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Business Unusual

Sealand Offers Unique Business Opportunity; Council on Economic Priorities Honors Ethics; Ancient British Wig Company Still Thrives

Aired July 16, 2000 - 6:30 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RHONDA SCHAFFLER, HOST: Ahead on BUSINESS UNUSUAL, welcome to Sealand, where the main rule is whatever Prince Roy says goes. How Prince Roy took over an abandoned fortress and made it his own private kingdom and why companies like HavenCo are beating a path to his door.

And the kindest, gentlest companies on Earth, from milkshakes to milk cows. You'll meet the people who run the profitable businesses chosen the world's most socially responsible.

Also, the new economy, the old economy, and the really, really ancient economy. It's still thriving.

That's all ahead on BUSINESS UNUSUAL.

Welcome to BUSINESS UNUSUAL. I'm Rhonda Schaffler.

First, British Army Major Roy Bates fought the Germans in World War II. Then after declaring himself Prince Roy of Sealand, he fought off German mercenaries who tried to invade his North Sea fortress. Now he's opening his unique little kingdom to businesses who appreciate his scrapping style and his interesting tax laws.

CNN's Tom Mintier has the story from the principality of Sealand.

(BEGIN VIDEOTAPE)

TOM MINTIER, CNN CORRESPONDENT (voice-over): Once upon a time, this steel and cement construction was a British World War II gun emplacement known as Rough's Tower (ph). Now it goes by the fancier title the Principality of Sealand.

It's been called Sealand ever since 1967. That's when a former major in the British army, Roy Bates, took it over, declared it a nation-state, and installed himself and his family as the concrete island's rulers.

Uninvited visitors are not welcome. On arrival, you and your bags will be searched by guards armed with .12 gauge shotguns. Your passport will be formally stamped.

Sealand has its own national flag, its own currency - the Sealand dollar, pegged to the U.S. dollar. The handful of inhabitants pay no tax. Sealand lies on the border of British territorial waters. And Prince Roy, as he now calls himself, poses no threat. So the British authorities leave him alone.

ROY BATES, PRINCE ROY OF SEALAND: Anything which is injurious to Britain won't be done here. But that doesn't mean that we won't do some things which they do. I mean, for instance, I get lots of propositions for gambling casinos. I've always turned them down.

MINTIER (on camera): Until recently, the most interesting thing about the principality of Sealand was its location, sitting in the North Sea about six miles off the coast of England. But with modern technology comes new ways of communicating, now the ability to talk to the rest of the world via satellite.

(voice-over): That technology combined with Sealand's unique location provided the perfect business opportunity for 32-year-old Sean Hastings, CEO of HavenCo. HavenCo was designed to do just what the name suggests, provide a safe haven to people in companies that might come under attack. What better place to do that than a small fortress island with not much in the way of pesky laws.

Hastings wanted to set up a Web server farm hosting Web sites where he could be sure they would not be subject to government scrutiny and tighter regulation. Sean Hastings and Prince Roy were made for each other.

SEAN HASTINGS, CEO, HAVENCO: It's a very, very small government. And that's the reason I came here because I wanted to have a situation where I could sit down with the whole government people who could make the decisions for a whole jurisdiction and say, "This is what we need to do to attract electronic business."

We need to say, "There are no laws on information technology but for these simple ones. And those won't be changed."

MINTIER: Sean Hastings has a special kind of clientele. For them, state interference is public enemy number one.

HASTINGS: A lot of what's going on in business right now, electronic business, is there's a chilling effect by the fact that the laws are changing constantly. And they keep reversing themselves, making new laws, appealing them.

Nobody knows what's going to be legal or illegal tomorrow. And nobody knows for certain that they can offer their customers the kind of privacy you want to be able to offer your customers.

MINTIER: Governments around the world are legislating to curb the activity of hackers and fraudsters operating on the Net. Hastings and his team believe those laws are draconian, bad for e-commerce but potentially good for HavenCo.

HASTINGS: The more restrictive the laws become in other countries, the more businesses of this sort which are easily able to migrate to other jurisdictions will do so.

MINTIER: Some 75 organizations have already approached HavenCo about its service. Hastings isn't say who they are. But amongst the first clients, Tibet Online, cyberspace address of the Dalai Lama's government in exile.

Organizations pay as much as $10,000 to purchase a HavenCo server. Rack space and Internet connectivity cost another $1,500 a month. HavenCo supplies the equipment.

