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QUEST MEANS BUSINESS

BP's Russian Deal; Dissecting the Deal, Investor Reaction; Final US Presidential Debate; China and the US Presidential Election; Euro, Pound Gaining; UK TV Presenter Scandal

Aired October 22, 2012 - 14:00   ET

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


MAX FOSTER, HOST: Next stop: the arctic. BP agrees a deal to buy one-fifth of Russia's Rosneft and a shortcut to untapped reserves.

Cycling's lost decade. The sport's governing body says Lance Armstrong deserves to be forgotten.

And the final showdown. We're just hours from the last US presidential debate, and there's no escaping the economy. I'm Max Foster, this is QUEST MEANS BUSINESS.

Well, Rosneft is tightening its grip on Russia's energy market in a $55 billion double deal. The state-controlled oil company has reached a deal with BP to buy its half of its fruitful joint venture TNKBP. The deal gives Rosneft more clout in the Russian market and allows BP to sever ties with its troublesome Russian partners while remaining in the lucrative Russian market.

Here's how things looked before the deal. BP has a tiny 1.25 percent stake in Rosneft, and this 50 percent share of TNKBP. A consortium of Russian oligarchs, AAR, owns the other half.

Here's what things will look like if the Russian government approves the purchase. BP will sell its TNKBP stakes to Rosneft, and AAR has agreed to do the same. BP will get around $12 billion and, more importantly, they will boost its Rosneft stake to nearly 20 percent, with two seats on the nine-member board.

AAR will get $28 billion and no shares. TNKBP will then be wholly- owned by Rosneft. Hope you kept up with that. It's basically a different landscape.

Investors didn't see the deal as good news, though, for everyone involved. BP shares fell more than 1.5 percent. TNKBP dropped nearly 2 percent. Rosneft was the only gainer, rising more than 2.5 percent.

Now, as Rosneft is under state control, BP is effectively creating business ties with the Russian government. CNN's Phil Black joins us from Moscow. And Phil, we haven't got approval from the government yet, but it does imply, if you look at the relationships involved, that Putin does approve of this deal.

PHIL BLACK, CNN INTERATIONAL CORRESPONDENT: Well, indeed, Max, Vladimir Putin seemed to give it his blessing today, publicly, in a meeting with the Rosneft boss and his old ally, Igor Sechin. So presumably, Vladimir Putin has gotten what he wants from this deal, a big, dominant champion that is largely state-owned in the Russian oil market.

Not quite a monopoly, in the sense that Gazprom is in the gas sector. But in terms of power, size, none of the Russian competitors are really close to it. So, it means that Vladimir Putin, the Russian government, now has a big, powerful vehicle to drive the Russian oil industry in the way that they believe is best for the Russian government.

But is that necessarily best for Russian oil, best for the world? There are, indeed, market concerns about this, about competition, the further consolidation of Russian oil under state control, about efficiency, about corporate governance, and the possibility that this new mega company could be used as an instrument of Russian foreign policy in -- to achieve geopolitical interests and goals in the same way that, many say, Gazprom is used by the Russian government, Max.

FOSTER: And Rosneft, apart from the presence in the global market, what does it actually get from BP specifically?

BLACK: Well, Rosneft is keen to stress that it will benefit from BP's experience and it -- traditions of world's best practice, and that fits broadly into a Rosneft strategy, which has seen it sign a number of exploration and -- exploration and extraction deals with various major international oil companies over the last year or so, particularly in the new frontiers of the Russian oil industry, the very hard to get places, like the Russian arctic and so forth.

Because they are the future of the oil industry in this country once its onshore reserves dry up. And the Russian government, Rosneft, has come -- and Rosneft have realized that in order to get this very hard-to-get oil, they will need the technology, the efficiency, the best practices, of international companies to really exploit this.

So, the Russian government is looking to do deals internationally. But only very carefully, very selectively, and that the trend has shown throughout this year if international companies really want to get access to these big Russian reserves, they have to deal with Rosneft, Max.

FOSTER: And what will the gamble be for BP? Because a lot of businesses talk about the difficulty in working in Russia as a Western company and, obviously, the stakes, as you've said, are very high here.

BLACK: Well, I think there are a few Western companies that know the risks and the rewards of operating in Russia as well as BP does. Its relationship in that joint venture, TNKBP, has been absolutely fraught, ultimately dysfunctional, and that is why BP has sought to exit from that relationship in reasonably favorable terms.

So, presumably, it has some reason to think that it will have a more stable, more civilized relationship in dealing with a company that is very close to the Russian government than the relationship it is currently leaving, Max.

FOSTER: OK, Phil, thank you very much for joining us from Moscow. A big day for business news there. Certainly, with BP's deal with Rosneft also opens up opportunities in oil's final frontier, which is the arctic. I spoke with Nina Dos Santos about the potential of arctic reserves.

(BEGIN VIDEOTAPE)

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: This is one of the largest untapped reserves anywhere in the world of oil and gas, deep in the arctic. But you need significant technical expertise to actually drill for those kind of deposits and get them out of the ground.

