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QUEST MEANS BUSINESS
ECB Tightens Greek Debt Restrictions; Greek Leaders Push Debt Relief Deal; Greeks Wait for Promises to be Met; European Markets Make Gains; Petrobras CEO Quits Amid Corruption Probe; Turkey Seizes Control of Private Bank; Silk Road Founder Convicted
Aired February 4, 2015 - 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)
RICHARD QUEST, HOST: A late sell-off, a small rally, the market has been all over the place in the last few moments. As the trading day comes
to an end on Wall Street, three hits of the gavel on Wednesday, the 4th of February.
In the past few minutes, the ECB has cut the ability of Greece's banks to borrow. I'll be talking in a moment to the ECB former president, Jean-
After the biggest corporate scandal in Brazilian history, the chief exec of Petrobras is out.
And consider it rough justice. Golf caddies go to court to demand a fair share of the sponsorship cash.
I'm Richard Quest. We have a busy hour together, and I mean business.
Good evening. Tonight, the ECB has made it a little bit tougher for Greek banks to borrow. There was a press release and an announcement
that's just come out in the past few moments, when the ECB said that Greek lenders were no longer to be able to borrow cheap ECB funds using their own
government's collateral. The reason? The restrictions are coming into effect weeks earlier than expected.
Now, the details of this are highly technical, but basically, the ECB has been allowing Greek banks to use government debt even though it wasn't
of the correct rating. It was too low. But they had a waiver to use it. That waiver has now gone, and so Greek banks will have to look elsewhere,
to the national central bank in Greece and to the emergency lending facility.
Look at what happened in the markets. The markets had been up very sharply earlier during the day. They were up sort of 60, 70 points. Then,
as soon as this announcement came from the ECB, the market went negative, went down by about 15, 16 points, and then quickly turned around again to
go up to 7.5 points within the last seconds, literally the seconds of trade. A small gain on a turbulent day as a result of what was announced.
Jean-Claude Trichet was at the helm of the ECB when Greece agreed to its first bailout in 2010. the former president of the ECB joins me now.
Mr. Trichet, as always, Mr. President, lovely to see you. Thank you. We need to digest this.
JEAN-CLAUDE TRICHET, FORMER PRESIDENT OF THE EUROPEAN CENTRAL BANK: Pleasure.
QUEST: The reason the ECB says it will no longer accept this lower- grade collateral is because it's not possible to assume a successful conclusion of the program in line with the rules. In other words, it fears
Greece is not going to arrange a deal before the deadline.
TRICHET: Yes, indeed. It is what I understand. Of course, as you said, the decision taken by the governing council is just arriving. But
what I understand is that taking into account the fact that it is impossible to assume that there would be an accord on a recovery program.
And it is -- it seems to be the will of Greece to reject any program that would be approved by the international community and by Europe, then
it is not possible to maintain the waiver because already, the Greek rating is not fitting the rules of the ECB.
TRICHET: So, there was a waiver. That waiver has been eliminated. I understand that my colleagues, my previous colleagues in the ECB governing
council could not do otherwise, taking into account all the information available.
QUEST: It's -- some will suggest that this is ratcheting up the pressure on the new Greek government. It's basically saying to them, fine,
you do what you want, but there are consequences to doing it. That -- would you agree with that?
TRICHET: Well, I always thought since the very beginning, including discussing with you and your colleagues that we had dramatic problems in
domestic handling of the Greek policies, then in this -- all this discussion on the debt outstanding.
The debt outstanding is a very, very important question, of course, and it would be absurd to cancel the debt. But it is possible to
negotiate, to discuss. But domestically, you have to run a policy which inspires confidence.
Because if you do not inspire confidence, then nobody would play ball. Neither the households nor the enterprises, nor the entrepreneurs and the
international community, investors and savers --
TRICHET: -- would not be in line with Greece, of course.
QUEST: So, now Greek banks -- let's face it, you know as well as I do, sir, that the main source of collateral that banks use when going to
the central bank is either government bonds or asset-backed securities. But government bonds is the main form. Now, Greek banks will only be able
to really borrow from the national central bank in Greece. That's right?
TRICHET: No, they will continue to borrow, as far as I understand, from the euro system, from the system as a whole, provided they have
collateral that are eligible. So, good collateral, not the collateral that is not eligible, and this is the case of the Greek bills and bonds. That's
Now, you have another problem, which is whether or not they are eligible to ELA, Emergency Liquidity Assistance. And that is also a
decision which needs appropriate collateral.
