Return to Transcripts main page
QUEST MEANS BUSINESS
South Africa's Labor Strikes Escalate; How Much Holiday Should We Be Entitled To?
Aired August 26, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: South Africa's strikes escalate depriving parents, and patients of emergency health care.
Back in Britain after 17 years, Asil Nadir faces fraud charges.
And how much holiday should we be entitled to? Ali Velshi and I discussing in tonight's "Q&A".
I'm Richard Quest. We have an hour together, where I mean business.
Nine days on and no resolution in sight to the crippling strike in South Africa. The strike has shut schools and brought the nation's health service to its knees. Thousands of public service workers marched through the streets of cities across the country on Thursday. More than 1 million teachers, health workers, and other civil servants have walked out in the standoff. With signs that more employees could soon join in, the indefinite strike now threatens to turn into a total industrial showdown and shutdown with government and employers.
When it comes down to it, it is about public sector workers who believe they deserve a better deal. And if you joined me in the library over here, you'll see what I mean. The South African strike is the issue of the whys, the terms, the conditions. This is a strike around 1.3 million unionized employees who have walked out. They are striking over terms and conditions, housing allowances-they're wanting an 8.6 percent pay increase. The government has offered 7 percent. That much we know so far. But the cost to the South African economy is $148 million a day.
The government says that if it was to give in to the 8 percent, and all the conditions, it would swell government spending by one to 1 to 2 percent. And that his not doable in this current economic crisis. However, the main union, COSATU has filed a notice to 2 million members, hoping that mining and manufacturing employees will also join in. If that happens then the overarching cost to the South African economy would be much greater than that. The dispute has vast political ramifications, beside any of the economic issues. For instance, COSATU, the ANC, and the Communists are all part of this triumvirate that put the ANC into government. These two, COSATU, was also one of the main pushing forces that got rid of President Mbeki, and paved the way for President Zuma to take control. In that scenario it now seems there is an element of internecine warfare between the very three parties that make up the South African government in the widest sense of the word.
However, the human cost of this is pretty dire indeed. As hospital workers are fighting for a fair wage, those who should be under their care are fighting for their lives. It is not exaggeration, as I heard from Robyn Curnow, who has been visiting several hospitals in Johannesburg. I needed to know can we say we're at the point where deaths can be directly attributed to this strike?
(BEGIN VIDEO CLIP)
ROBYN CURNOW, CNN INT'L. CORRESPONDENT: Absolutely. And people, who I spoke to, nurses, today told me when I asked them if they had blood on their hands, if they were taking to the streets while babies were literally dying neonatal wards, for example, that renal patients were not getting their dialysis? I said to the one lady, don't you have blood on your hands? And she said, no, the blood on the hands is on government.
So, there is a bit of a blame game going on here. The nurses say, listen, we want a wage. We are going to fight for it, we're going to stick to it. We care for our communities, yes, but what it boils down to, they say, they are worrying about their own lives first.
QUEST: And the government has had a court order forcing the strikers back to work, which is being ignored. At some point, surely, Robyn, they're going to have to go back to court and force them back to work.
CURNOW: You know what, by the looks things this is going to take a long time. Whether it is drawn out in the courts, whether it is played out on the streets, Richard, the mere fact is that there appears to be a real deadlock, a real disintegration in the relationship between the unions and the government. And the problem is, that while all of this is fought about, you know, kids are not going to school and writing exams, and sick, ill, elderly people are dying or being made worse.
You know, what the problem is here also is that it is a very, very complicated political arrangement, remember the trade unions are actually part of the government. There is a bit of an unholy alliance, quite an antagonistic alliance between the African National Congress and the trades union and the Communist Party. So this is all much larger, in a way. It is less about, you know, .6 percent of the pay increase, in difference between these two parties. It is about where South Africa is going on the macro scale and the unions are trying to push them down, a pro-poor, a pro- worker road. And of course the government is also digging its feet in and saying, listen we don't have the money.
But really this is a very crucial time in South Africa's history and I think it is being played out on the streets and the people who are suffering are those in the hospitals and the ones who don't even make it to the hospitals.
QUEST: So, have the wheels come off the Zuma administration? Or have they come off, if you like, the system of government, whoever was in power. How much of this can be blamed at Jacob Zuma's door?
CURNOW: You know, this is a huge dilemma for Jacob Zuma. Because you will remember he came to power, he was propelled to power by the power of the unions. They got him there. So, they're saying it is pay back time. And he, of course, is saying listen, 35 percent of the government budget is spent on wages. We want to increase jobs, create job opportunities, not bolster the salaries of the people who are already here.
So, for Jacob Zuma this is indeed a test. He's having a big of a political choice to make, and I think, you know, in a way his political future is being decided. How is he going to steer this ship? Is the going to steer this ship? Many people saying, you were in China the past few days. Why weren't you at home? Much criticism leveled at the South African president. And indeed some very interesting time, politically. As I said, that this country is starting to steer a course and nobody is quit sure where it is going. Jacob Zuma needs to lead and he needs to lead in a way that is going to make foreign investors, very important, they make foreign investors confident that they can invest in this country. And of course the images and the stories that we're seeing at the moment, that seems to deny all that good will we saw over the World Cup, doesn't' it, Richard?
