situation room." herman cain has been flying high. a leader in the republican nomination. suddenly there are stunning allegations of sexual misconduct, threatening to potentially dramatically hurt his campaign. they date back to the 1990s, brought by two women who reportedly received a financial settlement. herm yan cane flatly denies the jl gagss. they were first reported in politico. he says the allegations are totally false but why was his campaign seemingly caught flat-fooded by something going back more than a decade. joe johns has been digging teeper into this for us. joe, what are you finding. >> herman cain says this is a witch hunt and there was an investigation in the restaurant sewation where he works in the 1990s. he says they determined there is no factual basis pour what he calls false allegations against him for sexual harassment. he says he see knows reason to many release any more information. he is not aware that association paid a financial settlement against the alleged cases, though he hopes they didn't pay a lot of money. in hindsight still, it took him a long time to come out and publicly admit that there had been a complaint, false or otherwise. >> it's never a good day for presidential campaign when the candidates name appears on the morning headlines in a story about alleged sexually inappropriate behavior. but from a campaign management standpoint, this may be a textbook example of how not to handle a crisis. politico, which broke the story, says there was plenty of warning. it first asked the campaign about this ten days before this confrontational interview outside cbs on sunday. and when the campaign's chief of staff was asked by politico's allegation, he seemed confused too, saying he was not fair aware of any. just hours before the candidates said he had been falsely accused, herman cain's words, of sexual harassment. rich galan says it sounds like there is plenty of time for the campaign to prepare for the story to hit. >> this is the kind of thing you see with campaigns that aren't very skilled and very experienced. every campaign will have a bad time. every campaign will have to explain something they didn't think they were going to have to explain. but you practice it, try to get ready no it, and when it does happen, if it does, you just execute on the plan. >> here is how one reporter at politico responded when we asked if the story came from another presidential campaign. >> my colleagues and i have been reporting the story for the last three weeks. during the course of that time we talked to dozens of current former employees, at the organization, current former board members at the organization, and a lot of folks in washington were close to the organization. so this has been an extensively reported story. thorough story. we have a half a dozen sources telling us claims against mr. cain. >> a huge question there really, where did the story come from? we heard from politico. they got a tip on this, not clear at all, where the tip came from. herman cain says there is an investigation to this in the '90s. he said they determined there was no factual basis whatsoever for claims made against him. maybe he thinks nothing else needs to be released on it. the problem for the campaign is that when you have a story like this, people want to know more. their strategy has been to try to turn it into a media story accusing the media of drumming up false allegations, in an attempt to discredit the candidate, which could work of course, unless new details start trickling in to keep the story alive. wolf? >> we will play his entire statement he made at the national press club later this hour. our viewers will be interested in that. thanks very much. but let's dig deeper right now. more on the allegations against herman cain. how they came to light. what's going on. the chief investigator correspondent for politico, part of the team that worked on this story three weeks, you have been working on this story. ten days ago you went to the herman cain campaign and said what? >> we named one of the women who made the allegations. initially their response was to ignore us, then to say they were unfamiliar with them. then they sifted and said they were vaguely aware of the allegations but said he was not accused of sexual harassment. today of course he is admitting that he was the subject of a sexual harassment allegation but he says they were false. he says there was an investigation into it that cleared him. we are reporting now that there was no such investigation or if this was, if t was very narrowly held, within the top exec tis of the restaurant association because neither the director of human rer sources nor the officers of board of directors knew anything about the allegations, let alone a settlement when we talked to him. >> so basically what he said today, there was an investigation, when you say there was no investigation or it was a very modest investigation, you say he is misleading this on us. >> if he was saying there is a comprehensive investigation, i don't know his exact words, but something to that effect. we talked to all of the foekts involved in such an investigation and most of them never heard anything of the sort. >> this is what you write among other things, because i would like you to elaborate. the women complain of sexually suggestive behavior by cain that made them angry and uncomfortable. there were also descriptions of physical gestures not overtly sexual by that made women who experienced or witnessed them uncomfortable. did you get more specifics? you have more details of what this is all about? >> in fact, i was talking to a source today that said one of the women told her that herman cain invited her up to his hotel room to a national association event and made sexually explicit suggestions to her that made her feel uncomfortable. that is an example of the type of things we are talking about here. >> this is a woman who worked for him? >> that's correct. she is a woman who worked for him. she felt threatened. as if her job was at risk and she was very upset. the source who told this to me. who she told it to, said this is a very exposed young whom nonetheless was extremely angry that she was put into this situation by herm yan