QUEST: Let's talk in wider terms as we digest this news tonight. Do you agree that the Greek debt does need to be -- I'm trying to be
unemotional in my language, here, so let's put it in neutral terms. It needs to be managed. The debt, the current debt is unsustainable, and
therefore a deal has to be done?
TRICHET: I would say that the debt in question is mainly, the overwhelming majority is debt that are owed to friendly taxpayers of
friendly countries. So, you have to take that into account.
And my understanding is that a new language had been utilized by the Greek government, which was a little bit more understanding that it was
speaking -- it was talking with friendly countries, friendly governments, which have to defend the interest of their own taxpayers.
That being said, it seems to me that provided there is a good domestic program which inspires confidence, then it's probably possible to discuss
and have a lengthening of the duration of the debt --
QUEST: OK --
TRICHET: -- and perhaps interest rates that would be lower. That is, in my opinion, possible, provided you have a credible program inside the
QUEST: And now, finally, sir, we're not back at 2008, 2009. Everybody accepts that. But would you describe the situation facing Greece
and its counterparts as a crisis at the moment?
TRICHET: I would say -- I see, as I said, the language is progressively changing. The first language was really destroying
confidence, destroying relationship with the friends and destroying domestic and international confidence.
What I hope, I hope that very, very strongly, if I may, is that this language will also change domestically in order to be sure that Greece
recovers the level of confidence which is necessary. And confidence inside the country is as important, of course, as confidence in the international
community. And we will see what happens. But of course, it is a key moment. Absolutely key moment.
QUEST: Mr. Trichet, it's always good to see you and looking so well, sir. Thank you for joining us tonight on QUEST MEANS BUSINESS.
TRICHET: Pleasure, Richard. Great pleasure, Richard.
QUEST: Jean-Claude Trichet, the former president. And later in the program, we're also going to be hearing from Guy Verhofstadt at the
European Parliament, and his view is very much similar to those of Mr. Trichet's, which is before you start talking about debt renegotiation, you
have to have structural reform or confidence-building measures, in the words of the former president.
All of these events come as the Greek prime minister now is meeting with his European paymasters. Remember, this is the tour of the two of
them, the prime minister in red, the finance minister in turquoise. They've been going around Europe trying to drum up support and they've been
promising to play by the rules.
Now, while in Frankfurt, his finance minister headed for a battle with the ECB. In Brussels as well, of course, they were in Brussels, where you
saw the postcard from -- "Dear Yanis," from prime minister to finance minister.
"Dear Yanis, Europeans appear friendly. I'm not surprised." There you have Jean-Claude Juncker with the prime minister holding hands, hand-
in-hand with the Commission president. He also met the EU parliament president, Martin Schulz and the European Council president, Donald Tusk.
"Europeans appear friendly, but they emphasized debt must become viable and that all-in-all, there had to be respect for creditors."
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, PRIME MINISTER OF GREECE: Our goal is to respect the people's sovereignty in Greece and the clear mandate of our people. At the
same time, we respect the rules of the European Union. We want to reconnect this framework, not to smash this framework. And we believe that
in this framework, we could find a common, viable solution for our peoples.
(END VIDEO CLIP)
QUEST: So, you're hearing very much the words of conciliation whilst the policies appear to be those of confrontation. From Brussels, it was to
Paris, where there was a guarded welcome. Once again, PM writing to finance minister, where they met, of course -- Tsipras met Francois
And the prime minister said, "France should help lead the charge for growth," bearing in mind the French own problems. "France must help EU
grow." From the president of France's point of view, he says he continues to hold the line: respect for debts, commitments must be maintained.
The tour continues. The real problem, of course, is in Frankfurt with the ECB. That will have been made more difficult as a result of the
decisions taken tonight. And then, of course, there's still Berlin and Minister Schaeuble to come.
As the Greek prime minister tries to sell European leaders on his anti-austerity vision, the people who elected him back in Greece are
waiting to see promises fulfilled. I spoke to the editor of the newspaper "Kathimerini," and I asked if people in Greece understood the new
government may not get everything it wants.
TOM ELLIS, SENIOR EDITOR, "KATHIMERINI": I think as days go by, although people are a little bit, if I should use the word "enthused" by
the the fact that meetings take place with the Italian prime minister, with the French president, with the president of the European Commission, which
shows these are the first meetings that Tsipras is having as prime minister.
So, there's some kind of enthusiasm that his thoughts are being listened to. But at the same time, I think, as days go by, people realize
that it will be a difficult sell. The messages from Berlin, from Brussels, even from Paris and Rome, to be honest, are messages according to the lines
you just mentioned, that European Parliament, other democracies, would not be able to accept all the things that Mr. Tsipras is proposing.