And in fact, out of the TNKBP joint venture that BP was in with Russian investors, that was why it was a joint venture rather than a wholly-owned BP company.

It was the one that was the most innovative of those partners who has tried to get to drill for those resources, that tried repeatedly to form a deal, an alliance, with Rosneft to try and drill for oil and gas out in the Arctic Sea in Russia that was thwarted by its investors, so now it gets to have its cake and eat it, some investors might say.

FOSTER: And a certain BP executive, Bob Dudley, was in Russia at the time of the last exploration into the Russian oil market, and he got kicked out, didn't he?

DOS SANTOS: Yes.

FOSTER: But now he's the head of BP, so --

DOS SANTOS: That's right.

FOSTER: -- I guess he's back in.

DOS SANTOS: He was -- he had his visa refused, his offices were repeatedly raided. They also had all sorts of issues with their local Russian partners. So what this deal does here is it gives BP the opportunity of being involved on a large scale in something much bigger, but without the hassle of having to run its own company.

FOSTER: And obviously, BP famous for everything that went wrong with the Deepwater Horizon, and that's continuing, and the costs of that are mounting all the time. Is this linked to that in some way, as in they have an alternative to US exploration? And they also have some cash, now, in which to pay off those US expectations?

DOS SANTOS: Well, that's right. They've had to sell about $33 billion worth of assets since that Deepwater Horizon disaster that happened in 2010. And remember that that was a disaster that didn't just affect their bottom line, it affected their share price and the market value of the company. It wiped off about a third of BP's total market capitalization there.

So, this will help to try and fill up the coffers, also reassure investor confidence. And it does give them the opportunity of having a foothold in a market that is largely untapped if, as I was saying before, they can manage to push through those kind of innovative projects to try and get that gas and oil out of the ground.

FOSTER: Potentially, a new future for the company?

DOS SANTOS: Yes. Although, I must caution that its share price was down after this announcement was made and after the deal was signed, if you like. BP's share price is currently down about 2 percent so far this year.

So we'll have to see exactly how this deal is structured, exactly what kind of relationship BP will have with, as I said, a very different type of partner. Rosneft is sometimes seen as a proxy for the Russian government. It would be a very different type of relationship it'll have in Russia these days in accordance with the deal that's been struck today.

(END VIDEOTAPE)

FOSTER: Well, just ahead, the power of three. Why a lot is riding on tonight's third US presidential debate.

(COMMERCIAL BREAK)

FOSTER: We're just hours away from the final showdown of the US presidential debate season. President Barack Obama and Republican challenger Mitt Romney are in the swing state of Florida, which has a hefty prize of 29 electoral votes.

On paper, tonight's battle is all about foreign policy. Don't be surprised, though, if the economy grabs the spotlight. You'll only have to turn to Boca Raton's local paper, "The Sun-Sentinel Times" to see what people care about. Boca, as the locals call it, is the scene of tonight's action.

And now, go a little deeper into the paper, and you'll spot a big ad from Children's Education Fund, Every Child Matters. It's keen to let readers know that 7 million American youngsters have no health insurance and 22 percent live in poverty.

Senior Congressional Correspondent Dana Bash is in Boca Raton. She joins us, now, live. Thanks for joining us. It's an exciting debate, of course. The last one. The other two were quite different, the last one quite aggressive. Do you think Romney will have a different strategy on this last debate?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: I'm told he actually will, and that the goal, at least, inside debate prep, which he's been doing almost every day since the last debate, is to have a different kind of demeanor on the stage tonight, to try to make voters see him as commander in chief. So, to be a little bit more sober, a lot more calm, maybe more commanding.

But when it comes to the actual substance, as you were saying, this is about foreign policy, 90 minutes of foreign policy. But one of the things that I'm told that Romney and his advisors have been practicing in this debate prep is to pivot the whole idea of foreign policy back to the economy, which is not only his wheelhouse but, as you were mentioning, it is by far the number one issue that voters here in America care about.

Listen to what Dan Senor, who has been inside debate prep with Mitt Romney, told me about this strategy.

(BEGIN VIDEO CLIP)

DAN SENOR, ROMNEY ADVISOR: I think it's important for us to take a step back and recognize that what America does abroad is connected to what America does at home and vice versa. I think you're going to see Governor Romney talking about that.

It's talking about how America's ability to lead abroad and to have a strong position abroad is right now limited, is inhibited by the terrible economic situation we are in today at home. Our ability to support a strong defense budget is affected by our economy at home.

Our adversaries abroad, Ahmadinejad in Iran just said in recent days, "Why should I be worried about the Americans? Look how much -- how they're saddled with debt?"

(END VIDEO CLIP)

BASH: Now, of course, one of the biggest issues that Mitt Romney has hit on in past debates and certainly, we're told, will try to do tonight is China and, of course, that is -- it goes without saying that the US foreign policy towards China is very much tied to the US economy, extremely so. So, he is going to try to have this tough on China stance that he has had in the past.

