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QUEST MEANS BUSINESS
Mixed Verdict For The Murdoch Empire; S&P 500 Hits New Intra-Day Record; 90 U.S. "Military Advisors" Arrive In Iraq; Seas Are World's Biggest Failed State, Says One Commission Member
Aired June 24, 2014 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: The closing bell has rung, the market day is over, the Dow
is down more than 100 points. It is Tuesday, it is June the 24th. Tonight, a mixed verdict for the Murdoch empire that leads to a profound
apology from the British Prime Minister. Also, caught in the middle - Jordan's finance minister on his countries growing refugee crisis and what
they need most.
And literally turning the tide - ideas on how to save the oceans from disaster. I'm Richard Quest back in New York. And of course I mean
Good evening. Tonight verdicts in the phone-hacking scandal that shook the British journalism and the establishment. Illegal taping of voicemails
exposed the private lives of celebrities, royalty and even interfered in a murder investigation. It eventually brought down News International's
"News of the World Newspaper." It led to a major inquiry into journalistic ethics in the United Kingdom. It's also a personal embarrassment to David
Cameron, the British prime minister, because he employed as an advisor a man who faces tonight jail.
Let's go through what happened. Rebekah Brooks (RINGS BELL), the former editor of the "News of the World" and Rupert Murdoch's protege collapsed in
court after she was found not guilty of all charges. Andy Coulson (RINGS BELL), he was her deputy, then her successor, found guilty of conspiracy to
hack phones. The jury is still considering other charges against him. The Prime Minister David Cameron hired Coulson as a government communication
chief, and today unequivocally the British Prime Minister said, "Sorry."
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: I take full responsibility for employing Andy Coulson. I did so on the basis of undertakings I was given
by him about phone hacking and those turn out not to be the case. I always said that if they turned out to wrong, I would make a full and frank
apology, and I do that today. I'm extremely sorry that I employed him, it was the wrong decision and I'm very clear about that.
(END VIDEO CLIP)
QUEST: CNN's London correspondent is Max Foster. He's in Downing Street, the home of the British prime minister tonight. Max, some might say a very
interesting set of verdicts. Coulson guilty, his boss and lover and then - she's found not guilty on all counts.
MAX FOSTER, CNN INTERNATIONAL ANCHOR AND CNN'S ROYAL CORRESPONDENT: A huge relief for her and she'll be spending the evening no doubt taking it all in
because she faced a series of allegations and she's been cleared on all of them. So she was regarded as Rupert Murdoch's protege. No doubt they've -
they'll be back in contact with each other, and we're very interested to see what sort of job she'll go on to. Perhaps a job in New York, a big job
with Rupert Murdoch. She's always been very, very loyal to him. Coulson of course working here for a significant amount of time, and when he came
here, he'd actually been forced into resigning because hacking had been discovered the "News of the World." So David Cameron's talked in the past
about he gave Coulson a second chance, and he was let down in that second chance. He was - Andy Coulson said he was involved in hacking -
FOSTER: -- so he effectively lied to David Cameron after the result of this trial we can conclude. And it's not over yet because there are still
more verdicts to come in relation to the payoffs of a police officer who allegedly supplied directories of phone numbers at the palaces. So, that
perhaps played into hacking as well. It's not over yet, incredibly long trial, and certainly David Cameron's judgment is called into question.
QUEST: The allegations, I mean against Rebekah Brooks, they were - they were not so much about hacking, were they as much as conspiracy to pervert
the course of justice? Getting rid of computer files and the like. And I wonder does this verdict put a ceiling on the phone hacking allegations as
to how high it's believed it went up in News Corporation?
FOSTER: Well, there is some talk here that perhaps after this trial, then Rupert Murdoch may be questioned in relation to hacking as well. That's
reported in some of the newspapers here. I don't think it's all over. I think they're going through stages where other criminal charges as well are
looming. I think the British public are pretty exhausted by it all. It's very complex, been going on and on and on. You referred to the Leveson
inquiry earlier on about how the media ethics have been questioned in this country. And everyone was questioned around that. That's in political
deadlock at the moment. We haven't got any laws coming out of that because the political parties can't really agree on it -
FOSTER: -- no one can agree on it. I think people are pretty exhausted by the whole process. But I think hacking initially was very shocking. Now
people accepted it happened and that Coulson is seen as the bad guy in this as a result of his trial.
QUEST: In a word, Max, in a word - Coulson facing prison?
FOSTER: Yes, it looks likely and also Rebekah Brooks now off the hook as it were -
FOSTER: -- and is trying to rebuild her very successful career. Tomorrow got prime minister's questions as well which I'm sure will be dominated by
questions around this and that's going to be the difficult moment for David Cameron I think.
