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QUEST MEANS BUSINESS

Unrest in Iraq; European Markets Down; Oil Prices Rising; Nervous Session on Wall Street; Gazprom Turns Off Taps; Naftogaz Response; New GM Recalls; Starbucks to Cover College Tuition; Keeping Workers Happy

Aired June 16, 2014 - 16:00   ET

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


(NEW YORK STOCK EXCHANGE CLOSING BELL)

PAULA NEWTON, HOST: And it was a nervy session on Wall Street today. There you see Angie Harmon attempting to ring the bell there at the New

York Stock Exchange, and she apparently calmed the markets a bit. As we say, a nervy session, but managing to hang onto the slimmest of gains. But

again, a cautious market as the world watches Iraq spiral into chaos. It's Monday, June the 16th.

Tonight, as militants advance in Iraq, the US plans its difficult next step. We'll be live in northern Iraq with the latest.

See you court. As Russia turns off the gas to Ukraine, the Naftogaz CEO tells me he's ready to fight.

And from coffeehouse to college. Starbucks CEO tells us why he'll pay to send his staff to university.

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

Good evening. Rapid gains by Sunni militants across Iraq are forcing officials in the United States and Iran to consider direct talks. Now, the

two nations, which rarely agree on anything, are both gravely concerned about the deteriorating situation in Iraq.

Fighters for the Islamic State of Iraq and Syria now control vast parts of the country. The northwestern city of Tal Afar fell on Sunday.

It follows a massive offensive this past week, which saw the militants seize several cities north of Baghdad.

Now, militants took the city of Fallujah way back in January. This video purports to show two militants storming the city of Sharqat. As the

US government considers its next steps in Iraq, Iranian president Hassan Rouhani said he would be open to helping if he was asked, but he denied a

report that Iranian troops are already on the ground in Iraq.

Though relations between Iran and the US have been frozen for 30 years, the US secretary of state, John Kerry, did not discount

communication with Iran, speaking to Katie Couric for Yahoo! News.

(BEGIN VIDEO CLIP)

JOHN KERRY, US SECRETARY OF STATE: Let's see what Iran might or might not be willing to do before we start making any pronouncements. I think we

are open to any constructive process here that could minimize the violence, hold Iraq together, the integrity of the country, and eliminate the

presence of outside terrorist forces that are ripping it apart.

(END VIDEO CLIP)

NEWTON: Arwa Damon is now live for us in Arbil in northern Iraq. Arwa, I'm going to turn to you first about this issue of whether or not

Iran is involved right now, if it plans to help the United States get involved in Iraq. How realistic is that right now?

I already see that the White House is pushing back and saying that they really don't see any talks and definitely not asking for help

militarily from Iran.

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: And it would be quite the irony if the United States and Iran did end up collaborating in

Iraq, especially if it were to come to the sort of collaboration that would be required if they did, in fact, want to stop this offensive by ISIS and

its Sunni allies, many of whom are backed by longtime US allies, like Saudi Arabia and various other Gulf nations.

I think the key issue in all of this is not necessarily which nation - - outside nation is going to collaborate with whom, but what can these various different key players, like the United States, Iran, do to pressure

the various warring factions, political leaders here to try to come up with some sort of political compromise.

The big issue, of course, Paula, at this stage is that political compromise seems to be a distant notion at best because both sides are so

hardened against one another. ISIS most certainly is not fighting on its own.

It does have the support of the Sunni tribe, it does have the support and, for the moment at least, fighters from very well-known Sunni insurgent

groups that were operating here during the US occupation that are not necessarily fighting with it because of a shared ideology but because they

do believe that that's the step they have to take at this stage to bring down the government of Shia prime minister Nouri al-Maliki.

But should there be any sort of outside military intervention in the shape of airstrikes or drone strikes, that also has the potential to

further polarize what's happening here because if the US is perceived as just hitting out at the Sunnis, that's only going to further aggravate

them, instigate potentially even more violence, especially if it ends up doing so in conjunction with Iran, Paula.

NEWTON: Yes, certainly would be a strange set of events. Arwa, right now, we have the president, within hours, he'll have options on the table

from his advisors looking at the things. There really isn't any kind of a perfect option here.

I want to draw on your years of experience there. Many people are already saying that the partition of Iraq at this point is the best-case

scenario, that Iraq is over, as it exists today as a nation. What do you think? You're in the north, there, in a relatively stable area, a place

that has really operated autonomously for years. Is that what we're looking at here?

DAMON: Well, the thing right now, Paula, is that a lot of people in the beginning of all of this, starting back in the days of the US-led

invasion of 2003, when the notion of splitting Iraq into three different sections first began emerging, a lot of voices were very adamantly against

it, mostly the Sunni population.

Here where we are in the predominately Kurdish north, the autonomous region of Kurdistan, they've already reaped the benefits of not being

directly associated with Baghdad, managing to thrive economically to the point where they're actually being called "the other Iraq."

Now, you do hear more and more people beginning to say, you know what? Yes. Perhaps it would be in the best interests of the civilians, the

citizens, if Iraq were in fact to be partitioned into three to avoid the type of violence that we're seeing right now.

There was also a point that was brought up by the governor of Kirkuk, who we were speaking to yesterday, who was saying that one of the main

problems right now is that there's still this notion that there needs to be a centralized government, a base of power, and that is a very Saddam-era

notion.