QUEST: At the moment, does the new government -- and I know it's only two weeks since they were elected -- but is there a collective feeling that
you can gauge that the population is pleased with the result, or are they suffering a hangover as a result of the result?
ELLIS: I would say they are pleased. They give the benefit of the doubt. It's even less than two weeks, it's actually like nine days or
something. So, given, as I mentioned before, the fact that he's visiting big capitals, actually President Obama made a statement on CNN the other
day, which was very supportive of Greece.
Of course, the US is the biggest power, but at the same time, it's not part of the eurozone, so it's easy to say things.
ELLIS: But still, there is the momentum that things are happening. I think the momentum is ahead of reality. But no, people are pleased for the
time being. When the tough measures might come, then might be a different story.
QUEST: Obviously, the European markets had ended hours --
QUEST: -- before the ECB announcement, and look at the numbers, and you'll see double-digit gains for Greek banks. BP, Total went down, the
oil price is falling again. The gains that we saw, that 5 to 6 percent gains we saw on Tuesday, they have not been held or maintained.
The Brazilian media is calling it the biggest corporate scandal in the country's history. The head of one of the major oil companies paying the
price. She says she did nothing wrong. What did she do? In Sao Paulo, you'll hear after the break, QUEST MEANS BUSINESS, good evening.
QUEST: The head of Brazil's largest company is out amid a corruption scandal that shattered confidence in a major pillar of the country's
economy. Maria das Gracas Foster resigned as the chief exec of the massive Petrobras oil company.
Now, when we talk about Petrobras, you're not just talking about a company, you're talking about absolute core pillar of the Brazilian
economy. State-controlled, and it's been engulfed by allegations that former bosses accepted bribes and connived in creaming money from lucrative
projects. Politicians and contractors are also implicated in the scandal.
Now, put it all together, and the scandal has taken a terrible toll on the Brazilian economy and on Petrobras itself. Take a look and you'll see
exactly what's happened. The shares have more than halved since allegations surfaced in the media. So, the allegation is of corruption,
the shares have halved. Directors colluded, allegedly, with politicians to scam billions from 2004 to 2012.
Now, Dilma Rousseff is the president, of course. She is not implicated, although she was chairman for some of that time. Last
September, the former director, who had been arrested, has struck a deal and names names, alleged conspirators, including politicians and officials.
And then, go to November of last year, when the police raided the officials. The SEC and the United States has subpoenaed document.
And finally, last month, the company says it's unsure how much has been stolen. Extraordinary. Petrobras unable to calculate it. The
investigators say they'd found suspect transactions -- I hope you're sitting comfortably -- $9 billion. Eighty people have now been charged.
Shasta Darlington joins us now from Sao Paulo. You know, we have talked about this scandal before, but we've never really got to grips in
understanding the depth, scale, and gravity of it until now that the CEO's gone. Why did she go?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, I think we should make it very clear, she was never implicated in these corruption
allegations. But I think it's almost more a problem of what she didn't do.
Maria das Gracas Foster, she was a career Petrobras woman, a real oil woman. She'd been in that country for years in the company, she'd climbed
her way to the top. And so, there was a lot of hope when she was appointed back in 2012 that she would not be influenced by politics, that she would
keep the company on a path to profitability.
And no real suspects that she was corrupt or involved in corruption. The problem is that these corrupt practices did allegedly continue even
when she was the CEO, and certainly when she held other positions.
DARLINGTON: So, she failed to recognize it or at least to bring it to light, and she failed to eradicate it. And I think it just didn't make
sense anymore for so many people, for so many investors, to see the same person at the helm when all of these problems had come to light.
QUEST: All right, but Shasta --
DARLINGTON: And again, she wasn't implicated. Neither was the president. But what didn't they do is the question here, Richard.
QUEST: All right. But now you've got a problem, because you've got rid of the person who wasn't implicated, who might not have been very
competent in dealing with it, but now you've got to replace her, and you've got to -- I mean, this is -- it's the -- how far do they believe this
corruption went within Petrobras?
DARLINGTON: I think part of the problem here, Richard, is there is a lot of corruption in Brazil, so even if you weren't involved, who knew and
who didn't know and who didn't say anything?
Reportedly, they're looking outside Petrobras to choose a new CEO, and that has happened in the past. Part of the reason people were so hopeful
about Gracas Foster is because she actually was an oil woman. In the past, presidents had chosen sort of political appointees.
We could see that happening again. Reportedly, they're looking at, for example, a former central bank president, also a former president of
one of the Petrobras distribution arms.