QUEST: So, that's our correspondent Robyn Curnow with a frank assessment of the situation in South Africa tonight. A short while ago I spoke to the South African government spokesman, Themba Maseko. And I asked him when he looks at the scenario, nine days on, what is the government doing about it?
(BEGIN VIDEO CLIP)
THEMBA MASEKO, SOUTH AFRICAN GOV'T. SPOKESMAN: Well the first thing we're going to do about it is to ensure that we reopen the negotiations with the unions as soon as possible, with a view to finding a lasting solution to this wage dispute that we're having at this stage. But just for the sake of security, we've decided to deploy military and the police to hospitals and clinics to make sure that those who need urgent medical treatment can receive it.
QUEST: Is the tri-partide (ph), if you like, of the ANC, government, Communist Party-has that broken down in the sense that all the parties that helped put President Zuma into government are not turning into his biggest enemies?
MASEKO: Well, at this stage there are no indications that the alliance between the three political players has broken down. Yes, the strike could be an indication of some tensions, but we believe that this is purely a wage dispute between the states and its workers. And it should actually, essentially, be left to the state and its employees to resolve this matter without turning this into a political fight between the ruling ANC, labor unions, and the Communist Party.
So we believe that, in fact, when the labor issues are sorted out, the political parties will be able to come together and attend to their political issues. But this is essentially a labor dispute between the state and its employees.
QUEST: So you don't think that actually this is either pay back time, or this is going far deeper into South African politics, that is now actually playing out on the national economic stage?
MASEKO: Mr. Zuma and his cabinet have a responsibility to the broader society to ensure that when we settle it is a settlement that is affordable. At this stage our inflation rate is hovering around 3.7 percent, the latest figures. So if we were to settle around 8.6, which is demanded by the unions, it is essentially means that we would have settled 5 percent above the inflation rate, which in our view is not sustainable. So we believe that we will be able to sit and explain the economic challenges that we are facing as a nation, and that the unions will understand that, yes, improving the salaries of employees is important. But equally, building schools, making sure that the safety and security, providing water, electricity, building houses to our cities is equally important.
And the economy shuttered (ph) about 1 million jobs in the past financial period.
QUEST: Thank you.
MASEKO: And therefore we can't be saying put more money into salaries, because that means that we'll then not be able to attend to the needs of the millions who are unemployed, the poor, and youngster who are actually desperately needing jobs that we need to be creating, as an economy. So, this is about managing the economy, but also being sensitive to the needs of our employees. So the offer that we have put on the table-
QUEST: All right.
MASEKO: -in our view, is indeed reasonable. And we think that the unions will actually come to terms with it.
QUEST: The South African government spokesman.
Two hours left to go on trading, on Wall Street. And as you can see the Dow is under 10,000 and we'll tell you why and discuss the recovery in just a moment.
QUEST: Economic twists and turns in the U.S. are playing out on Wall Street at this hour. All the markets are in the red after a modest, higher open. The Nasdaq is, well, it is bouncing around as you can see, now just back over 10,000. The main moving factor, the better-than-thought jobless claims. The number was 473,000. It had been expected at 485,000.
We're going to get a revision on second quarter GDP in the United States on Friday. So all these factors playing into the market at the moment. Primarily now, everybody looking forward to the GDP number, but where that will end, I'm not a betting man. And I certainly wouldn't put my shirt and tie on it tonight.
The Fed will give its economic outlook tomorrow, which will give hints about the economy. Maggie Lake sat down with two leading U.S. economists to find out if they are expecting a dreaded double-dip recession.
ETHAN HARRIS, ECONOMIST, BoA MERRILL LYNCH: I don't think we'll go into an outright recession, but clearly we are in a period of much weaker growth, and if you think about this from a historic perspective, normally coming out of a big recession we should be growing 6, 7 percent right now. This is an extremely disappointing recovery. So, I think it is hard to describe this in positive terms.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: It is disappointing but, see, people are flooding into Treasuries like it is the end of the world again. I mean, we are seeing big, big moves on yields. Everyone is seeking safety. Is that justified? I mean, how bad is it going to get?
STEVEN RICCHIUTO, ECONOMIST, MIZUHO SECURITIES USA: I am in the double-dip camp. I think we are going to see negative GDP come probably in the second half of this year. And my biggest concern is how does the market respond when that develops? In an of itself, we should not see a really sharp additional downturn, like we had seen in the original part of the recession, or the environment. But what I'm concerned about is the degree which confidence can be eroded rapidly, and be transmitted through the financial press. And lead to an even bigger second decline than my models would anticipate.
LAKE: Is confidence the problem here? I mean, recoveries are messy. They are uneven. We went though a very serious credit crisis. Is it the worst thing in the world? Should we be that afraid of a double-dip recession?