Baghdad needs to begin to accept, no matter who it is who's in power in Baghdad, that the various different provinces do need certain levels of

autonomy, do need to be allowed to govern on their own.

But at this stage, given the violence that is raging throughout the entire country, the potential for even more bloodshed, you are hearing more

individuals beginning to say perhaps we should look at the option of a divided Iraq, and that Iraq as we know it today cannot survive this type of

violence or this type of warfare.

NEWTON: No one there wanting to see the continued suffering of the civilian population. Arwa, thanks. We know you're keeping a close eye on

things there. Appreciate it.

Now, European stocks, not surprising, edged mostly lower on Monday. Investors were, of course, concerned about the increasing violence in Iraq

and the dispute also between Russia and Ukraine and the way that it could disrupt gas supplies to the rest of Europe. We'll have more on those

markets later on in the show.

Now, the unrest in Iraq has the price of crude hovering near nine- month highs. Branko Terzic is president and CEO at Branko Terzic and Associates. Thanks so much for joining us today. They're talking about

oil, now, going to, perhaps, $120, $130 a barrel. Can we afford that? Can our fragile recoveries afford that?

BRANKO TERZIC, PRESIDENT AND CEO, BRANKO TERZIC AND ASSOCIATES: Well, that's really speculation. It'll take quite a bit more than has currently

happened. The Iraqi oil has not been affected. As you know, 90 percent of Iraq's oil is in the south in the Shia region, 2.5 million barrels a day.

The oil -- we just had a reporter from the Kurdish region. That oil, that small amount of oil, is also not being affected. So right now, the

hostilities have not affected Iraq's either southern or norther oil fields.

It'll take more than the current situation, maybe the introduction of Iranian troops, the spreading of the war, I think, before we get that extra

boost. It's about $10 a barrel -- is about 25 cents for gasoline.

NEWTON: Yes, which is going to be -- not come at a great time here in the United States or elsewhere in Europe. Having said that, OPEC was

counting on Iraq to really account for a lot of the growth in output over the next five years. Almost as much as half of the growth. How much will

that hurt in terms of the growth of economies going forward, the global economy?

TERZIC: Well, clearly if Iraq doesn't step up, the additional supply will have to come somewhere else. Currently, we believe that the Saudis

have a small margin that they can put out. And of course, I'm not sure what the US production could be.

It'd be very nice if the US president announced that he would support the export of oil from the United States. Even though we couldn't do that

immediately, that would really, I think, remove some of the pressure and send a signal to markets.

NEWTON: Many people have been watching that closely. I know that you follow these things very closely in terms of geopolitical effect. When you

look at what's happening in Iraq and the fact that there is now solution there that's imminent, how are things changing, energy-wise? You just

mentioned one: the US as a potential exporter of energy. How are things changing globally for the energy picture?

TERZIC: Well, the largest global change, of course, for energy is the great boom in shale oil and shale gas from the United States. Shale gas

has already lowered the -- American shale gas has already lowered the price of gas in Europe by displacement. Natural gas, which was going to come to

the United States, is now going to Europe.

A similar thing could happen with oil. We're no longer -- our exports -- our imports are down. We're looking to be self-sufficient. That's the

big story. The US is the largest story, I think, in oil.

NEWTON: And the fact that they're -- they have other resources, now, helps everyone along the way.

TERZIC: Absolutely. The US, I thin, is the big game-changer in this.

NEWTON: OK. Branko Terzic, thanks so much for joining us. Appreciate it.

TERZIC: Thank you, Paula.

NEWTON: Now, US stocks also traded lower Monday. Investors are concerned violence in the Middle East could send energy prices soaring, as

we were just discussing, and the IMF slashed the growth forecast for the US to 2 percent this year, blaming the harsh winter.

The IMF says the US needs to reform immigration and lift restrictions on oil exports to boost growth. Managing director Christine Lagarde says

that there is much to do.

(BEGIN VIDEO CLIP)

CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: There is no single measure that is going to deal with all those issue, and

it's going to be, really, an issue of putting all hands on deck in order to address all of them.

(END VIDEO CLIP)

NEWTON: Russia has stopped supplying gas to Ukraine. Both sides have told each other, see you in court. We'll have more from Moscow and Kiev.

That's after the break.

(COMMERCIAL BREAK)

NEWTON: The Russian state-owned gas company Gazprom has cut off supplies to Ukraine over an unpaid bill. It says Ukraine now owes a total

of $4.5 billion. Matthew Chance is in Moscow for us tonight.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, this failure to agree on a gas price is the sign of just how low relations

between Russia and Ukraine have become, both sides accusing each other of bad faith in negotiations, Russia saying that Ukraine has been siphoning

off gas into underground storage silos, then refusing to pay for it.

Moscow says it's now switching to a pre-payment system for gas supplies to Ukraine. The country from now on is only going to get the gas

it pays for in advance, essentially cutting it off from Russian supplies and possibly having a knock-on impact on European gas supplies as well.

Alexander Novak is the Russian energy minister.

ALEXANDER NOVAK, RUSSIAN ENERGY MINISTER (through translator): Our proposal was fully rejected by the Ukrainian side. It was not

constructive, starting from the very beginning of the talks. And in actual fact, we did not have the possibility to discuss any compromise decisions

with the Ukrainian side.