So, you're right, it has to be somebody who's really above suspicion and who isn't too involved in politics, because that's another problem.
They don't want someone in there who can be pushed around by the president.
It's a real tough call. At this point, the markets are telling us any change is good. We'll see what happens when they really pull those names
out of the hat, though, Richard.
QUEST: Shasta in Sao Paulo, thank you. Keep us informed as and when we get rumors and news of who is the selected person.
As we continue our discussion tonight, a clash between the Turkish government and in influential religious leader has now spilled over into
the county's financial sector. Bank Asya, an Islamic lender, has been taken over by Turkish authorities. Barricades were set up outside the
bank's headquarters overnight.
Asya is closely aligned with the religious movement headed by Fethullah Gulen, formerly a supporter of Turkey's President Erdogan, now
locked in a power struggle with him. The journalist Andrew Finkel joins us now from Istanbul.
You were just hearing about -- I'm sure you were listening to our discussion on Petrobras in Brazil, but this makes that look almost like a
tea party, this is so complicated as to who did what where. It's politics, this taking over of the bank, or am I wrong?
ANDREW FINKEL, JOURNALIST: I think that's a pretty fair guess. Yes, there's a huge feud between this government and Fethullah Gulen. Fethullah
Gulen is the leader of a religious community, he has a great following in Turkey, a following worldwide.
And perhaps the most incongruous thing about him is that he actually lives in the Pocono Mountains of Pennsylvania. So, Pennsylvania now in
government circles of Turkey has become synonymous with an attempt to create a parallel state to overthrow the democratically-elected government
of Tayyip Erdogan, who's now the president.
And the reason they accuse Gulen of doing this is because there were a series of police raids well over a year ago --
FINKEL: -- on key ministers, key businessmen, key figures in the Erdogan entourage, and they were uncovering what they said was great
evidence of corruption. Since then, the government has cracked down on Gulen's supporters, Gulen's supporters within the government.
It wasn't all that long ago that the police were raiding a Gulen- controlled newspaper, which it said was helping to orchestrate this coup attempt against them. And now they've moved against this bank.
FINKEL: There's been pressure against this bank, and last night we saw that happen.
QUEST: Andrew, thank you for that. Andrew Finkel, joining us from Istanbul. Apologies if I cut your short, briefly, there, Andrew, because
we have some news to bring you at the moment.
A Manhattan court has found the man who created the underground website Silk Road guilty of all charges against him. Ross Ulbricht, who's
30 years old, who has been convicted of seven counts, including drug trafficking and money laundering.
He was accused of running the Silk Road, which as you may be aware, is a shadowy online marketplace which sold everything from drugs to hacking
guides. Payments were made using Bitcoins.
Ulbricht's attorneys said although he created the site, he later handed it over to others to run. He faces up to life in prison. As we
continue, we will discuss this more with Laurie Segall, who's been following it closely. QUEST MEANS BUSINESS.
QUEST: So, the man accused of running the online drugs bazaar Silk Road has now been convicted in New York of seven counts. He is, of course,
Ross Ulbricht, and he was charged with allowing users to use Bitcoins to buy drugs. CNN Money's Laurie Segall joins me now.
LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT: Indeed.
QUEST: Tell me what happened in court.
SEGALL: Found guilty on all counts. We're talking drug trafficking, criminal enterprise, hacking, money laundering. This was a big deal in
court. It wasn't just Ross Ulbricht on trial. This was the Dark Web on trial. He's going -- we're going to wait and we'll see. He could face
life in prison.
QUEST: Right. So, they're very serious allegations
QUEST: But Silk Road itself was always known as this place where if you wanted to buy drugs or if you wanted to do something nefarious --
QUEST: Tell me about Silk Road.
SEGALL: Silk Road was fascinating, because it came out in 2011. And Silk Road was the first of its kind, it was the Dark Web, the underground
web where you could go on Silk Road, and you would access through something called Tor, which is a software that will let you browse anonymously.
You could buy anything you wanted on Silk Road, but you use Bitcoin. Now, Bitcoin is a digital currency that's difficult to trace. So, you
combine all this, and it had -- it started -- it was started by Ross, he was convicted today, who had a very libertarian idealism that anything
should be bought and traded free on the marketplace, and you could anything --
QUEST: He's American, is he? Or was he based in --
SEGALL: He's American. He's from Texas, but he was arrested at a public library, nonetheless, with his computer open, in San Francisco. But
on this website, Richard, you could get anything from psychedelics to heroine, hacking exploits. This website was worth millions of dollars.
