Former Mayor Giuliani on Gov. Blagojevich: 'He Has to Resign'

This is a rush transcript from "On the Record ," December 23, 2008. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: It's out. President-elect Obama's transition team issues its report on the Illinois corruption scandal. The Illinois governor is accused of trying to sell the president-elect's open United States Senate seat. The transition team is reporting that President-elect Obama had zero contact with the Illinois governor about the open seat and zero contact with the governor's staff about that open seat.

The new report does state incoming chief of staff Rahm Emanuel spoke to the Illinois governor once or twice about his decision to vacate his own congressional seat and the vacancy left by then Senator Obama's election. The report states Rahm Emanuel spoke four times with the Illinois governor's chief of staff, John Harris. Now, as you know Harris, like the governor, has been charged with corruption. But the headline, the transition team report says Emanuel had zero discussion about selling the Senate seat with the governor himself or with the governor's staff.

And moments ago, former New York Mayor Rudy Giuliani went "On the Record."

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Mr. Mayor, thank you very much for joining us.

RUDY GIULIANI (R), FORMER NEW YORK MAYOR: Hi, Greta. How are you?

VAN SUSTEREN: I'm very well, sir. Sir, if you listen to the United States attorney in Illinois and you -- and you accept everything that's said in the President-elect Obama transition report today, it appears that President-elect Obama has zero legal problems with this investigation with the governor, but it's a political problem, is it not?

GIULIANI: Well, I hope that's all true. I mean, we all hope that there's no legal problem. And look, the political problem is the governor doesn't seem to want to resign. And the reality is, he has to resign. Look, you and I both know we can't prejudge the case in court, but he has said enough on tape so that he shouldn't be governor of Illinois anymore.

I mean, he was going around, asking for a quid pro quo for putting somebody in the United States Senate. Now, whether or not that actually was consummated into a conspiracy and there were overt acts and all of that, that's something the U.S. attorney, a grand jury and a court's going to have to figure out. But you can figure out this guy doesn't belong as governor of Illinois.

VAN SUSTEREN: But here's what I don't understand, is I certainly understand why it's a legal problem and a political problem for the governor. What I don't understand is why it appears to be noise to President-elect Obama, when he hasn't done anything wrong. How does he shake it? How does he get rid of this problem for himself?

GIULIANI: Well, I think as it -- if it plays out that he's no connection with it, the people around him had no connection with it, they've had nothing to do with it, and even though this was kind of fairly well-known in Springfield, Illinois -- there was one state senator who was interviewed about a week ago, a week-and-a-half ago, who said that it was known around Springfield that the governor was looking for something.

Well, I mean, you know, who knew that? How well did they know it? Did they report it? And who are those people? If they have no connection with the president-elect, then the president-elect has no problem. But I guess until that all plays out, people aren't going to be completely satisfied.

VAN SUSTEREN: Now, in one of your prior lives, you were the United States attorney in New York. How do you decide as a United States attorney who to give immunity to in an investigation like this?

GIULIANI: Well, first of all, you try not to give immunity. But when you do, you try to give immunity so that it helps you get to up one step or two steps or three steps. Or sometimes you give immunity because you can get an investigation over with a lot quicker. I can remember doing that in one very important corruption investigation, giving immunity at a very early stage to somebody, and it broke the whole thing open. So I mean, it's a tough decision, but sometimes it can save you two, three years of work, even though, you know, prosecutors don't, as you know, like to give immunity.

VAN SUSTEREN: Do you foresee sort of the situation where Fitzgerald and his assistant United States attorney sit around a room and sort of almost look at a flow chart and try to decide who maybe they should go to, to talk to because of who might be able to advance -- I mean, does it get as complex as that when you have a number of potential targets?

GIULIANI: They have a great benefit that sometimes you don't have in an investigation. They have a lot of tapes. So they probably have a very good picture of this, much better than any of us have on the outside or any people in that report, frankly, have. So they probably know exactly who to go to, and they may or may not have to give immunity, depending on what kind of evidence they have on those tapes.

VAN SUSTEREN: How much of a problem do you think it is for Fitzgerald that they have this parallel process -- parallel impeachment going on?

GIULIANI: It's a big problem. The last thing is you want for your people to be interviewed prematurely. They may say something inconsistent. Some lead that you're still following, trying to get some evidence, may get broken by it. I mean, it's a big, big problem. It's the last thing in the world that you want.

And I don't think he wanted to bring this case down right now. Looks to me like he was forced to do it, either by the fact that it was going to become public, I guess through The Chicago Tribune, or he was afraid that the governor would go ahead and select a senator, and that would be a whole tainted process. And that would be a terrible thing.

(END VIDEOTAPE)

VAN SUSTEREN: Up next, much more with former New York Mayor Rudy Giuliani. The corruption scandal could spread way past the governor of Illinois. Should the governor's wife be sweating bullets? Mayor Giuliani tells you.