HARRIS: I don't think we're facing a 1930s type situation here. I think we can go back a little bit closer to a period in history and look at some of the modern banking crisis. We've had them in Scandinavia, we had it in Japan. And in order to go back into recession right now, as opposed to just being in an anemic state. I think we need some new shock, a big policy mistake, a big external shock. That is really what got Japan into their second recession when they were in serious trouble in the 1990s.
LAKE: Is there a worry that we're running out of ammunition? Especially when you are talking about deflation? Clearly the Fed is looking at that versus looking at trying to get the market, their operations back to normal. Does the Fed have a handle on what is going on, Ethan? Certainly a lot of discussion about the fact that maybe they don't.
HARRIS: I think the ammunition issue is important. I think the Fed still has some bullets left in their gun, but they are kind of lower caliber bullets, so they can step in, do a massive buying program in the Treasury market and drive interest rates down close to zero.
The next step in this process has to be on the fiscal front. The U.S. government can still borrow at an incredibly cheap rates. So the markets are willing to lend to the U.S. government. We need to have a continued stimulative fiscal policy. We shouldn't be talking about tax hikes right now.
RICCHIUTO: I think there is a fundamental difference that hasn't been brought up here, between previous business cycles and this business cycle. If you look at the U.S. economy, you split it down into the banking industry, the consumer, the non-financial corporate sector, and you go back and look at every other recession we've had, it has been one sector that has caused the problem. If you look at this particular recessionary environment, it is two. It is banks and consumers. The only other country that has experienced that is Japan, the corporate sector and the banks. And a look at the Japan situation, and that is where I'm afraid we are actually focusing ourselves into, into a Japan scenario. Because it takes time to correct one balance sheet problem, let alone having to correct two, where they are both intimately involved with each other.
HARRIS: You know, I have to say, I mean, I think that Japan risk is there for the U.S., but I think there are a couple of very big differences. Which make me think we will not go down the path of Japan. The main difference is policy. In Japan they had a very crippled banking system and there was no attempt to fix their banking system for more than a decade. So the banks sat in this crippled state. In the U.S. we have very aggressive recapitalization banks. The other big difference is the Fed. The Fed learned from the Bank of Japan's mistakes and Bernanke has been very-when push comes to shove he will be very aggressive.
RICCHIUTO: The difference may wind up being Japan has been suffering in this for 20, plus years. We may be in it for five, plus, years.
RICCHIUTO: And we're only two into it.
QUEST: It is not only the United States that has been having a funny old summer. In the U.K., too, there has been a lot to talk about in terms of economic news, which has been counter balanced with mergers and company earnings. But we haven't seen much volume on the trading floors. David Buik, an old friend of this program, from PGC Partners, told me why he thinks it has been such an odd summer.
DAVID BUIK, ECONOMIST, PGC PARTNERS: I think we've seen conditions, during the course of the last three months, which we've never seen before. First and foremost we saw recovery in the United States way above what anybody had expected in the first quarter. And also 80 percent of second quarter earnings, both here and of course, in the United States, have been better than expected.
Now, during this period we have seen companies put their balance sheets back into shape. Get mean and lean, and pay decent dividends, way above alternative asset classes elsewhere. And if you are getting a yield of 4 and 5 percent, for a top quoted company, that is pretty good by most people. And also you have seen a surfeit of merger and acquisition activity. Unprecedented for August, a part from 2007. And by the time this month finishes, even though it has only got a few days to go, it won't be very far short of 2007's record.
QUEST: So why have we seen, particularly in the London market, I think to use your phrase, volumes are derisory, I've seen you say.
BUIK: Because I think the data, the economic data that we have had has been debilitating and poor. But for reasons I explained just a couple of minutes ago. There isn't sufficient reason to desert equities, providing they're in the right sectors, paying the right kind of dividends, that have got an international flavor. I think domestic companies, in whatever country they're involved in, are under supreme duress. But as 70 percent of the FTSE companies are international, there is a general feeling, and of course, BP was the exception to the rule. That these companies, probably, for the next six to nine months, are OK. And I think that is the reason why we have seen no volumes at all, because people have said, not enough to buy stock, there's certainly not enough to sell it.
QUEST: Just ahead, it is time for "Q&A", head-to-head, with Ali Velshi.
ALI VELSHI, CNN FINANCIAL CORRESPONDENT: QUEST MEANS BUSINESS and the "CNN NEWSROOM", together around the world.
Good afternoon, Richard.
QUEST: Good afternoon, and a good evening, Ali.
Every Thursday, you and I, talking economy, travel, and innovation.
VELSHI: And nothing is off limits. Today we are talking about that beloved PTO time, call it holiday, call it vacation. Whatever you call it, we feel entitled.
Richard, 60 seconds to tell our audience about how vacation time stacks up around the world.
QUEST: And here we go. It is really very simple, when you think of vacation. In Europe most people have good, long, luxurious vacation times of four or five weeks. Sometimes, in the case of Finland, France, Lithuania and the U.K., it might go as much as 40 days a year. But in the United States, Ali, you are so poor. You don't even get any statutory leave. Oh, yes, add in two weeks if you've been there 10 years and a few public holidays and you get 25 days.
