrowed to buy stocks.

They don't yet know whether or not it is enough to draw a line out of the stock market crash. But one thing is certain, in this environment, you pay your money, you take your chances, and expect a few bumps along the way. Andrew Stevens, CNN, Hong Kong.

(END VIDEOTAPE)

HOWELL: Never seen the Chinese markets broken down like that.

ALLEN: I know, quite clever, Andrew. We appreciate it. I think he had fun in those bumper cars.

HOWELL: I think he did for sure.

History is about to be made in U.S. state of South Carolina. Lawmakers there have decided that the confederate battle flag, a fixture for 50 years on the state house grounds, will be coming down later today.

ALLEN: The confederate flag is seen by many as a reminder of slavery and racism in the U.S. the fight to remove the flag was reignited last month after nine black worshippers were shot and killed inside a church in Charleston. Police say the white suspect who posed for pictures with the flag wanted to start a race war.

HOWELL: Earlier, I spoke with the state lawmaker who voted to take the flag down and he says even though he had ancestors who served in the confederacy, this was the right thing to do.

(BEGIN VIDEOTAPE)

GRADY BROWN, SOUTH CAROLINA HOUSE DEMOCRAT: It's been a big week. You know, since all this has happened, couple of weeks ago, South Carolina has been very nice in the fact we have, all about people, have been so calm and collected. And I'm just happy to be a part of the process. Here in South Carolina, too, to bring the flag down and do what's best for her people, for our people, and for the great state of South Carolina. It has been my pleasure to represent my district, District 50, for the past 31 years, and this is something that I'm looking forward to being a part of. Hopefully tomorrow morning, it will all get done. It'll be placed in the confederate room, which will be the resting place for the confederate flag.

HOWELL: Talk to me, sir, about what it was like, because it would take -- it took an overwhelming amount of support among your fellow legislators to bring this flag down and what we saw. We saw this 12- hour debate play out about whether it should come down. What was it like for you to be in that hall and to see that debate happen?

BROWN: Well, you know, for me, with the amount of confederate heritage that I have, a great granddaddy, who fought for four years, who took his oath 150 years ago to support the union, I knew that the best thing for me to do was to vote in the affirmative to bring the flag done and there were a lot of house members who felt that way from the very beginning.

There were others who had different opinions and there were a lot of constituents back home calling, e-mailing, and telling legislators, do not bother my flag. But you know, what's happened, I think tonight, as we approach tomorrow morning at 10:00 on the 10th of July is what is best for her people, that's South Carolina, and our state.

I'm looking forward to this being a peaceful resolution to an issue that's been boiling for quite some time.

(END VIDEOTAPE)

ALLEN: It has been quite remarkable to see this happen and we will of course be covering it in just a few hours there in South Carolina.

We want to turn now to the pope's visit to South America. In a passionate speech, Pope Francis criticized capitalism, that's a recurring theme of his papacy.

HOWELL: That's right. He criticized the quote, "new colonialism" in the world today, which includes certain free trade deals and austerity measures that hurt the poor.

[03:15:05] He also apologized for past offenses committed by the Catholic Church in Latin-America. His remarks in Bolivia came Wednesday as he toured South America.

ALLEN: The pope's next scheduled appearance will be at a prison complex in Santa Cruz. He will meet with inmates and their children just hours from now.

HOWELL: CNN's Rosa Flores has been following the pope on his tour and she has a closer look from Santa Cruz at how the Catholic leader is interacting with his followers.

(BEGIN VIDEOTAPE)

ROSA FLORES, CNN CORRESPONDENT: During this trip, Pope Francis has broken protocol. He has looked at a script and said, no, I'm not going to read this. I'm going to speak from the heart. He has made fun of nuns saying that they watch too many telenovelas or soaps.

Right now, you are taking a look at him embrace the crowds like Pope Francis can. Now today he delivered a very important homily. He said that we all come from different places. But sometimes we get burdened by the everyday and we forget to be thankful for all of the gifts from God.

He said every blessing is a mission to deliver on something for someone to help the poor, to help someone else out. Now, you can see that there are hundreds of thousands, if not more than a million people here today celebrating mass with Pope Francis.

And as we look ahead to tomorrow, he still will be speaking to priests and seminarians. He will also attend an event that is a non-Catholic popular movement and of course, he still has Paraguay on his agenda. Rosa Flores, CNN, Santa Cruz, Bolivia.