HASTINGS: The reason people are not allowed to ship in their own equipment is security, physical security again, listening devices or what's called tempests, which is the ability to read other computers at a distance by the electronic signals that are emitted from them. Or even a bomb could be shipped inside of a server box.

MINTIER: The only rules, no child porn, no bombarding online addresses with unwanted e-mail, and no corporate terrorism. The HavenCo team has already raised $3 million from private investors. That's bought satellite and microwave communications technology. But to improve the service, HavenCo is planning to lay fiber optic cable from Sealand to the UK and the Netherlands by the end of the year at a cost of over $1 million.

(on camera): You seem to take security pretty seriously here.

UNIDENTIFIED FEMALE: Well, we have to.

MINTIER (voice-over): Prince Roy's armed guards provide physical security for HavenCo.

BATES: It is a 3-7 (ph), it's the equipment of the German 88.

MINTIER: Sealand's rusting anti-aircraft guns are destined to become museum pieces. But there are plans to extend the arsenal to include .50 caliber heavy machine guns as well as automatic rifles.

In return for providing that security and leasing space to HavenCo, Prince Roy received $250,000 in cash and stock. The principality of Sealand, HavenCo just might be the start of something a lot bigger.

Prince Roy has plans for a land reclamation project to physically create an island around the twin towers of Sealand. And that could make room for other businesses attracted by the idiosyncrasies of Roy's royalty structure.

BATES: Don't forget, you're looking at it now. In 10 years time, it will be totally different with the land all around and various developments going on. We've even had people want to base small shipping lines on us and everything because of the taxation.

And this could all be happening in the next 10 years. I don't know if I'll be here to see it. But nice to know it's going to happen.

MINTIER: For BUSINESS UNUSUAL, I'm Tom Mintier on Sealand.

(END VIDEOTAPE)

SCHAFFLER: Next on BUSINESS UNUSUAL, corporations with a conscience. Plus, how to hook a consumer in spite of really high prices.

(COMMERCIAL BREAK)

SCHAFFLER: In New York City recently, the Council on Economic Priorities named the top companies doing good business while doing good for the environment, employees, and society. For 14 years, the council has selected companies proving that the best social, ethical, and environmental policies are also the best business practices.

Bruce Francis reports.

(BEGIN VIDEOTAPE)

BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): What do cows, carpets, and a controversial restaurant chain have in common? Horizon Organic Dairy, Collins and Aikman Floor Coverings, and Denny's restaurants are all big winners, honored with awards recognizing corporations with a conscience.

ALICE TIPPER MARLIN, PRESIDENT AND FOUNDER, COUNCIL ON ECONOMIC PRIORITIES: We give the corporate conscience awards to the companies that have done a really stellar job at environmental protection, at providing a wonderful workplace that people can do their best work in, at advancing minorities and women.

FRANCIS: For over three decades, the Council for Economic Priorities, a nonprofit independent organization funded entirely through donations, has made it their business to inform consumers of companies that have both good and bad business practices.

CHUCK MARCY, PRESIDENT AND CEO, HORIZON ORGANIC DAIRY: We support over 200,000 acres of organic agriculture throughout the world. We support over 700 family farms.

FRANCIS: Horizon Organic Dairy, honored for its environmental stewardship, represents two-thirds of the organic dairy market and expects to reach $100 million in sales in the year 2000. The company treats their herds, 10,000 bovine beauties, like the mothers that they are, calling them happy cows.

MARCY: Well, the guys at our farm like to talk about the happy bulls. We always talk about the happy cows that give the milk. But they claim that the bulls are the ones that are really happy because we are one of the few dairy farms in the country that doesn't use artificial insemination.

FRANCIS: Horizon pampers its cows with daily foot massages to prevent hoof disease, provides stress-free loafing space, and treats sick cows with all natural medicines.

Another winner, Collins and Aikman Floor Coverings has kept a million pound of carpet out of landfills.

MAC BRIDGER, PRESIDENT AND CEO, COLLINS AND AIKMAN FLOOR COVERINGS: We have the only closed-loop recycling system in the world that can take back used carpet to make new products with waste. Today, we're mining buildings instead of the earth for raw materials.

FRANCIS: Also honored for its global HIV-AIDS program, Bristol Myers Squibb, for employee empowerment programs Caris Reels (ph), for environmental stewardship Rico Corporation (ph).