And he's also going to, I'm told, Max, try to make the case that although he is a former governor of the state of Massachusetts with no foreign policy experience, try to say that he is a CEO, not only of the state of Massachusetts but of a successful business here in the US, and try to say that that is the kind of leadership and the kind of experience that he can use on the world stage.

That sitting down, negotiating, understanding complicated issues, that is what it takes to be a good CEO, and he's going to argue that's what it takes to be a good commander in chief, and that's going to be part of -- a big part of his strategy tonight.

FOSTER: Barack Obama has obviously had more experience in foreign policy, he's been the president for a couple of years. He knows that China may be a threat, but it's also a key ally, it holds all of that US debt. Is that an area where actually he can attack Romney on, because Romney can't actually live up to these threats, can he? Saying that China's a currency manipulator, if China suddenly gives a backlash on that?

BASH: You bet. It will be hard to imagine, Max, that the president will not sort of effectively try to either stay or paint Romney as naive, that he is somebody who is saying the right things politically here at home, especially in some of the states that have been hit hard because of unfair trade balances with China, like Ohio.

Romney says over and over again how he's going to be much tougher than the president, he's going to make sure that the country doesn't manipulate its currency and try to have a better balance when it comes to trade, but as you said, it is a lot more complicated.

Because the minute you anger China, if they do hold all the cards, meaning all the debt that the US has, and there is a lot of debt, so that could be potentially a moment where you can see Barack Obama kind of do the little head pat, like, oh, oh, there, there, naive man. So, it's going to be a hard thing for Romney to play.

FOSTER: How important is this debate finally? If Romney was seen as winning the first and Obama the second, is it very important that one of them comes out on top here, or do they just need to hold the fort?

BASH: This is such an important debate. And I think that's true because so many -- in fact, all of the debates, this entire campaign season, even going back to the Republican primaries, have been incredibly important. People are really tuning in more than the past.

And I think maybe it's because there's just such a bombardment of information, whether it's ads, information on the internet, talking points from various campaigns. But this -- for people who -- in the United States who really are hungry for a sense of what these candidates really are like, this is the only way that they can see it.

So, all of these debates are important and this, the final one, is the last chance for both of them to close the deal.

FOSTER: OK, Dana, thank you very much, indeed. We look forward to hearing your reporting after the big debate tonight.

Now, as the contenders for America's top job trade verbal blows, China's global influence could be part of that final bout, as we've been hearing. But it came up during last week's town hall showdown, and President Obama and Mitt Romney have both blamed Beijing for some of America's economic troubles.

Still, at least one American living in China is hoping for the dawn of a fresh, special relationship. Stan Grant reports.

(BEGIN VIDEOTAPE)

JON LEVINE, UNIVERSITY LECTURER: Hello. My name is Jon Levine. I am from New York City, New York, United States of America. And I came to China in search of gainful employment. I was unemployed and then severely underemployed, and then I left.

STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): And this is where he ended up, Tsinghua University in Beijing, where he now teaches Chinese students about the country he's left behind. 25-year-old Jonathan Levine had a master's degree and a dead-end job. Good-bye America, hello China, the new land of opportunity.

GRANT (on camera): Look at this? How hard do you think it us to get used to this new food?

LEVINE: It was difficult. You could say it was a long march.

GRANT (voice-over): A long march, indeed, for Jonathan and world now waking up to the full extent of China's powers.

LEVINE: In the States, everyone's so mopey. Everyone, it's the end of the world and there's no jobs and income inequality is through the roof, and we're back to the gilded age in the US.

GRANT: And for presidential candidates looking for someone to blame, enter big bad China. China, keeping its currency low, boosting exports. China, stealing American jobs.

MITT ROMNEY (R), US PRESIDENTIAL CANDIDATE: And the president has a regular opportunity to label them as a currency manipulator but refuses to do so. On day one, I will label China a currency manipulator.

GRANT: Both Governor Romney and President Obama are using the debates to prove who is tougher on China.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As far as currency manipulation, the currency's actually gone up 11 percent since I've been president because we have pushed them hard. And we've put unprecedented trade pressure on China.

GRANT: US military might is backing off its interests, President Obama is resetting American power in Asia after wars in Afghanistan and Iraq. More troops on the ground, closer ties to Asian nations. China fears this is an attempt to thwart its rise.

But to people like Jonathan Levine, there's nothing to fear.

LEVINE: It's not like going to the moon, like it might have been 100 years ago.

GRANT: This is a new world, says Jonathan. To people struggling back home, he says don't bash China.

LEVINE: Get out! Get out!

GRANT (on camera): Leave.

LEVINE: Get out! Leave everyone behind you.

GRANT (voice-over): Stan Grant, CNN, Beijing.

(END VIDEOTAPE)

FOSTER: CNN is your destination for full coverage of the 2012 US election. We'll be live at Lynn University in the US state of Florida for the final debate. Stay up with us, watch it live starting early on Tuesday at 1:00 in the morning in London. Or if you miss that, you can see a replay of the full debate Tuesday night at 9:00 in London, 10:00 in Berlin, midnight in Abu Dhabi right here on CNN.