CHANCE: Well, this was always so much more than a commercial dispute, though, having strong political overtones. When Ukraine's pro-Russian

president was toppled back in March, Moscow then increased Ukraine's gas price by 80 percent. Relations have also been soured, of course, by the

ongoing fighting in eastern Ukraine in which pro-Russian separatists are fighting the central government.

Ukraine's prime minister called it, saying this isn't about gas, but it's a Russian plan to try and destroy Ukraine. The country, he said, will

not pay billions of dollars to Russia so that Moscow can buy tanks and jets to bomb Ukrainian territory.

Matthew Chance, CNN, Moscow.

(END VIDEOTAPE)

NEWTON: Now, I want you to listen to this. When Richard spoke to the Naftogaz CEO on Friday night, Andriy Kobolev was adamant that the disputed

bills would not be paid.

(BEGIN VIDEO CLIP)

ANDRIY KOBOLEV, CEO, NAFTOGAZ: The position of Gazprom is so unconstructive, and I would say even aggressive, that Ukraine does not see

any reason to pay disputed amounts of unpaid invoices.

(END VIDEO CLIP)

NEWTON: Now, that was the situation on Friday. Now, with Russia turning off the taps, I asked Mr. Kobolev what sort of deal they had

offered the Russians.

(BEGIN VIDEOTAPE)

KOBOLEV: Firstly, suggest that all areas would debate. Secondly, we're establishing fair market and quite profitable price for Gazprom, even

higher than in European countries in some respects.

However, Gazprom refused to accept those package solutions, all of them, which makes us believe that they are acting not in rational or

economic reentered manner, and that they have other reasons to create this crisis.

For example, one of the positions of Gazprom is that they want to keep a mechanism of changing price of Ukraine in the unilateral manner. I am

absolutely sure no company in Europe or in other parts of the world would agree to such a position.

NEWTON: In terms of what's going to happen going forward, though, what can change the situation? You've been in negotiations for several

weeks, it's gone nowhere. What happens next?

KOBOLEV: We are going to court. I must say that Gazprom was the first to go. We are doing a bit later because we were asked by a

representative of the European Commission who were trying to mitigate striation, to avoid aggressive actions, to allow sometime for compromise to

be reached.

However, Gazprom left negotiations yesterday night, and this morning, they now say they are not prepared to negotiate anymore.

NEWTON: The EU has --

(CROSSTALK)

KOBOLEV: Ukraine is a large consumer of gas. Our next steps would be to unlock gas supplies for -- to Ukraine from European countries to maximum

capacity. That's our major goal.

NEWTON: A lot of the natural gas coming from Russia goes through your country to get to the EU. Do you foresee that there'll be any disruptions

to that European supply?

KOBOLEV: If assumptions made by many analysts are correct, and the real target of Gazprom is promotion of south stream, then they may try to

create disruption. And since metering of inflow counts from Russia to Europe is done on Russian side, that's quite difficult to verify.

That is why Naftogaz and its subsidiary company, Ukrtransgaz, has always been a reliable transit company, and reliable transit operator. We

will keep it this way. Let's see what the Russians do.

(END VIDEOTAPE)

NEWTON: And we'll have more for you right after the break.

(COMMERCIAL BREAK)

NEWTON: Now, breaking news from General Motors, and its nightmare continues with another recall. The automaker says it will recall more than

3 million vehicles to fix an ignition problem. Poppy Harlow joins us now with the latest. Poppy, again, the ignition switch?

POPPY HARLOW, CNN CORRESPONDENT: Again the ignition switch. This affects a host of cars, 3.16 million, to be exact, from 2000 to 2014, all

sorts of GM cars, from the Buick LaCrosse to Cadillacs to Chevys.

This is another, Paula, ignition switch problem. The issue here is if a keychain is very heavy or someone goes over a big bump, they can

inadvertently knock the key from the on position to the accessory position. That turns off the engine. That means the airbags, the power steering, the

anti-lock brakes are disabled. That's very dangerous. It has led to at least 13 deaths.

GM is saying in these models, most of them old models, this same issue can happen, but for a slightly different reason, because of the key slot on

the key. It's very confusing. But the difference here is that they are going to replace the keys in these cars, not the actual ignition switch.

However, they're warning, if you have one of these cars, and you can go to cnnmoney.com and find out if yours is on the list, or gm.com/recall,

you should take everything off the keychain, so there's no extra weight pulling on it so that it can't get knocked into that position. But yes,

this is another ignition switch recall, which has been an absolute nightmare for this company.

NEWTON: And have they talked at all about accidents that were caused because of this or any death or injury?

HARLOW: Yes, they didn't mention any deaths caused by this. They talked about several accidents and injuries. I believe the number is six

at this point. It's just coming down in the last 20 minutes or so. But no deaths that we know of at this point tied to this.

But again, this very similar ignition switch problem, and the reason they're recalling them is because after that delayed recall that they

didn't tell the public about for more than a decade, they went back and looked at all of these cars.

They haven't figured out yet, or they don't know yet, whether this is the same ignition switch in those other 2.6 million recalled cars, or if

it's slightly different, but they do have to replace the key.

NEWTON: The problem is, they're leaving a lot of their drivers wondering as well.

HARLOW: Yes, it's called caution.

NEWTON: Yes, Poppy. So, we'll continue to follow that story. In the meantime, you had a very interesting conversation with the head of

Starbucks today --

HARLOW: Yes.

NEWTON: -- about the fact that he's sending everyone back to school?