LYNN CHER, ABC NEWS MASTER OF CEREMONIES: We honor Denny's willingness to address past unfair policies by offering greater opportunities to members of minority groups.

FRANCIS: And the most surprising winner this year, the restaurant chain Denny's. In the early '90s, Denny's was better known for discrimination than diversity.

MARLIN: Denny's is one of those wonderful turnaround stories. You know, they were hit with a huge suit, and because of major discrimination problems throughout their company just a few years ago. But they brought in new management, new CEO, new plans. And they have improved so dramatically that it's a completely different company.

FRANCIS: Ray Hood-Phillips, chief diversity officer, was brought in to give the company a dramatic makeover. She says the change is more than cosmetic. It is transformational.

RAY HOOD-PHILLIPS, CHIEF DIVERSITY OFFICER, DENNY'S: I don't know a company in the United States of America that has done more training than we have. It begins at the top of the house, all the way with the board of directors, to the senior management team, down to every restaurant manager, assistant restaurant manager, hostess, server, cook.

And it's not a one-time shot. It's the ongoing process of growth and development and teaching people how to serve America.

FRANCIS: Denny's seems to have learned its lesson well.

PHILLIPS: We have a million more African Americans coming to Denny's than we did in 1996 when we began to measure that. We have the highest market share of African Americans for example than our largest competitors.

FRANCIS: CEP hopes other companies follow in the footsteps of these corporate good citizens.

MARCY: We're doing good for the environment and hopefully doing good for our shareholders.

MARLIN: The payoff can be really big and a lot more than the costs.

BRIDGER: What I think most businesses don't understand is that it is the right thing to do for their business.

FRANCIS: For BUSINESS UNUSUAL, I'm Bruce Francis, CNN Financial News, New York.

(END VIDEOTAPE) SCHAFFLER: It appears that Denny's is reaping the benefits of diversity. Advantica Restaurant Group (ph), the parent company of Denny's, is ranked number one in America's 50 best companies for minorities surveyed recently released by "Fortune" magazine.

Coming up, this entrepreneur is looking to catch more than just your attention, eliminating stereotypes, and tantalizing taste buds. Next.

(COMMERCIAL BREAK)

SCHAFFLER: More than two decades ago, his ambitious mission began to educate the citizens of his adopted continent, North America, about the culture of his homeland Greece. Costas Spiliadis figured that the way to North American hearts was through their stomachs.

His two restaurants in Montreal and New York feature the finest and freshest seafood from all over the world. If you through Greek food was just souvlaki and feta cheese, John Metaxas is about to enlighten you.

(BEGIN VIDEOTAPE)

COSTAS SPILIADIS, OWNER, MILOS RESTAURANTS: So tonight we have a beautiful selection.

JOHN METAXAS, CNN CORRESPONDENT (voice-over): If scaly things that swim and cold blooded denizens of the deep whet your appetite and cause your mouth to water, then Milos restaurants are where you want to dine.

SPILIADIS: We're going to start with the anchovies.

METAXAS: Restaurateur Costas Spiliadis has created two restaurants in two countries dedicated to one mission, introducing North Americans to elegant Greek dining.

SPILIADIS: The perception of Americans about Greece and Greek culture is based on the cliches that we encounter every day, souvlaki and gyro. But definitely it's not all that we are.

METAXAS: Spiliadis grew up in Patras (ph), a port city in Greece. He studied in New York and Montreal, settling in Montreal, and working as a program director of a Greek radio show. That experience taught him his new countrymen were poorly informed about Greek culture.

SPILIADIS: And that's how Milos was born 20 years ago. I had no clue about cooking. I had no clue about business. But I had a very deep love for food that inherited from home.

METAXAS: At home, Spiliadis had watched his mother carefully select and artfully prepare the food for the meals which were such an important part of his family's daily life.

SPILIADIS: I started calling my mother two or three times a day asking for advice.

METAXAS: The lessons Spiliadis learned in the beginning have become the credo that infuses the menu, fine fresh ingredients prepared with respect and restraint.

SPILIADIS: You have to have a tremendous sense of discipline in terms of your intervention with this food.

METAXAS: Spiliadis named his restaurant for the windmills in his homeland. Twenty years ago in Montreal, he created an intimate taverna (ph) atmosphere intended to capture the Greek spirit. In 1997, Spiliadis returned to New York, opening Estiatorio Milos (ph) in midtown Manhattan.