The truth is, there are three Rs to remember: rest, relaxation, and re-charge. Is it reasonable that people are expected to work for 52 weeks of the year, and maybe just have a little bit of a break? No, clearly not. At this time of the year, surely, it is the three hours of enjoying vacation, wherever you are.
VELSHI: Whew, 60 seconds, right on the nose. And I don't understand how you got those moving trees. Let me take a go at it.
(DESK BELL CHIMES)
Americans, Richard, work more hours per year and take fewer vacations than workers in most industrialized nations do. On average Americans get, as you said, 14 days of paid vacation time per year. Most of the rest of the world calls it holiday.
Those leisurely Italians? 42 days off. The French? 37. Even the workaholic Japanese get 25 days off. The U.S. is only one of four countries in the world, Richard, without legal protection for any paid time off. But despite this miserly system, get this, just about half of all working Americans even use those four weeks-14 days a year. 30 percent don't even use half of them.
And all of this is excellent for the U.S. economy, Richard, because American worker productivity is higher than that of any of your beloved European countries. U.S. workers, indeed, are the most productive in the industrialized world.
Now, let's talk about quality of life for the five seconds I have left.
U.S. tops everyone in the world, all the time, in terms of quality of life. So-
VELSHI: I don't know. We just like working hard and we're good at it, Richard.
QUEST: Ah! You went over. Yes, but let's talk about quality of life in a wider sense. Ali, it is time for us to go head-to-head on this one. I'm getting my bell ready.
VELSHI: Let's introduce the voice.
UNIDENTIFIED MALE: Hello, Gentlemen. And I'm afraid there no holiday for you because I'm about to put you to work. First question, you both answered only one question right in the past two weeks, so let's start with a really obvious one. My six-year-old niece could answer this and she doesn't even have a job.
Of the top 30 richest countries in the world, which of the following is the only one with not legally required paid vacation. A, England-
(DESK BELL CHIMES)
UNIDENTIFIED MALE: Ali, ringing in early.
VELSHI: Sadly, the United States.
UNIDENTIFIED MALE: That is true, Ali. You are on the board. It is a land of laws, but there is no paid vacation law.
Question 2: According to the OECD, which as you know, stands for the Organization for Economic Cooperation and Development, what country's employees work the longest hours per year. A, Japan; B, China, C, South Korea, or D, India?
(DESK BELL CHIMES)
UNIDENTIFIED MALE: Richard?
QUEST: I'm going for South Korea.
UNIDENTIFIED MALE: Richard, you are exactly right!
And you have tied it at one all. The average South Korean, as a matter of fact, works 2,390 hours each year, according to the OECD. This is over 400 hours longer than the next longest working country, which is, Poland. A typical workweek in South Korea is 44 hours or longer. Most people start their day at 8 a.m., and actually end at around 10 p.m., or later. Often having dinner before returning to work.
UNIDENTIFIED MALE: It is tied at one all. This is for all the marbles.
Question 3: According to a study done by the human resources consulting firm, Mercer, just this year, what two countries are tied for the most PTO time for employees with 10 years of service?
(DESK BELL CHIMES)
UNIDENTIFIED MALE: Richard?
VELSHI: How do you know that? He didn't even ask the question?
QUEST: It is going to be-go on? Oh, well, I ah-
UNIDENTIFIED MALE: Would you like me to finish the question, Richard?
QUEST: No, no, no. I know the answer, it is Finland and France.
UNIDENTIFIED MALE: Richard, you're wrong!
UNIDENTIFIED MALE: Ali, shall I finish the question for you?
QUEST: Brazil and Lithuania?
UNIDENTIFIED MALE: No!
VELSHI: U.K. and Malta.
UNIDENTIFIED MALE: That is wrong as well.
QUEST: It is Brazil and Lithuania?
UNIDENTIFIED MALE: OK, Richard, you are finally right.
VELSHI: That was just a lucky guess!
UNIDENTIFIED MALE: You're finally right. It is Brazil and Lithuania, keeping in mind we are talking about countries with a mandatory minimum, according to law and national holidays.
And a warning from The Voice, next time, please, let me finish the question.
VELSHI: Thank you, Voice. Always a pleasure. Brazil and Lithuania, if anybody ever asked you, if you want to be reposted anywhere, sounds like those two are good options.
QUEST: It's a trick at the end of the question, because it is statutory holidays, plus public holidays and that is how Brazil and Lithuania.
VELSHI: I wouldn't know that, because I didn't hear the end of the question, thanks to you.
QUEST: Hey, you're the one who has had more holidays than me, this year.
That will do it for this week. Remember we are here each Thursday. QUEST MEANS BUSINESS at 1800. Don't forget out blogs, CNN.com/Q M B, CNN.com/Ali. See you next week, Ali.
