This is a partial transcript from "Hannity & Colmes," Sept. 20, 2004, that has been edited for clarity.

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ALAN COLMES, CO-HOST: After coming under fire for nearly two weeks, CBS News has finally admitted that they cannot authenticate the documents used two weeks ago on "60 Minutes" that raised questions about President Bush's (search) service in the National Guard.

It's a dramatic reversal for the network after staunchly defending the memos for days, even after serious questions were raised about their veracity.

Tonight Dan Rather (search) apologized and admitted that CBS had made a mistake. So what does this mean for Dan Rather and the gang and how could something like this have happened?

Joining us now in a "Hannity and Colmes"exclusive interview is the former president of CBS News, Van Sauter (search).

Mr. Sauter, thank you very much for being with us tonight.

VAN SAUTER, FORMER PRESIDENT OF CBS NEWS: It's a pleasure being here.

COLMES: How did CBS do tonight? How did they handle the situation on tonight's newscast?

SAUTER: Well, I think today they've only handled a very small percentage of what must be done to get this under control and to begin to regain standing in the court of public opinion.

What was said today was that a mistake was made. The real issue is how stringent is going to be the investigation into the passion or haste or fury that went into this erroneous report, and apparently they're going to name the members of that investigative body soon.

But the real thing that has to be done is that CBS must aggressively and thoroughly address the issue of who slipped it the Mickey Finn. Who lied and why did they lie?

And only when CBS engages that issue will, I think, the public feel, "Yes, CBS is working to regain my credibility."

COLMES: If there were a panel named, would you be willing to participate?

SAUTER: Oh, you know, I don't think anybody is going to reach down into a trout stream in Idaho and lift me out. There are a lot of very qualified people who would willingly do this and I think do it with impartiality.

COLMES: As a former president of CBS News, you might be a likely go-to guy for something like this?

SAUTER: Goodness knows, I have no great curiosity about who's running CBS and how they're doing it right now.

All I know is that this has to be a good, solid, independent group that's going to delve into the organization and find out how this went wrong.

COLMES: Could this have happened on your watch?

SAUTER: I think it could happen on anyone's watch.

I think the first thing we need to keep in mind, gentlemen, is that this was a very good news story, if true. I think getting a lead on this story, whether you were Fox News or CBS News, The New York Times or The New York Post, you would have grabbed the opportunity and chased that story.

But something went wrong here, when a story, which obviously had some significant shortcomings, slipped through the system.

Now, bad stories slip through the system a lot. And I don't think we should be saying, "Oh, my gosh, we've had a failed, flawed story."

They happen.

But this was a story of consequence. The failings were pronounced. An hour after the story appeared, people began to mount credible evidence of its shortcomings. It took CBS 13 days or so to reach that conclusion.

CBS must now hustle to gain the high ground and it must get that high ground.

SEAN HANNITY, CO-HOST: Mr. Sauter, thank you for being with us. Sean Hannity here. Appreciate you taking time out of your schedule.

I think this is just a small first step for a lot of different reasons. Here are some of the questions I think we need to have answered. You tell me if I'm right.

Who created these documents? Who spoke with Max Cleland? To what extent did he go into the document discussion with them? Who from the DNC picked up the ball and sent it to CBS? What did John Kerry and Terry McAuliffe know and when did they know it?

Are those all good questions?

SAUTER: You're absolutely right, as I said earlier. The easy thing here is to create the group to investigate what went wrong internally.

The true standard of credibility for CBS is going to be asking those kinds of questions and coming back to the CBS audience and say, "This is what we discovered."

No matter where this line of questioning goes, whether it goes in the direction that you're taking it or whether it goes to just a couple of crack pots in Texas, it has to be explored until it's answered.

HANNITY: Well, let me tell you why it's going in my direction, and I'm a conservative. And I admit that.

SAUTER: I'm not saying your direction is right or the other direction.

HANNITY: Right.

SAUTER: Whatever the direction it has to go there.

HANNITY: But the fact that they had this other coordinated effort timed with this piece, the report in the paper that Mary Beth Cahill was the first person to call Ben Barnes after the "60 Minutes" piece, the fact that Tom Harkin and Terry McAuliffe were ready to go with Operation Fortunate Son, the exact same time, doesn't that raise a lot of questions about coordination?

