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QUEST MEANS BUSINESS

Interview with Ben Verwaayen; Interview with Maurice Levy; The Mining Indaba; Interview with Gillian Milovanovic; Four Greek Cabinet Ministers Resign Over Austerity Plan; Police and Protesters Clash in Athens; Greece in Chaos; Market Impact of Greek Crisis; PIMCO CEO Weighs In; Greek Lawmaker Wants Out of Euro; Portugal Bailout; Rising Tensions in Falklands Over Oil; Europe Freeze Continues

Aired February 10, 2012 - 14:00   ET

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


RICHARD QUEST, HOST: A stone's throw from Ground Zero, the Greek prime minister tonight warns bankruptcy is not an option.

For many, the pill is too bitter to swallow. Four government ministers have resigned in Athens.

Also tonight, the big bad bonuses. What chief executives have to say about their pay packet.

It may be Friday. I'm Richard Quest, and I still mean business.

Good evening. Tonight, Greece's prime minister says there's no room in the government for anyone who opposes the austerity agreement reached yesterday. The country's deputy foreign minister and all four cabinet ministers from the Laos Party have now resigned, as Europe's demand for deeper cuts has pushed the Greek government to breaking point.

(BEGIN VIDEO CLIP)

LUCAS PAPADEMOS, PRIME MINISTER OF GREECE (through translator): The priority is whatever is necessary to approve the new economic program and credit agreements. Any other developments would be destructive. It's logical that whoever disagrees and doesn't vote for the new program cannot stay within the government.

(END VIDEO CLIP)

QUEST: The turmoil in Greece is spilling onto the streets. Today, violent clashes started outside the Greek parliament. Protesters through stones and fire bombs whilst the police retaliated with stun grenades and teargas.

Friday marked the start of a two-day strike by workers from Greece's two main unions which, together, represent half the Greek workforce.

In Athens tonight for CNN, our Senior Correspondent Matthew Chance joins me now. Matthew, so the agreement that they thought had been reached is not going to hold, or at least looks like it. How much chaos, what's the feeling in the Greek capital tonight?

(POLICE SIRENS)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, of course, that bailout deal is subject to parliamentary approval. The vote is expected to come at some time this weekend, so wait and see how that turns out.

In terms of the mood on the streets of Athens and elsewhere in the country, people clearly very angry, indeed. We've seen thousands of people throughout the course of this day, as you mentioned, clashing with riot police in the main square here in the center of Athens.

You get a sense, Richard, that people are just fed up. Fed up with the two years or so of austerity cuts that they've already had to endure. People have seen their incomes fall off a cliff. They've seen job losses, they've seen public services eroded.

And there's just a general sense, here, that these austerity measures, more of which are now being demanded by the European Commission, the European Central Bank, and the IMF, are not going to make the matters -- any better. They're going to make that recession even worse.

We've just had some very interesting unemployment figures that have come out within the past few days here in Greece, 20.9 percent for the entire country, obviously extremely high.

But even that doesn't tell the higher -- the whole picture, because if you look at the age group between 16 and 24, that figure rises to 48 percent, and it's that age group that we're seeing throwing the petrol bombs, throwing the rocks and stones at the police in the main square of Athens throughout the course of the day, Richard.

QUEST: And the view from Athens -- on the Germans, Angela Merkel, the eurozone -- we've heard on this program in recent days politicians being vitriolic against eurozone partners. What are you hearing there?

CHANCE: There's a great deal of animosity, resentment, a sense of national humiliation as well, about what the eurozone, led by the Germans, is wanting the Greeks to do.

Because as well as make these very difficult, painful cuts to the country's public services and average minimum wage and things like that, they're also asking for what they call the strong political commitment from the political leaders in Greece to push through these austerity measures.

They want written guarantees from Greece's political leadership that they will follow through on these commitments, and that's perceived as a sort of national humiliation stacked on top of the humiliating cuts this country has already had to make.

But nevertheless, the prime minister of the country, Lucas Papademos, making it quite clear that he does not believe a default in Greece is an option, that he wants to push through these measures in the country's parliament at whatever cost.

He's also made the point, as we've reported, that any government minister that does not agree with the bailout deal that is being demanded by Brussels has no place in government, and already we've seen four senior figures, senior ministers in the Greek coalition resign from office. And so, there's going to be a big reshuffle in order to get these measures through, Richard.

QUEST: Matthew Chance, who is Athens for us tonight. Matthew, thank you.

The pain of Greece's knock back is playing out on the markets. I want to show you first, before we go any further, I just want to show you this one. We'll come back to it in a minute. This shows, really, Athens had performed quite well during the course of the week, but now as the sentiment turns very, very sour, it takes that down. We'll come back to it in a moment.