We're going to continue our holiday theme in just a moment. We'll look at the charges that could zap your holiday money before you've even arrived. QUEST MEANS BUSINESS, good evening.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news will always come first.
Flood-ravaged Pakistan is expecting some rain in the next 24 hours in the north. Officials say the larger danger right now is in the south of the country, where the Indus River is rising in Sindh Province. Five hundred thousand people there have been warned to evacuate their homes immediately. Four million people nationwide have lost their homes already. The U.N. says millions more face the threat of disease from contaminated water.
Chile's miners have now been trapped underground for three weeks and what they don't realize is, they could be down there for at least three months. Authorities believe telling them that outright would be too much of a psychological blow. Thirty-three men are living in a shelter that's only four -- 540 square feet. The big worry right now is their mental well being.
A grizzly murder investigation is underway at this ranch in northeast Mexico, where authorities say 72 presumed migrants were killed. Mexico has asked diplomats from several Central and South American countries to identify the bodies. Brazil says at least four Brazilians were amongst the dead. The massacre is one of the worst in Mexico's four year old war on drug cartels.
The German pop star has been found guilty of causing grievous bodily harm by not telling her sexual partners that she is HIV positive. Nadja Benaissa was also convicted of attempted bodily harm. She received a suspended sentence and has been ordered to perform 300 hours of community service with people who have HIV. Benaissa told the court, "I'm sorry from the heart."
Now, our top story tonight and nine straight days of strikes that have brought South Africa's schools and hospitals to a standstill.
Earlier, we heard from Robyn Curnow, who told us how hospital wards are unstaffed and that it's putting lives at risk.
I asked her earlier whether people had died as a result of this strike.
Well, Robyn's seen it firsthand in Johannesburg, where she met one father desperate to give his premature baby the best start in life despite the strike.
ROBYN CURNOW, CNN CORRESPONDENT (voice-over): A father touches his premature son for the first time. Safe at last in the intensive care unit of a private hospital, hours after being born at home because state hospitals are closed or barely functional due to a strike by public employees that includes nurses and hospital workers.
THOMAS LEHLOHOLO, FATHER OF NEWBORN: They went to a maternity ward and it was closed.
CURNOW: So he and his girlfriend went home, where she gave birth, helped by her grandmother here. Thomas was still driving around, trying to find a doctor when she called him with the news that he was a father.
LEHLOHOLO: I could hear the baby screaming in the background. And I said you cannot be having your baby yet. She said, no, we just had a baby. I said, wow! My biggest worry is now here we have a premature baby and the mother, you know -- you know, she has some complications and in the month after her pregnancy and said, you know, a premature baby and the mother who just gave birth in the house, you know, this is not normal, you know, in this court day and age.
So I said to myself, let me run out and see if I can get help. You know, if I can just get into any hospital.
CURNOW: So, Thomas phoned this radio station, asking for help.
UNIDENTIFIED MALE: Talk Radio 702.
UNIDENTIFIED MALE: Thomas, who needs some help.
Welcome to you.
LEHLOHOLO: Hi, John.
How are you?
UNIDENTIFIED MALE: Yes. Good. I believe you need help.
What's the story?
LEHLOHOLO: Yes, no, John, we went to the girls hospital here on Soweto and we couldn't get any help. So we had to go back home.
UNIDENTIFIED MALE: Yes?
LEHLOHOLO: And my girlfriend gave birth to a child. So we're just trying to find a hospital because she doesn't have medical aid.
UNIDENTIFIED FEMALE: What made you guys decide to phone the radio station?
NOKULUTHULA MAHLANGU, MOTHER OF NEWBORN: We were so desperate. There was no other place to go to. We had no other option.
CURNOW: This pediatrician heard his call and offered to bring the mother and child to this private hospital, where they joined many other babies who have been rescued from state hospitals over the past week by concerned doctors like Dr. Richard Friedland.
DR. RICHARD FRIEDLAND, CEO, NETCARE: And when we went into that ward, it only had two security guards. And we found 24 crying babies. And I think for all of us who are pretty hardened in terms of trauma and doctors, this is probably the most emotional moment of our lives. And many of us started crying because the last -- these are babies that are only being fed at 9:00 in the morning. It was now half past 11, 12 o'clock at night. They had soled their nappies. They were cold and many of them needed to be resuscitated.
CURNOW: This private hospital group is caring for more than 400 patients free of charge. More than 100 are sick newborn babies who were left for dead by striking nurses.
The nurses are protesting for better wages. They say they are not responsible for any deaths due to their strike action.
How do you feel about the fact that nurses like you are abandoning sick patients?
NTOMBENHLE PRECIOUS NDABA, NURSE: You know what?
We -- we -- we like our community and we feel bad for the community because the courage -- the people who are suffering now is the community.
CURNOW: Do you not think there is the blood of the community on nurses' hands who leave patients unfed, unclothed, dirty in their beds?
NDABA: No. On that side, I will -- I will say, the blood of the patients who -- who -- which is shed is on the -- in the -- on the hands of the government.
CURNOW (voice-over): The government says they just can't afford to pay more in wages.