QUEST: All right. So, the website's gone. He's been convicted. He must have had a defense.
SEGALL: Of course. What was fascinating about this trial was this was also technology on display. And what the defense was that he started
Silk Road, right? But he passed it on. And I actually spoke exclusively to his parents, and they paint a whole other picture of Ross Ulbricht.
Take a look.
(BEGIN VIDEO CLIP)
LYN ULBRICHT, MOTHER OF SILK ROAD FOUNDER: He's very creative, he's very idealistic. I could see Ross creating, saying I want to create an
open market, where people can freely trade. And have this concept.
But it also made sense that when he said but, it became too much for him, he got out of it and passed it along to someone else.
SEGALL: Is it possible that there is just a whole other side to Ross that you guys just didn't know?
L. ULBRICHT: You know, I think in 30 years, there would have been a glimmer among either us, his family, all his friends, and everyone who knew
KIRK ULBRICHT, FATHER OF SILK ROAD FOUNDER: I feel like I know Ross as well as a father can know a son. We were very close. We were buddies.
(END VIDEO CLIP)
SEGALL: And what his mother said to me as I was leaving is, she said it would be a shame to see him rot in prison. You could tell it's
obviously a very emotional time for this family, but a very big deal for the Dark Web and internet and digital privacy.
QUEST: In a word, what's he facing now that he's been convicted?
SEGALL: Life in prison.
QUEST: Laurie Segall.
SEGALL: Good to see you.
QUEST: Thank you very much, indeed. QUEST MEANS BUSINESS, we will have more as we continue our nightly digest.
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment when we'll tell you about one of the top leaders of the
European Parliament who tells me Greece must persist with structural reforms. You're also going to hear how Amazon goes 3D and it's opened its
first ever bricks and mortar shop. Why is online going real life? Before all of that, this is CNN, and on this network the news always comes first.
Jordan says it's more determined than ever to fight ISIS after military pilot Moaz al-Kasasbeh was burned alive. King Abdullah met with
top security officials in Amman earlier. He is promising to wage a relentless war against the militants. A U.S. official says Jordan wants a
bigger role in conducting airstrikes.
At least 31 people have died after the passenger jet crashed into a river in Taiwan's capital Taipei. The plane clipped a highway bridge
before plunging into the water. It was all recorded as you can see on a dashboard camera video from our affiliate TBBS. Rescuers managed to pull
some survivors from the wreckage. Twelve people are still missing.
One person is still in a critical condition after a deadly train crash near New York on Tuesday night. Six people died when the train slammed
into a car at a crossing. Another seven passengers were seriously injured. Officials say it was the worst accident in Metro North Railways 32-year
And it's a very homecoming for the Aljazeera journalist Peter Greste who's now back in Australia after being released from jail in Egypt. He
was held for more than 400 days after being convicted of aiding the blacklisted Muslim Brotherhood to have its colleagues remain in prison in
The ECB has made it tougher for Greek banks to borrow. In the last hour the European Central Bank has announced that Greek lenders will no
longer be allowed to borrow cheap funds using government bonds as collateral. I asked the former president of the ECB if this meant to put
more pressure on the new Greek government.
JEAN-CLAUDE TRICHET, FORMER PRESIDENT, ECB: You always through (ph) since the very beginning including in discussing with you and your
colleagues that we had a more dramatic problem in domestic handling of the Greek policies than in this, you know, -- all this discussion on the debt
outstanding. The debt outstanding is a very, very important question of course and it would be absurd to cancel the debt. But it is possible to
negotiate to discuss.
QUEST: You just heard Jean-Claude Trichet talking about the importance of confidence and a proper reform program. Well as the Greek
leaders look to change the terms of their bailout, they're facing calls to come up with a plan for structural reform, and many believe that the
structural reform must come before the negotiations on debt restructuring. I spoke to the president of the Alliance of Liberals and Democrats for
Europe - Guy Verhofstadt. He's a former prime minister of Belgium and he's taking a hardline the most on reforms. I asked him if restructuring the
Greek debt was inevitable.
GUY VERHOFSTADT, ALLIANCE OF LIBERALS AND DEMOCRATS FOR EUROPE: It could be inevitable but I don't think it's the right moment to start a
negotiation about that with the new Greek government. The first thing what we need is that the Greek government is showing us real in-depth structural
reforms in Greek society and if they are not ready to do that, if they're not ready to present that to their European partners, there shall be no
renegotiation of all this this.