cane. >> did you and your colleagues speak to these two women? >> some of the colleagues did the reporting and talked to either of the women or representatives of the women or folks to whom they directly related -- >> but your colleagues did speak to these women personally. >> at least one of them. >> at least one of them. the other didn't want to say anything. they signed confidentiality agreements to not disclose anything in for a specific sum, five figures, 50,000 or do you know how much they received? >> more than 10,000 and less than 100,000 and included in those were nondisclosure agreement. that is part of the sensitivity here. part of the reason we are not naming these people. >> were they not allowed to speak to friends or family about it either or juf the public. >> not familiar with the precise language, we did have one of my colleagues who did review one of vees documents, i can't speak to directly what this particular one said but particularly the way a nondisclosure agreement would work is folks outside. inner circle. >> when i read the report, you posted it last night on politico, my first suspicion as a long time political reporter in washington is the initial tip from politico may have come from opposition research from some of the political rivals. without getting into the specifics of who tipped you off, was it another campaign? >> we got a tip from someone outside. we managed to corroborate all of the details an more. we have to be clear here that this tip was a general tip. and we through within dogged reported, talked to dozens of people, on the restaurant association, on the board, people who knew the allegations and reported on the case -- >> you are a good reporter. if it came from a political campaign were when you say outside, maybe someone from the nationality restaurant association or whatever, you understand the interest where you got the original tip to check this out. >> certainly. and i would say, what's more significant are the facts of the situation. we independently corroborated and verified that. >> you don't want to say whether or not opposition research or another campaign provide the initial tip? >> that's correct. we don't think that's -- that original source is as important as the actual information -- >> i know the actual information is important but the original source is important as well if we look at the whole political environment, what is going on among republicans. you know we have covered a lot of campaigns. opposition research always provides reporters, journalists, you go check out this, go check out that, you may find something good. i'm just curious because it is part of the presidential campaign right now whether another campaign helped you begin this reporting. >> i mean, politics are politics. as you said. and certainly there are people digging up research. i'm just not going to do flig that would identify that would point towards the identity of the original source. >> by the way, what cain did say at the national press club, it was -- and i'm paraphrasing, but he said concluded after a report thorough investigation that there was no sexual harassment. that's what his explanation was today. a thorough investigation. what you are saying is that is not true. there is no thorough investigation. >> it is certainly possible it could have been thorough but very narrowly held. we talk to some of the people who would lonl logically be involved, including the director of human resources, who was named in that investigation and this person name herd by position, was involved in this. we talked to her and she said, no, she never heard anything about it. >> is it possible, that he didn't know if there was a financial settlement. he said he didn't know. if there was a settlement with the two women and he didn't know that, is that possible based on your reporting, what you are seeing? would he know about a five-figure financial statement to these women? >> we didn't report explicitly on that. i assume it could be possible. in fact he didn't know of the settlement. but clearly he knew of the allegations. he said there was an investigation of them and this is something that it took him a while to say that initially when we confronted him with these allegations, and with a specific name of a woman who made these allegations, he pretty much denied all knowledge. now you have him admitting knowledge but saying he was exonerated in a thorough investigation. >> how long did he continue working at this organization after the settlement. >> it is unclear. however he did leave early. he signed for for three-year term p november of 1999. 1996. he left in late june of 1999. so he left a few months before his three-year term was up. we talked to a number of board members including those on the executive committee at the time of his departure. and they are unclear as to why he left. they said that in fact his resignation came to them. they accepted. they thought it was for personal reasons but didn't have any indication as to what they were. >> that is not unusual for someone to leave a few months before the end of a contract. >> it is possible that, particularly if he was going into something specific. in this case though, the ambiguity and sort of the lack of clarity about his plans and why he was leaving, was something that was in fact notable to some of the board members who nonetheless did not know anything about these settlements until we told them about it. >> ken vogel, i know you will do more reporting on this. thanks for coming in. >> my pleasure. >> we will have more on this story, including the entire statement that herman cain delivered describing his store pr prip. let's check in with jack cafferty. as we say, jack, the world of presidential politics, never dull. >> well, if you assume that this came from somebody else in the presidential political arena, it may not have, it may have come from someone else. >> and as you just heard from ken, he is not telling us. >> if you were holding those cases, you wouldn't tip your hand either. it is a good story and they did a good job reporting it. there is probably more to come in the days and weeks ahead. in the meantime, smokers and fat people can pay more for their health insurance. reuters reports