The euro against the dollar. The big picture, it has been up 2 percent on the year to date, and the euro was trading at an eight-month high against the US currency. But now, with the events of the last 24 hours, once again, it's come back.

And that has spilled over into these equity markets, which are down, now, for the whole week. The big losses were the banks, Commerzbank, Societe Generale down 7 percent. These are the banks, particularly those like Societe, Piraeus Bank, they are the ones that will take an absolute clobbering when you take the haircuts and the default, if it happens.

And New York is also down. New York is down more than 130 points.

So, two of the markets open and doing business and to discuss this now, PIMCO's chief executive, Mohamed El-Erian, wrote in the "Financial Times" that the Greek agreement stands little chance of placing the country on the path to growth, higher employment, and stability.

Mohamed El-Erian joins me now from Newport Beach in California. Good to see you this evening, Mohamed, thank you for joining us.

The first question has to be, what were the eurozone thinking when they basically pulled the rug out from under the Greek prime minister and the agreement?

MOHAMED EL-ERIAN, CEO, PIMCO: Basically, Richard, what you're seeing is that there is no common analysis or understanding of what's going on. So, each side is pursuing their own agenda.

In the case of the European countries, they are saying, look, Greece, you've made promises in the past, you haven't delivered, and we're not just going to accept promises again. We want two other things. We want implementation and we want political parties to sign. So, the Europeans are pushing and pushing the Greeks.

The problem is the approach itself will not lead to what you need, and what you need is growth, medium-term debt sustainability, and attracting new capital into investments. And that's not going to result from what is being discussed.

QUEST: But have they basically, in this humiliating response to Greece, have they basically cut Greece off? They are now prepared, as indeed -- look. With the exception of the stock market tonight, the markets do seem to be basically coming to a view of, if it defaults, it defaults, and we'll deal with it then.

EL-ERIAN: Yes, I think there's two things going on. I think in the case of Greece, they are pushing it towards social and political fragmentation that will make it very hard to implement a package.

I think more generally, over the last five months since October, the Europeans have been pivoting, first quietly, and now openly. Before, it was about rescuing the periphery.

Today, it's about refounding, to use the words of President Sarkozy, refounding the core. And they want to strengthen the core, build the firewalls, and let the periphery go.

QUEST: That's pretty dramatic. You're basically saying that everyone now is -- whatever they say publicly, they are resigned to the fact that this -- this Greece might go bankrupt, it might get messy, and they'll have to just deal with that as and when it happens.

EL-ERIAN: Yes. It's the only way to explain what happened yesterday in Brussels. Yesterday, the European ministers humiliated Greece in a very open way. They said, we no longer give you the benefit of the doubt. They made it very clear --

QUEST: OK --

EL-ERIAN: -- that where they stand.

QUEST: One question that's been troubling me through the course of the day and watching the events. Are we at that sort of situation that in five years time, when Greece has been through civil war and riot and the whole thing has collapsed, we will look back and say with the historians, and they'll say, ah, if you want to know when the mistake happened, it's when they pushed too far. When they decided to do this.

Would you agree that we're at a turning point?

EL-ERIAN: I agree we're at a turning point. I hope it's more like what happened in Argentina in December of 2001. In Argentina in 2001, society said, "We can no longer take it." At that point, Argentina pivoted, including an overhaul, a resetting, in economic, financial, institutional terms.

And that allowed Argentina, albeit in a messy way, to get out of a straightjacket and get back to a path that promised more growth and more jobs. Hopefully, that's what's going to happen, because the alternative would be absolutely awful, Richard.

QUEST: Mohamed El-Erian joins us from Newport in California. Have a good weekend, many thanks, indeed, for joining us.

Coming up next, QUEST MEANS BUSINESS continues. When the going gets tough, the tough get going. Greek MP Liana Kanelli says staying in the euro would be a disaster.

(RINGS BELL)

QUEST: She wants out.

(COMMERCIAL BREAK)

QUEST: The options for Greece are limited: bankruptcy, bailout, or bite the bullet and go it alone. The Communist Party's Liana Kanelli is a member of the Greek parliament, and today she told me staying in the euro would be a disaster. And she, like many others, wants out.

(BEGIN VIDEOTAPE)

LIANA KANELLI, MEMBER OF GREEK PARLIAMENT, COMMUNIST PARTY: I think that it was not only me, it was the whole Greek people, practically not mad, enraged about what is happening in the country.

We are counted as collateral damage of a huge mistake of Western capitalism, IMF, the Central Bank, Mrs. Merkel, and all the guys that want their money back.