(END VIDEOTAPE)

HOWELL: A volcano is forcing airports to close in one Asian country and at one of the busiest times of year there for travel. We will see more of the fiery images. And check in with our meteorologist, Derek Van Dam ahead.

ALLEN: Also, ahead here, two sides to the story. What Trump is saying happened during his phone call with the Republican Party boss.

(COMMERCIAL BREAK)

[03:21:07]

ALLEN: Stunning video here from Indonesia. It's beautiful. But this right here, there volcano is causing some nightmares as it spews ash into the air, just amazing video. But this is what's happening. Four airports are now closed because of the scores of flights cancelled. Thousands of passengers are going nowhere.

HOWELL: That's right. Let's get to our meteorologist, Derek Van Dam, here. Derek, I mean, these images are incredible. The power of nature here.

DEREK VAN DAM, AMS METEOROLOGIST: bthat is called a river of lava. I mean, you can see it behind me. It is kind of that brighter shading of orange. That's the lava just spewing out in East Java.

Unfortunately, the ash cloud associated with this volcanic eruption was sent about 4 kilometers to 6 kilometers up into the air. The upper level winds drifted that ash cloud into the nearby well- populated tourist destination of Bali.

That forced the cancellation of several different flights and also the closure of four different airports including the airport in the southern portions of Bali. OK, here is a perspective for you. This is East Java. This is Indonesia and we are looking at the island of Bali. This is just to the north. Now what we have done is located with satellite imagery the actual volcano when it erupted. You notice the darker shading on this map.

That's actually the volcanic ash getting picked up by upper level wind. We identified it here with the red line and notice how it drifts eastward across Bali and into the greater Denpezar area where the airport is located.

That is exactly why they closed that airport down because volcanic ash and jetliners do not mix well. We have reported on this several times. Unfortunately, it doesn't look like the winds are going to ease up much.

We could see a change in the direction that will allow perhaps for the, well, airports to reopen. I will switch gears because we've got so much to talk about including four named tropical typhoons across the Pacific, six storms in total.

Take a look at what downtown Hong Kong looks like at the moment. We have clear skies in Hong Kong and actually a beautiful day, but it wasn't much long ago that we saw typhoon moving through the region and that produced well a significant amount of damage just to the east in the Guangdong Province. Wind gust of over 100 kilometers per hour.

Now we are focusing on a new storm. The storm is going to impact the east coast of China including Shanghai. Roughly 24 million people there under the gun for the possibility of strong winds, localized flooding and as this new approaching typhoon reaches the eastern shores of China, that is going to cause some serious problems going into this weekend. Something we'll be monitoring very closely.

HOWELL: You're a busy man.

VAN DAM: Very busy. Thanks, guys.

ALLEN: Well, police in Bangladesh say a rush to receive donated clothes resulted in a stampede killing at least 20 people and injuring many more.

HOWELL: I want to show these pictures here, the aftermath, authorities fear the death toll may rise. The stampede took place outside the gates of a tobacco factory.

Now to the latest in the Iran nuclear talks, we are just hours away now from the third deadline set for negotiators to try to reach an agreement.

ALLEN: U.S. Secretary of State John Kerry said Thursday that progress is being made. He has been saying that a lot, but he is now saying the west is willing to walk away from these talks. Earlier this week, a top U.S. Democrat quoted President Obama saying the chances of a deal are now less than 50/50. An agreement would require Tehran to curb its nuclear program in exchange for easing of economic sanctions.

HOWELL: All eyes will be on what happens with that.

ALLEN: After a barrage of comments about illegal immigrants in the U.S. being criminals and rapist, several leading Republicans are distancing themselves from Donald Trump.

[03:25:08] HOWELL: A Republican source tells CNN the party's committee chairman called Trump on Wednesday to rein him in. Trump tells a different story. Here is Joe Johns.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT (voice-over): One call, two very different stories, Donald Trump pushing back against reports that Republican National Committee Chairman Reince Priebus asked him to back off his rhetoric about undocumented immigrants.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE (via telephone): No, we didn't discuss it. He did say perhaps you could tone it down a little bit if that's possible, but I know it's your personality and you are who you are, but that's the way it is.

JOHNS: Trump says the call was quick and positive.

TRUMP: It was a very brief call and it was a very nice call. It was more of a congratulatory call than anything else.

JOHNS: But a Republican source tells CNN's Dana Bash that Priebus talked with Trump about a range of issues and voice concerns about the damage he's doing to the Republican brand.

TRUMP: They're bringing drugs. They're bringing crime. They're rapists and some I assume are good people.