SAUTER: There are tons of questions that are attendant to this kind of a fraud. And we can create all these hypothetical circumstances and, indeed, we should.

But at some point, the independent journalists of CBS, and, indeed, those from other news organizations, need to chase this story with all vigor.

HANNITY: Are you as surprised, as I am, that they ignored the exculpatory evidence in this case?

For example, we now know that their own experts came to the conclusion — at least one of them on this program — that they didn't want to get to the truth of the authenticity of the documents.

Colonel Killian's son, Colonel Killian's wife, those closest to them, their statements were ignored and distant political partisans were featured heavily in the piece?

SAUTER: I think this is a very mortifying set of circumstances.

We have all been involved in chasing stories. We know the passion when you're moving towards a story that may be of magnitude. And we know that there are people who will in haste, in passion, cut corners.

Should these things have been caught? Absolutely. An investigation has to find out why they weren't.

You know, we were once involved in a circumstance at CBS where a person walked into our news bureau in Bangkok and said that he and some friends had been up on the border and they saw an American, probably in his 40s, shackled to a post. And they said that we thought this was a person from Vietnam, an MIA.

And my gosh, we began to chase that story with incredible vigor, and finally, some rational people stood up and said, "You cannot do this."

But in the passion to get at that story, we made some very dumb decisions. Dumb decisions get made, which doesn't mean that they are prejudicial decisions.

HANNITY: You worked with Dan Rather for how many years?

SAUTER: Well, I think four or five. I've known Dan for a long time.

HANNITY: A lot of conservatives think Dan is liberal, biased. Would that be a fair characterization?

SAUTER: I don't think Dan is biased and I must say I don't ever recall any consequential ideological discussions with him.

I think Dan comes from a unique place. I think he's had experiences as a young person and a professional that has led him to calibrate himself to the left of me, but I don't have hesitations about Dan.

HANNITY: I met him recently. I'll be honest, during the Republican convention, could not have been nicer, more charming. He was a nice guy.

I went back and I looked at his comments from a week ago, and it says, "I know this story is true." When all the evidence was pointing in the other direction.

And I was just thinking to myself, "If Republicans had forged documents or had gotten forged documents and gave it to a news organization and they turned out to be false, wouldn't this be a much bigger story in the mainstream media?"

SAUTER: Well, first of all, I think the mainstream media has done a very good job of covering this story. And I think they have brought pressures upon CBS and Dan Rather.

But I think we exist in a world where most of the journalists, or a good percentage of the journalists, are all part of a culture that is inherently liberal.

Whether they are editing magazines or they're publishing books or they're working for the networks or they're working for the large newspapers or whether they're in the film business or in the academic world, the overwhelming chances are they're liberal. And that's the nature of the universe that's out there.

COLMES: Mr. Sauter, is this an example of liberal bias or is this a rush to get a story out on the air because it's a good story?

SAUTER: This is an example of bad journalism. That's what it is. It was a good story that any legitimate news organization would have pursued with great vigor.

The problem here was there were huge, gaping holes in the net applied to this story at CBS and bad things happened. This story is not a result of some ideological bias. It's a result of flawed journalism.

COLMES: Not everybody knows how the sausage is made. Is this a case of Dan Rather rushing with a story? Who is culpable here?

SAUTER: Well, we don't know and that's what CBS has to find out.

Maybe their problem was haste. Maybe it was the passion of having a story that really sounded like it's a superb story. Maybe there was a fear that somebody else was going to get that story on the air.

Indeed, the person who gave them the story may have been saying, "If you don't run this story now, I'm going to give it to somebody else."

We don't know. There's not much value in speculating. We have to wait on what we hope will be a credible group of people to go into CBS and determine what happened.

COLMES: Is this a matter of Burkett, who we saw on the "CBS Evening News" tonight just giving bad information and then saying, "Yes, I gave them bad information. I didn't tell them the truth."

Is CBS then basically off the hook?

SAUTER: No, not at all. In no way. Let's just presume Burkett is in one way or another an evil man. The issue is: Who was he working with?

Now you might think it was this group or that group. Whoever it is, CBS has to get to that person or that group to find out who planted this terrible story.

HANNITY: Mr. Sauter, good to see you. Thank you for taking time out of your busy day. Thank you for joining us.

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