QUEST: Yes, well you may well be that, but the fact is, they do want their money back, and they've told Greece it's time to start playing by the same rules as everybody else.

KANELLI: Yes, but I have to explain to you something. You lend money to somebody with the hope of taking it back. You don't lend somebody money so that to take his life back as a price and as a punishment. What is happening now is --

(CROSSTALK)

QUEST: OK. So --

KANELLI: -- that nobody knows what exactly is this --

QUEST: All right --

KANELLI: -- Richard, what exactly is this debt? Whose debt is it? Is it he Greek people's debt? No. It's not our debt. It's not the Greek people that took the money. It's a small amount of big companies --

QUEST: Right.

KANELLI: -- multinational companies --

QUEST: Right.

KANELLI: -- multinational lenders --

QUEST: All right --

KANELLI: -- and banks.

QUEST: So --

KANELLI: It's not the Greek people --

QUEST: So what --

KANELLI: -- and you should ask other --

QUEST: Hang on. Just a minute --

KANELLI: -- other deputies in the world, can they survive --

QUEST: Just a minute.

KANELLI: -- under these terms? Can you survive?

QUEST: Just a minute. What do you want from your eurozone partners, then? What do you want them to do? Because they basically say, look, we can't keep sending money to Greece. Greece hasn't got the money to pay back their debts, it's going to have to have a reform of the economy. So what do you want?

KANELLI: What do I want, and lots of people want now here in this country? A beautiful exodus. We want to get out of the eurozone. We want to take our lives back. Staying in the eurozone is a disaster. A disaster getting in, and a disaster getting out.

QUEST: But you must know that exiting the eurozone would lead to a total collapse of the banking system, a total collapse of the economy, and put Greece in a worse situation than it is today, if you had to go back to the drachma overnight.

KANELLI: It can't be overnight. And it can't be the way this is planned by our lenders, our creditors. It is a decision, it is a political decision. This country is a country. It's not a business.

QUEST: But --

KANELLI: And that's why we cannot accept proposals, change your name, remake your image, start from the beginning. You can't start a whole country from the beginning. You can start an economy from the beginning.

QUEST: As we look forward, though, and you come to the conclusion of what happens now, ministers are already resigning from the government, there is strikes on the street, there are riots. What is your fundamental fear of what can and might happen in Greece?

KANELLI: It's not a fundamental fear, it's a demand. The first thing we need is elections now.

QUEST: Oh!

KANELLI: There is no legitimacy of this government the way it's running things, and there is no legitimacy for signing the future of two or three or four generations.

Nobody elected Mr. Papademos. He was picked up and selected as the available man to do the job that is against us.

QUEST: OK. So, when --

KANELLI: Elections now. Who's afraid in a democracy of elections?

QUEST: When --

KANELLI: Who is afraid?

QUEST: When the eurozone leaders say that there has to be another 300 million in cuts, that all political parties have to sign up to the deal so that they can't change after an election when it comes, what is your message back to Brussels?

KANELLI: We will resist. To the last breath. Even if the law passes, nobody is going to implement the law.

(END VIDEOTAPE)

QUEST: Ahem. Robust discussion where, of course, feelings are very strong and hot on both sides.

Now, whilst Greece is certainly on the agenda, Germany may be preparing to ease the bailout burden on Portugal, too. The German finance minister was overheard telling his Portuguese counterpart that he's ready to support changes to the terms of Portugal's bailout.

The pair were caught discussing the deal on an open microphone. They apparently were unaware they were on tape. It's very faint. You can, though, make out what they're saying. Take a listen.

(VIDEO CLIP INAUDIBLE)

QUEST: That's the way deals are done, in the conference center, quietly. Anyway, we'll find out more, of course, whether Portugal does, indeed, get a renegotiation of its terms.

An old rivalry reignited by oil. Britain and Argentina are told to cool off over the Falkland Islands. We'll bring you a dispatch from Port Stanley in a moment.

(COMMERCIAL BREAK)

QUEST: Britain and Argentina should try to avoid an escalation of bad feeling over the Falkland Islands says the UN Secretary-General Ban Ki- moon. It's 30 years since the end of the war over the islands, which are known by the Argentinians as the Malvinas, or Las Malvinas.

Diplomatic relations are severely strained. Argentina's foreign minister complained over Britain's militarizing the South Atlantic. The UK prime minister has defended his right to send a warship to the region and the islanders' right to be British.