(LAUGHTER)

HARLOW: Not everyone, not everyone is going back to college. But this is an announcement that just came down from Starbucks here in the

United States.

What they are doing is they teamed up with Arizona State University through their online program, and if you are a Starbucks employee,

Starbucks is saying in the US, they will pay for two full years of college or junior and senior year through Arizona State online, or a partial

payment for your freshman and sophomore year.

You keep working at Starbucks, you get tuition paid for. A lot of people scratching their heads saying why would you do this? We know this

is going to cost the company millions of dollars. The argument that they're making here is that this is going to significantly reduce

attrition, they're going to have better, more dedicated employees, and of course, they want them to stick around after they get that degree.

But take a listen. We sat down with both Howard Shultz, the CEO of Starbucks, and also the president of Arizona State, to find out a little

bit more about this really unique partnership.

(BEGIN VIDEOTAPE)

HARLOW: There is now clause here that says that these employees have to stay working at Starbucks after they graduate with this degree with

Starbucks money. Why not?

HOWARD SCHULTZ, CEO, STARBUCKS: We believe strongly we will attract and retain great people at Starbucks. We will lower attrition rate, we

will enhance performance. And if somebody gets a college degree at ASU through Starbucks and they want to leave, it's great for the country and

it's great for the Starbucks brand.

MICHAEL CROW, PRESIDENT, ARIZONA STATE UNIVERSITY: There's this notion that somehow you can't make new things work, or that only some

people win and some people have to lose. How about solutions where everyone wins?

SCHULTZ: I remember when we provide health care, people said, that's going to be dilutive to shareholder value. It was the opposite, and it'll

be the opposite again this time.

HARLOW: What's the estimate right now on what this is going to cost the company? In, say, the next year?

SCHULTZ: It's going to cost millions of dollars, but I don't view it as a cost. This is an investment, and I'm so confident that this

investment is going to drive performance and enhance value for our shareholders.

HARLOW: Have you gotten any or do you expect to get any shareholder pushback, people saying, come on, now, is this what we should be doing?

SCHULTZ: We have a long history of performance and a long history of exceeding expectations of our shareholders. I don't expect many people to

be concerned about this. The large majority of shareholders will understand this and they'll applaud this initiative.

HARLOW: Seventy percent of Starbucks employees right now do not have a college degree. Do you think that once they get a college degree,

they're probably going to leave Starbucks?

SCHULTZ: Well, I think the burden of responsibility is on Starbucks to create opportunities for many of the people who will get the college

degree. And we will do everything we can to retain them. But if they want to leave, so be it.

(END VIDEOTAPE)

HARLOW: Really interesting. Like most companies, Paula, that would make you stay on after they pay for college, Starbucks is not doing this.

This is an experiment. We're going to see how it works out, how much it costs the company, if it's beneficial.

But one of the analysts that we talked to said in many ways, Starbucks is so much more than a coffee company. They're becoming a consumer

products company. They're in many ways a technology company, with the mobile app, et cetera.

So, I talked to Howard Schultz about whether or not he thinks in four or five, six years, and these people graduate, there are going to be many

more high-paying jobs at Starbucks, not the majority barista jobs, and whether that is what he's training this workforce for.

He sort of smiled and nodded. So, it seems like this is part of the company's transformation and evolution into something much more.

NEWTON: And I was going to say, allow me to just be cynical just very quickly for a second --

HARLOW: Yes.

NEWTON: -- it's obviously changed our impression already of everyone serving us our coffee, right?

HARLOW: Yes. Oh, it's great PR for the company, right?

NEWTON: Great PR.

HARLOW: But they insist this is not about the PR.

NEWTON: Yes, yes, yes.

(LAUGHTER)

HARLOW: But it is, certainly, a big headline for them.

NEWTON: Yes. Definitely made a lot of news today. Poppy, thanks for bringing it to us.

HARLOW: You got it.

NEWTON: Appreciate it. Now, retaining workers isn't just a problem for the service sector. PricewaterhouseCoopers employs nearly 200,000

people across 157 countries. I asked the chairman, Dennis Nally, how companies like his could attract and keep top talent.

(BEGIN VIDEOTAPE)

DENNIS NALLY, CHAIRMAN, PRICEWATERHOUSECOOPERS: CEOs today say one of the biggest challenges they're facing is the lack of talent that has

available skills to really drive their strategy, to drive their growth agenda. And I think this is going to be an increasingly important issue

for all companies, including PWC, to really focus on.

So, it's not just about how you attract talent, as you say, because at PWC we do a very good job at recruiting the best and brightest. But this

is all about how you create an environment where each individual can really be successful.

Recognizing that the one-size-fits-all kind of model that I think we saw in many organizations in the past, that has to change. It has to be

more flexible, more adaptable. You have to make sure that you're investing in your people for the longer term.

It's not just about training. It's about training, retraining, retraining, retraining, providing individuals with the right skills that

are going to enable them to be successful going forward.

NEWTON: And what would you think in this new world economy? Many people in other generations were taught about loyalty to a company, but is

that really what it's going to be about going forward?

Do companies do better when you have a shorter tenure at a company and perhaps you develop more as an individual and you allow companies to

develop a little bit more by kind of going in and out of industries or even competitors within one industry?

NALLY: Well, it's interesting. People talk about this loyalty factor a lot, and I still think it's incredibly important, but I also think it's

here as well.