QUEST: Max Foster, our London correspondent in Downing Street for us tonight. "News U.K.," Rupert Murdoch's newspaper division, issued a
statement. It repeated an apology it had made over the conduct of its staff and it added, "We made changes in the way we do business to help
ensure wrongdoings like this does not occur again." Certainly in terms of structure, Murdoch's empire did change its business. It separated 21st
Century Fox and the Fox Network from News Corp, the publishing business that owns "News U.K." amongst the other titles. The split was completed a
Come have a look at the shares at the Super Screen, and you'll see this is the - this is the newspaper side, not the Fox side. This is the newspaper,
the publishing side, and you can see how they have performed. Very sharp fall off back there in February of this year, but as you can see, almost
back to their all-time or a relative all-time high indeed (ph). Not long after that it made its biggest acquisition since the split. You can see
the way the shares are now trading. They are just at around 18.3. So, moving along now as we can turn to put some more analysis into all of this.
Peter Jukes joins me now from London, the author of the forthcoming book "The Inside Story of the Phone Hacking Trial." Peter, so, you have had the
privilege and civic duty of being in court pretty much every moment of the trial. The verdict of the - of guilty for Coulson and Rebekah Brooks'
acquittal - that changes the whole landscape, doesn't it?
PETER JUKES, AUTHOR, "THE FALL OF THE HOUSE OF MURDOCH": I think it does and it doesn't bizarrely. It's a kind of split verdict, isn't it? We now
know and we have, you know, four or five guilty pleas coming in, including Dan Evans and other "News of the World" journalists during the trial so we
have this systematic hacking - "News of the World" from at least 2003-6, and Mulcaire was paid. I mean, I suppose the question is, and what the
jury had to decide when it came to Brooks, you know, should she have known or must she have known? And they obviously went well, you know, there's no
reason she must have known. But one could ask the question why didn't she know? You know, $100,000 paid to a private detective during her
editorship. Andy Coulson obviously politically that verdict is very difficult. And, you know, the indications tonight that the corporate
charges are still being looked at, and the evidence -
JUKES: -- in court of senior executives -
QUEST: So -
JUKES: -- involved in questionable -
QUEST: Let's not - let's look at what still remains to be decided? We've certainly got some more charges against Coulson and others. But if you
take News Corp and you take the entity, how much of that is still got questions, damages to pay, the company still has reparation to make?
JUKES: Well, we have a new self-confessed phone hacker in Dan Evans, so there may be more civil litigation on that. I think, as I said, you know,
the company split which you mentioned which happened last year or it was actually 2012 was accelerated because it became clear. Sue Akers said
before Parliament that they - the police - were investing - they were investigating - corporate charges. I think then that's gone away. It's
slightly easier now that, you know, Rebekah Brooks, the close family protege, has been, you know, been found not guilty. In that way, a
firewall hasn't gone down. But I think there's a lot of evidence that's come out in this which, you know, --
JUKES: -- other trials and just general public scrutiny.
QUEST: Briefly, Peter, does this verdict in many ways bring to a close the phone hacking scandal in the U.K.? And I'm thinking now of other papers
that may be involved, other people that may be involved - a widening scandal. At various given moments, you've wondered whether it's going to
explode again or basically go down into a dump squib and peter out. What's your feeling?
JUKES: My feeling, OK, I mean, things are being investigated. It's the time lapse, you know. When you got back to Milly Dowler in 2002, all that
and the other, you know, other newspapers being looked at, it's, you know, it's a long time ago. The police only had that evidence from Mulcaire
because they'd arrested him in 2006. And so I think it gets increasingly difficult to go back 12 years -
JUKES: -- and find out.
QUEST: Thank you very much, Peter. Good to see you. Thank you, sir, for your work and for joining us this evening.
The markets - the S&P 500 hit a new intra-day record. It ran out of steam and dropped back a bit by the close. The Dow was down. Alison, our old
friend, the question comes to you - the Dow was down and why?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Because Iraq kept investors on edge, Richard. Stocks waivered early on from negative to positive, and
then the selling really picked up towards the late - late in the session. Some of it, yes, was geopolitical concerns about what's going on in Iraq,
but then again oil prices ended lower, so that was interesting. But the other catalyst for the sell off - lower volume, you know, not many in the
game that causes volatility as well, Richard.
QUEST: It's almost summertime. They've all gone away.
QUEST: -- Alison Kosik, many thanks indeed for joining us.
QUEST: Alison's there now. More than a million Iraqis have fled their homes ahead of a wave of violence. In a moment after the break, inside and
Iraqi refugee camp. Good evening.
QUEST: Ninety U.S. troops have arrived in Iraq and Washington says they're not going into combat, they're military advisors. Officials say the job is
to assess the situation and give advice and assistance to the Iraqi forces. Earlier, the U.S. Secretary of State John Kerry met Masoud Barzani, the
president of the Kurdish region of Iraq. He's trying to build support for the Iraqi government's battle against ISIS. The U.S. Secretary of State
says it'll be very difficult for America to help until there's a unity government in Baghdad.