And bubbling away, the question of oil. Britain's tapping into what it believes will be a vast oil reserve under the Falklands sea bed. It makes the dispute more bitter. From Port Stanley, our Senior Correspondent, Dan Rivers, has sent this dispatch.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The waters that have so isolated these islands and their wildlife are now about to change life here forever. Environmentalists might be fretting about the threat to these pristine beaches, but 225 kilometers away, it's drill, baby, drill.

This is the Ocean Guardian, hired to a British oil exploration firm, Rockhopper, which has hit black gold in an area of ocean called the Falklands Northern Basin, to the fury of the Argentines, who claim the oil and the islands are theirs.

STEPHEN LUXTON, DIRECTOR OF MINERAL RESOURCES: There -- have the North Falkland Basin here, which is the focus --

RIVERS: Stephen Luxton is the director of mineral resources and shows me other drilling sites to the north and south. The oil rush is only just beginning.

LUXTON: I think it will change things. It's how you manage that change and how you control it. The current development model is to keep as much of the engineering work as possible offshore.

RIVERS: In some places, it feels like the celebrations have already begin. The Globe Pub is a lively local nightspot which is only set to get busier with oil workers.

But elsewhere, this sleepy capital of 3,000 people seems only just to be waking up to the fact that business is about to boom.

In one of the two supermarkets here, shoppers browse the expensive imported fruit. Soon, they might be less worried about the prices. The Falkland government will get 9 percent of oil revenue generating tens of millions of Falkland Island pounds, potentially transforming life here.

ANDREZ SHORT, FARMER: If I look back to when I grew up here, it is totally, totally different now to what it ever was then. So, it will change. How it will change, I don't know, but it will change.

RIVERS: Over a very British cuppa at government house, the governor of the islands rejects Argentine claims the oil is theirs.

NIGEL HAYWOOD, GOVERNOR, FALKLAND ISLANDS: It's another Argentine myth that they peddle that Britain is after their oil. It's not Britain. It's the Falkland Islands' resource.

RIVERS (on camera): Most islanders of this windswept place want to spend the first chunk of oil money on improving the terrible roads, most of which are only made of gravel. The reality is, they could probably pave them with gold, such is the amount of money that's going to come into the coffers. They're talking about setting up a sovereign well fund to preserve it for future generations.

RIVERS (voice-over): The Falklands might be remote, but they are about to get very rich, and Argentina is furious that they won't get a cent. The dispute is set to get even more intense.

Dan Rivers, CNN, on the Falkland Islands.

(END VIDEOTAPE)

QUEST: Looks brisk and breezy, there. Jenny Harrison's also brisk and breezy with European cold weather.

JENNY HARRISION, CNN METEOROLOGIST: More of it, yes, Richard. It's - - heading into your weekend, it is going to be another chilly one. There's more snow in the forecast. Quite a vigorous system in the central Med right now, and also a bit of rain pushing into the northwest.

Here is what is outdoors at this moment in time. Minus 3 in London, minus 6 in Copenhagen, Warsaw minus 13, Kiev minus 21. Those are the actual temperatures. It does feel a little bit cooler in most cases with the wind factored in, but the lowest temperature this morning, this Friday morning, was minus 24 in Bucharest and minus 21 in Belgrade, and so the list goes on.

And so it will continue to go on as, indeed, will the freezing conditions throughout the Danube. As we know, the shipping has been suspended, so much is running through -- or not, of course -- stopping any water running through that area.

What we need is for the temperatures to actually rise above freezing. They are not looking to do that as we head into the weekend. You can see here, more snow is also in the forecast, Belgrade and Bucharest. And those overnight temperatures, very low, indeed.

Here's a sight we don't see very often. It's actually an icebreaker on the River Seine in Paris. Yes, it's been a number of years since they've actually had to literally bring out the icebreaker. And of course they've been doing this in the River Danube in places, but there, the ice has actually got too thick, so they're just trying to keep the waters running smoothly through the River Seine.

Come back to the map, and I can show you to say there's more snow in the forecast. It's also -- can you believe this? -- the temperatures are about to get even colder over the next few days. The air is coming once again from the northeast across these central areas. So, for example, the temperature has been on the decline in Ukraine for the last couple of days.

And then, look at this snow. Look at this. Another 40 centimeters in Sarajevo. There has been a tremendous amount of snow in some regions. Look at this, Sarajevo, this year, 80 centimeters. Last year at this time, just one centimeter.

And then, similar story in Belgrade, not quite as much right now, but even so, 42 centimeters, none last year. Similar story in Bucharest.

Now, this ice, this snow, it is, of course, causing all sorts of dangers. And here's a bit of a tidbit for you. In Split in Croatia, they have actually used as much plaster of Paris in the last five days that they would normally use in two years. So, that much has gone because of the ice. Everybody's slipping about.