And what I mean by that is, people want to join an organization when they know what that organization stands for. That's very, very important

to the millennial generation and what we're seeing today. So, having a clearly-stated purpose, as I alluded to earlier, I think is very important.

But then, strategically, organizations have to make sure that they clearly have the strategy, the initiatives in place to really support the

development of those people. And quite frankly, when you have a clearly- stated purpose, when you have a real commitment to your people strategies and people see that happening every single day in terms of what's

happening, you can build very loyal people.

Now, on the other hand, we also see a lot more mobility, if you will, with what people want to do from a career standpoint. So, people leave an

organization, they come back, they may go to a competitor, what have you. But creating an environment that allows our talent to really be successful

and to define success on their terms, we think, is going to be the winning formula for the longer term.

(END VIDEOTAPE)

NEWTON: A World Cup update for you after the break on QUEST MEANS BUSINESS, plus peeling back an old-school hobby that stood the test of

time. The craze for football stickers shows no sign of waning.

(COMMERCIAL BREAK)

NEWTON: Welcome back, I'm Paula Newton in New York and these are the top news headlines we're following this hour. Iraqi state TV says air

strikes killed more than 200 militants today in a recently-seized town northwest of Fallujah as the Shiite government tries to fight off the Sunni

insurgency, the U.S. is now considering opening talks with Iran on ways to diffuse the crisis.

Russia has stopped delivering to Ukraine after negotiations failed to agree deal on gas payments. Speaking to me on "Quest Means Business," the

CEO of Ukraine's state-run energy company said both sides are going to the International Arbitration Court in Stockholm to try and setting this

dispute.

In Kenya, the militant al-Shabaab group has claimed responsibility for an attack that killed almost 50 people in a well-known tourist resort.

Heavily-armed gunmen attacked hotels, restaurants and other buildings in Lamu Island. Many people were killed while at a World Cup viewing party on

Sunday.

Fifteen people died when gunmen opened fire on market vendors in Nigeria's Borno state according to witnesses. The militant group Boko

Haram is being blamed for the attack. It happened near the town of Chibok,where the group kidnapped 300 teenage girls in April.

Now we're going to break away from business news for a moment and take you to the FIFA World Cup in Brazil. We're in the dying minutes of the

Iran/Nigeria clash. Neither side have scored and our reporter, Don Riddell is following all the action for us from CNN Center in Atlanta. Don, -- I

mean -- there weren't big expectations for either team going into this, am I right or am I wrong?

DON RIDDELL, ANCHOR AND CORRESPONDENT FOR CNN's `WORLD SPORT': For the tournament I would say you were right, yes.

(LAUGHTER)

RIDDELL: We were hoping at least given the tournament has gone so far, there would've at least been some excitement, because it's been a

cracking (ph) World Cup so far. We've not had a draw yet, and almost every team has scored. But so far, this is shaping up to be a goal or straw

which would be rather disappointing in group F. That would of course be good news for Argentina who won their first game in this group against

Bosnia last night. So it's goalless so for with about 18/19 minutes to go but that takes nothing away from the fact there's been an amazing World Cup

so far. With the amount of goals being scored, which is currently on average just under 3 and a 1/2 per game, it is the highest scoring World

Cup since 1950. It really has been great to watch.

NEWTON: And the match from earlier today, going down in that vein - I watched some of this match. I mean, Germany and Portugal, I expected more,

Don. I expected more from Portugal.

RIDDELL: But we all expected more. I mean, it was only really a game for about 20 minutes, wasn't it? This was one of the high-profile games in

the first round between two teams that you really thought would bring an awful lot to the table. But in the end, it was a very, very one-sided game

from Germany. Let me just bring up some of the highlights for you. The star of the game was Thomas Muller who was actually the joint leading goal

scorer at the last World Cup in South Africa four years ago. He ended up with three goals in this game as Portugal were hammered 4-nil and it could

have been an awful lot worse for them. They also had Pepe, their defender, sent off midway through the first half. That means he's going to miss the

next couple of games. They also had another defender Fabio Coentrao injured. He's going to be out for around ten games. So, just the worst

possible result for Portugal in so many ways. Germany are no stranger to big score lines in the World Cup. They quite often kick off by scoring at

least four goals in World Cup tournaments, so pretty much what you would expect from them. But, nobody expected it to be quite so one-sided.

And who would have thought, by the way, that the Iberian teams, Spain and Portugal would concede nine goals between them in their first games -

quite remarkable.

NEWTON: Don, it sounds like you're rubbing it in, but we'll take the stat - it's true --

(LAUGHTER)

RIDDELL: It's true.

NEWTON: -- we have to go with it, and so do they. Thanks, Don, appreciate your time. Now, this has to be one of the few childhood hobbies

you can still enjoy as an adult - that's if you admit that you still enjoy it. For decades, football fans around the world have been hooked on Panini

stickers, and this year's World Cup collection is no exception. There might be plenty of people still searching for that Wayne Rooney or perhaps

Yogia (ph) Carlos. Laura Rutledge takes a look behind the scenes at the Panini factory in Brazil.

(BEGIN VIDEOCLIP)

LAURA RUTLEDGE, FREELANCE JOURNALIST AT CNN: Carlos Serralta has spent almost $200 buying tiny pieces of paper.

CARLOS SERRALTA, FATHER: We spent a lot of money - yes. A lot of money.

