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India Votes for Change; Light Volume Helps US Markets Gain; Turkey Mine Disaster; GM Fined

Aired May 16, 2014 - 16:00   ET



PAULA NEWTON, HOST: All smiles with a modest gain on Wall Street today, and they'll take what they can get. It's been a wild week on Wall Street, and it's ending with at least those gains everyone's been looking for. It's Friday, May 16th.

India has made its choice. The world's largest democracy has a new leader and, perhaps, new hope for the economy.

The whistle is blown on the champions of England. Manchester City gets a record fine from UEFA.

And business lessons from a desperate housewife. Felicity Huffman tells me why women need to take more risks in the workplace.

I'm Paula Newton, and this is QUEST MEANS BUSINESS.

Good evening. Good times are a-coming. That's the promise of Narendra Modi, who will become India's next prime minister. The votes are still being tallied in the largest democratic election in history. Supporters of the Hindu nationalist Bharatiya Janata Party are already celebrating what appears to be a landslide victory. It is an historic political shift.

The National Congress Party has dominated Indian politics for most of the last 67 years. Becky Anderson has had a front-row seat to all of this. She joins us now, live from New Delhi. We all knew it was going to be quite a tumultuous event there, but it really exceeded expectations, didn't it?

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: It's been quite remarkable. This has been an historic election day. Show me the Modi: India has spoken.

Now, the world waits to hear exactly what the intentions are, so far as policy is concerned, from the tea-seller turned politician, who has run a western state here in India for nigh on more than a decade here, with fantastic results.

How he's done that is a point in issue, let me say here. This is a very polarizing character. A decisive but very divisive man. But as election victories go, you don't get any more emphatic than this. Let's just step back for a moment and just take a look at how this day unfolded.


ANDERSON (voice-over): "India has won." A sign of the changing times, India's prime minister-in-waiting announced his victory on Twitter and created history. His Bharatiya Janata Party won a landslide victory in India's general election, bagging an overwhelming number of seats in India's lower house of parliament.

ANDERSON (on camera): It seems India has spoken. Now, the world waits to see whether a tea-seller turned politician, one Narendra Modi, can really drag this huge country of more than a billion people out of the relative economic malaise.

ANDERSON (voice-over): Friday's victory is the best showing for the BJP since it was formed in 1918, and the worst for the Congress Party that's ruled India for most of its 67-year history. Gracious in defeat, the party's vice president said, "It's time for introspection."

RAHUL GANDHI, VICE PRESIDENT, INDIA'S CONGRESS PARTY: I wish the new government all the best. For my part, Congress Party has done pretty badly. There's a lot for us to think about. And as vice president of the party, I hold myself responsible.

ANDERSON: It was Narendra Modi's day. He sought his 95-year-old mother's blessing before heading to his constituency in his home state of Gujarat. This is how they welcomed him there.


ANDERSON: Modi thanked supporters, who just couldn't get enough of him. In the end, this has been less an election, more a referendum with one question: are you for or against Narendra Modi? Either way, no one's doubting one thing: Modi is the face of the BJP and the future of India.


ANDERSON: This is a man who has been extremely successful in his own state as chief minister, but has very little if no experience on the national stage. And as far as foreign policy is concerned, Paula, we heard very little on the campaign trail.

In the last hour or so, we have heard from the States, that they have congratulated Narendra Modi, who was waiting for that, to a certain extent. I spoke to his spokesman earlier on this evening, and there's -- there was a certain sense --

This is a many who, by the way, had had his visa revoked by the United States for travel to America back in 2005. There was an anti-Muslim riot in his home state, which he presided over. He was alleged to have been involved in those riots, in which many Muslims died. He has been certainly -- has denied those allegations always.

But tonight, the States say that they have congratulated him and that he will have a visa going forward. Investors have loved this story, let me tell you. The SENSEX has been up and down today, but basically up some 5 percent at one point. This is an index which has been up some 22 percent sine Modi got on the campaign trail back in September.

So if nothing else, this is a polarizing character, let me tell you, but if nothing else, the investment community certainly likes his story.

NEWTON: And I'm sure people in India are thinking to themselves, even if they are against him and have some reservations about his Hindu nationalist party, they're talking about the price of onions, they are talking about the inflation. They have at least a hope. Becky, how much of a hope do they need? It's been a sluggish economy, now, for years. What do they need to see here?

ANDERSON: Sluggish at 4.5 percent, by the way. Most of us around the world would love a bit of growth like that. But listen, because growth was so much more robust a couple of years ago and back through the last decade, this looks like a sort of faltering economy, to a certain extent.

Growth of about 4.5 percent. Inflation, though, you rightly point out, above 11 percent. This guy is talking tough on business. He says he is business-friendly and he has experience in that. He's investor- friendly.