And the other thing, just to say, is we're watching, as well, Richard, conditions in the central Med because of the location of the Concordia. There's snow in the region, there's very strong winds and, as I say, that is affecting the central Med.

So, that's how it is looking. So, a cold weekend for just about everybody, and snow there, as well.

QUEST: Jenny, we thank you for that. Have a warm weekend yourself. We thank you.

Now, after the break, two captains of French industry on this program. The chief execs of Alcatel and Publicis give us their view on Europe's economy.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

First, this is CNN. And on this network, the news always has priority.

Syria's government and the opposition are blaming one another for two deadly bombings in the northern city of Aleppo. The car bombs wrecked a police headquarters and a military intelligence base. State media reports at least 28 people were killed and 235 people have been injured.

Across Syria, thousands of protesters braved the military's crackdown again and protested in the streets. The demonstration in Damascus was one of several on Friday. The theme was, "Russia is killing our children," a reference to Russia's veto last Saturday of a U.N. resolution on Syria.

And protesters have been out on the streets in Greece, where their complaint is over more painful austerity in the works. The new plan calls for deep job cuts and a sharp decrease in the minimum wage. Eurozone officials want the Greek parliament to make the plan into law before they'll approve a new bailout.

The U.N. secretary-general, Ban Ki-moon, has warned Britain and Argentina against escalating their dispute over the Falkland Islands. Argentina has lodged a formal protest at the U.N. claiming Britain is militarizing the strategic islands, which are located in the South Atlantic.

It's taken six years of cost cutting and restructuring, finally, Alcatel-Lucent has made a profit, not as much as it would have liked, $1.4 billion net, but much better than the $400 million loss in 2010.

Now, the market loved it. Shares rose 12 percent. They're now at their highest level in three months.

Ben Verwaayen joined me from a very cold Paris. And I asked Ben how he plans to repeat this profitable feat.

(BEGIN VIDEOTAPE)

BEN VERWAAYEN, ALCATEL-LUCENT CEO: First of all, I think that we delivered on our promises, which is a good thing.

Second, our cash flow was positive and, for the first time, as you said, we had a positive year for Alcatel-Lucent since the merger.

I think we have a lot to play with and we have told the market that they should expect a better margin in 2012 than we have delivered in 2011. So I think the market will expect us to deliver in 2012, as well.

QUEST: And this idea that you've got to lease or rent or license your patents, why have you suddenly decided -- I mean you've had these patents for decades, why all of a sudden is now a good time...

VERWAAYEN: Yes.

QUEST: -- except everybody else is doing it?

VERWAAYEN: Well, first of all, I don't think everybody else is doing what we are doing. But even if some -- everybody else were doing it, it is still a very good idea.

What we're doing is not so much selling our patents. Our patents are very vital for us as a company. It's the core of Bell Labs. It's what we do. We're 29 -- 29,000 patents. They're absolutely the center of what happens in the Internet.

No, what we're doing is -- is we do a syndicate licensing that's an ability to reach out much further than we could do on our own. We do it with a company called RPX. It's an innovative way of doing it. It's new in the market. We believe in it and we think it will benefit our shareholders and the people who work with RPX.

QUEST: Are you able to put a figure on how much you expect to bring in as a result of this patent deal?

VERWAAYEN: We expect it to be significant.

QUEST: Yes, we'll wait and see, no doubt, as the years go on, what that translates to in terms -- back to the overall numbers.

Are we seeing a success of the turnaround that could be blown off course by wider economic issues, Eurozone and the U.S.?

VERWAAYEN: Well, you're never immune to anything. You know that. But I would say that we have a -- a resistant model in place. Lots of the things we have to do, we have to do ourselves. It's not so much dependent on the market. But lots of other things, of course, in an ebullient market, you have an easier play than if the market is very difficult.

For 2012, we expect some markets to be better than others. We are not taking an over optimistic approach to the market as such. We think that what we've seen in 2011 will continue in 2012. That means consumers consume more...

QUEST: Right.

VERWAAYEN: -- they love their -- their tablets. They love their smartphones. But the market will be challenging.

QUEST: Are you sweeping your Greece accounts, your peripheral Eurozone accounts, like some other companies are, so you're not leaving any money on the table in these riskier economies overnight?

VERWAAYEN: Well, we have a very prudent approach anyway. We are a -- a euro denominated company. And we think that the euro have a good future. From that perspective, we don't take dramatic action. But we are prudent and we have been prudent all the way.

(END VIDEO TAPE)

QUEST: That's Ben Verwaayen on a windy and cold balcony in Paris.