Time for our Currency Conundrum. Russia's currency, the ruble, is derived from the Russian verb "rubit," but what does that mean? A to shop, B to chop, C to make? We'll have the answer for you later in the show.

The euro and the pound are gaining against the US dollar currently, and the yen is slightly lower.

(COMMERCIAL BREAK)

FOSTER: In the UK, a child abuse scandal involving a former TV presenter has sparked a crisis at Britain's public service broadcaster, the BBC. The editor of its flagship current affairs program has stepped aside after claims the corporation tried to stop its own journalists from exposing the scandal.

Earlier this month, Jimmy Savile, a former BBC presenter who died last year, was accused of sexually abusing young girls. It emerged that BBC's "Newsnight" program had been investigating the allegations, but then inexplicably abandoned the story. The program's editor, Peter Rippon, wrote a blog denying he'd been put under pressure by BBC management.

Meanwhile, the claims against Savile continue to grow. Police made contact with 40 potential victims. On October the 12th, the BBC's director general, George Entwistle, ordered two inquiries into the case, one investigating the BBC culture and another of the decision to drop the story.

Tonight, "Newsnight's" Peter Rippon has stepped aside. The BBC now says his blog was inaccurate or incomplete. The British prime minister, David Cameron, has joined the debate, saying it was the BBC's responsibility to find the truth.

(BEGIN VIDEO CLIP)

DAVID CAMERON, PRIME MINISTER OF BRITAIN: First of all, I think these investigations are important and they are independent, and they need absolutely to be seen to be independent.

The nation is appalled, we're all appalled by the allegations of what Jimmy Savile did, and they seem to get worse by the day. And so, every organization that was involved with him, whether the NHS or whether the BBC, needs to get to the bottom of what happened.

And the developments today are concerning, because the BBC has effectively changed its story about why it dropped the "Newsnight" program about Jimmy Savile. So, these are serious questions, they need to be answered, they need to be answered by these independent reviews that the BBC has established, and I'm sure that they will be.

(END VIDEO CLIP)

FOSTER: One veteran BBC reporter says it's the worst crisis at the BBC in 50 years. Allyson Stewart-Allen is the director of International Marketing Partners, which specializes in corporate diplomacy. I asked her if other global companies would be watching events with a cautious eye.

(BEGIN VIDEOTAPE)

ALLYSON STEWART-ALLEN, DIRECTOR, INTERNATIONAL MARKETING PARTNERS: I think business leaders are recognizing that they're potentially much more exposed than ever before, mostly because we have a proliferation of social media, which means that everything that you do inside an organization, though you'd like to keep it confidential and private, unfortunately, the risk is now that your employees can tweet, they can blog, they can broadcast from their desktop.

So, while you're trying to contain a potential crisis or an upset in an enterprise, you really have to be extremely strict in terms of what you instruct your employees to do and not do and try to get them to comply. It's about leadership, really.

FOSTER: Why do media companies keep getting caught out when they should know more about this than anyone else?

STEWART-ALLEN: Well, that's the greatest irony. It's the shoemaker's kids never have shoes syndrome. And you would have thought that a media company would know how to manage media.

FOSTER: It's their business.

STEWART-ALLEN: It is. But then again, it's the -- how can you be objective about your own enterprise when you're within it? You can't heal yourself easily because you're inside. What you really need to be doing is getting an outside, objective perspective and outside advice because you're too close to the situation.

FOSTER: The consultants that can come in and say this is what potentially could be seen as a story.

STEWART-ALLEN: Consultants or anybody who is friendly but an outsider. You need the outside perspective, because it's just much too difficult when you're inside, because you're biased.

FOSTER: As you watch this story unfold and criticize the BBC in the way that some other people have, saying that whilst they are doing a lot of the right things and they seem to be responsible in what they're doing, they're just constantly playing catch-up ever since that very first statement when they said, actually, we've looked into this and we don't think there is anything to investigate?

STEWART-ALLEN: Well, any organization, whether it's the BBC or lots of others, need to recognize that you need to be proactive and preemptive. So, rather than just shut down a line of inquiry, the better thing to do is to actually come forward and say, look, we are inquiring and we're pursuing this, even though it may lead to nothing, we're still investigating.

And that's actually the right response, because it demonstrates not only to your employees internally but to stakeholders outside the enterprise that you're taking it seriously and that you're not just going to shut down dissonant voices that don't agree with your point of view. So, it's quite important that you communicate openness.

FOSTER: And what about the BBC as a brand. It's a famous brand, one of the world's most famous brands. People like giving it a kick when it's down because it's got so many competitors. Do you think there's an element of that, as well, that people aren't being entirely fair?

STEWART-ALLEN: Oh, I think in any competitive marketplace, whether it's the BBC or Coca-Cola or any big global brands, people will want to -- and competitors, especially -- will want to make sure that there's a little bit of nuanced, maybe there's some truth, there's no smoke without fire suppositions here.

I think, actually, what it boils down to is the integrity of the enterprise, making sure that its communicating, make sure that it's taking action, making sure that it's open and transparent. I think those, regardless of what industry the enterprise is in, those are the things that get things done.