But what happens at a state level in India is very different to what happens on a national level. This is a man who, as chief minister in Gujarat state, actually owned the finance portfolio. Now, there is much discussion as to how he will carve up the portfolios going forward. Some people say maybe he'll take the finance portfolio himself. That would be an interesting position, wouldn't it?

But this is a man who has promised big. When I say big, I'm talking massive. This is a $2 trillion economy, but as I say, underperforming, so far as many Indians and investors around the world are concerned.

Can he come good on these promises? Well, there are going to be a lot of eyes on him, because I've seen no real evidence of any explicit or specific policies, a monetary policy, on fiscal policy, there was an enormous infrastructure issue here, soft and hard. Railways, electricity.

And then, on the softer basis, education, health. There is a real job to be done here. How he goes about doing that remains to be seen.

NEWTON: OK, Becky Anderson, tonight. Thank you so much for staying up late for us, Becky, we appreciate it.

Now, Jagdish Bhagwati is a professor at Columbia University and a senior fellow of international economics at the Council of Foreign Relations. I'm going to turn your own title of your book onto you: "Why Growth Matters."


NEWTON: Why does Modi matter? Why does he matter, especially when we need to see that growth in India?

BHAGWATI: Well, I think in two ways. I think he's very much someone who has performed at the state level in an extraordinary fashion. Three elections, the growth has been spectacular. I think the -- by contrast, the Indian performance in the last four-to-five years, as your correspondent was pointing out, has been very sluggish.

Part of the reason has been a tight monetary policy, which I think was excessively tight. That breaks the economy, as you know. And the second reason was that everybody was concerned about massive corruption in the system.

The prime minister himself, whom I went to school with in Cambridge, England, 65 years ago, he's as old as me --


BHAGWATI: -- and should not be running an economy. And so, he was completely honest, but he was surrounded by a bunch of crooks, basically. So, he got carried away by this tsunami that happened. Because everybody was talking about how much corruption there was, and there was massive corruption.

And that meant that meant that the bureaucrats were not taking decisions. You see, if I'm a bureaucrat, and you come up for a license, if I give it to you, I could be accused of taking a bribe. If I don't do anything, I'm safe. So, a lot of people were simply not taking decisions. So, that --

NEWTON: The Indian economy was stuck, paralyzed.

BHAGWATI: Yes, absolutely paralyzed because of this. And I think where Narendra Modi is going to come in with a great advantage is that he has -- he's completely corruption-free. He's like the prime minister, but he's not surrounded by crooks. That's the great difference.

NEWTON: But do you think that the expectations are too high? And what does he have to do to make sure that economy gets going?

BHAGWATI: I don't think they're too high for the following reason, that Gujarat's model is one of -- Gujarat is, for millennia -- and not a failure, but --

NEWTON: The state that he's from.

BHAGWATI: Right. They've been trading throughout the world. When they want -- when they go and compete with other people, they're not afraid of competition. They think the other guy should be afraid of the competition.

They invite foreign investment, they collaborate with it. So, the -- what the chief minister had been doing, Narendra Modi, was to actually use internationalization of India, on trade and on investment, and these are major components of growth. And that is what he'll be able to bring to the center.

And nothing succeeds like success. It effuses you. See, people see how he's really triumphed, in terms of Gujarat's prosperity. And the more prosperous an economy, the more you pull people out of poverty into gainful employment. Now, I call it the fill-up process, not the trickle-down, which suggests some crumbs fall from the table.

NEWTON: Which has been your economic stand for decades --


NEWTON: Professor Bhagwati, I thank you so much. I can't think of anyone else to be here on this momentous day for India, and I appreciate your insights.

BHAGWATI: Thank you.

NEWTON: Talk to you again.

BHAGWATI: Thank you.

NEWTON: Now, Alison Kosik is at the New York Stock Exchange. As I was saying earlier, Alison, a bit of a relief today. Was the volume thin as well? At least they got gains out of the day.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: There were gains out of the day, but yes, the light volume really had a lot to do with the fact that we saw stocks in the red most of the session, and then turn to the upside toward the last hour of the trading day. So, there was a little caution, and some confusion, today, as well.

We did get some mixed economic reports that kind of fed that momentum. An upbeat housing report along with a downbeat report on the consumer. That pushed investors, many, to just sit it out. So yes, we did see volume a bit thin today.

But I'll tell you what. What a difference a few days make. We saw stocks begin the week, Paula, with record highs. We saw things calm down today. Still those comments from David Tepper kind of lingering today, limiting the gains today.

He said the other day that he's a little nervous about where stocks are going and at this point, stocks aren't cheap, especially when you look at the disconnect between where stocks are, near record highs, but the economy is growing only slowly. So, that's also why you saw investors kind of thinking twice about jumping in with both feet. Paula?

NEWTON: Yes, definitely a lot of talk on how this market, how the bulls, it might be over. We'll wait to see what happens on Monday. Have a nice weekend, Alison.