(on camera): These nurses and hospital workers around me have a constitutional right to strike. But as their dispute with the government over wages intensifies, it doesn't look like this strike is going to end any time soon. It's the ordinary South African -- the weak, the sick and the young who are paying the real price.
(END VIDEO TAPE)
QUEST: Robyn Curnow there reporting.
Now, it's time for the next chapter of a story that started 17 years ago. The fugitive tycoon of the 1980s has returned to the U.K. Asil Nadir thinks now is the right time to come back and face trial.
QUEST: Seventeen years ago he left the U.K., hoping to avoid a trial from fraud. Now, the high profile fugitive has returned to face justice.
Asil Nadir landed this morning in London. Nadir was a major stir of the 1980s. His company, Polly Peck, was one of the biggest in the U.K. At the turn of the decade, things turned sour. The collapsed and he was charged for a $50 million fraud. Nadir fled to Northern Cyprus, which didn't as yet have an extradition treaty with the U.K. Seventeen years on, he says the time is right to return.
(BEGIN VIDEO CLIP)
ASIL NADIR, FORMER CEO, POLLY PECK: I'm here. I've come voluntarily because the conditions now are correct. And I'm hoping that the people that rule this country and the entire population are as interested as -- as I am that justice is practiced.
(END VIDEO CLIP)
QUEST: Jim Boulden is old enough to remember the Polly Peck debacle, as, indeed, I am.
All right, hands up -- I covered the story.
JIM BOULDEN, CNN CORRESPONDENT: As well. You know, when I first moved here in 1990, in the first couple of years, there were three big scandals. Of course, Robert Maxwell fell off his boat. His empire collapsed. The BCCI Bank went belly-up and that was a huge scandal. People protesting in the streets for both of those. And there was, of course, Asil Nadir and Polly Peck. I mean it was the -- the star of the Conservative Party and the star of the stock exchange.
QUEST: Why has he come back?
BOULDEN: Well, it's interesting, because he -- actually, when he left, there -- he wasn't out on bail so he didn't flay -- he didn't flee from bail. He simply flew one of the country to Northern Cyprus. He says he wants to be able to clear his name. He thinks there was a terrible injustice done to him seventeen years ago and that's why he left after the empire collapsed.
But, of course, you had -- you had -- his board was upset and they wanted -- they -- they accused him of taking money. The accountants accused him of some very dodgy dealings. And then, of course, he was charged with fraud. So there's a big case for him to still answer.
QUEST: Is it likely that these charges will go ahead?
The SFO, the Serious Fraud Office, has an appalling history of convictions. It's -- it -- trials for fraud are notoriously difficult to start with...
BOULDEN: Yes. Yes.
QUEST: This is going to require witnesses to remember events two decades ago.
BOULDEN: Exactly. And there wasn't a -- there wasn't a trial in the beginning, so there's no trial transcript, you know, to go back to. In fact, yes, the fellow admitted that it was -- the files were in the archives. They have to go back and find these archives. Next Friday, he goes to court at the Old Bailey. And that's when we'll hear how many of these charges they want to -- to stick to him and we can hear the process of what will go on.
He came back knowing that he would be able to go back out on bail and that these charges would be flied. So we will have something to hang our hat on next Friday.
QUEST: Why now, Jim?
BOULDEN: Well, he's 69 years old. He was living, apparently, a very nice live in Cyprus. I haven't heard him answer the question, why now, specifically, because he could have spent the rest of his life untouched in -- in the northern part of Cyprus.
QUEST: It's one of the big questions that people will really want to know about this. But he -- because has been very successful in Cyprus. I mean it just proves, maybe, the entrepreneurship of the man. He makes a fortune in the U.K., absconds that off to -- to Cyprus, Cyprus, where he makes another fortune.
BOULDEN: You know, and -- and it was amazing what he did in the 1980s in this country. He's -- he bought a little company. And the share price, according to Reuters, went up 100 times, right up into the FTSE 100 just in 1989. It only lasted the year until it all started to fall apart.
BOULDEN: But he owns everything -- textiles, fresh fruits, electronics. He bought a Japanese company. Nobody bought a Japanese company in the 1980s. He did.
QUEST: You missed out one scandal, because even you're too young to remember. The Guinness affair.
BOULDEN: Ah, that was before my time.
QUEST: That was before your time and that was the scandal with Milken and Boesky and it all came down in the Guinness affair. I'm aging myself here, aren't I?
Jim, many thanks.
Jim, I can promise you, will be doing good duty at the Old Bailey if and when that trial gets underway. He's earned the right to cover the trial.
Forget the holiday buzz, beware the holiday sting. We have got the cash, carriers and governments wanting every bit of your protection and money, in a moment.
QUEST: You've packed your bags. You have your passport and the all important suntan lotion. Now, don't forget some repellent. You could be about to suffer a nasty sting. And I don't mean from the mozzes (ph). No frills carriers have extra costs called ancillary charges. And they are just about everywhere.