(END VIDEOTAPE)

FOSTER: Well, after the break, history rewritten, a legacy destroyed. Lance Armstrong has no more titles to his name. He's been banned from cycling for life. We'll bring you the latest next.

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster. These are the headlines this hour.

(BEGIN VIDEO CLIP)

FOSTER (voice-over): The FBI says it is sending a team to Lebanon to assist with the investigation into the assassination of the Lebanese intelligence chief. Thousands of people attended Wissam al-Hassan's funeral on Sunday. He and at least two others were killed in a massive car bombing in Beirut on Friday.

U.S. presidential candidates will meet in their final debate tonight. The contest will focus strictly on foreign policy. It comes with polls showing the race in a dead heat, so neither President Barack Obama nor Republican challenger Mitt Romney can afford a stumble.

New fallout from the scandal surrounding Jimmy Savile, the late British TV personality, who is alleged to abuse young girls. BBC editor Peter Rippon is stepping aside over editorial decisions the network made regarding Savile after he died. The network says Rippon gave incomplete information about why a story on Savile was pulled in December.

Jordan says 11 men are under arrest for plotting a major terrorist operation. Intelligence officials say the men have stockpiled explosives and weapons from Syria's civil war. Among the alleged targets were the U.S. embassy in Jordan, shopping centers and residential areas.

An Italian court has sentenced a group of scientists to six years in jail over the 2009 deadly earthquake in L'Aquila. They were found guilty of manslaughter for giving false and reassuring statements about the severity of the quake. The earthquake killed 309 people and devastated the city.

(MUSIC PLAYING)

FOSTER: The doping allegations against Lance Armstrong have claimed two more huge pieces of his legacy. Today he's been stripped of his seven Tour de France titles and lost the support of Oakley, his major, his last major sponsor. As Isa Soares reports, it follows a string of high-profile desertions.

(BEGIN VIDEO CLIP)

ISA SOARES, CNN CORRESPONDENT (voice-over): Whether he was racing or raising money for charity, Lance Armstrong always had Nike on his side. But it seems this relationship has run its course.

After more than a decade, Nike's cutting all sporting ties with the cyclist. In a statement to CNN, Nike said, "Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him."

ARMSTRONG: They can say whatever they want. I'm not back on my bike for them.

SOARES (voice-over): The U-turn comes after Nike spent millions of dollars on brand Armstrong. They made him the face of many Nike commercials, including this one against doping.

ARMSTRONG: Everybody wants to know what I'm on. What am I on? I'm on my bike.

SOARES (voice-over): At Nike product launches, he was a spokesman for the brand. Off his bike, the cancer survivor convinced Nike to launch and back his cancer charity LIVESTRONG, with its distinctive yellow products, still for sale on Nike's online store.

All the while, Lance Armstrong has been cashing in. In 2005, the cyclist made about $17.5 million in endorsements. That's the last year his earnings were tracked by "Fortune" magazine. But an annual report by Nike shows commitments totaling more than $3.2 billion worth of endorsements deals for the next five years.

SOARES: Nike was his biggest sponsor. It depended on Lance Armstrong's clean image to sell its products to a mass audience. The strong evidence of doping on his part has made Nike to have cut all ties with the cyclist rather than risk taking its brand.

SOARES (voice-over): Other major sponsors have followed suit.

Anheuser-Busch, elections retailer Radio Shack and Trek have all back pedaled on their sponsorship. And now his final major sponsor, Oakley, has decided to drop him, just as the UCI decided to strip Armstrong of his seven Tour de France titles.

In a statement to CNN, Oakley says, "When Lance joined our family many years ago, he was a symbol of possibility. We are deeply saddened by the outcome."

Day by day, Lance Armstrong's inspirational legacy is disappearing, even as he maintains his innocence -- Isa Soares, CNN, London.

(END VIDEO CLIP)

FOSTER: Well, the head of the International Cyclists Union said today that Lance Armstrong deserves to be forgotten. His removal from the record books leaves a black hole in the sport's history. From 1999 to 2005, he dominated the Tour de France. Now he's lost those seven titles. The French Cycling Federation says it wants Armstrong to give back $4 million worth of prize money.

And a Texas insurance company is also asking for bonus payments to be returned. UCI will decide this week if those titles will be awarded to another rider.

Incidentally, the 2006 winner, Oscar Pereiro, was only given the title after Floyd Landis was stripped of the prize in 2010.

Think it's wrong there, but we can follow that up later.

Alex, we've been following this obviously for the last few weeks. But today, it feels as if the whole -- the sport was suffering because of what he did.

ALEX THOMAS, CNN CONTRIBUTOR: Yes, and I love your wall there, which actually illustrates part of the problem for cycling going forward. They need to convince sponsors, fans, the media, young riders coming in for sports, that they're now different from those dark days, very much dark when we take out Lance Armstrong.

But you mentioned the 2006 winner, who only took the podium after the results, because there was a drugs cheat in his place, Floyd Landis, one of those that testified against Lance Armstrong. And so many of the second and third places in these races are also people that have since admitted to taking some form of drugs.