KOSIK: Sure, you, too. Thanks.

NEWTON: Still to come on QUEST MEANS BUSINESS, in Turkey, protesters keep up the pressure on the government over this week's mine disaster. Police respond with force. We'll take you there live. That's next.


NEWTON: Eight more bodies have been recovered from the Soma mine in western Turkey -- 292 people are now known to have died in Tuesday's mine disaster. The authorities say 18 miners are still unaccounted for. Hopes they will be find alive, though, are dwindling.

Protests continued in Soma, meantime, with demonstrators urging the city not to sleep, but to remember the dead. Police used teargas, plastic pellets, and a water cannon against the crowds. Questions are mounting over the mine's safety practices and whether the miners had access to a safety chamber.

The Turkish government's handling of the disaster has bee controversial and, at times, unpredictable. Our senior international correspondent Ivan Watson has more.


IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Turkish riot police unleashing water cannons on demonstrators in a mining town reeling from a deadly disaster.

WATSON (on camera): Water cannons being fired, teargas in the air in a small mining city still reeling from the worst mining disaster in Turkish history. The police here, very jumpy. They don't appear like they're accustomed to this kind of protest. People are furious.

We've seen one man injured already. This is a very ugly scene after quite literally hundreds of coal miners died in a mountain just a few miles away from where we're standing right now.

WATSON (voice-over): A fire broke out in a coal mine here in Soma on Tuesday. The death toll quickly skyrocketed into the hundreds. Turkey's prime minister declared three days of mourning. The day after the accident, Recep Tayyip Erdogan rushed to the mine to express his condolences. That day, he promised an investigation, but also sounded defensive.

RECEP TAYYIP ERDOGAN, PRIME MINISTER OF TURKEY (through translator): Such mine accidents do not happen only in Turkey. They also happen in many countries, such as the US, China, France, India, and Belgium.

WATSON: Erdogan went on to site statistics from deadly mine disasters in Britain and the US dating back to the 1860s and 1900s.

When Erdogan walked through the streets of Soma, an angry crowd booed and chanted, "Prime Minister, Resign."


WATSON: He and his entourage moved up the steps of a crowded supermarket, where Erdogan was filmed in some kind of a scuffle with a man. Seconds later, the prime minister's body guards were seen beating him.

The man turned out to be a coal miner named Taner Kuruca, who is now asking for an apology from the prime minister.

TANER KURUCA, MINER (through translator): Without meaning to do it, he touched me in a manner of a slap. I pulled back, but the security team brought the rest of it on me. I was seriously hit and hurt.

WATSON: A government spokesman has said there's no footage to prove Kuruca's allegation that the prime minister slapped him. But later on that same day in Soma, one of Erdogan's top advisors was photographed kicking a protester pinned down by Gendarmerie officers.

"I'm sad that I could not keep my calm in the face of all of the provocations, insults, and attacks that I was subjected to that day," wrote Erdogan's advisor, Yusuf Yerkel in a statement.

In Soma, where funeral flags hang in shop windows, grief over the disaster runs deep. And some here denounce the government's use of force here. "The prime minister delivered a slap against the entire city of Soma," says this retiree.

"The priority now should not be politics," says this 19-year-old. "We should be focused on the families of the dead and wounded." Wise words from a teenager at a time when this anguished community is burying its dead and coming to grips with the worst mining disaster in Turkish history.


NEWTON: And he's live for us, tonight, in Soma. Ivan, as you were saying, the teenager, wise words, let's try and concentrate on the victims. But has this really changed politics in Turkey? There seems to have been a tipping point here.

And you had described the story yesterday of this man who claims he was slapped by the prime minister. From an image point of view, extraordinary that in the middle of this tragedy, they seem not to want to count on their prime minister for condolences, for assuring words about the investigation, for anything.

WATSON: I asked one man here, this seems very strange for the most senior government officials to come to this town to offer help, and then for these images to emerge of government officials kicking, beating, slapping the residents of this stricken city.

And the man responded to me and said, "We've grown accustomed to being on the receiving end of violence from our own government." Those are the words of one Turkish man I spoke with.

And certainly, there has been a great deal of unrest across Turkey throughout the course of the last year, a year of unprecedented anti- government protests and a lot of police violence against demonstrators and clashes.

The difference here is that there is this massive tragedy that the whole country agrees upon, that life has really come to a stop, certainly, in this region. Everybody agrees that this is a terrible thing and the families of the wounded, the families of the dead, should be helped somehow.

Some of the big questions are going to be about accountability. Will anybody lose their jobs as a result, for example, of at least 292 men being killed. So far, nobody has been suspended.

We hear that investigation is underway, that prosecutors are working and are gathering evidence, but so far, nobody has even stepped down from their jobs, either in the mining company or in the government agencies that were tasked with inspecting the mine as recently as last March.