(BEGIN VIDEO CLIP)
JOHN KERRY, SECRETARY OF STATE, UNITED STATES: We have to let that organic process work out a little bit. Words are cheap. I fully - you know, I'm
not taking anything I hear to the bank and saying, wow, it's going to be solved. But I'm hearing things that indicate to me that if they follow
through on the things they're saying, there's a capacity to have a new government that could be a unity government, that could reflect a greater
capacity for success.
(END VIDEO CLIP)
QUEST: The fighting in Iraq has created a humanitarian crisis. More than a million people have fled their homes with little more than the clothes on
their backs. Now, they're struggling to find the basic necessities - food, water and shelter. Our senior correspondent Arwa Damon took this report
from the Garmava Refugee Camp.
(BEGIN VIDEO CLIP)
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: A tattered doll their mother picked out of the trash, and other bits and pieces she scavenged,
are all the kids have for toys. "It doesn't seem real. It's like a dream," Wisok (ph) says of the home they left behind. "All gone." The
family fled Mosul in the middle of the night. But still, Wisok (ph) and her husband couldn't spare their children the horrors. "We saw ISIS and a
car with three bodies and one had no arm," seven-year-old Yoxen (ph) said. "One had his arm cut off and two didn't have legs," her younger sister
The girls didn't sleep for days. It's all too much for Wisok (ph), haunted by the fear of the present and scars of the past. Twice over the last ten
years, her husband had a gun pointed at his head. "They wanted to kill him because of his I.D." Wisok can't hold back her tears. "Because of his
sect." The second time was when they were in a market, Wisok (ph)pregnant with one of the girls.
The family is mixed - they're both Sunni and Shia -- and they used to live in Baghdad, but they had to flee the sectarian violence so that's how they
ended up in Mosul. For more than a decade now, Iraqis have been trying to keep themselves safe. This most recent ISIS offensive has caused what
eight organizations are calling the single largest mass movement of people in such a short period of time in recent history. Around half a million
people fled Mosul alone over the span of just a few dates, dispersed throughout Iraqi Kurdistan in areas like this one. But others are stuck in
more remote parts of Iraq Help Camp Reach. Eight agencies already buckling under the Syrian refugee crisis had to divert emergency supplies and
desperately need more. Warning - Iraq and Syria's flow of refugees will impact the region in ways we haven't seen.
(WISOK): Woman crying.
DAMON: Tears pouring down her face, Wisok (ph) can't understand how she ended up like this. "I swear, my heart is burning. The low-lifes ruined
our country and from where did they come? From here," she says. "Iraqis betrayed themselves." Arwa Damon, CNN Garmava Refugee Camp, Iraq.
(END VIDEO CLIP)
QUEST: As ISIS militants advance on Baghdad, they also have moved west - excuse me - to Iraq's border with Jordan. Now the crisis threatens to put
further strain on Jordan's economy which is already under strain. It has 1.3 million refugees from Syria, half of those have arrived in the past two
years. It's costing Jordan billions of dollars a year and authorities say that's around a quarter of their total government expenditure. The finance
minister says the international community must do more to help. The minister is with me. Now, Minister -
QUEST: Good to see you as he joins me in the C-Suite. We have here, this is the sort of -- this is basically a picture of a refugee camp in Jordan
that is you're funding and you're having to pay for and it's causing an enormous strain. Tell me more.
UMAYYA TOUKAN, JORDANIAN FINANCE MINISTER: Well you're right, Richard. It is an increasing burden daily and it's becoming really too much for our own
resources. So that's why we do need international support - much more international support -
TOUKAN: -- and we are also borrowing to finance the increasing expenditure on refugees.
QUEST: One of the reasons you're in this state is that for the second year running, you have launched - the second year you've launched a Jordanian
bond which is backed by the U.S. government.
QUEST: Guaranteed by the government.
TOUKAN: Yes. We issued that yesterday and it's for five years and the yield was 1.945.
QUEST: One point nine 45 which compares to about a 5 percent yield you'll be paying if it was (inaudible).
TOUKAN: At least if we go to the (inaudible).
QUEST: How much did you raise?
TOUKAN: One billion. It was oversubscribed actually, and by $200 million and 34 investment companies or investment houses were subscribers.
QUEST: Now, look, Minister, you need that money for your economy -
QUEST: But what's that money going to pay for?
TOUKAN: Mostly the increasing burden of the Syrian crisis really - the refugees. I mean, the Jordan economy, the budget itself, is doing OK. Our
domestic revenues are OK as far as financing our domestic expenditures. It's the - it's the extraordinary expenditure on - due to the Syrian
refugee problem and the security situation in the region, the security situation. And so, especially now with the Iraqi development -
QUEST: So how are you managing? How are you managing your economy in that situation?
TOUKAN: Well, we are managing - (LAUGHTER). We're managing. Remember last year you were probably skeptical even -
QUEST: I was. I was.
TOUKAN: -- how can we proceed in such a difficult external environment or region? But honestly, you have to manage.