JOHNS: According to the source, Priebus told Trump, look, I got to tell you, I've spent four years trying to make inroads with the Hispanic. How we address illegal immigration is very important to winning back Hispanics politically. Republican rival and South Carolina Senator Lindsey Graham agreed in an interview with Jake Tapper.

SENATOR LINDSEY GRAHAM (R), SOUTH CAROLINA: My party is in a hole with Hispanics. The first rule of politics when you're in a hole is stop digging. Somebody needs to take the shovel out of Donald Trump's hands.

(END VIDEOTAPE)

ALLEN: Good luck with that.

HOWELL: That was Joe Johns reporting.

ALLEN: Well, the European stock exchanges are open for the day. Just ahead, we'll go live to London to see if the new Greek reform plan is moving the markets.

HOWELL: Plus, there are reports of bizarre and vicious executions in North Korea all at the command of the supreme leader, Kim Jong-Un. We take a closer look as this broadcast continues worldwide on CNN International and CNN USA.

(COMMERCIAL BREAK)

[03:30:30]

HOWELL: Welcome back to our viewers here in the United States and around the world. This is CNN NEWSROOM. Good to have you with us. I'm George Howell.

ALLEN: I'm Natalie Allen. Let's take the headlines for you.

Greece, hoping to secure another European bailout with a reform plan of tax hikes and spending cuts its proposing. Parliament will debate the proposal today before it goes to European creditors. If they don't approve the plan, Greece could go bankrupt and be forced out of the Eurozone.

HOWELL: History is made in the U.S. state of South Carolina. The state's governor, Nikki Haley, signed into a law a bill that will take down the confederate battle flag from the state house grounds. It will be removed later today. The flag gave national attention last month after a white gunman killed nine African-Americans seen in pictures with that flag.

ALLEN: Today, Pope Francis will visit what's considered Bolivia's most violent prison. He will meet with inmates and their children at maximum security in Santa Cruz. The Catholics leader's visit is part of his eight-day tour of South America.

ALLEN: We are going to turn now to more on our top story, the Greek financial crisis. Athens is outlining the steps it plans to take to save the country from financial ruin.

Nina Dos Santos joins us now from London. Good morning to you, Nina. What are we learning about this plan and how are European markets reacting in early going on?

NINA DOS SANTOS, CNN CORRESPONDENT (voice-over): Hi. Good morning to you, Natalie. Let's start with the former. What we've seen here is a plan that's not too different, I might add, from the one that the Greeks actually rejected in that referendum vote that they decided to hold last weekend, which will raise a number of questions back home in Greece.

Perhaps a number of politicians in Europe will be more amenable to this plan because it does make a number of concessions and let me run you through them.

They include concessions of one of the major sticking points that had been a top ups for some of the poorest pensioners in Greece, tax hikes as can you see on restaurants, hotels as well as taxes for TV advertising.

And we've also got plans to recheck the VAT concessions for some of the islands that you will remember the tourists hot spots that were so much part of the red lines that the Greek government didn't want cross there.

Saying that well, what we need for these islands is their outlying areas. The poorer we need VAT relief. What they've decided to do is capitulate some of the island, the richer island where the foreign tourists go to saying that they will raise VAT on that.

Perhaps the sticking point for other islands because they haven't yet volunteered to do that. So as you can see phasing out tax breaks and raising corporation tax as well.

So really what will be interesting here is to see how the Europeans digest it because it does seem this is a bit of a capitulation on a number of the points that the Greek government had been saying had been red lines all along.

It's one of the reasons why they decided to vote no in that referendum. Let's take a look at how the markets are faring because That is the other question you asked me, Natalie. The market is not too bad.

In fact, we have had quite a robust reaction here to the optimism that finally this deal is on the table. They've only got a razor thin time now between now and Sunday, 48 hours to try and get European leaders to take a good concrete hard look at these proposals.

Remember that the Eurozone owns about 60 percent of the debt Greece has outstanding. Big countries like Germany and France have a big say on whether or not these proposals really are enough.

ALLEN: Nina, so that's how the markets see it, but of course, the big question, will Europe buy into this deal at the summit this weekend.

DOS SANTOS: Yes, exactly. As I was saying before, Natalie, that really hinges on the number of big players here, France and also Germany. It's a bit of a split here because apparently these were drafted, according to a couple of media reports I've been reading this morning, with the help of the French government.

The French government has all along said and has become more vocal in saying well, we've to help Greece stay inside the single currency rather than leave the single currency. Angela Merkel, the German chancellor, has taken a far, far hardest dance.