there is unhealthy employees, translation, people who can't quick kwit quit smoking, lose weigh or lower cholesterol. employers have been trying to get workers to help their health, bring down soaring insurance costs. there are classes to stop smoking. but not enough employees signed up for these and improve their health. so instead, companies are now going to start making these employees pay more. one recent survey shows the use of penalties is expected to climb next year to include almost 40% of large and medium sides companies. that's up from 19% this year, only 8 percent in 2009. penalties include higher insurance premiums and deductibles. and those engaged in risky health behavior like smoking. wal-mart insures more than 1 million people. they say smokers consume about 25% more healthcare services than nonsmokers do. starting next week, wal-mart will charge smokers higher premiums along with a free program to help them stop smoking. . anyway, here is the question. should smokers and fat folks pay more for healthcare or health insurance? go to cnn.com/caffertyfile. post a comment on my blog or to to the situation's room facebook page. >> thank you. other news we are following, nato ends its official stay in libya. allegations against herman cain that go back more than a decade. why was his campaign seemingly caught off guard. much more on this story coming up this hour. yeah, i'm married. does it matter? you'd do that for me? really? yeah, i'd like that. who are you talking to? uh, it's jake from state farm. sounds like a really good deal. jake from state farm at three in the morning. who is this? it's jake from state farm. what are you wearing, jake from state farm? [ jake ] uh... khakis. she sounds hideous. well she's a guy, so... [ male announcer ] another reason more people stay with state farm. get to a better state. ♪ less than two hours from now, nato will officially end its mission in libya. nato took over the air campaign seven months ago. it was aimed at protecting libyan civilians and with almost 10,000 strike missions alone, it certainly helped speed the end of the gadhafi regime. libya's national transitional console today elected its interim prime minister. an engineer who lived in the united states for more than three decades, but libya still faces extraordinary challenges. let's go to matthew chance, he is joining us from tripoli. matthew, are the allies ending their military mission too soon? what are officials in libya and other experts telling you? >> well, if you spoke to nato, as i've been doing today, what they say is they are ending it at exactly the right time. they say they achieved all of the objectives and fulfilled the u.n. mandate to protect civilians they say, to the letter. when you speak it libyan officials, you get 5 slightly different picture. they are concerned about the security threat facing libya. they are concerned that gadhafi corally themselves, and muster and pose a security challenge in the future. but none of this is convincing nato. they are determined in about 2 hours 40 minutes from now, their mission in the skies over libya will come 20 an end. earlier i sat down with the secretary-general of nato. i flew with him from nato head quart into tripoli. take a listen about what he had to say. >> mandated by the security council to protect civilians. we have prevented -- we have satisfied countless lives. we have fully -- [ inaudible ] that was our mission and we have done what we promised to do. >> so as far as nato is concerned, then, wolf, mission accompliced. but here on the ground in libya, it still could go in many directions. lots of questiones about what kind of country libya will emerge. >> i heard the soundbite with nato secretary general but all that extra sound, i couldn't understand what he was saying. what exactly did he say to you that really jumped out? >> basically, he has been congratulating his own organization, nato, for a which he says has been done extremely well. they are calling it the most successful mission in history. they are leaving at midnight local time, something they haven't been able to do in afghanistan and iraq. they also down played, even denied, that nato caused any civilian casualties in libya as a direct result of its bombardance. remember there were thousands of airstrikes, as you mentioned, on the country. they are say nothing civilian casualties were caused as a direct result they can confirm from the nato bombardment. they are putting the most positive spin on this possible. >> did they say that nato allies would ask the new libyan government to reimburse nate o yo for the 1 or $2 billion nato spent operating this campaign in libya the last few months? there have been hints from the libyans they might be willing to do so. they an oil rich exporting country. they have money. are they ready to reimburse nato allies? did you get into that with russ rasmussen. >> i didn't. that is something specifically that would have been addressed today when the secretary-general came. but i have no doubt, wolf, this is being discussed behind closed doors. certainly libya has the potential to pay back a lost money, whether or not a deal is in the offing or not, i just can't say. but i can imagine given the economic tremors in the world, in europe, the united states as well, that many european countries, may be looking to a relatively rich libya, to pay back some of the money they spent liberating the country. >> no doubt about that. the u.s. alone spent about $1 billion and u.s. still has frozen, i think, about $30 billion in libyan assets. many members of congress suggested deduct some of that money and reimburse u.s. taxpayers. but i'm sure we will get more on that in coming weeks and months. thanks, matthew. thanks, very much. presidential candidate herman cain in a potentially devastating scandal. >> i have never sexually harassed anyone. 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[ applause ] >> number one, in all of my over 40 years of business experience, running businesses and corporations, i have never sexually harassed begin. number two, while at the restaurant association, i was accused of sexual harassment. falsely accused, i might add. i was falsely accused of sex sexual harassment, and as leade