QUEST: Let's face it, sir, you're taking a hard line here. You've already got ministers saying yes there's a deal to be done, yes they'll
talk about this and that, but nobody is - except you - is really coming out - and maybe the Germans when they meet later this week - nobody's really
coming out and saying show us the reforms before we show you the money.
VERHOFSTADT: Well nevertheless it's - that is the line we have to follow because otherwise we shall end again with a renegotiation of the
whole package without guarantee of in-depth structural reforms. I'm more optimistic than you because Mr. Tsipras have said that he is ready to take
another line on this - to start in-depth reforms. And what I'm talking about in debt reforms, I'm not talking about lowering the minimum wages in
Greece - that has been done. I'm not talking about increasing taxation on small and medium companies. What I'm talking about in debt reforms is real
structural reforms - opening the markets in Greece, opening professions in Greece and, yes, the minister of finance of Greece has said that he can be
ready before the end of the month - before the end of February with a package on in-depth structural reforms. And if he can put that on the
table, then I'm very open for renegotiation. And for example, for an extension of the maturities of the Greek loans.
QUEST: On the ways forward, do you have a preference? I mean, this idea of the debt swap, the growth-linked bonds - the perpetual bonds. I
mean, assuming as a precursor to the discussion they do get the - they do put forward the structural reforms - is that something you would support as
VERHOFSTADT: I think it's very difficult to enter now in details. For example, the idea of perpetual bonds - I don't know, maybe you can go
to your bank once and ask for perpetual bonds and you can see what they're going to response on that. I don't think that the reactions shall be very
positive. But in my opinion, the best thing that we can do if we renegotiate, is to talk about an extension of the maturities of Greek loans
because that means that everybody can be sure all the creditors - private and public - can be sure that they can find their money back but on a
longer timetable than the timetable as set today.
QUEST: That's Guy Verhofstadt on the question of Greece. Now we aren't second-class citizens (RINGS BELL) and we aren't human billboards
(RINGS BELL). Dozens of professional golf caddies hope to get that message across and they've launched a $50 million-dollar lawsuit to make sure they
are heard. They're suing the PGA Tour and they say the PGA forces them to wear bibs that carry paid-for advertising. And as they're wearing their
bibs whether it's for heroes of the whatever, none of the money goes to the caddies. It all goes to the tour. According to the complaint, the PGA
makes big money from this sort of sponsorship. The Association of Professional Tour Caddies says it's been talking to the PGA for the last
year and was told there was no question of giving ground on the bibs. I'm joined now by Kenny Harms from San Diego, California on the board of the
Association of Professional Tour Caddies. He caddies for Kevin Na who's ranked 29th in the world. Thank you, sir, for joining us. Why do you all
feel so strongly about this? At the end of the day, you're paid a salary to do your jobs and if have to wear a bit of advertising, what's that to
KENNY HARMS, ASSOCIATION OF PROFESSIONAL TOUR CADDIES: Well you know the - what is happening is that they're putting this bib over the top of
us. This is restricting us from actually getting sponsors because no sponsor knows they're going to put a sponsor on our shirt when they have a
bib over the top of it. Then you have the sponsors on top of it that we're advertising on our body. In the United States of America, if you have - if
you're creating income from your body, you should be rewarded for it, and we are not rewarded for it. We are not being taken care.
HARMS: We're asking for only what is fair here.
QUEST: Well how much would you say is -- to use your phrase - how much would be fair as a percentage of that which you're there - I mean, can
you - have you put a number on it?
HARMS: Well, we have learned that the PGA Tour has told the sponsors that they're getting a million dollars in advertising out of the caddies
each week. So that's a significant number. If there's 40 tournaments, that's $40 million. We worked with the Tour for the last year trying to
get use of the bibs so that we can take care of our kids - our caddies'
HARMS: -- healthcare and our caddies' retirement.
QUEST: So, but what would you say is a fair amount? Five percent? Two percent? Ten percent?
HARMS: I think it's 100 percent myself. It's on my body - it's part of me. The PGA Tour is thriving right now.
QUEST: Right, so -
HARMS: We're part of - we are part of the family.
QUEST: Right, so but you're - forgive me for not - maybe I should know this - but why don't you just take it off?
HARMS: We have been told that if we take the bib off, we are no longer caddying, we are no longer going to be able to caddy. And we do not
want to interrupt our players. Our players come first. So if the PGA Tour is going to say, 'If you don't put the bib on, you're not caddying,' well
we're not going to interfere with our player. Our player comes first. We come second. Now, we tried to work for the Tour for about a year on this.
I've met three times, and we told the bid is off the table. Well, we hired a law firm.
QUEST: Right, right.