She is coming under increasing pressure from the German media and the German taxpayers to not let the Greece off the hook for another chunk of bailout money.

By the way, in these proposals, I might point out, we don't yet know the sum that Greece is asking for in return for these concessions on reforms. It could be around about 55 to 56 billion euros according to some media reports.

But we have seen a split between some of these European countries and remember that there is other countries themselves have been hit hard by austerity had their own bailouts like Portugal and of course, they are heading towards elections towards the end of the year.

[03:35:08] They can't afford to see an anti-austerity party do extremely well in those elections or in the referendum and in their negotiations with Brussels and Greece because, of course, that would mean that the anti-austerity parties in those countries would also have a larger say. So who knows, this could cause some friction inside Europe when we see those summits taking place over the weekend.

ALLEN: Some are saying this perhaps could be Angela Merkel's most important decision and she has had lot of them, hasn't she? Thank you so much. Nina Dos Santos for us there in London.

Well, the newly appointed leader of al Qaeda in the Arabian Peninsula is calling for attacks on the United States. A 14-minute video released by the terror group also features (inaudible) eulogizing his predecessor.

He was killed in a drone strike in Yemen last month. Aremi (ph) pledges allegiance to al Qaeda chief and he urges his followers to, this is a quote, "direct and gather your arrows and swords against the U.S."

HOWELL: The British government says another terrorist attack in Tunisia, that it is highly likely and it's warning citizens not to travel there, unless it is absolutely necessary. And it is asking people already in that country to leave. The warning comes nearly two weeks after that beach attack that killed 38 people. Most were British tourists.

ALLEN: We turn now to North Korea where we are learning even being in the highest levels of the government does not guarantee your safety.

HOWELL: There is new information from South Korea that suggests North Korea's supreme leader, Kim Jong-Un has made horrific executions a primary way of ensuring his authority. Our Brian Todd has details.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): He is forceful, reckless and has a thirst for power that amounts to a reign of terror according to a top South Korean official. The young dictator, Kim Jong-Un, has executed 70 officials since coming to power in late 2011, says the South Korean foreign minister. By most accounts, that's shockingly more than were executed by his father, Kim Jong-Il.

JONATHAN POLLACK, BROOKINGS INSTITUTION: Unlike his father, he exhibits ruthlessness here by his actions, by the things that he is prepared to do that his father simply was not prepared to do or didn't feel the need to do it, he does.

TODD: Kim even executed his own uncle and reportedly his defense minister. Human rights monitor, Greg Scariatoiu says the regime often uses grotesque methods.

GREG SCARIATOIU, COMMITTEE FOR HUMAN RIGHTS IN NORTH KOREA: They are executed by 50-caliber ZPU4 anti-aircraft machine gun battery. The bodies are pulverized. There is nothing left behind.

TODD: U.S. officials tell CNN executions are Kim's way of solidifying his position. One official calls them a crude mechanism for internal control. Analysts say the purges may show that Kim feels vulnerable, but he is also sending a bone-chilling signal to those in his closest circles.

POLLACK: Don't mess with me, I'm the boss, and if you know what's good for you, you'll stay absolutely loyal to me.

TODD: There are even published reports that architect of Pyongyang's new airport was executed because Kim didn't like the design.

UNIDENTIFIED FEMALE: I saw my first public execution when I was 7.

TODD: Defector Hyeonseo Lee, who left while Kim's father was in power says people have been executed over their homosexuality or their religion. CNN cannot independently verify Lee's accounts. She says people were executed by hanging, by machine gun fire, and often in front of large crowds.

HYEONSEO LEE, NORTH KOREAN DEFECTOR: Many people gathered to watch those public executions because it was mandatory in North Korea. And the very front line of the crowd, that should be the victim's criminal's family members, the immediate family members and including relatives have to sit in the front line.

(END VIDEOTAPE)

TODD: And Lee says relatives witnessing a loved one's execution are considered betrayers if they cry at the event so very often they simply sit there stone-faced. One analyst says we need to watch how long the pattern of executions continues under Kim Jong-Un. If they go on much longer, he says, those closest to Kim may get nervous and move against him. Brian Todd, CNN, Washington.

HOWELL: A breach of U.S. government data is much worse than previously thought. Investigators now believe that hackers stole the personal information of more than 21 million people both inside and outside the government.

Those exposed include 19.7 million people who applied for security clearances with the Office of Personnel Management plus roughly 2 million non-applicants, mostly spouses and partners of applicants.