And it was remarkable to hear the owner and the top officials from Soma Holding Company, that's the mining and construction and real estate company that owns the mine, telling reporters at a press conference today that there was no record of negligence at this mine, standing by their record of safety and health there.

And also admitting, however, that one of the safe rooms at the depths of the mine, where most of the work, they said, was taking place, had been closed down, decommissioned, and that there were plans to build a new safe room, but it hadn't been constructed yet.

That means that one of the places where people could have potentially run to to use gas masks, to use fresh air, to protect them from the poisonous carbon monoxide gas, was not available to them.

Lots of questions and, in fact, that mining company also saying that, in fact, the fire that began there Tuesday, that resulted in all these deaths, was not started by an electrical transformer. They don't know the cause of it.

So, there are big, big questions at stake here, and questions also whether the government will follow through on the investigation. For example, the top aide to the prime minister, photographed kicking that protester, has not stepped down, he has not resigned.

And if anything, a spokesman for the government defended him and his actions, kicking a protester in the streets of this very city a few blocks from where I'm standing right now.

NEWTON: Yes, Ivan, extraordinary, as you say, that the issue of accountability hasn't really risen to those levels. And you had the company so much on the defensive, as you say, during that press conference. Ivan, thank you for this, and we'll stay on top of it throughout the weekend. Appreciate it.

Still to come on QUEST MEANS BUSINESS, General Motors agrees to pay a relatively small fine over its ignition switch recall. That may not be the end of it, though, for the automaker. We'll have more on that up next.


NEWTON: General Motors is paying just $35 million to settle in inquiry into why it took ten years to issue a major recall. The civil fine is the maximum the National Highway Traffic Safety Administration is allowed to give for a single violation. It represents less than 1 percent of GM's annual earnings.

GM admitted it had known about an ignition switch problem since 2004, but waited until this year to recall 2.6 million cars. The fault has been linked to at least 13 deaths. Now, transportation secretary Anthony Foxx says he wants to be able to raise the limit for fines to $300 million.


ANTHONY FOXX, US TRANSPORTATION SECRETARY: But $35 million, as I've said before, is a rounding error. And we do think $300 million is attention-grabbing and capable of creating deterrent value for automakers.


NEWTON: To me, that sounds like too little too late. Poppy Harlow, thankfully, is in the studio with me here. I know you've been following this very closely. Is this a slap in the face to the victims who've gone through this recall?

POPPY HARLOW, CNN CORRESPONDENT: To some it is. We spoke with the mother of one daughter who died in an accident she believes is caused by this ignition switch problem. We have to remember, this is still the beginning, though. This is a civil penalty, and there's a criminal investigation by the Department of Justice going on.

The problem here is that the ignition switch in a number of these numbers could be knocked off by your knee hitting the key or a car going over a bump. That means that the airbags might not employ, power steering, power brakes could go off. So, it's very significant.

The key here is that General Motors knew about this ten years ago, didn't say anything until a few months ago, $35 million though, now, is the law in terms of a civil fine for a single violation of this sort in a recall.

The National Highway Traffic Safety Administration that monitors this in the US saying interestingly today not only do they believe that General Motors engineers knew about this at the time, but that it went up to, quote, "executives."

Now, they were asked if Mary Barra, the CEO at the time, who was not CEO at that time, she was with the company, though, did she know? And she's the current CEO. They said they have no indication of that.

They didn't name executives, but the real key, here, is who knew what when? How high did this go? And that we're still waiting to find out.

I do want to read you what Mary Barra, the current CEO of GM did say today in a statement. She did not go on camera. Here's this statement. "We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company."

I did talk on the phone extensively with General Motors press PR after this, and they said more internal changes are ahead, Paula. They have restructured, they've brought in a new head of global safety, they've doubled the amount of investigators. They say more changes are ahead. Still, though, no firings as a result of this. Two engineers put on leave, but that's it so far.

NEWTON: And I'm so happy for them that this has worked out and they're going to be a stronger company, but at the end of the day --

HARLOW: Right.

NEWTON: -- I mean, I hate to be cynical about it, but in terms of companies seeking --


HARLOW: You're talking about lives, at least 13 lives.

NEWTON: And when we talk about where this can go from here --


NEWTON: -- this isn't the end of it, is it?

HARLOW: Not at all. You've go the FBI, DOJ, still investigating here in the United States. They're the ones who can bring criminal charges and criminal penalties. In the Toyota unintended acceleration massive recall, the DOJ fined Toyota $1.2 billion to settle those criminal charges.

It's interesting, though, when you look at what could be ahead, we still don't know about victims' compensation. They've brought in a key attorney to deal with compensating victims and their families.

Also, we talked today to a man named Clarence Ditlow, he's head, the executive director of the Center for Auto Safety, and he feels very strongly here that the punishment for General Motors should be really unlimited until they know more. He expects and would like to see about $1 billion or more fine. I want you to take a listen to what he told me.