And we stay on that balcony to hear from the head of Publicis, who says the kind of halting progress we're seeing in Greece threatens to take the gloss off a promising year. The numbers we had this week from his company were much better than expected thanks to growth in emerging markets.

Maurice Levy says it's been a good start to the year.

(BEGIN VIDEOTAPE)

MAURICE LEVY, CEO, PUBLICIS: For the time being, the 2012 is starting quite well. The month of January has been good and our expectation for the full year is that we will be doing much better than market expectations.

Obviously, there are some clouds and particularly on the south of Europe, where there are some issues, particularly on the sovereign debt...

QUEST: Right.

LEVY: -- Greece, Italy, Spain, etc.

QUEST: When we look at France, you've got a presidential election this year. You've got an economy that has been in great trouble in -- in France.

Do you see any sign of optimism in French business at the moment, Maurice?

LEVY: There is a kind of paradox in France. We had a year in 2011 which was excellent for us. We had a growth of 80 percent. I'm speaking organic growth, which is ahead of what Germany is delivering. And we had the month of January, which is excellent.

So this is this paradox where you have some activities which are doing extremely well and the mood of the people, which is a little bit down. And why the mood of the people is down, obviously, there is the fact that unemployment is raising, the uncertainties regarding the Eurozone and also the election, which is creating a period of wait and see.

So when you look at all these aspects, one could say that France will go into serious trouble. And, on the other hand, we see that the -- the very large companies are doing extremely well, as we do. And it's the situation which, by the way, is creating, also, a -- a situation where the very large companies are not very much liked because they seem to be in a kind of shelter.

QUEST: Right.

(COMMERCIAL BREAK)

QUEST: Finally tonight, Barclay's chief exec, Bob Diamond, says his company's latest figures are unacceptable and, as a result, its investment bankers are being hit where it hurts, square in the bonus.

As you can see here in the library, the pre-tax profit was down 3 percent for Barclay's, down to $9.25 billion, which is described as a major disappointment, not completely unexpected, but a disappointment, nonetheless.

As for Mr. Diamond, he describes it as unacceptable. The analysts say they are way off. Barclay's blames the overall gloomy climate and new regulation for these unacceptable results.

Overall, though, of course, the investment bankers' bonuses were capped, the total bonus pool was only three quarters of the size of previous years. The maximum cash bonus for Barclay's is 102,000, the average total year.

Now, as for Mr. Diamond himself, well, he's not saying. He hasn't yet revealed what his emoluments were for last year. But it's a fair bet if the cap is there, his will be lowered, too.

So here in London, bonuses, indeed, the whole issue has been controversial. Stephen Hester of RBS was pressured into giving up his -- his bonus this year. And all this week, we've had CEOs talking about the bonus issue.

So on the one hand, who basically says Maurice Levy of Publicis. Maurice Levy is extremely outspoken on tax contributions, even though his company beat expectations. He wants moderation.

(BEGIN VIDEO CLIP)

LEVY: There is a real issue. And we have to recognize that it is very difficult, when there is a tough economy, that CEOs get a hefty pay and with very large bonuses and very large compensation.

So, clearly, a kind of self-moderation would, I think, be well received by everyone.

(END VIDEO CLIP)

QUEST: Now, Maurice Levy is on that side of the argument.

Paul Walsh of Diageo, who saw first half earnings up 16 percent, Paul Walsh takes exactly the opposite point of view.

(BEGIN VIDEO CLIP)

PAUL WALSH, CEO, DIAGEO: I do believe what George Osborne said in his speech the other evening is absolutely spot on. It's not productive. We should be focused on exports, creating jobs, rather than this side show.

(END VIDEO CLIP)

QUEST: So, Bob Diamond of Barclay's, as you heard about his results, Bob believes that compensation shouldn't be a political issue.

(BEGIN VIDEO CLIP)

DIAMOND: I think getting some of the emotion out of this is healthy. It's about pay for performance. And I hear a lot of people talk about the eradication of pay for failure. We support that. No one wants to see pay for failure. But every time I hear a political leader mention the eradication of pay for failure, I'd like to also hear them talk about rewards for success. And I think balancing our responsibility and being competitive is the challenge we have. And we accept that challenge in terms of how we compensate in this industry.

(END VIDEO CLIP)

QUEST: So you have both sides of the argument, the issues, the distraction and those in the middle, Ben Verwaayen, John Chambers and Tom Albanese.