HARMS: The law firm told us that's unlawful.
QUEST: So ultimately though if your players, I mean, many of whom - and I know Kevin Na and others - support the cause that you're saying. But
ultimately, if the players said to the PGA, 'You start giving our caddies' - because let's face it, the relationship is primarily between you and your
QUEST: -- if your player said 'Give our caddies a share of the money or we don't play,' then the PGA will be up the proverbial without a paddle.
HARMS: That would be correct. And I think that, you know, 90 to 100 percent of these players are backing us on this. I mean, I don't think
you'd find a player that wouldn't want healthcare and wouldn't want retirement for their caddy.
QUEST: Sir, when you get the results of your lawsuit, please come back and talk more about it and I will send you -
HARMS: I would love to, Richard.
QUEST: -- and I'm going to send you a bib to wear saying "Quest Means Business and you're not going to get any payment for wearing it." But
thank you very much, sir.
HARMS: Sounds good to me.
QUEST: Maybe this is an argument I should offer up to CNN. That maybe the commercials I should get a share of the cost of that. Seems like
it could be a trend that will - all right, maybe not. It's the little hotel chain that could. It's called Kimpton and it says it was never about
size but being best love. And now it's been taken over by the largest hotelier in the world. Will the biggest ruin the smallest? That's "Quest
Means Business" (RINGS BELL).
QUEST: Business travelers of the world unite. Intercontinental Hotels - IHG - has launched its 600th Academy program that creates
partnerships with schools around the world to help students get skills to work in the hospitality industry. Now graduates might one day work at a
Kimpton Hotel. It's the - supposedly according to Kimpton - they are the original boutique chain. But it was acquired by IHG last month. So, you
have the largest hotel group in the world buying one of the most famous and most loved boutique hotels in the world. Will one ruin the other? I
visited Kimpton's to find out how they maintain a boutique feel now they're part of IHG.
QUEST: Is there a bigger value in being smaller? Until now, a boutique hotel chain in the U.S. has thought so. Kimpton Hotel Group has
more than 60 small hotels offering a different way to stay. Mike DeFrino, the chief operating officer of Kimpton, says it's all about the personal
MICHAEL DEFRINO, CHIEF OPERATING OFFICER FOR KIMPTON HOTELS: We deal with smaller hotels that are in the two to 200-room range. They are each
individually designed so no two Kimpton Hotels are alike. We don't want to be the biggest hotel company, we want to be the best loved hotel company in
QUEST: By staying small, Kimpton's growth was limited. If it wanted to play in the big league, it was going to have to be taken over. And so
that's what's happened to little Kimpton. It's now being bought by IHG, the world's largest hotel group. It's a deal that creates the world's
biggest boutique 'round (ph).
DEFRINO: We're bridging the gap between the big brands and the independent hotels in each market. We're a brand that people are getting
more and more comfortable with and more and more comfortable staying with us instead of the traditional brands like the big Marriotts or Hiltons.
QUEST: The goal for Kimpton in the larger IHG will be how to make sure it doesn't throw the baby out with the bathwater. Kimpton's ethos is
to customize the hotel for the location and set yourself apart from the competition.
DEFRINO: The way we operate and the way we present our properties in Seattle is much different than what we do in Miami, for example.
QUEST: Miami - the sun and the surf -- and South Beach - a place to see and be seen. I've come to the Surfcomber Hotel to see if Kimpton
practices what they preach. Thank you, good morning.
DONTE JOHNSON, GM, SURFCOMBER HOTEL: Good morning, sir. Welcome.
QUEST: Hi. Good to see you, sir.
JOHNSON: Good to see you as well.
QUEST: Good to see you. What are you told to do? What's your instructions from HQ?
JOHNSON: Provide a wonderful experience that speaks to your geography, that speaks to your clientele and that is truly reflective of
the essence of the city where you're located.
QUEST: Why here and not the Marriott or the Hyatt or the big chain?
JOHNSON: It's all about the social experience. And so rather than serve wine out where we're passing out a glass of wine and people are going
on about their day, we want people to hang out here. We want people to congregate and interact with each other, not just the hotel.
QUEST: Kimpton Hotels now part of IHG. And the CEO IHG said it was clear that they were going to make sure that they ran it as an independent
part of the larger goal.
A gateway not a gatekeeper - that's how U.S. regulators see the internet service provider, and now they want to make broadband the utility.
The push for net neutrality next.