So when the UCI meet later on this week, World Cycling's governing body, to decide what to do now they've agreed that Armstrong is guilty in their opinion of everything in that USADA report, what do they do?

They just put a question mark or an asterisk next to him name, because they can't award it to the second rider or even the third rider. You can go down to the eighth, ninth, 10th rider before you get someone that's possibly clean in their minds. So it is an awful mess for them.

FOSTER: Is it the shakeup to the sport needs because there's been so many allegations over the years about this. Actually, this is a real wakeup call, because everyone's going to suffer as a result of this.

THOMAS: Yes, and there's been talks of lines in the sand before. And Pat McQuaid, the president of the UCI, stood up (inaudible) in Geneva, that news conference today, and said that, yes, they're not going to go to the court of arbitration for sport because their relationship with USADA is frosty.

At least they've agreed with USADA that Armstrong should be banned for life, have all those titles stripped away. And there could be further titles stripped, prize money requested back. But he's under pressure to answer why it was the UCI didn't get to grips with this earlier. And this was his response.

(BEGIN VIDEO CLIP)

PAT MCQUAID, UCI PRESIDENT: The UCI always had a commitment to the fight against doping, always had a commitment to try and protect clean riders and to try and get cheats out of our sport. And if I have to apologize now on behalf of the UCI, what I will say is that I am sorry that we couldn't catch every damn one of them red-handed and throw them out of the sport.

QUESTION: Will it ever free from doping?

MCQUAID: That's a very difficult question to answer. I probably, to be honest with you, would say no, because I don't think in any aspect of society, there are no cheats. But I do believe that doping can be hugely reduced.

(END VIDEO CLIP)

THOMAS: That's a real dilemma there, very contradictory from Pat McQuaid. He talked at that news conference about cycling going forward, being clean, but then admitting to a questioner he doesn't think doping will ever be truly eradicated from the sport.

FOSTER: On the money side of things, it seems that Armstrong isn't only not going to get his (inaudible) sponsorship money. That's all going to be cut off. But he's actually being asked to give it back. Is there any precedent for that?

THOMAS: I can't think of any precedent for that. But it's going to amount to not just tens of millions of dollars, but possibly hundreds of millions of dollars. The latest is an American insurance company that insured his team against the bonus that Armstrong might win if he won a Tour de France title.

I think I'm right in saying that insurance company actually wanted not to pay out, because they said they didn't believe Armstrong won it legitimately. At the time, there was no evidence and they were forced to pay out.

Now there's lots of evidence, and they told the BBC they definitely will be pressing ahead with legal proceedings within the week. When CNN got in touch with them, they were less clear about that. But they still said they're going to look at great detail at this. And it looks like there's a case for them getting their money back off Armstrong. And that's just going to be the tip of the iceberg, Max.

FOSTER: Alex, we'll (inaudible) for a while, this story, won't we? Thank you very much indeed.

Coming up after the break, we're watching Wall Street for you. We'll show you why investors are having a blue Monday.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

FOSTER (voice-over): (Inaudible) the answer to today's "Currency Conundrum," we asked you what's Russia's currency the ruble means? The answer is B, to chop. That's because in early Russian history the ruble was a piece chopped off a silver ingot, called a grivna.

(Inaudible) on Wall Street are heading lower this Monday. Investors are at least (inaudible) by gloomy outlook from the economic bellwether Caterpillar. Alison Kosik is at the New York Stock Exchange, not just a big company, Alison, but if Caterpillar does well, the feeling is the economy's doing well.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. And this is the heavy equipment maker that we're talking about, Caterpillar, reported a 49 percent jump in third quarter profit, beating Wall Street estimates.

But here's the problem: the company cut its sales forecast by a billion dollars, citing continued economic weakening and uncertainty, meaning the global economy there, especially Europe and Latin America.

Now Caterpillar, though, still expects to pull in $66 billion for the full year. Its CEO is also trying to calm some fears, saying the economy isn't going to go off the rails, saying we're not expecting rapid growth, but we're not predicting a global recession.

But the forecast certainly has Wall Street worried, though you wouldn't know it by looking at its share price right now. Shares are up a little over a half a percent. But there were also disappointing earnings from Hasbro, the world's second largest toy maker, posted at 3.6 percent decline in third quarter earnings, Max.

FOSTER: I just want to ask you about Yahoo! because Marissa Mayer obviously running the company now, her first quarter results are out later. So obviously a well-known company, but also interesting from her perspective as well.

KOSIK: Right, and this is going to be the first time she's talking publicly about what her sort of plan to turn Yahoo! around will be. Now as far as the results go, investors really aren't expecting much from the actual results, just a small increase in earnings and the street wouldn't be surprised to see the earnings miss the mark at this point, following Google's miss last week.

And you know what, as far as Marissa Mayer goes, she probably will get a bit of a pass on the current performance because she took over the company the day before the last earnings call, which means she wasn't even in charge for the full quarter.