CLARENCE DITLOW, EXECUTIVE DIRECTOR, CENTER FOR AUTO SAFETY: People died as a result of a knowing action. And to let General Motors off the hook for that action is simply sending the wrong lesson to corporate America. And the automakers should know that someone can and will go to jail if you cover up a defect that you knowingly put into your production of your vehicles.


HARLOW: Now, he clearly believes, as you heard there, that this was covered up. That is what some members of Congress said to Mary Barra --

NEWTON: And that's not proven yet.

HARLOW: It is not, and General Motors said they are still investigating. We are waiting for this -- what we expect to be a very big report from GM internally on what went wrong, was there a cover-up or not. He believes there was. General Motors is not saying that yet.

When are we going to get that report? I asked GM that, that is the really big question. But again, this -- I think this $35 million fine is civil, I think it is the beginning of a long road still ahead for GM.

NEWTON: And no doubt we'll be talking to you about it again. Poppy, thanks so much.

HARLOW: You got it.

NEWTON: Appreciate it. Coming up, what India's economy could look like under Prime Minister-Elect Modi.


NEWTON: Welcome back, I'm Paula Newton and these are the top news headlines we're following this hour. It's the end of an era in India.

BJP leader Narendra Modi has declared victory in elections ending more than a decade of Congress Party rule. Outgoing Prime Minister Manmohan Singh is expected to submit his resignation Saturday. Two blasts rocked Nairobi just a day after hundreds of Western tourists were evacuated. Officials say at least ten people died and 76 were injured when two grenades exploded in the Kenyan capital. There have been no claims of responsibility. Two suspects have been arrested.

In Turkey the death toll from Tuesday's mine disaster has risen to 292. Friday saw violent confrontations between police and protesters in the town of Soma, close to the mine site.

Officials have described California's wildfires as the worst they've ever seen. Fierce winds have worsened conditions and even led to fire-filled tornados. Thousands of people have had to leave their homes. The number of injured though remains low.

Now, returning to our top story tonight -- the BJP has won the largest democratic election the world has ever seen. The new Prime Minister-Elect Narendra Modi has pledged to boost India's sagging economy. Supporters tout his economic record in his home state of Gujarat. Mallika Kapur has more.


MALLIKA KAPUR, CNN'S MUMBAI-BASED INTERNATIONAL CORRESPONDENT: Modi mania sweeps India. The tea seller turned politician turned prime ministerial candidate, Narendra Modi, works the crowds at election rallies. He promises voters he'll fix the economy. Since becoming chief minister of the western state of Gujarat in 2001, the economy there has grown rapidly at around ten percent a year. That's faster than China. Gujarat is seen as investor-friendly, industrialized and export-focused. India's largest conglomerate the Tata Group moved its Nano car plant out of another state and into Gujarat four years ago. The former chairman of the company credited the chief minister with helping make that happen.

RATAN TATA, FORMER CHAIRMAN, TATA GROUP: He delivered in three days what other states which were also trying to woo us could only offer their best endeavors to do. No side deals, quid pro quos -


TATA: No, none whatsoever.

JIGNESH DESAI, NJ INDIA INVEST: Leadership is very important -

KAPUR: There's no better place to do business say these entrepreneurs who've been in Gujarat for 20 years.

JIGNESH DESAI, NJ INDIA INVEST: In fact it is the key for any economic development, so in Gujarat, if you look at the quality of the roads are extremely well. Apart from roads, if you look at power, there's no power cut (ph).

KAPUR: Dubbed the Gujarat model of development, Modi says he'll replicate it across India if he becomes prime minister.

RAMESH MENON, AUTHOR, MODI "DEMYSTIFIED": I think it's the model of governance. Modi is a good administrator in the sense that he's very strict. And because he is very strict, he ensures that that administration works.


NEWTON: Now, I asked JP Morgan's chief India economist what this election will mean for the country's economy.


SAIJID CHINOY, CHIEF INDIA ECONOMIST, JP MORGAN: For the first time the government in the lower house will not be constrained by coalition politics. And that certainly creates the opportunity of - for big bang reform. I think it's clear to all now if India's economy is to grow at 7 or 8 percent for the next five years, you need the second generation of reforms, you know - reforming the labor market, reforming taxation, reforming infrastructure which often can be politically sensitive.

NEWTON: When we talk about the challenges though as they relate to inflation, corruption, that reform - you know, he says he wants to roll out the red carpet, not give red tape for businesses. Can he really do that? I mean, Gujarat is a state where he is credited with having so much reform. It's different, isn't it in terms of getting that from state level to the national level?