QUEST: But you're - you're exerting huge resources and vast amount of time but the situation is not getting better, and others who could make it get
better are not performing their tasks.
TOUKAN: Yes, that's why self - self - we should sustain really on our own in many ways, and that's what we're doing. Domestic reforms basically -
economic reforms, political reforms, have enabled us to sustain in spite of the several really regional crises. Now, those reforms of course the
Eurobond yesterday -
TOUKAN: Was oversubscribed and at a very comfortable rate is evidence that our reforms were credible, our consolidation measures were credible and
that's why people still believe that Jordan economy can service this new debt.
QUEST: It's almost impossible when you look at the size and scale of what you're facing. But, Minister, what's the one thing you need most now?
TOUKAN: Frankly, international support and international understanding really regarding the size of the problem. When we feel that maybe it's
underestimated the size of the problem, and of course given that there are several crises, not only in the region but in other countries, all the
international attention is being diversified on many other issues.
QUEST: Dissipated. Dissipated.
TOUKAN: Dissipated, sorry.
QUEST: Dissipated we might even say - I mean diverted and dissipated. Minister, we'll be in Jordan later this year. I look forward to hopefully
you'll - we hoping to do the program from Jordan. And hopefully you'll join us to -
TOUKAN: Well I'm very happy to hear this. We look forward to your visit and wish you all the best 'til then. Thank you, Richard.
QUEST: Thank you. Now, when we come back after the break, our evening conversation continues with you. The sea covers three-quarters of the
earth's surface, and we could be, maybe, probably are killing it. Saving the oceans in a moment. It's "Quest Means Business." Good evening to you.
QUEST: The seas are the world's biggest failed state. Well, that's not just hyperbole messages. That's a message from one member of a commission
investigating the heath of the oceans. Its report says things are getting worse and points to a lack of leadership as the key issue. So, think about
the oceans. Now, the commission says rescuing our oceans must be a priority over the next five years. What's that going to involve? Firstly,
stronger governance, more centralized governance of the world's seas. That in itself is controversial - we'll talk about it in a moment. Also, action
to prevent over-fishing and a major restructuring and reduction in pollution, especially from plastics. It all sounds so obvious. So why is
the situation so bad? Trevor Manuel is the co-chair of the Global Ocean Commission. He's also the former finance minister and government
(inaudible) in South Africa. And it is good to see you, sir.
TREVOR MANUEL, CO-CHAIR, GLOBAL OCEAN COMMISSION: Good to see you, Richard.
QUEST: Please, welcome to the C-Suite. The situation of the oceans, it's not getting better, it's getting worse and nobody seems to really care
except commissions like yours.
MANUEL: That's not entirely correct. Just last week Senator Kerry held a conference that focused primarily on the exclusive economic zone around the
United States. President Obama made some commitments about a marine- protected area in the Pacific. But a lot of the discussion from states is in the 200 miles of exclusive economic zone. Our focus has been on
MANUEL: -- outside of that - which is the ungoverned part of the ocean.
QUEST: And that's the problem. Who do you think should govern it?
MANUEL: We think that the United Nations should play a much stronger role. There's the United Nations Commission - Convention - on the Law of the Sea.
It's a bit tired now. It's -
QUEST: Tired? It's almost moribund.
MANUEL: OK. OK, you said it - thank you, Richard. (LAUGHTER).
QUEST: But it's what you need, isn't it.
MANUEL: It's what you need because the problem of the ocean is the high seas - it's out of sight. So because it's out of sight, it frequently is
out of mind. Occasionally, you know, there's the search for MH370, now then you see plastic.
QUEST: Now that - you raised it - I was just about to go there. One of the things we learned during MH370 was the sheer amount of debris,
particularly in these gyres down in the Southern Indian Ocean -- the amount of garbage that's in the sea.
MANUEL: But the point to remember about that is that scientists suggested about - only about - 3 percent sits on the surface. The remainder breaks
up and sinks to the bottom of it, ingested by all manner of seafood. It's there in the clay beneath the sea.
QUEST: Now, that's the pollution. The fishing, governments can do something about, because the fishing - fish has to come ashore, it has to
be sold in markets. That can be regulated. Why are we not regulating it better?
MANUEL: Because governments don't care. And that is a big issue. I think the first problem is to ensure that we know who is fishing and to prevent
the transshipment on the high seas, and you can do this quite easily by ensuring that every fishing vessel is fitted with a transponder, that they
can't turn off. Secondly, we must ensure that there's a protocol called the port states measures from the United Nations that allows port states
right of access to vessels, that it is enforced and then you've got to be able to track and trace through markets.
QUEST: Minister, you have dealt with many intractable problems in your times as finance minister, as government minister in South Africa. Is this
equal or greater in terms of the complexity of solving the ocean's problems.