Then imagine driving in your car one minute, and then the next minute, being swallowed by a rushing wall of water. Look at this video. The helicopter pilot and a police sergeant who rescued some of these threatened drivers gives you the inside story.

(COMMERCIAL BREAK)

VAN SUSTEREN: We continue now with former New York City Mayor Rudy Giuliani.

(BEGIN VIDEOTAPE)

VAN SUSTEREN: Now, you said that the governor of Illinois should resign. What does he get out of resigning?

GIULIANI: He doesn't get anything out of it, I mean, I guess. I mean, I guess his lawyer wants to make a deal of some kind. The reality is the evidence that is out there says that this man did something dishonorable, unethical and really pretty horrible. Again, whether or not there's enough there for a grand jury to indict him for a conspiracy, whether there's an overt act, whether a jury's going to convict him, that's a whole other matter. But a governor going around asking for benefits and favors in order to make somebody a senator, in the kind of way that he was doing, really stinks.

VAN SUSTEREN: Well, it's sort of interesting, then, looking -- obviously, if he said, you know, You can have the Senate seat for, you know, $2 million or whatever, that's plainly against the law. I guess what I'm sort of interested to know is a little bit more beyond the tapes. I'd like to hear all the tapes to see...

GIULIANI: Oh, sure.

VAN SUSTEREN: ... What kind of wheeling and dealing it is because -- is it against the law to say, Look, I'll appoint Joe Smith to the United States Senate because he's the kind of guy who I know will really help the district and he plays ball with the people back in Chicago...

GIULIANI: That's great. That's all wonderful.

VAN SUSTEREN: Is that OK?

GIULIANI: That's wonderful. That's exactly why you want to appoint a senator. You want to appoint a senator who's going to fight for the state, fight for the city, fight for the district. It's illegal to take money to appoint a senator. And then you get into this gray area if the conversations go more like, I would like to get something out of this. I mean, none of us want a governor in any state that's looking for something personal out of appointing a senator.

On the other hand, whether he's gone far enough to commit a crime, boy, that's a little -- that's a lot tougher. You know, it requires an agreement and then an overt act, not just the agreement to commit a crime.

VAN SUSTEREN: Can the -- Fitzgerald talk to the legislature? He's free to talk to them and say, you know, Put on the brakes because you're interfering with my case?

GIULIANI: Did that many times...

(CROSSTALK)

GIULIANI: ... The Justice Department, did it with Congress. Congress sometimes really gets annoyed with the Justice Department because you're kind of holding up their hearings and holding up their investigations. But the reality is, any time any of that happens prematurely, usually, the prosecution gets hurt.

VAN SUSTEREN: So what's the -- I mean, what are the scenarios, then? Is it -- if Fitzgerald thinks that his prosecution would be hurt by the impeachment proceedings go forward, if he can get the legislature to halt it, now we're in a situation where the governor is just -- we're talking maybe six months...

GIULIANI: Wow.

VAN SUSTEREN: ... Even perhaps longer to get to trial.

GIULIANI: This is a terrible situation. And I think you have -- you probably -- I mean, I don't want to tell the U.S. attorney what to do. He happens to be someone that, as we know, is a very effective U.S. attorney. Maybe you have to make a compromise here. It's very, very hard having somebody like this sitting in a governor's seat for two months, three months, four months, as you -- you know, as you go into the year.

He was already working on something like a 16 percent approval rating before this ever happened. So this is somebody that none of the Democrats and none of the Republicans in the state want. So maybe he has to give up a little evidence so that they can go ahead with an impeachment and just, you know, hold his breath that it doesn't hurt his prosecution.

VAN SUSTEREN: Now, just the governor and the chief of staff have been charged by criminal complaint. But in reading that affidavit, if I were his wife's lawyer, not knowing what's in those tapes, I'd be worried for her.

GIULIANI: You know, again, we don't know what's in the tapes. I bet there are a lot of people worried about the conversations they were having with him, and you know, what they said and how it's all going to be interpreted. And of course, the U.S. attorney has the benefit of, at least for now, keeping that secret. If it goes to an impeachment proceeding, then he's going to have to give some of that up, I guess.

VAN SUSTEREN: One last question. Do you miss your old life of being the United States attorney?

GIULIANI: Yes. I've always missed it, even when I was mayor. I used to -- I used to look back on it -- I mean, it was one of the great experiences of my life. I mean, you get a chance -- you get a chance to be on the side of good, and you work with some of the most talented people, all those assistant U.S. attorneys and FBI agents and DEA agents. They're probably the best people I worked with.

VAN SUSTEREN: Mr. Mayor, thank you very much for joining us.

GIULIANI: Happy holidays.

VAN SUSTEREN: Same to you, sir.

GIULIANI: Take care.

(END VIDEOTAPE)

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