RUTLEDGE: But the look on his son's face as he gets closer to filling up his World Cup sticker book seems to be priceless.

GIANCARLO SERRALTA, COLLECTOR: I have around 600 and I need 24 more.

RUTLEDGE: Giancarlo is one of millions buying the albums and packs of stickers.

C. SERRALTA: He love it. Every day when he come from school, he asks me to buy some more, then we collect them every day.

RUTLEDGE: There are 640 stickers in the set, everything from each of the players on the 32 teams to logos, to pictures of the stadiums.

Male: The hysteria is that the kids are taking it to school and they're not doing their school work. I mean, they're just sitting in

school trading, you know, and they're driving their parents crazy looking for the stickers.

RUTLEDGE: They're flying off the shelves, earning millions of dollars for the Panini Group. The company has been releasing the stickers since

1970 when Mexico hosted the World Cup.

ANTONIO ALLEGRA, PANINI GROUP MARKET DIRECTOR, VIA TRANSLATOR: The emotions you feel when you open a packet and find the sticky you're

missing. Well, in some ways you feel you've won.

RUTLEDGE: Some high-profile athletes including basketball superstar Kobe Bryant and NFL quarterback Andrew Luck star in ads promoting Panini

stickers.

ANDREW LUCK, IN A COMMERCIAL: Before I played football, I played football - who do you root for?

(END VIDEOCLIP)

RUTLEDGE: The internet has added a whole new dimension to the craze. There's even a hashtag #gotgotneed. That's trending among sticker swappers

on Twitter.

G. SERRALTA: When somebody has a card that you need, you trade. That's how you get more and more.

RUTLEDGE: The competition to get the entire set is like a sport itself, one that reflects no athletic ability.

Male: It's really catching on and it's the kids that are being influenced by it. They're getting excited about the World Cup and they're

excited to fill their books.

RUTLEDGE: Laura Rutledge, CNN.

(BEGIN VIDEOCLIP)

NEWTON: Now, we are lucky this evening that the CEO of Panini Brazil joins me now live from Sao Paul. Jose Eduard Martins, I love the fact that

this is no longer an online thing. You need the stickers, you need your book, and that's what most people are doing, right? Why do you think for

so many years this has been so popular?

JOSE EDUARDO MARTINS, CEO, PANINI BRAZIL: Oh, because we incentivate (ph). Now, Panini to -- the fans they like to meet the charter, exchange

the stickers, it's is a socializing thing. So instead of now stay home in front of the computer, they get together, they collect the stickers, they

exchange the double ones with their friends. It's just a big amusement, it's a big entertainment and it's a socializing thing.

NEWTON: A socializing thing which sometimes we don't do enough of, and it's a competitive thing. You know, as I'm opening up my stickers here

- because I've got a few and I want to see what I got. I want you to tell me, isn't this random. Do you deliberately not print as many of the stars

because you know there'll be more of a competition to get them?

MARTINS: No, everything - all the stickers - they are printed in equal numbers, and all the stickers are printed and they are distributed,

the whole collection in random - yes. The stickers are packed in our factory here in Brazil and they are distributed to the points of sales at

random.

NEWTON: All right. Now I have to tell you this would've been like a dud pack, although Ghana and Iran, and nothing to take away from those two

countries, these are not ones that my son likes. He likes to actually see the players themselves. Now, I want you to tell me - and tell -

MARTINS: Right.

NEWTON: -- the truth here, how many people that you know tell you, `I want the guy that I'm missing. Can you just go into the factory and pick

it up for me? I'm missing - whatever. I'm missing this team, I'm missing this player.'

MARTINS: (LAUGHTER).

NEWTON: Do they ask you for freebies? How many times you get asked for freebies?

MARTINS: Yes, all the time. Yes.

NEWTON: And do you give them out? Can I hit you up for some right now?

MARTINS: Of course you can.

NEWTON: (LAUGHTER).

MARTINS: And just give me your e-mail and I'll send you - I'll send you the missing stickers. But we try to promote in all the events for the

collectors to exchange the double stickers. That's the fun of collecting stickers - is to open the package, that you find the ones you're missing,

and then if you have double stickers, you get together with your friends and you collect. So everybody is collecting. Now, even the president of

Brazil is collecting stickers and is enjoying herself with her grandson in the evening when she arrives home.

NEWTON: I hope there's some good friendly competition there as well. As I said, many adults collecting these, some not too keen to admit it, but

we're told almost half of the people collecting these are actually adults. And I'm sure it's a tradition that will continue.

MARTINS: I'm sure too. It's from kids to adults, grandparents with grandsons and uncles. Everybody's collecting because it's fun. They amuse

themselves, they get to know a lot also about the competition, about the players. So when the competition starts, everybody wants to have the album

completed.

NEWTON: Right. Excellent. Thanks so much for talking to us. We appreciate your time tonight.

MARTINS: Oh. Thank you very much.

NEWTON: Now, putting in `go' - in Lego - yes the `go' in Lego. The CEO tells us how he's building his company's future one idea at a time.

(COMMERCIAL BREAK)

NEWTON: The queen of England and some of her fellow royals are ready for a day at the races, complete with designer hats. This is Lego Land

Windsor's way of marking the royal ascot race meeting which starts on Tuesday. Now, constant reinvention is the key to the Danish company's

success. However, Legos' CEO says you've got to stay focused on what matters. He is this week's "Executive Innovator."