MANUEL: You know, we've opted for a set of measures. All that we need is leadership. The world needs leadership, because the argument is self-
evident and last week, just watching President Obama for instance talk about the need to regenerate fish stocks in the Pacific. The argument is
self-evident. What we need is collective, determined leadership to be able to drive this matter forward. And that is why decisions at the U.N. are
going to be so important this year as one part of it. If it doesn't get there, we need - we need - communities across -
MANUEL: -- the world to add voice to this matter.
QUEST: Good to see you, sir. Come back and talk about this really interesting subject.
MANUEL: Thank you very much, Richard.
QUEST: Thank you. Now, still ahead on "Quest Means Business," Mark Carney owes lawmakers some candy and flowers. Find out why they're not feeling
the love - in a moment.
QUEST: Hello,, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN and on this network, the news always comes
first. Ukraine says a military helicopter has been shot down near the eastern city of Slovyansk. A government spokesman said it went down over
rebel-held territory as it returned from an operation against insurgence. All nine people on board believed to have been killed.
On "Quest Means Business," Jordan's finance minister's expressed concern about the consequences for his country as the situation deteriorates across
the border in Iraq. Jordan has already received more than a million refugees who fled from Syria. Umayya Toukan is visiting the U.S. to launch
a Jordanian bond backed by the United States government.
A court in London's found the former "News of the World" editor Andy Coulson guilty of conspiring to hack telephones. His predecessor as editor
Rebekah Brooks was cleared of all charges. After the verdict, the British prime minister apologized for hiring Coulson as his communications
A report on the crash landing of an Asiana plane in San Francisco last year has blamed pilot error. The U.S. Transportation and Safety Board - the
NTSB says the flight crew incorrectly used complex flight management systems in the approach to landing. Three people died in the crash.
Italy has been knocked out of the World Cup in a controversial game with Uruguay. The Uruguayans' star Luis Suarez appeared to bite - there it is -
in go the teeth. He appeared to bite Italy's defender Giorgio Chiellini but he was not punished by the referee. Just one minute later, Uruguay
scored the goal that won that game and sent Italy home.
It's a U-turn for the Bank of England after the governor Mark Carney recently hinted at interest rates rising soon. Now he's gone the other
way, and says (RINGS BILL) 'not so fast.' Carney told lawmakers he's waiting for wages to rise significantly before raising rates. One MP
claimed about what he felt were mixed messages.
(BEGIN VIDEO CLIP)
Male: It strikes me that the bank's behaving a bit like it's a -- unreliable boyfriend.
Male: One day hot, one day cold. And the people on the other side of the message are left with not really knowing where they stand.
(END VIDEO CLIP)
QUEST: Not often is the governor of the Bank of England called an "unreliable boyfriend." Investors perhaps could want some candy and
flowers as well. As a result of these shenanigans, depending if you're long or short of course, the pound fell a third of a percent against the
dollar during the session. The FTSE ended the day down. In Germany the Ifo business confidence index fell more than expected and the decks - the
DAX index - well, it still was robustly higher.
Argentina's turned to the media in its fight to avoid another default. Look at this - extraordinary. Argentina wants to continue paying its debts
but they won't let it. 'They' are the courts in the United States, particularly New York District Court Judge Thomas Griesa and the U.S.
Supreme Court that refused to hear their appeal. These full-page adverts in U.S. and European newspapers criticized the court's ruling in what it
calls the "vulture funds."
Now, the orders by the U.S. court all the way up to the top have told Argentina to pay over a billion dollars to a bunch of stubborn creditors
who refused to take a restructuring. Argentina says they don't deserve a cent and anyway, if they're forced to pay them, then the billions extra to
everybody else will be enormous. The U.S. judge they want to stay the ruling until it can have time to sort it all out. Steve Hanke of Johns
Hopkins University joins me from Baltimore. You, sir, are an expert - one of the world's experts - on debt restructuring. Do you in a word have any
sympathy with the Argentinian case that basically says, 'We are restructuring, we are paying but not to these vultures.'
STEVE HANKE, PROFESSOR OF APPLIED ECONOMICS, JOHNS HOPKINS UNIVERSITY: I have no sympathy.
HANKE: None. And let me give you one reason why. Just to start, we have to look at the history of Argentina, Richard. In the last 200 years,
Argentina has been a serial defaulter. They've been in default about 35 percent of the time over the 200-year period. So, these guys have been in
the soup and playing games throughout their history.
HANKE: So that's the historical background. And then you look at the current situation and I calculate something called the misery index. And
the misery index is just inflation plus unemployment plus the interest rate you have to pay at a bank if you want a loan minus the economic growth. So
you've got one positive thing in there -
HANKE: -- you're netting out. And what do we end up with? We end up with the two worst cases with the worst misery in Latin America are number one,
Venezuela by a long shot, and then right behind it -
QUEST: OK, let me jump in here though.
HANKE: -- of course Argentina. OK.