(BEGIN VIDEO CLIP)

TOM ALBANESE, CEO, RIO TINTO: The Alcan acquisition was early in my watch, but it happened on my watch. There's write-offs related to that. So it's only appropriate for me, basically, to -- to -- to offer that I should not be considered for a bonus this year.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

JOHN CHAMBERS, CEO, CISCO: I'm a believer in pay for performance. But that means when you don't perform, you shouldn't get paid. So it ought to be how did you do versus the available market and how did you do versus what was realistic expectations of companies.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

WALSH: I do believe what George Osborne said in his speech the other evening is absolutely spot on. It's not productive. We should be focused on exports, creating jobs, rather than this side show.

(END VIDEO CLIP)

QUEST: The views of the chief executives.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I hope it's profitable.

See you on Monday.

(COMMERCIAL BREAK)

ROBYN CURNOW, HOST: I'm Robyn Curnow.

You're watching MARKETPLACE AFRICA.

And this week, we're at the Mining Indaba in Cape Town. Now indaba in Zulu means a gathering or a meeting. And just like the old tribal chiefs used to sit under a tree to discuss a community's problems, this, too, is a gathering of leaders -- of CEOs, of ministers, of investors all talking about investing in Africa's mining sector.

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CURNOW (voice-over): Copper, gold, iron ore, diamonds and oil -- almost all of the world's most precious commodities are found in abundance in Africa. Some experts here at this mining conference believe that global economic trends mean Africa is becoming increasingly important for mining.

TIM GOLDSMITH, GLOBAL MINING LEADER, PWC: Well, I think there's a big trend, is the development of the industry in a far great way throughout the continent than we've ever seen before. While mining globally is in boom times, which is really driven by the industrialization, particularly of Asia, which is leading to a huge increase in demand, historically we've looked to countries like Australia, Canada, South Africa. That's not enough anymore.

So people are looking further and further afield.

At the same time, we've seen Africa change a little bit. So countries which, 20 years ago, people really didn't want to touch, all of a sudden now have had a bit of political certainty to them. Some still have a range of uncertainty.

But even so, these countries can't be ignored. They're needed for what the world needs in resources.

CURNOW (on camera): Mining in Africa still has its risks, so much so that Deloitte, the consultancy firm, has compiled an Insomnia Index, basically a ranking of what keeps investors, CEOs and ministers awake at night.

We'll see what the delegates have to say, what gives them sleepless nights.

(voice-over): Irene Muloni is Uganda's energy minister. Her country has just negotiated major oil deals following a recent discovery of new reserves.

(on camera): What keeps you awake at night?

IRENE MULONI, UGANDAN MINING MINISTER: Of course the -- the important issue is that oil is the resource, a resource which is of substantial magnitude. It's seeing my country in a better situation, seeing the people of Uganda living a better life.

So that is really the driving force.

How do we handle this natural resources to the best of our ability as a country, to make the life of Uganda better than what it is now?

CURNOW (voice-over): Graeme Hossie is the CEO of London Mining. His company has an iron ore mine in Sierra Leone.

(on camera): You've been on the ground for more than five years. Still, today, what keeps you awake at night?

GRAEME HOSSIE, CEO, LONDON MINING PLC: We probably have experienced every kind of challenge in getting to the point that we now have, because when one starts a mine, you know, in the first stages, you've got to have your resource base. So we were faced with basically a burnt out mine site, no knowledge of what was there anymore. There -- you know, it didn't have a lot of infrastructure when we got there. It didn't have, you know, the - - the ability to get a lot of equipment in through -- through ports in a timely manner.

So it was very hard to predict exactly how quickly we could build. The rainy season came. We were doing night shifts, etc.

But all of that's passed. And I guess keeping awake at night, I just want to ensure that -- do what we can to ensure that that continues.

CURNOW (voice-over): And then there's investor Dean Cunningham, who runs TWP Investments. And he's in Cape Town looking for new business opportunities.

(on camera): What keeps you awake at night?

What worries you the most?

DEAN CUNNINGHAM, CEO, TWP INVESTMENTS: I think the important thing that we're trying to come to terms with is what's the next bubble that has a major impact from a demand perspective. That, I think, keeps us awake, trying to understand where it could come from. You know, we've had the IT bubble. We've had the -- the housing crisis. And there still is an -- a hangover of that at the moment.

CURNOW (voice-over): One area that has the potential to spook investors and CEOs is ministers calling for tax changes and increased royalties. According to one observer, Africa's governments are demanding more from companies.

IAN KRAMER, HEAD OF MINING IN AFRICA, KPMG: The -- I think the biggest thing for us is the whole new drive from governments toward increasing taxes, royalties, on top of that, even going as far as full scale nationalization.

CURNOW: Despite the risks and sleepless nights, new deals are being done here. This continent's minerals have been mined for decades, but as commodity prices continue to rise, people still see Africa as a land of plenty.