CHINOY: No, there's no doubt that, you know, running a state and governing a country are different things. It's also true that some of these issues, whether it's food inflation, other kinds of structural reform, will only have in the medium term. It'll take time, there are other near term constraints as well. But I think the message is clear to everybody that, you know, good economics has increasingly become good politics. And Mr. Modi has a very strong record of development in Gujarat. So I think he understands both the challenges and opportunities of governing at the center, though, as I mentioned, all of this will take time.

I think in the near term there is a risk here that expectations of markets will get ahead of themselves. India has very real issues in the very short term. We talk - we spoke about inflation and the fact that monetary quality has to be tight. We have to pursue tight fiscal policy as well. There is the risk of a subnormal monsoon which will create more dilemmas, we've got corporates that have to undergo a painful deleveraging, a lot of the problems are at the local and state level. So there are real issues in the short-term and I think turning around the economy very quickly will be a challenge, but the fact is given the size of this mandate and given the entire thrust on development in Mr. Modi's campaign, there's very real hope here in India that all the next two or three years, a real reform can be delivered. It's just that markets will have to be patient. This will be a slow, long, tough grind. We just have to be patient and give the new government enough time to settle down and make the necessary cross corrections.


NEWTON: Now, they may be English football champions, but they're also in a heck of a lot of hot water. More on that when we come back.


NEWTON: And just in the past few hours, UEFA has imposed a record fine on the team which won England's Premier League this year. Manchester City is being punished for breaking financial fair play rules on spending. Now, the team will pay an $82 million fine and a restriction on the size of their squad for the Champions League. Alex Thomas now joins us live from London. I hope, Alex, that you can put this in context for me. It seems like a lot of money -- 60 million Euros, $82 million - but is it a slap on the wrist for what happened?

ALEX THOMAS, CNN SPORTS CORRESPONDENT: That's open to interpretation, Paula, and I think UEFA, European football's governing body, will really hope these are the first faltering steps into a brave new world that brought in these financial fair play rules to, as it says, manage the financial health of clubs across Europe. Because although football already bucks the global economic recession in recent years. Nonetheless, while the rich got richer, some of the much smaller clubs got a lot poorer and that disparity was growing.

As it is, whether they've targeted the right clubs here will be open to debate. Nine clubs have been punished overall. You're right to point out Manchester City who are the champions of England for the second time in three years, but also the French champions, Paris Saint-Germain, also backed by very rich Middle Eastern owners. And with a squad full of star football players that are known across the globe have been hit with similar sanctions to the ones you mentioned there for Manchester City.

Of the other seven clubs, three are from Russia, three are from Turkey and one from Bulgaria. And those punishments are strong, although the ultimate sanction open to UEFA was to exclude a team from UEFA competition, so you'd (ph) be Champions League which is the most prestigious club competition around the world or even take a trophy away. So they haven't gone down that route, and I say first faltering steps because this news is coming out since her on a Friday evening, late evening European time --

NEWTON: That's no coincidence, Alex.

THOMAS: -- after a week of discussions.

NEWTON: I mean, come on, that wasn't a coincidence, was it Alex -- you release the news late on a Friday night?

THOMAS: You could say they're trying to bury bad news, but I think actually - I'm trying to be fair to them - I think it might just be a coincidence. We know discussions down going (ph), and I think the other eight clubs quickly agreed to sanctions where a city were trying holding out to the very last minute. A statement they released this evening said there was a big disagreement about some of the small print in those financial fair play regulations.

NEWTON: Now, some more controversy in football. I have to say I was kind of stunned - FIFA perhaps suggesting that Qatar in 2020 (ph) - I mean that Qatar, the next World Cup, was not really a good idea. They actually are backtracking on that. And let's be clear, there is no backtracking - that is where the World Cup will be in four years.

THOMAS: That's right. Well we've got - Brazil is coming up in less than a month -


THOMAS: Then we've got Russia in 2018, but for the first time when they chose Russia, they also picked the host for 2022 at the same time and that was Qatar, a country with a population the size of we'll just say just (ph) here in London. So that's what's taken everyone by surprise. The huge football (inaudible) that is the World Cup has never been held in that part of the planet before and there's been so much controversy around the heat during the summer in Qatar. Sepp Blatter, the FIFA president, has said previously that he thought it was a mistake to go to Qatar, and then it was claimed that those words were misconstrued. And again we got the FIFA media office telling the world's press, 'Hold on, you've got Blatter's comments all out of context, but listen, let's let the viewers make up their own minds.' This is what he said to Swiss Channel RTS.

SEPP BLATTER, FIFA PRESIDENT, VIA TRANSLATOR: Yes it is a mistake. You know there are many mistakes in life. It was clearly shown in the study of Qatar that the temperatures would be too hot in summer. The situation did not stop FIFA Executive Committee, with a majority vote from deciding that the World Cup should be played in Qatar.