But you know, what analysts -- what investors and analysts really want to hear at this point are about how she's going to turn around Yahoo!, what's her strategy, how is the company going to reestablish its foothold and compete better with Google and Facebook. Investors are sitting tight ahead of the report though. Yahoo! shares are holding their own right now. Max, back to you.

FOSTER: OK. Thank you very much, Alison.

Now a shining day for the stock of the world's largest lighting company. Shares in Philips Electronics gained about 6 percent in Europe after its third quarter net profits soared to around $220 million. That's compared with $96 million in the same period a year ago.

I asked Philips' chief executive, Frans van Houten, if the positive number are all to do with his company overhaul.

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FRANS VAN HOUTEN, CEO, PHILIPS: Over the year -- over a year ago, we decided that our television business needed a new business model. And by teaming up with TPV of Taiwan, we've moved the television business into a joint venture, which gives the TV business a new lease on life.

That allows Philips to focus on what we are really good at, and that is as a technology company, to innovate, to make the world healthier and more sustainable. We do that in three areas, health care, energy efficient lighting and consumer health and well-being. We think that this is really important for the world.

There will be a lot of demand for these products. And at the same time, we're improving our operational excellence through our accelerate (ph) program and in the third quarter results, that's what you see coming through, you know, in increasing top line and in improving bottom line, thanks to Philips accelerating (ph).

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FOSTER: Well, when I asked about the future, the Philips chief was a bit more cautious.

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VAN HOUTEN: The talk about economic headwinds at Philips, and we see three parts of the world slowing down: China with a lower GDP; Europe, of course, in a recessionary period and the United States, where especially the second half of this year, we see more uncertainty creep in, undoubtedly related to the elections and the threat of the fiscal cliff, and the uncertainty around the Responsible Care Act.

We see some orders being pushed out in the United States, even though the third quarter we're still very good in growth. The visibility looking ahead is -- it's much lower.

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FOSTER: Well, despite that news, today's round of earnings helped push European stocks lower, especially because of the outlook from the U.S. industrial giant, Caterpillar, which Alison was showing us earlier. Here's how Europe's major stock indices finished Monday's session. They're all down, not more than 1 percent, but all down at the same time, as you can see.

Let's find out what the weather has in store for you though. Tom Sater's at the Weather Center for us tonight.

Hi, Tom.

TOM SATER, AMS METEOROLOGIST: Well ,hello, Max. It was in an interesting weekend for parts of Europe. Many locations, unfortunately, had flooding rains. This on top of what was a prolonged period of drought. And when you add too much rain just too quickly, that's what we're going to have.

We had it in parts of Spain and France, still have an area of low pressure spinning. You can tell so much from a view from space. The satellite picture, notice the cloud strength, well up to the north.

This is the jet stream. These areas of low pressure, the little spins you see here, are called cutoff lows. They are cut off from the flow. So they're going to sit and they're going to spin. And with the buoyancy in the air, we're going to have thunderstorms. We're going to have heavy rainfall.

But more importantly, you can see all the clearing. There's still starting to see the after effects of the heavy rainfall, of course in the flash flooding. Look at the school children, peeking in the windows of their classroom, seeing the flood line well up, midway up the wall. So there's unfortunately some cleanup for them before they resume classes.

But on the weather map, high pressure, as it slides across, the unseasonably warm temperatures eventually will start to cool down to seasonal averages. But underneath high pressure, the air becomes stagnant.

Let me show you what happened late last night. In fact, continues to be a problem. So this is fog, heavy fog. In fact, passengers at several airports in the Poland area, from Warsaw to Boltcloth (ph) as well, saw not only delays but cancellations of flights, paralyzing traffic on the roadways as well.

In fact, many areas, in fact, the flights that were coming in from Berlin and Frankfurt and Hamburg, all canceled so as you say there, those that were flying had to find -- and that looks very comfortable -- and unfortunately, the advisories are going to be in effect until noon tomorrow. Visibility is well below 200 meters and could be down as low as 50 meters.

As we go back to the weather maps, let's get more in close and talk more in depth about these two areas of low pressure because each area, a level 1 for heavy rainfall, waterspouts possible, again, drought-stricken areas in parts of Greece, as you say, the areas of western Turkey and, again, this area of low pressure, which was responsible for that flooding rain, is starting to lose a little bit of its punch.

But we're going to watch from around Sardinia over to Corsica and parts of Italy, start to see the threat still for flooding rains. Here's the cooldown we were talking about, temperatures eventually dropping down and London, Brussels as well, getting down to 12 degrees by Thursday, 16 in Paris, but it looks like Tuesday, 22 degrees.

So keep in mind the fog will be thick up to the areas of Germany as mentioned, Slovakia and Hungary, parts of Poland. But we're also going to watch a fire threat for the heavy winds and the dry conditions in Austria at the higher terrain. So they could do without that. Hopefully things will get back to normal. We'll have some sunshine along with some normal temperatures, Max.

FOSTER: Absolutely. Thank you very much, Tom.

QUEST MEANS BUSINESS will be back in just a moment.