For instance, checked in bag fees at Ryanair -- those fees can cost you up to $23 to $54 a time. And then, if you want to be a speedy border on Yves Jet (ph), be prepared to pay almost $15. It goes on and on. If you want more leg room, Winds will charge you between $6 and $12 for a few extra inches around the emergency exit. But it's not just the airlines that are buzzing for cash. If you're departing from a U.K. airport, you'll be paying the APT, the air passenger duty. And depending on your destination, that could be from $37 to $264. Everyone's in on the act. This is highly controversial, the EPD. And Germany's new tax, which will be coming in in January, will set you back $16 to $33, depending on your destination.
Everybody wants to rock and rob the traveler through their tickets.
And now, there's another bit of mischief coming along. Starting from next month, the United States is going to charge for non-visa tourists to enter the country. It's part of the ESTA scheme. If you're from a visa- waiver country, you have to have ESTA to go to the United States. It lasts for two years. But now, from next month, $14 per person.
The deputy director of traveler entry programs for America's Department of Homeland Security, Robert Neumann, joined me.
I wanted to know why was the U.S. charging tourists to fly -- to enter the United States when they didn't have to pay before.
ROBERT NEUMANN, U.S. DEPARTMENT OF HOMELAND SECURITY: There are two parts of the fee. It's $14 U.S., which is a nominal fee, that covers two years of travel to the United States. Four dollars recovers the costs of administering the program and then there's a $10 fee to cover costs from the Travel Promotion Act.
QUEST: Right. And the travel -- so let's -- let's break that down. So $4 goes, basically, to -- to run the program?
QUEST: I suppose one can't object too much about that, except why should tourists pay for you to run your program?
NEUMANN: And, actually, it turns out that 56 countries around the world do charge a fee to enter or exit their country. Sometimes it's hidden in hotel taxes. Sometimes it's included as part of an airline fee, when you buy your ticket. But for us, we're doing it so you directly know where the money is going and you're paying of it online. You're paying it directly.
QUEST: There's all -- this other bit -- this other $10 -- I mean I have to express it here. This goes, basically, for the promotion of the United States as a tourist destination?
NEUMANN: Yes. It's -- it's also to provide information to tourists. So they'll -- they'll be setting up a corporation that's going to provide information to everybody who's arriving in the United States.
QUEST: But effectively, the U.S. is charging its incoming tourists to promote the US?
NEUMANN: In -- in some respects, of course, that's how we would see it.
QUEST: Currently, under the visa wavier program, there is no fee involved.
NEUMANN: Right, through September 8th.
QUEST: Right. So that is quite a substantial change, isn't it, for people to get into the US?
NEUMANN: Yes. But if you have an ESTA in effect already, if you've already applied and it's been approved, it's good for two years. So you don't have to worry about the fee for the next two years.
QUEST: One of the biggest problems, looking online, that I've seen is if we go to your site, there's the $14 fee -- or there will be. But there's many scam sites -- not even scam sites -- just people who will charge me a fee to do something that I don't even need.
NEUMANN: Yes. And we've actually been recommending that everybody goes to a dot-gov Web site. So if you go to the CDP.gov Web site, you'll be able to link directly to the ESTA process and you can go through. We've also been working very closely with the airline industry. We've provided links directly from the airlines' Web sites. So all the major airlines and most smaller airlines have created a situation where you can go on, you can make your reservation and link in directly to our Web site, so you don't have (INAUDIBLE)...
QUEST: Because some people are now charging quite large fees...
QUEST: -- for doing something that's actually...
NEUMANN: Yes, today it's free.
QUEST: And in...
NEUMANN: And after September 8th, it will be $14. So that's one of the reasons I'm here. We're trying to get the word out to everybody so they know. It's just a $14 fee. And you can go directly to the ESTA Web site to fill out the information. It's very simple. It usually takes a couple of minutes. Over 99 percent of the people are approved very quickly and -- and they can travel to the U.S. for two years multiple times.
(END VIDEO TAPE)
UNIDENTIFIED MALE: B.A. Flight 177 to New York now boarding at Gate 15.
QUEST: So what does the smart money do sitting in the lounge, as we are, when faced with these lurking fees?
The editor of Lonely Planet, Tom Hall, joins me in our lounge tonight. Business, of course, which this, of course, is the only place you'd want to be in.
TOM HALL, EDITOR, LONELY PLANET: It's already come up in the lounge for a very long time.
QUEST: Let's talk about fees, sir, and the ESTA fee. It's a modest amount, but it is a fee for something that you didn't have to pay for before.
HALL: It is a -- an additional you haven't had to pay, you're right. The American authorities argue it's paying for a tourist information service, which will help people -- give people something they haven't had before. However, when you're paying lots of additional fees anyway, it's possible to look at this and think, is this the straw that breaks the camel's back?
I can travel to lots of places without paying any fee at all.
QUEST: The $14, when I put this to the U.S., they point out that something like 50 countries do have visa fees. But they don't tend to be in the top countries that people visit.