THOMAS: So, Paula, the clarification there is that Blatter was just pointing out to the technical disparity between what was in the report about all the countries bidding for that 2022 tournament, and it was very clear in that report the heat was a real problem. People voting for that tournament ignored it, still picked Qatar very controversially and they weren't saying that Sepp Blatter was saying it was wrong to take the tournament to that region or that particular nation or some are saying that it's a terrific political move from Blatter if he wants to stand for a fifth term as FIFA president when the elections are held next year - there he is separating himself from the other possible candidates, UEFA president Michel Platini if he wants to try and step up to the World Governing Body, we know that Platini did vote for Qatar.

NEWTON: OK I guess if he thinks that'll get him in for a fifth term, I don't know enough about football, but, Alex, let's see what happens. It is certainly a controversy for people who don't even follow it that closely. We'll have to wait and see what happens. Thanks, Alex, appreciate your update.

Now, scenes of broken glass and fire in the streets of Brazil threaten to overshadow what is supposed to be a golden moment for the football-crazed nation. Now, anti-World Cup protests have been going on in Brazil and it has spread to some 18 cities. Many Brazilians are angry over the high cost of the tournament and say money would have been better spent on public work projects. CNN's Shasta Darlington filed this report from Sao Paulo.


SHASTA DARLINGTON, CNN BRAZIL BUREAU CHIEF: Thousands of people have hit the streets across Brazil on Thursday in a series of protests against the World Cup as well as strikes and marches aimed at a government the people say has spent way too much money on a sporting event and not enough on everything from salaries to hospitals. Now, this evening what we've seen are big signs saying, "FIFA go home," and this just caps off tons of events around the country. Police strike in Recife, also a World Cup city that has left the city vulnerable to crime and looting. Here in Sao Paulo, 5,000 teachers took to the streets to ask for higher wages. Now another group demanding lower income housing also blocked main avenues and marched all the way to the Arena Sao Paulo which is where the inaugural game of the World Cup will be played on June 12th, Brazil against Croatia. And they, like everyone here, says they're going to be back out on the streets every week until the end of the World Cup.


DARLINGTON: They'd been marching peacefully for just a couple of blocks when the whole scene exploded. Looks like this is how it's going to end tonight with hundreds of riot police on one side and some pretty angry protesters here. Police shot teargas, protesters threw stones and we saw then vandalizing a car dealership. A violent end to a day of mostly peaceful protests and likely a sign of more to come.


NEWTON: And now we go to the forecast with Jenny Harrison. Unfortunately, Jenny, we have to pick up where we left off with you yesterday on the European flooding.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes we do, unfortunately, Paula, you're right. But it is a slightly improving picture as we head towards the weekend, that much I can say. Unfortunately of course the damage really has already been done. I think I showed you this picture yesterday, but just another look at it because this is actually the situation across many, many parts of the Balkans, Serbia, also Bosnia. We've had as many as 200 landslides throughout the region, and of course we've got dozens and dozens of villages and towns that are cut off, people are being rescued, there's no power, and all of this because of this one area of low pressure. It's been sitting across the southeast, it really isn't moving very far. It's eventually going to push up towards more northern and eastern areas but of course more rain has been continuing to come down in the last few hours.

And just look at the totals that have been recorded so far. In just 72 hours in Sarajevo, 126 millimeters. It averages 82, and then across into Belgrade, over 200 millimeters - the average in May is just 45 millimeters. And we've got some pictures to show you because obviously this sort of amount of rain it really is unprecedented. This has been the worst flooding. I think we've got some video to show you if you have -- there we go. It's the worst flooding in over 120 years. Now, I say that and that's a fact the records for this particular region only go back that far - 1894 they began to keep records. So it really is just unprecedented and certainly in that time this sort of rain so very, very widespread. And of course it's going to take quite a while for these rains to actually come down. As many as 6,000 people in Serbia have been forced from their homes, both Bosnia and also Herzegovina and Serbia have all asked for assistance - international assistance - to deal with this flooding. So let me just show you some more totals, because as I say, it's very, very widespread, and the rain has been coming down across this region for the last several days. The landslides - the damage is just amazing. Look at this, over 233 millimeters, 128 and so it goes on. There's 202 in Belgrade.

This is the storm system. We've got these storms as well still in the forecast continuing through the rest of Friday into Saturday and then eventually the storm system, it does begin to move away. But the warnings in place quite widespread, pushing across into western Russia as you can see. More heavy rain, possibly large hail and the chance of tornados. Here's another thing. This is the Fermi Power Plant in Serbia. This has been completely flooded. And just look again, it gives you an idea I think, when you see these sort of still images, the scope of the flooding. So you really begin to get an idea on why it is such a disaster.

Now this is showing you the water vapor. This is a different type of satellite. What it shows in the last 48 hours - this brown area - this is a drying up of those conditions as that system works its way away from the region. Still some rain to come down, but it won't be as heavy, and finally throughout the weekend - latter part, Paula, -- it should begin to ease finally.