(BEGIN VIDEOCLIP)

MAX FOSTER, CNN INTERNATIONAL ANCHOR: The Lego factory at the company's home in Denmark isn't quite the toy town you'd expect.

Production facilities in Billund are almost a half a kilometer long. Hundreds of machines are busy - plastic injection molding and manufacturing

some of the 55 billion LEGO pieces made each year. Toys are big business, and innovation is key.

JORGEN VIG KNUDSTORP, CEO LEGO GROUP: That would be crucial because every year, 60 percent of our assortment is brand new, so we are

constantly, if you like, reinventing ourselves. My name is Jorgen Vig Knudstorp. I'm the CEO of the Lego Group ever since 2004. Today it is the

second biggest toy company in the world.

FOSTER: During his tenure, Knudstorp has overseen consecutive years of growth. The Lego story is one of innovation, good and bad. In the

1990s the company tried to innovate and failed.

KNUDSTORP: By 2003, the company was a little bit lost because it had gone into a lot of new ventures, and so I found a company that was

neglecting its core. It wasn't very good actually at its core business anymore. We'd lost our own self confidence and identity and needed to sort

of find ourselves again so to speak.

FOSTER: In 2003, the company almost went bankrupt. The differences between now and then says Knudstorp is discipline and focus, or `back to

brick' as he calls it.

KNUDSTORP: I think innovation's such a boss word and I think we've learned a lot about discipline processes. Lego is a very simple business

idea - you take the pieces, they act as if they were glued, yet, you know, you can easily take them apart. And we sort of had forgotten that that's

what we're synonymous with.

Male: Awesome!

FOSTER: For 2013, Lego Movie, which earned about $462 million at the box office was an example of a company stepping back.

KNUDSTORP: Yes, we tried to influence the script and the story line, and, you know, we hope it really emanates Lego spirit. But somebody else

did that - took all the risk on that project and made a wonderful movie because that's what they do best. So we don't go into those sorts of

things but stay very closely focused on what we can do better than anybody else in the world.

FOSTER: Innovation, says Knudstorp, can exist within those boundaries. Crowd sourcing design is one such way.

KNUDSTORP: So, I started up meeting regularly with fans of Lego. You know, I consider it like if you're a car manufacturer, this is like meeting

the racing driver - nobody understand the product better than them, and that led us to Lego Ideas which is our website where we, you know,

encourage users to share their dreams, their ideas, what they would love Lego to do, and then there's a possibility to vote and enough people are

expressing their support for that idea, we will go ahead and manufacture it.

FOSTER: Suggestions need 10,000 votes to make it to the production line, and the person behind the idea will receive 1% of revenue. With more

than half a million users registered on the site, it's clearly a popular idea. A family business dating back to the 1930s, there are now 94 pieces

of Lego per person on the planet, and a new production hub opening in China. Innovation has been both friend and foe of this Danish toymaker,

and for now, it's been harnessed into success.

(END VIDEOCLIP)

NEWTON: Now all eyes are on the World Cup as we've been talking about. And Brazil has seen - yes - a World of weather with more to come.

Meteorologist Alexandra Steele is at the CNN International Weather Center. Alexandra, I keep telling people Brazil is huge - so many climates to talk

about in one country, and the games are spread out all over the country.

ALEXANDRA STEELE, METEOROLOGIST FOR CNN: Absolutely, Paula. You know I've been saying that exact same thing - the microclimates in Brazil are

incredible from the rainforests of Manaus to the lowlands - absolutely. You know, one place though where we have seen an inundation of rain and

will continue to is in the fall, which of course is in the northeast corridor. So, let's show you right now some video of what's happened here.

In the last three days, they have seen more rain than they usually get in a month. The city has declared a state of emergency, we're going to see more

rain for the next couple of days as way - inundating streets, damaging/destroying homes as well. You know, actually the worst area about

15 minute drive from the stadium and about a ten-minute drive from where the players' hotels are. So, officials are certainly concerned about the

safety of players and also of fans.

So, look at how much rain they've seen. It's just been incredible. Right now though we are seeing dry skies, but we are expecting rain showers

throughout the match tonight. So currently clear skies, but here's what we're going to see tonight - 26 degrees and showers throughout the match.

But here are a few places on Tuesday - those three matches we are not going to see rain. So that is good news. Here in Belo Horizonte, we're going to

see dry skies and 26, Fortaleza as well - dry skies, no rain happening there, so that is good. You can see temperatures of 28 -- Brazil/Mexico,

so it is hot. Also, Paula, you know we've seen such an incredible amount of rain there, that what we're going to see, the roads continue to be

flooded and things are only going to get exacerbated because more rain is coming. So there really is quite a concern in Natal.

NEWTON: More adversity to come for some of those matches. Appreciate it, Alexandra. Thanks.

STEELE: Yes. Sure.

NEWTON: Now, how much money does an international police force really need?

(BEGIN VIDEOCLIP)

RONALD NOBLE, INTERPOL SECRETARY GENERAL: If Interpol's budget isn't at least a billion a year, the world's not as safe as it should be.

(END VIDEOCLIP)

NEWTON: That was 2010. Next, Richard Quest returns to France to find out if Interpol got its billion.

(COMMERCIAL BREAK)

NEWTON: The world's top policeman admits the cyber criminals are winning. Interpol's Secretary-General told Richard Quest that fighting

cybercrime will be a key challenge for his organization as it marks its 100th birthday. Interpol has come a long way since the first police

congress in Monaco in 1914. It has grown in size, budget and significance since those early years. Richard asked the Secretary-General if the

modern-day Interpol has the tools it needs to beat cyber criminals.