QUEST: Let me just jump in because Argentina says if forced to pay under the judge's ruling - the $1 and 1/2 billion or whatever - that rapidly
becomes $15 billion and then it mushrooms out as everybody else has to get paid. They'll be facing another bankruptcy.
HANKE: Don't believe a word of it. The inflation rate - the official inflation rate in Argentina is 10.9 percent. My implied inflation rate
estimate right now is 44 percent. Even the mild-mannered IMF said that these guys were doctoring the inflation numbers and took them to the
HANKE: -- several years ago. So, forget about that. I think what Argentina really needs, Richard, is a massive confidence shock. And the
new numbers for GDP just came out. The GDP contracted to everyone's surprise by 2/10ths of a percent in the first quarter of the year, so
they're really backed into -
HANKE: -- a corner now with these court rulings and they will come to the table and I think this all spells a deal. A deal with the holdout
creditors will be the best of all possible worlds for Argentina -
QUEST: All right.
HANKE: -- and the poor citizens who, by the way, have had to live with the Kirchner government - two of them now - and those governments have in fact
been the vultures on the local populations.
QUEST: Steve, we'll have to leave it there. Good to see you, sir.
QUEST: Thank you very much.
HANKE: Thank you, Richard.
QUEST: Thank you. Coming up after the break, the rise of an innovative means of raising capital, and we have a World Cup conundrum for you. Which
team is doing the most traveling during the group stage of the World Cup? And we think we've got an answer in the studio. I think he's wrong.
QUEST: Getting the rock band Foo Fighters to perform and sending time capsules to Mars. What do they both have in common? Both projects got
funding in recent days by crowdfunding. CNN's Diana Magnay now takes a look at the rise of this new way of raising capital as part of this week's
(BEGIN VIDEO CLIP)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: The 2008 global financial crisis saw the banks turning off the taps on loans. Overnight, the
investment landscape changed, budding entrepreneurs with no track record had to find new ways to raise capital to fund growth. Along came
crowdfunding, leveraging the power of people to finance projects. And the return on your investment, well, it could be some kind of equity stake or a
reward or maybe even just the warm feeling inside you get from financing something that you believe in.
Hamburg-based startup Protonet turned to the crowd for cash to develop it's secure personal service.
ALI JELVEH, FOUNDER, PROTONET: These parts come out directly from our 3D printer that we have here and it helps us keep production and development
MAGNAY: How many companies have this in their offices now?
JELVEH: About - a little over 250, so this is - we're sending out, I don't know, three/four boxes more each day. We said, OK, this is what we're
going to do. Going to take a story and a vision of what we believe the future should look like and tell it to the crowd and see what happens.
MAGNAY: What happened is that in less than an hour and a half, Protonet had raised $1 million.
JELVEH: It's a profit-sharing agreement, so if we get out big and have huge successes which we'll hopefully have, you will be a part of that.
Plus you also get one of our latest products. The percentage of Protonet we have is about 60/65 percent, and I believe in the future, we will see
companies that are 100 percent crowd funded.
MAGNAY: Crowdfunding taps into an online community, generating small contributions from lots of people.
BEN YEARSLEY, CHARLES STANLEY DIRECT: I think that's a dilemma for the crowdfunding industry to sort out, that the level of risk involved add to
they're actually marketing to and who they want to invest in their platforms. So the future is interesting. There's a need for funding but
you've got this issue of risk and levels of investment that have to be solved I think.
MAGNAY: It's an industry that's finding its way, but Oliver Gajda believes the crowdfunding approach will have a place in how businesses are funded in
OLIVER GAJDA, CHAIRMAN, EUROPEAN CROWDFUNDING NETWORK: If you look at how startups were financed before, many of them first raised hundred thousand
euros through friends and family. Which if you want is like crowdfunding. So this is - this is bringing this to the digitalized world, all the tools
that we have into the public. And I think this is really what is driving the change. I believe it will be one ecosystem where you can move from one
to the other, and you will also see many people that first have their own business agent (ph) funding and then go crowdfunding, to reap the benefits
of market research and marketing but all to raise capital.
(BELL RINGS REPEATEDLY)
MAGNAY: Protonet celebrates another sale. This small German startup thinks the crowd could become a powerful force in finance.
JELVEH: I think it's going to be an earthquake, and I believe that's going to fundamentally change the way things are funded.
MAGNAY: As social media communities grow, the power of the online crowd could play an increasingly important role in democratizing the investment
world and in backing the businesses of the future.
(END VIDEO CLIP)
QUEST: The question of future finance. I gave the dear lady Rosemarie(ph) in makeup a much harder time today. My suntan was a little brisk and harsh
from being in southern Spain last week on holiday. Jenny Harrison is at the World Weather Center. Jenny, the weather and the rain in Spain was
nowhere to be seen, and the temperatures were just glorious. Glorious!
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, you know you - you timed it quite well actually, Richard because the last few days,
they've had an area of low pressure bringing showers and thunderstorms. Temperatures still fairly high, but yet you did well though with the warm,
sunny weather. But talking about temperatures -
QUEST: Oh, yes.