QUEST: The head of the U.S. Federal Communications Commission has laid out its plan to turn the internet into another utility like
electricity or running water. The chairman Tom Wheeler in an essay for "Wired" said his proposal "will ensure the internet remains open now and in
the future for all Americans." It's called for net neutrality and it's like equal opportunity for internet speeds and access to websites. Our
senior media correspondent Brian Stelter joins me from Los Angeles. Brian, net neutrality is one of those subjects where the eyes glaze over - and you
BRIAN STELTER, SENIOR MEDIA CORRESPONDENT: (LAUGHTER).
QUEST: -- it's a bit like the cup (ph) up the last mile and unbundling the local loop in telecoms.
STELTER: Right, right.
QUEST: -- but it's crucial because net neutrality means I get - you and I get the same service, whatever we pay.
STELTER: That's right. Whether I'm in Los Angeles and you're in New York or anywhere else in the country, and whether you're using wire
broadband or wireless broadband. For the first time the government is saying that your AT&T or your Verizon or your T-Mobile service should also
be subject to these rules. These rules are essentially designed to stop companies like AT&T or Comcast or Verizon from creating fast lanes and slow
lanes on the internet. They want to have all fast lanes and not have a provider slow down your connection. This is mostly a hypothetical concern,
but it can be real in some cases. I mean, imagine, Richard, if Comcast which provides a lot of cable and broadband to people but also owns NBC
wanted to speed up its own NBC shows but slow down ABC's streams. That's the kind of behavior that hasn't actually happened -
STELTER: -- in real life, but which the government wants to make sure won't happen in the future.
QUEST: Yes, but what about those situations - and there have been some in the last year - where it's been clear if you pay more, you will get
a faster, better streaming service, and therefore that also flies in the face of net neutrality.
STELTER: Yes, and that is more on the backend of the internet. That's the kind of hidden part of the internet we don't see - further from
consumers and closer to the companies like Netflix and Comcast. That part will not come under these rules. However, there will be a system in place
for let's say Netflix for example to complain to the FCC if it feels like it's being gauged and taken advantage of by the broadband providers.
One source said to me it's like there's going to be a cop on the beat for the first time, but they won't know what the laws are until there are
further rulings from the government on how that can be enforced. But it's a milestone moment for activists who've wanted solid net neutrality for
And for big companies like AT&T and Verizon who've been wary of this, who say we don't need it -- we're going to protect the internet ourselves,
-- this is somewhat of a down day although I have to say their stocks were not hurt today. You probably noticed Comcast stock was up, AT&T's stock
was flat. That's because the FCC is not going to step further in regulating rates. They say they're not going to get involved in the rates
- the amounts charged for broadband, -- they just want to make sure people's broadband connections are not interfered with.
QUEST: Right. Well as long as - all I care about is that my broadband is faster than yours. Brian Stelter, thank you very much indeed.
STELTER: (LAUGHTER). Thank you.
QUEST: A final look at how Wall Street finished the day (RINGS BELL). The Dow Jones - it had been solidly higher thanks to a surge in Walt Disney
shares. Disney's latest earnings were better than expected. But as you look down - well if you go back to the market - and you'll see the - it
drifted off to the end with the ECB decision and a gain of 60/70 points translated into a loss and then just a small eked-out gain towards the end.
A big departure for the king of online sales. Amazon is going old school. It's opening its first-ever bricks and mortar store. Its testing
ground is university in the Midwest of America. It's not a shop in the old-fashioned sense - it's a place where you part with cash and walk out
with goods. Amazon said its campus pick up and drop off location will offer students a hassle-free way of returning textbooks. We'll have a
profitable moment after the break.
QUEST: Tonight's "Profitable Moment." So the truth of the situation is now becoming clear. The new government in Greece may have had a mandate
for reform and may wanted to have gone 'round Europe saying they wanted to renegotiate even if it didn't mean debt forgiveness. But what's clear now
is they're not going to have it all their own way. This is the press release from the ECB. It came out just as we came to air tonight.
Basically, Greek government debt can no longer be used by Greek banks as collateral to lend - to borrow - money from the ECB. And you heard Guy
Verhofstadt saying tonight on this program there has to be structural reform before any form of renegotiation. Minister Scheuble will be meeting
the Greek prime minister - finance minister - in Berlin. And I'm guessing the message will be the same.
It's not that everybody is ganging up on Greece. The fact is that commitments were made and that there are obligations to be followed. And
whilst everybody accepts that there is a deal to be done, probably some form of renegotiations - stretching maturities, changing interest rates,
The other half of the equation remains, and that according to people like Guy Verhofstadt is reform - structural reform - it's two sides of the
same coin. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL)
I hope it's profitable. And we'll get together tomorrow.