ALLEN: It was initially estimated that 4 million people were impacted. Director of National Intelligence, James Clapper, told CNN China is the leading suspect in the hack.

HOWELL: From skin cells to stem cells, researchers think they've discovered a new way to fight cancer and the results are promising.

ALLEN: We'll have that story coming up. Also Arnold Schwarzenegger isn't responding to questions about a murder sentence he commuted as California's governor, but the convicted killer's father is talking. Our report next here on CNN NEWSROOM. (COMMERCIAL BREAK)

ALLEN: Scientists at University of North Carolina are using cutting edge stem cell research in the fight against cancer. Researchers are targeting brain tumors by converting skin cell into stem cells and then loading them with anti-cancer drugs.

HOWELL: They use this method on mice and they found the converted stem cells are capable of seeking out cancerous cells in the brain. So far the results have been promising. Clinical trials could begin within the next two years.

Another story we are following, CNN has been trying to contact former California Governor Arnold Schwarzenegger about a murder sentence that he commuted on his last day in office. So far we've had no response from him.

ALLEN: But the convicted killer's father is speaking out telling us his side of the story. Here's CNN's Kyung Lah from Los Angeles.

(BEGIN VIDEOTAPE)

KYUNG LAH, CNN CORRESPONDENT: Arnold, Arnold --

(voice-over): Arnold Schwarzenegger on the red carpet for "Terminator Genesis" refusing to talk.

(on camera): Will you answer another question from CNN?

(voice-over): About his final act as governor, a final act that at least one family calls devastating and insulting. In the final hour in office then Governor Schwarzenegger slashed in half the jail sentence of Esteban Nunez, the son of a political ally, who pleaded guilty in the 2008 stabbing death of Luis Santos.

ARNOLD SCHWARZENEGGER, FORMER CALIFORNIA GOVERNOR: Since we are here for a movie promotion, we only talk movies.

LAH (on camera): The family is trying to go to the Supreme Court, sir.

FRED SANTOS, VICTIM'S FATHER: That's the type of person he is. He thinks somebody being murdered is a news that is below his status.

[03:45:09] LAH: Luis' parents, Fred and Kathy Santos, have been fighting Schwarzenegger's commutations since 2011 and how they even found out about it added insult to injury. No one from the governor's office called them.

How they learned of the man who pleaded guilty to the stabbing death of their son was being let out of jail early when reporters started calling their home.

Esteban Nunez's 16-year sentence was cut to just seven years amid widespread criticism that the case reeked of back door politics. Esteban's father is Fabian Nunez, once California's most powerful Democrat. He was also a known political friend to Arnold Schwarzenegger.

KATHY SANTOS, VICTIM'S MOTHER: Cowardly act that he didn't even have the nerve or the heart to contact us and tell us that he planned to do this. I mean, come on. Be a man.

LAH: While Arnold wouldn't address the case, someone else did. After refusing repeated requests for an interview, Fabian Nunez called CNN after our story first aired on Monday. He repeated statements he's made in the past.

FABIAN NUNEZ: There was a totally different standard, legal standard, applied to my son.

LAH: Then went on to argue that Schwarzenegger merely righted wrongs perpetuated by a conservative judge and an overzealous district attorney. Nunez claims the DA Bonnie Dumanis pushed for the plea bargain, not his son, because she wanted a high profile conviction before making a run for mayor. She calls that ridiculous.

BONNIE DUMANIS, SAN DIEGO COUNTY DISTRICT ATTORNEY: I would say that if that were true, we were trying to treat him differently and good all out because it was a powerful person, we never would have plea bargained this case.

LAH: But Fabian Nunez and Arnold Schwarzenegger in his commutation letter claimed the case was never as air tight as a prosecution argued. Witnesses say co-defendant, Ryan Jett, already on probation actually stabbed Luis Santos while Nunez stabbed two others who survived.

Considering Nunez's limited role in the killing and his clean prior criminal record, Schwarzenegger wrote, I believe his sentence is disproportionate to Jett's, but that's not how Schwarzenegger ruled one year earlier when he refused to commute the sentences of 29 suspects, who also had limited roles in various homicides, 29 suspects who also had no powerful political connections to Governor Arnold Schwarzenegger.

NINA SOLARNO, SANTOS FAMILY ATTORNEY: I think this connotation is a complete joke. It highlights how politics has come into permeate the entire justice system.

LAH: Kyung Lah, CNN, Los Angeles.