SPILIADIS: This is the top of a well. And people used to bring their water from this well. Now on that part you can see that all this is done by the role (ph) over the centuries.

METAXAS: In New York, the restaurant's ambiance is less intimate and more minimal, more evocative and less literal.

SPILIADIS: It's a feeling that you have in Greece when you go and when you look at the Andles (ph) Sea and the sun, the sense of being free.

UNIDENTIFIED FEMALE: It's like being on vacation in the middle of Manhattan.

METAXAS: While the environment seduces, it is the food that convinces.

SPILIADIS: There's nothing better than a long lunch with a close friend, a glass of good Chardonnay, and the fish.

METAXAS: Sixty percent of the establishment's business comes from repeat customers.

SPILIADIS: My fisherman are unhooking the fish and getting out of the water 5:00 in the morning. The same afternoon, they're in New York.

METAXAS: Spiliadis explains such service necessarily costs more.

SPILIADIS: How more fresh can you get when you have the langoos (ph), which is the Mediterranean version of the lobster, and it comes from Greece alive and kicking?

When I turn around and I look at my customers smiling and having good time in the restaurant, enjoying the food, enjoying the service, enjoying the experience, I walk away with a smile as well.

And here comes your favorite octopus.

METAXAS: For BUSINESS UNUSUAL, John Metaxas, CNN Financial News.

(END VIDEOTAPE) SCHAFFLER: Just ahead, they have served some of the most important clientele in the world for more than three centuries and haven't changed on stitch of their business plan.

(COMMERCIAL BREAK)

SCHAFFLER: Finally, there are some things you just can't do with a computer, and most of them happen in England.

From our London bureau, Amanda Kibel tells us about a business that has catered to the same consumers for more than 300 years. And they don't want any newfangled new economy to change things.

(BEGIN VIDEOTAPE)

AMANDA KIBEL, CNN CORRESPONDENT (voice-over): Against the backdrop of some thoroughly modern sounds, the perpetuation of an ancient craft, every stitch a step back and time, the methods and materials exactly as they have been for over 300 years.

KATHLEEN CLIFFORD, WIG MANAGER: Nothing has changed. Nothing, even with the materials and all the tools that we use that are behind me, the bits and bobs that we use, nothing has changed.

KIBEL: Edes and Ravenscroft (ph) began trading in 1689 handcrafting robes and later wigs for the royal family. The company has made robes for 12 coronations so far. Wigs and robes for lords and ladies, lawyers and judges, and an American president. Ronald Reagan had his robe made here when he was given an honorary knighthood.

Other clients include Cherie Blair, wife of the British prime minister, and former British Prime Minister Margaret Thatcher.

Keeping them all in wigs and robes is painstaking and time consuming. One horsehair wig takes an average of four weeks to make.

CLIFFORD: For a judge's full bottomed wig, which there's one here in front of me, I need to sit here for 40 hours to weave the hair just for this, just for that alone.

UNIDENTIFIED FEMALE: My government will publish a white paper...

KIBEL: And in the lofty realms of pomp and ceremony, wigs and robes are more than just that.

(on camera): A robe like this one would be worn by piers (ph) in the House of Lords for the official opening of Parliament. In this case, the three bars of gold, lace, and fur indicate that the wearer is an earl.

(voice-over): Two bars would indicate a baron, and four denote a duke. When wigs were still worn in the royal household, the code was in the curls. Seven rows for the servants of a duke or marcus (ph), six for royal house servants, and five for servants of the horse drawn carriage. Back then, wigs also had to be powdered and primped every day. But the company invented a new patent in 1822, a wig which needs hardly any attention at all and lasts about 100 years. The price back then, 10 guineas (ph). Now the top of the range could cost over 1,000 pounds, about $1,600. Some things it seems have changed in the world of wigs and robes.

For BUSINESS UNUSUAL, Amanda Kibel, CNN, London.

(END VIDEOTAPE)

SCHAFFLER: And that is BUSINESS UNUSUAL. This week, the quirks in odd corners of the new economy. If you missed any of today's program, you can catch it on the Web. Just log on to CNNFN.com and click on BUSINESS UNUSUAL.

I'm Rhonda Schaffler. Thanks for joining us. Goodbye from New York.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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