(BEGIN VIDEOCLIP)

RONALD NOBLE, INTERPOL SECRETARY GENERAL: We're so far behind the game in terms of being able to cope with cybercrime as individuals, as

businesses, as governments and as law enforcement agencies. Interpol's recognized this for some time and we are going to be opening this year

Interpol's global complex for innovation which will be focusing on cybercrime and cybersecurity to try to get as close to where we need to but

we are not where we need to be right now, you're right.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: But the crooks are winning.

NOBLE: The crooks are winning, and the crooks at all levels are winning. The organized criminals are winning and the individual brilliant

crooks who are quick at understanding how to make it work with cybercrime illegally.

QUEST: So what do you - we - need to do? Because it seems to me, even when you get a scandal like a couple 100 million people's credit card

details being siphoned off - companies take it seriously. And I've spoken to the attorney general of New York who has been on this program who makes

exactly the same point that you do - that more needs to be done, but nobody's saying what.

NOBLE: OK, so first the most obvious point is that there are so many people who are beginning to use the internet for the first time - novices

not wealthy enough, sophisticated who are being tricked and duped. So one of the first things we need to do is come up with automated ways to flag

and highlight those people who are trying to break through various barriers. And we need to do that both for businesses and for individuals

and for governments. And then we need to make sure that we target the organized crime groups behind it by following the money, right when they're

engaged in fraud, the money's got to go somewhere. And following the money's been a very, very, very effective way for tackling organized crime.

QUEST: You have 600 people, roughly, a budget of 60-odd million. How much more do you need. How much more do you want?

NOBLE: Here's what I say - last year there were 900 million people traveling internationally. People with backgrounds either criminal or not

criminal - our police need to know that. So my point is if Interpol's budget isn't at least a billion a year, the world's not as safe as it

should be.

QUEST: What's your current budget?

NOBLE: Seventy million euros.

QUEST: Oh dear.

NOBLE: It's not a lot, is it?

QUEST: You said to me - you remember -

NOBLE: A billion.

QUEST: -- you said -- are you prepared to say now you still want a billion?

NOBLE: -- I got in trouble for it.

QUEST: Are you prepared to say now you still want a billion?

NOBLE: I still want a billion. I still believe it should be a billion, and I believe it's easy to defend.

QUEST: Who's stopping you getting a billion?

NOBLE: Our member countries. Our member countries are prepared to spend billions and tens of billions and hundreds of billions of dollars in

war and other ways to try to make the world safer, and not spend a fraction of that to try to prevent crime.

QUEST: You're telling me as secretary-general - you've been secretary-general for the best part of 15 years.

NOBLE: That's right.

QUEST: It's coming towards an end next year.

NOBLE: It is.

QUEST: Interpol today is a very different organization to the one that you took over, and those changes for the better are largely because of

your determination and some would say gentle diplomacy tinged with bloody- mindedness.

NOBLE: I believe that I was at the right place at the right time. When I became secretary-general, internet was just taking off. We became

the first organization in the world to transfer police data using the internet. Before I got there, it used to take us four months from the time

someone would ask for someone to be arrested before it would be in mailboxes of our member countries. Now we do it within minutes and hours.

QUEST: So what would you like your legacy to be?

NOBLE: You know, I would like for my legacy to be that whenever any one of our member countries called Interpol for help, we were there, and

whenever a citizen anywhere in the world disappeared or was lost, that Interpol was there. And that the law enforcement officer in the street,

anywhere in the world, when they come across someone from another country not known to him or her, they'll have a better way of identifying him. If

I could be remembered in those three ways, my life will have been worth it.

(END VIDEOCLIP)

NEWTON: Now, just an update here from the World Cup. We have a final score to bring to you from that World Cup. Nigeria and Iran have drawn

nil-nil in group F, and that's the first draw of the tournament as we were hearing earlier from Don. Most of these games have gone with lots of

goals, and it is the only game without a goal so far in the entire tournament.

Now, dotting the I's and crossing the T's are part and parcel of doing business, aren't they? After the break, how pressing the wrong key spelled

a decimal disaster for a new IPO.

(COMMERCIAL BREAK)

NEWTON: Now, when you're preparing an IPO, it's important to get the math right, right? It's a lesson one company won't forget after its debut

on the London market went wrong because of one decimal point. The Australian fashion retailer MySale priced its shares at 226 pence.

Unfortunately, they were noted at 2 pounds, 26. That caused many traders to believe they had started trading at 2.6 pence. That triggered mass

confusion and automatic selling - meaning the shares lost as much as 27 percent of their value, and yes it's not the first time a decimal point

caused serious embarrassment. Get this one - Spain's submarine program nearly ran aground when a vessel which was almost complete was 70,000 kilos

too heavy, meaning it would struggle to ever surface. You guessed it - an engineer put a decimal point in the wrong place. And the British

Conservative Party, not be outdone, once told the world that 54 percent of under 18s in poor areas of Britain are getting pregnant. The correct

number was actually 5.4 percent. And it goes to show you something Richard would always say - you got to check those dots before you put them in. And

that is QUEST MEANS BUSUNESS for today. I'm Paula Newton in New York. Thanks for watching.

END