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CURNOW: It's called the resource curse, when Africa's mineral wealth is used to fuel conflict or corruption. Well, after the break, we have an exclusive television interview with the new head of the Kimberly Process, to talk about blood diamonds in Africa.

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CURNOW: We're in the exhibition hall of the mining conference in Cape Town.

Now, Africa has the largest amount of diamond deposits in the world. And ever since a bloody civil war in Sierra Leone, the Kimberly Process has been trying to break that link between diamond sales and conflict.

But since diamonds were discovered in Zimbabwe, the KP, or the Kimberly Process, has been under intense pressure.

We now have an exclusive television interview with the new chair of the Kimberly Process.

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CURNOW: Is the Kimberly Process in crisis?

GILLIAN MILOVANOVIC, KIMBERLY PROCESS CHAIR: Oh, no. I do not believe so. In fact, I'm very pleased to have an opportunity to be the chair at this time because we are essentially on the eve of the tenth anniversary of the process.

CURNOW: Global Witness, one of the founding members, pulled out. They said it was because they were shocked that the Kimberly Process has authorized sales of diamonds from the Marange fields in Zimbabwe.

What's your reaction to that?

MILOVANOVIC: Well, obviously, we're very sorry that that was the decision that -- that the Global Witness took. They were one of the founding members of the process. Unfortunate. Sad development. But the bridges are not cut, as far as we're concerned. And certainly I can -- intend to talk with everyone.

CURNOW: What broke the camel's back, essentially, was -- was this authorization of diamond sales from Zimbabwe, very controversial fields in Marange.

MILOVANOVIC: Well, certainly, for two years, the Kimberly Process labored to find a solution to how to handle the dam -- diamonds from Marange. November of last year, the process made a decision. The United States deliberately chose to abstain in order to allow the process to continue and in order to move forward.

Now, that said, I think that for our chairmanship, the experience of the difficulties that were experienced in finding a solution for the Marange diamonds are an impetus to looking at how well the Kimberly Process is situated to deal with today's challenges.

CURNOW: From the U.S. perspective, you said you abstained from that decision.

Why has the U.S. particularly imposed sanctions against one of the companies operating in Marange?

MILOVANOVIC: Well, the United States, on a bilateral basis, of course, has sanctions against Zimbabwe and identified entities. Essentially, these are imposed because these entities are undermining democracy and democratic institutions. And a -- it happens that some entities which are designated by our process as having to do with undermining democracy are, in fact, 50 percent or more shareholders in diamond mines in Marange.

And, hence, the link between the -- the two things.

CURNOW: There is a sense of -- of contradiction here. The U.S. just abstained.

Why didn't you veto it, particularly because the U.S. has sanctions against some companies in -- in the Zimbabwean diamond fields?

MILOVANOVIC: All right, but there is also, one could argue, a similar situation in the fact that the Kimberly Process, indeed, made a decision, by consensus minus us, that to certify diamonds from a number of mines, whereas those same diamonds cannot be imported into the United States.

That is the situation.

With respect to my own chairmanship, I have been asked to be the -- the chair, and, therefore, my role, as I see it, is to give impetus, to show leadership, but to understand that it is the -- the organization that is ultimately going to be responsible for the decisions that are made.

CURNOW: So the U.S. has proof, evidence, that at least one company in Marange has links with ZANU-PF, Robert Mugabe's party?

Is that correct?

MILOVANOVIC: Well, it is ZMDC, as I understand, which is the identified entity. And that entity has 50 percent or more ownership of several of the diamond mines. Consequential, our sanctions apply to several of the -- of the diamond mines, that is correct.

CURNOW: Do you see the definition of a blood diamond, a conflict diamond, being widened?

MILOVANOVIC: A diamond which -- the proceeds of which are used by illicit guerilla or rebel entities trying to overthrow legitimate governments, that was the basis on which the organization was founded.

One of the things which will certainly be looked at and which we certainly support looking at and believe should get a close look is whether that definition is still sufficiently encompassing or appropriate given today's challenges.

CURNOW: How can you be sure, as a consumer, that the diamonds that you have on your finger are not being used to finance a corrupt or conflict scenario?

MILOVANOVIC: Well, I think it's important -- and I think that it's important that the consumers do understand that it's not a conflict diamond in the sense of the definition which exists, namely, that guerilla war -- guerillas are not using the money from this to conduct bloody wars to overthrow a legitimate government.

Now, if one is looking for something beyond that as a consumer, that is the kind of question that one needs to address to the person who's -- who's selling the diamond.

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CURNOW: Well, that's it from us here in Cape Town.

I'm Robyn Curnow.

Thanks for watching.

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