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FOSTER: Now the maker of London's iconic black cabs is facing the end of the road. Manganese Bronze has run out of cash and says it'll call in the administrators. The company hasn't made a profit for years now. And this month, it had to do a costly recall of its TX-4 models due to a steering fault.

The London taxi company is one of Manganese Bronze's subsidiaries and earlier this year, went to its factory in the U.K. city of Coventry to find out how they're made.

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PAUL WILLIAMS, PRODUCTION SUPERVISOR, LONDON TAXI COMPANY: This is exactly how they arrive. They have cling film over the -- over the bodies, not only as a protection but also to encapsulate the parts inside.

JOHN RUSSELL, CEO, MANGANESE BRONZE: We took the decision to bring the bodies from Shanghai because we had a new sort of tooling there, which was a significant improvement on the tooling we had in Coventry. And economically it made no sense to build the bodies in two locations.

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WILLIAMS: This is the green room area. The fellows here can see if there's any issues with the metalwork. So it actually highlights the high spots or the deficiencies in the metal.

The process of painting one cab will take 50 (ph) minutes. That includes the main body and the detail kit as well.

After the paint process, we go into the lacquer booth, a similar process. It's just spraying over the lacquer, which protects the paint work. That's a 50 (ph) minute process. And then it goes into the oven for another 50 (ph) minute process of drying up.

UNIDENTIFIED MALE: There's roughly 10 of these cabs put together every day over a four-day period. So we do 40 for the week.

WILLIAMS: At this point, this is the end of the first part of the assembly process. What we do then is we use a hoist, which transfers the body onto the chassis.

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UNIDENTIFIED MALE: This is where the chassis is. At this point, there's a number of location points that we use to locate the shell onto the chassis. This is nine operators on this track, and they all have 50 (ph) minutes of work. So it's quite a -- it's quite a skill process.

This is the final part of the assembly area, and this is where the bigger panels get fitted. So you get all the seats, you get the carpets, you get the -- a lot of the print (ph) interior, the drivers (ph), you know, the steering wheel and the driver's seat. All that is fitted.

RUSSELL: I think we just love to take this great icon that is so valued and appreciated and admired throughout the world, and actually take it to as many cities in the world as we can.

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FOSTER: Well, it really is an icon of the London streets, like the phone box in the bus, isn't it. But the company does insist that the idea of the cab can continue if Manganese Bronze doesn't.

Well, from one London based staple to another, if you're wondering where Richard has got to, (inaudible) in just a minute.

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FOSTER: Well, the presidential candidates in the U.S. are getting ready to make their final debate push tonight, another great American journey is coming to a close.

Richard has been traveling the length and breadth of the United States as part of his "American Quest." To give you a flavor of the topics and the talking points that really matter ahead of the election. He's ended his trip on the West Coast, and of course he sent back a postcard.

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RICHARD QUEST, CNN HOST: Hello! You've joined me in San Francisco, the end of "American Quest." Our reports from Chicago, Iowa, Colorado, Utah and California will be coming your way in the weeks ahead.

Here in San Francisco, I've been hearing how people are very worried, not only about the economy, but about education and crucially how they'll continue to enjoy the good life.

I'm Richard Quest. And I mean business.

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FOSTER: And you can find out much more about Richard's travels by following him on Twitter or reading his latest blog at CNN.com/business. He'll also be back on the show tomorrow from CNN's headquarters in Atlanta.

Don't forget the big event in the U.S. this Monday, the third and final presidential debate, CNN is your destination for full coverage of the 2012 U.S. election. We've be live at Lynn University in the U.S. state of Florida, for the final debate.

Stay with us. Stay after and watch it live, starting early Tuesday at 1:00 in the morning in London. You miss that, you can see a replay of the full debate Tuesday night at 9:00 in London, 10:00 in Berlin, midnight in Abu Dhabi, right here on CNN.

Now Caterpillar is leading the Wall Street shares lower with about an hour to go before the close, the Dow is extending Friday's fall down, 0.6 percent currently. We'll bring you the final result as it comes in. But that is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London.

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FOSTER (voice-over): These are the headlines this hour.

The FBI says it is sending a team to Lebanon to assist with the investigation into the assassination of the Lebanese intelligence chief. Thousands of people attended Wissam al-Hassan's funeral on Sunday. He and at least two others were killed in a massive car bombing in Beirut on Friday.

U.S. presidential candidates will meet in their final debate tonight. The contest will focus strictly on foreign policy. It comes with polls showing the race in a dead heat, so neither President Barack Obama nor Republican challenger Mitt Romney can afford a stumble.

Lance Armstrong has been banned from cycling for life by the International Cyclists' Union. Armstrong will also be stripped of his seven Tour de France titles. He's accused by U.S. doping authorities of being part of a sophisticated but widespread doping program.

An Italian court has sentenced a group of scientists to six years in jail over the 2009 deadly earthquake in L'Aquila. They were found guilty of manslaughter for giving false and reassuring statements about the severity of the quake. The earthquake killed 309 people and devastated the city.

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FOSTER: That's a look at some of the stories we're watching for you here on CNN. "AMANPOUR" is next.

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