HARRISON: We've had this information and it's from the Global Climate Report for May 2014. Now, what you're looking at of course is a huge
picture of the entire world. All these areas in the pinks and the reds are indicating areas of the world that have had temperatures above the average.
And in fact some areas a little bit cooler. You can see this a little purple there. The white, by the way, are average temperatures. But, it is
quite staggering to see the number of regions that have indeed had above- average temperatures. And this is since record began in 1880.
And of course May follows April which was the hottest April ever on record as well. And when it comes to as much as how much hotter than normal, well
.74 Celsius - and nearly 1 degree Celsius above the 20th century average of 14.8 degrees Celsius. Three hundred and fifty-one consecutive months with
above-average temperatures. That is 29 - just over 29 years of months above the average temperature. It is quite staggering what this data is
revealing and I would have to say quite concerning as well.
And during an El Nino period, you could actually see more records in 2014. But just giving you examples, some of the places that've been very, very
warm - Beijing in China for example. Warmest May there ever on record - 41.1 degrees Celsius. You can see these areas that have been very red
indeed showing you the above-average temperatures. On one region, by the way, the red is above-average temperatures. These areas in the yellow are
dryer than average and the green are wetter than average. So, by far, the biggest differential has got to be those temperatures.
So, in Europe, again, temperatures here have been so very, very warm. This is one of the warmest areas in particular. Look at this - Latvia, Norway,
Denmark, England and Wales. And talking about this region in particular around the Baltics - Estonia - Cunda and Estonia, 33.1 Celsius this May.
That was the hottest day ever reported -
QUEST: Good Lord.
HARRISON: -- Petersburg 33 Celsius again on May the 19th. So you begin to get an idea and then we've had some areas that've been way dryer than
normal - Colombia and also Venezuela. So, when it comes to things to be concerned about, that is it.
There's the rain in the southwest. We've got more thunderstorms across the south and the east in the next couple of days. And, Richard, I've got to
stop talking, so back to you.
QUEST: Thank you, Jenny Harrison, very interesting. Particularly since we were talking about the oceans earlier, and now the climate control now.
Many thanks. Jenny Harrison at the World Weather Center. Now, an update for you from the World Cup in Brazil. A penalty from Juan Cuadrado gave
Colombia the lead over Japan. Japan equalized at the end of the first half. Greece is now leaving the Ivory Coast with a good dubois (ph) - 1-
nil near the end of the first half.
But, we need of course to give you our update on the "Quest Means Business" the Footy 32 index. Now, this is really important. This is the "Quest
Means Business" QMB Footy 32. In this index of which you will be familiar, in this index you see we give a valuation and a percentage to the teams in
the tournament which rises or falls by $10 million for each goal they score or that they concede. If you concede, you lose ten -- $10 million. If you
get the goal, you get $10 million. You get the basic idea. What this will give us is not only the list price but the performance valuation of the
teams involved, and you'll rapidly see who becomes the most valuable. And the question of course is whether or not we actually see.
So let's get straight underway by looking at Uruguay. And we need to start with Uruguay because there are suggestions of misconduct. Remember, look
at - now look at that. So you have base value. The World Cup gain or loss is none, and of course, the Quest 32 value remains the same. But it's the
most dramatic moment of the game -- of the Italy-Uruguay match - Luis Suarez accused of biting the Italian defender Giorgio Chiellini. Watch the
video and you'll see. Yes, there we go. Watch as it go - in they go! (LAUGHTER). Uruguay go on to the next round after beating Italy 1-nil.
If we put Italy into the equation, Italy is down 3 percent on our index and you'll see why. Because although they have a list value, they've conceded
ten and at $321. So their value - they are set to delist. Three - in other words, they're out of the competition. Their players and two yellow
cards, one red card in the final match. Italy's coach says he's offered to resign after losing to Uruguay. Think of Italy -- the coach -- as being
Now, the answer to our World Cup Conundrum. We asked you which team has had to do the most traveling in the group stages of the World Cup. The
answer is -
Male 1 in studio background: U.S.A.
Male 2 in studio background: Brazil.
QUEST: We've got a Brazil, we've got a U.S.A. Anybody else like to join in? Nope. It's the answer is - you're not fair really. United States.
They'll cover more than 8,000 miles, 14,000 kilometers. They fly from their camp at Sao Paulo to Natal to Manaus, they then go to Recife and
there are matches in Ghana, Portugal and Germany as you can see. That is what you call some serious air miles. And of course if they move on to the
next round, then they will have even more traveling to do.
Now, we've probably all been given back an essay like this in our school days. A sea of red ink is never a good sign. However, there's a different
reason for these angry marks. After the break, I'll explain.
QUEST: Now, it looks like an essay that's been butchered by a professor at university, but it's the latest spat between corporations - just look at
the corrections, the annotations and the like. It all started with an op- ed piece in "The New York Times" by Timothy Egan, a columnist for the paper where he bashed Wal-Mart for what he said was not paying living wages.