NEWTON: Oh, I'm sure they're looking forward to that relief. Thanks, Jenny, appreciate it. Now coming up, what women need most to succeed in business and motherhood. One of the "Desperate Housewives" actress Felicity Huffman shares her advice.


FELICITY HUFFMAN, ACTRESS: In order to be an entrepreneur, you have to be a risk-taker and you have to be farsighted. And as a feminist, you need to be a risk-taker and you need to be farsighted.



NEWTON: Actress Felicity Huffman who you might know from "Desperate Housewives" says women need courage to succeed in business, and that more needs to be done to promote equality. Now, she was in New York this week for the annual Forbes Women's Summit. As well as being successful actress, Huffman is also an entrepreneur. She runs a website for women called "What the Flicka." I asked her why we still need women's summits.


HUFFMAN: In the U.S., we are ranked 60th in terms of women in lawmaker positions, we are ranked 67th in all countries in terms of wage equality, the vast majority of people who are underrepresented, abused and are the victims of violence are women across the globe. So, unfortunately, it's still an issue, it's still alive, we do have to address it.

NEWTON: What was the preoccupation of the conference this year? I mean, if you had to say there was a hot topic there, what was everyone buzzing about this time?

HUFFMAN: It was entrepreneurship -- innovation and entrepreneurship. I think entrepreneurs and feminists, they go hand in hand because in order to be an entrepreneur, you have to be a risk-taker and you have to be farsighted. And as a feminist, you need to be a risk-taker and you need to be farsighted. Entrepreneurs are at the forefront of power because with entrepreneurship if it's successful comes money, with money comes power and with power, hopefully comes equality. Women come up with great ideas, they're wonderful innovators. Not that I'm a wonderful innovator, but, for example, I was there because of a website I started called So, they're wonderful innovators and I think the next step they need to take is figuring out how best to monetize it, to be the entrepreneurs.

NEWTON: In terms of what you've taken from the website itself, what has it taught you about what is going on out there with - I daresay - women's issues?

HUFFMAN: Well, you know it's interesting. I started the website because of two reasons. When I was leaving "Desperate Housewives," and I loved, you know - every fan sort of connected with a different desperate housewife. You know, there were the Bree fans and the Susan fans and I got the moms, and I was really happy to be with the moms because I think they're heroes.


HUFFMAN, AS CHARACTER LYNETTE SCAVO: You are going to behave today. I am not going to be humiliated in front of the entire neighborhood, and just so you know how serious I am -

Male Child: What's that?

HUFFMAN: -- Santa's phone number.


HUFFMAN: And then the other reason was because of my experience with motherhood which was my - when my children were young, they came and I just found it lonely and bewildering and incredibly difficult and depressing and overwhelming and there was no conversation for that out there, you know?


HUFFMAN, AS LYNETTE SCAVO: OK, let's get this over with.


HUFFMAN: The more I look into the icon of the perfect mother, I see that it's not just wow, this is uncomfortable. I don't like it. But it has societal impact - 40 percent of women don't have sick days or family leave, 50 percent of women can't stay home to take care of a sick kid and kids get six to ten colds a year. So, I guess I've gotten into, you know, I think we should vote in more women lawmakers. I think we need more women in positions of power.

NEWTON: What is so empowering about being an entrepreneur?

HUFFMAN: Well, I think it gets back to, you know, self-confidence. Everyone goes, 'Oh, you want self-esteem, bring up your kids with self- esteem.' But the only way that I've experienced that you build self-esteem is by meeting challenges and being successful at them. You go, 'Look what I did - I built this company or I took this idea.' I don't know that we need confidence, I think we need courage because confidence entails 'I feel confident.' I never feel confident.


HUFFMAN: I'm always frightened. But you sort of do it anyway.


NEWTON: That's one dynamic woman. We'll be right back after the break.


NEWTON: Tricky issues of morals, ethics and doing the right thing feature in this weeks "Reading for Leading" on the "Best of Quest." This weekend it's the turn of a national newspaper editor who's also written a book of "Oh (ph) Cricket."


AMOL RAJAN, EDITOR, "THE INDEPENDENT": I say it's crucially important if you're going to be a journalist to enjoy reading it all its forms. Right now the book I'm reading which is completely engrossing is "Justice" by Michael Sandel. He's a Harvard professor who's got a famous course at Harvard called Justice and he's turned into a book. And the idea of justice or the narrative of justice is he looks at history of moral thought and he tries to come up with a new way of understanding how we should behave ethically and what's the right thing to do.


NEWTON: Now, for the rest of Amol Rajan and his favorite book, watch the "Best of Quest" tomorrow from 12 noon London time and repeated throughout the weekend. And that's it for "Quest Means Business." I'm Paula Newton. Have a great weekend.