(END VIDEOTAPE)

ALLEN: Elsewhere in California, American actor, Tom Selleck may have reached settlement with the California Water District, which accused him of stealing trucks full of water during the state's devastating drought.

HOWELL: That's right. CNN's Sara Sidner shows you how it was all uncovered in an investigation reminiscent of one of his most popular TV roles.

(BEGIN VIDEOTAPE) SARA SIDNER, CNN CORRESPONDENT (voice-over): As California weather is under the worst drought in a hundred years and the government is demand everyone conserve water the drought shaming just hit blockbuster status.

One of Hollywood's favorite private investigators, "Magnum PI" actor, Tom Selleck, is being accused of stealing truckloads of water after being investigated by a real PI. Selleck and his wife are being sued by the Calleguas Municipal Water District.

In a complaint filed in court, the water district says that back in 2013 a large whitewater tender type truck was observed filling the truck's tank with water from the hydrant.

Twenty minutes later that same truck was seen delivering the water to Selleck's property about 5.5 miles away and outside the district's boundaries.

The lawsuit says it just kept happening saying the truck was observed making seven trips into and four trips out of the Hidden Valley area where the Selleck property is located.

That was just between September and October that year. Identical cease and desist letters sent to the Selleck's property and mailing address in November of 2013, but the suit says in December, it happened again, same hydrant, same truck, dropping water load on the same property.

Then in March of this year, just a few days before the governor announced unprecedented mandatory statewide water restrictions, the lawsuit says the same water truck siphoned water from the same hydrant, went to the same property four more times.

The Calleguas Water District is suing the Selleck's for $21,685 for wrongful conduct. It warns the district may suffer more damage if the conduct continues and the water district wants it to stop now asking a judge for an injunction to keep away from their water.

[03:50:08] ERIC BERGH, CALLEGUAS MUNICIPAL WATER DISTRICT: We are asking them to stop. Again, it is not equitable. It's not fair for current customer base. Those water users invested in the system. On top of that in this particular case, we are seeking damages related to the cost of the research, reconnaissance we've done on this matter.

(END VIDEOTAPE)

SIDNER: The attorney for the Calleguas Municipal Water District told me he that Tom Selleck's attorneys have come to a tentative agreement in this case. But that the water board has to approve that agreement and they don't meet until Wednesday.

We have reached out again to Selleck's representatives. We have not heard anything back. Not on this matter or the original matter at hand. Sara Sidner, CNN, Los Angeles.

HOWELL: The women's finals are set at Wimbledon. ALLEN: Serena Williams crushes a big name opponent and now prepares to battle for her 21st grand slam victory. A little preview for you is next.

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ALLEN: We want to turn now to Wimbledon. Serena Williams headed to the women's singles final once again after she beat her arch rival, Maria Sharapova in Thursday's semifinal match.

HOWELL: World sports, Christina Macfarland has details.

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[03:55:06] CHRISTINA MACFARLAND, CNN WORLD SPORT: The women's finals are set here at Wimbledon. The 20-time grand slam champion, Serena Williams, will take on 21-year-old Garbine Muguruza of Spain. Serena survived three tough matches only to breeze through this semifinal against longtime rival, Maria Sharapova.

She hit 13 aces on her way to straight sets victory recording her 17th straight victory against the Russian since 2004. Now she will compete in her eighth Wimbledon final and a chance of course to keep on track for that potentially historic calendar grand slams.

However, Garbine Muguruza cause an upset on Saturday. The young Spaniard put Serena Williams out of the French Open just a year ago and today she played the match of her life against the far more experienced player from Poland.

Now Garbine Muguruza is through to her first ever grand slam final and she becomes the first Spanish player to go all the way it final here since Sanchez back 19 years ago. Christina Macfarland, CNN, Wimbledon.

(END VIDEOTAPE)

HOWELL: All right, so now a story about dinosaurs. Scientists have discovered a new horned dinosaur species. It's the "Wendiceratops." It was named after the dinosaur hunter who first spotted the fossil in a remote region of Canada five years ago.

ALLEN: It is windy. The dinosaur is about 6 meters or 20 feet long and weighed in around 2 tons. Here is what makes it unique, the short forward curling forward horns that make a shield on the back of its head. What a creature.

Thank you for watching this hour. I'm Natalie Allen.

HOWELL: And I'm George Howell. "EARLY START" is coming up for our viewers in the U.S. and for viewers around the world. Stay tuned for CNN NEWSROOM.

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