He's described the most humiliating salaries force employees to rely on welfare.
Now, that was the article. But Wal-Mart fought back. And it actually used a red pen and made a variety of statements. The head of comms posted an
article on the Wal-Mart blog with corrections. Among the criticism - "for thousands of employees, a bit repetitive, see above." Asking people to
donate food - by one measure Politifact concluded. As you can see, on and a gone. "We are the largest taxpayer in America. Can we see your math?"
On more and more.
So, Egan has now returned saying that he doesn't accept this. Let's talk more about this and just whether this was - how brilliant a strategy it
was, and if so, by whom. Peter Shankman is the co-founder of the public relations firm Shankman | Honig.
Well, there's the article.
PETER SHANKMAN, CO-FOUNDER, SHANKMAN | HONIG: Yes.
QUEST: Then you have the response. What do you make of it?
SHANKMAN: Well, first of all, whoever authorized this is brilliant. Because this is a huge multi-billion dollar company that's usually very,
very calm and safe and rational. When they propose something like this, for them to approve it and for it to go live, is brilliant.
QUEST: Now, but what's the clever part? Is the clever part to respond or to respond in this fashion?
SHANKMAN: The clever part is to respond in this fashion because if they responded traditionally -
SHANKMAN: And they'd --
SHANKMAN: If they wanted op-ed space, they would have gotten it. They would've been able to get out the space in "The Times," they would've said,
'Here's our response,' they would have run it. And that would've been it. No one would've talked about it, no one would've cared. This is making
front-page news. Because who would consider basically taking this guy to high school, OK, and redlining everything he wrote?
QUEST: Do you think there was a huge debate in Wal-Mart about this strategy to do this?
SHANKMAN: I think there was. Yes, this is not - if this hadn't come from the head of comms at Wal-Mart - the head of comms at Wal-Mart is a pretty
big position. You know, he reports directly to the CEO -
QUEST: No other (CROSS TALK) in the world.
SHANKMAN: No, no question about it. So he had some strength and he has some leverage, but I guarantee you this had to be vetted by a huge legal
team, a huge marketing team and eventually the CEO had to sign off on this. And I give them a lot of credit for doing this because not a lot of big
companies would ever take that kind of a gamble.
QUEST: Does this tell us though not only about their answers and who's right or wrong - and you and I are not going to get into that. But, this
is almost millennial and social media -
QUEST: -- in its response, isn't it?
SHANKMAN: Exactly. What this reminds me of is you remember last year when a reviewer did a review of the restaurant in Times Square - Guy Fieri's
restaurant, and said, 'How do you - how can you possibly call this food?" And he broke down point by point the entire menu. These are the kind of
things designed to go viral. They're funny, people laugh at them, it's a little highbrow, and it's certainly something that goes immediately
ballistic on social media. And it - that's how I first saw it. It was - my stream was littered. I thought I was back in college. My streamer was
littered with red pen, red pen, red pen. Everyone was talking about it.
QUEST: Is it a one-hit wonder?
SHANKMAN: Yes. Because -
QUEST: Because the next person who tries this -
SHANKMAN: -- Exactly.
QUEST: Has done a Wal-Mart -
SHANKMAN: Exactly, you can't -
QUEST: -- and, you know, you can't do it again.
SHANKMAN: -- do that. So what that says is someone who - the next person who does it has to up the game. Maybe it'll be McDonald's, maybe it'll be
a Target, who knows. But whoever does it next has to come up with something even better.
QUEST: And you hope they'll come to for the --
SHANKMAN: Oh, without question.
QUEST: You - I had to do.
SHANKMAN: Yes, Richard, my pleasure.
QUEST: We'll have "Profitable Moment" (RINGS BELL) after the break.
QUEST: Tonight's "Profitable Moment." Trevor Manuel was on the program, you heard him earlier talking about the awful state of the world's oceans
and what needs to be done. We learned something about this during our coverage of Malaysia Airlines 370 when they were searching in the wrong
place in the furthest part of the Southern Indian Ocean and indeed even out in the South China Sea. The amount of debris that was being discovered -
bits of plastic, oil drums, containers, cable drums and the like. It gave us all an eye opener into the awful state of the world's deep seas.
And Minister Manuel reminds us it's only 3 percent that we're looking at. The rest of it is as the classic iceberg, deep underground underwater. The
question is what should be done? He suggests the United Nations. That seems to me to be a bit of a long shot and possibly a waste of time. The
problem of course is nobody owns the oceans. It's international territory, so it may have to be the United Nations. But when the U.N. can't put most
problems right, what hope can we have that they'll ever manage to do anything with the oceans? A long way off, deep under water, out of sight,
out of mind.
And that's the problem that got us into the mess that we're in at the moment. And that of course is "Quest Means Business" for this Tuesday.
I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.