HALL: They don't. And it's inevitable that you end up looking at these when you travel to more adventurous places -- I was in Zimbabwe last year -- $50 U.S. I think I was in the country for seven or eight hours going through Victoria Falls. When you go to the U.S., I'm not sure if you expect it. After all, if you're within the European Union, you drive across a border, it's like crossing from one county to a state or crossing a state line from another.
QUEST: EPD in the United Kingdom, the passenger duty. There is no -- the industry is up in arms about it.
Is it really that much, these taxes on airlines?
Is it really that much of a -- of a big deal?
HALL: The question is how much can the passenger bear?
If you look now, you -- a seat sale for an airline, the ticket to New York, something like that, the amount that you pay seems to be mostly taxes and charges. So I think eventually people are going to say, this is ridiculous. And (INAUDIBLE)...
QUEST: But that's only because the ticket is cheap to start with. If you're going on a class ticket, the APD is relative.
HALL: It is relative. But also, passengers increasingly have a choice. And when we're talking about APD, people can choose to start their journey for somewhere else.
QUEST: What about the dreaded ancillary charges?
What is your hated one most?
HALL: Well, of the $13.5 billion raised by ancillary charges every year -- which is 43 percent up from 2009 than it was in 2008 -- I think the one that I dislike the most, speedy boarding. We were just talking about that...
HALL: -- the first on the bus.
QUEST: The first on the bus. I know, you always end up being first on the bus. Speedy boarding, this is priority boarding, isn't it?
But do you -- do you prefer, overall, the concept of decoupling the ticket from things like the luggage that you're going to get on the overhead, the speedy boarding?
Do you prefer that or would you rather have an all in?
HALL: I think there's a bit of a balance to be struck here. You want to pay for things where they're relevant but you don't want to feel you're being ripped off. I think the balance is going in the wrong direction.
QUEST: Tom, many thanks, indeed.
I think I can just hear an announcement. I'm looking at the -- your flight, all final boarding. You'd better be on. You have a safe flight.
HALL: Thank you very much.
QUEST: Many thanks, indeed.
Tom Hall joining us.
UNIDENTIFIED MALE: Will the last remaining passengers to Abu Dhabi...
QUEST: Oooh, Abu Dhabi, I should go.
Right. I will -- we're going to now go to the weather forecast.
Tom goes to Abu, I'm staying here in London -- Guillermo, if you haven't got some decent weather for me now, don't bother coming back tomorrow.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Whoa. I'm going to leave now, I think.
But let me tell you, I think that it's going to be fine. Friday and Saturday will be good again. So it's improved. It's not as bad as it was last night. We see some rain now moving in. It's over England and Northern France. But the bad storms are going to go south. You see -- we see some evidence over here in the English Channel and the northern parts of France. I imagine the English Channel must be very choppy right now.
So it's going to clear. Then the rain will come back. But the weekend, it's going to be nice. Actually, we're not posting any delays at London Heathrow, you see, Richard?
Nothing to worry about. Things are getting better. It's even going up in temperatures just by one degree. Nineteen is the high for Friday, we think; 34 in Bucharest, still quite hot in Madrid at 36.
But the storms are basically in Central France, in Germany, in the Alpine Region. The chance of tornadoes is there, as well. Nothing in Great Britain. We don't see any alerts there posted.
And as you see, Frankfurt, Munich, Zurich may see some rain showers but nothing bad at all that may create problems for travelers.
Nothing with Frank. If you're watching from Mexico and you say, hey, what's going on with that hurricane?
Forget about it. Nothing is going to happen. It's actually moving away. We saw some rain in Puerto Vallarta, but things are getting better.
And what about Bermuda?
You know, the cyclone is going to get close to Bermuda as a hurricane. It's pretty big. But it's going to go to the right, to the east of it. So you will see some clouds and some winds and that's about it.
Another one is coming behind, Richard, so we're looking at that. It's too early to tell, but we'll see what happens.
QUEST: And tomorrow, Guillermo, we'll find out where you're going for one of those many vacations.
QUEST: Perpetual vacationer.
All right, many thanks, Guillermo, at the World Weather Center.
ARDUINO: Thank you.
QUEST: I'll have the Profitable Moment after the break.
I'm going to catch my flight.
QUEST: Tonight's Profitable Moment. For nine days, South African public service workers have been on strike. Hardship and chaos in the country to those most in need. Patients in hospital, children facing school exams, prisons, the various central services provided by a state have now been curtailed. People have died and negotiations have stalled.
On this program, you heard the government spokesman said this was evidence of a maturing democracy that can weather the right to strike, even when it causes such hardship. Most workers have only one major weapon at our disposal. We have the right to withdraw our labor. And that's a right that must be guarded jealousy, as fundamental as the right to free speech.
But with rights come responsibilities. Union and government have a duty to come together and negotiate to end this misery. Nine days on, negotiations are nowhere to be seen. The best indication of a maturing democracy will be when the talking begins to end the strike.
And that's QUEST MEANS BUSINESS.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
"WORLD ONE" now.