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Quest Means Business
EU Hits Gazprom With Antitrust Charges; Companies Demand Action on Climate Change; Trader in Court Over Flash Crash; US Stocks Rise; Facebook Earnings Top Estimates; European Stocks End Mixed; New Images of London Jewel Heist
Aired April 22, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:03] (NEW YORK STOCK EXCHANGE CLOSING BELL)
POPPY HARLOW, HOST: It is Wednesday the 22nd of April. Turning the heat up on Gazprom. The EU accuses it of abusing it dominant position.
Flash Crash arrest. Like a bolt out of the blue, this trader blamed fights extradition.
And thankfully for us, summer, not winter, is coming. Northern Ireland wants to cash in on the "Game of Thrones" tourism.
I'm Poppy Harlow and this is QUEST MEANS BUSINESS.
Good evening. Tonight on the program, Europe takes on Russia. The EU has filed antitrust charges against the world's largest energy producer,
Gazprom. The company stands accused of inflating prices and preventing the free flow of gas between nations.
They're charges which Lithuania's president says are tantamount to economic blackmail from the Kremlin. Gazprom says the charges are
completely unfounded. The EU raided Gazprom's offices, you'll remember, back in 2011 and announced a formal investigation the following year.
Settlement talks were put on the back burner as the crisis worsened in Ukraine. It said that Brussels didn't want to undermine those cease-fire
negotiations at such a fragile point. Well now, the new EU competition commissioner has turned up the heat, and it is a move that will likely
strain already tense relations between Moscow and Brussels.
Gazprom may face a fine of up to 10 percent of its total global revenue. The company's profits have already, of course, taken a hit from
falling energy prices.
In announcing the charges, the European competition commissioner wrote, quote, "All companies that operate in Europe -- in that European
market have to play by EU rules." Russia insists that Gazprom has always played by the rules. Our Maggie Lake asked Margrethe Vestager why now was
the right time for those formal charges.
(BEGIN VIDEOTAPE)
MARGRETHE VESTAGER, EUROPEAN COMMISSIONER FOR COMPETITION: It is not a problem to be a dominant company or big or successful. When we have a
problem with a company, it's when a dominance is abused. And here, we find that as our preliminary view that prices have been unfairly high in five
different member countries.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Commissioner, you know that critics will say that this is politically motivated, a way to punish Russia
for the annexation of Crimea, Ukraine. What would you say to that?
VESTAGER: Well, I just state the fact that this case started with inspections already back in 2011, so it has been here for quite some time,
and even longer than any issue with Crimea or with Ukraine.
And basically, I think when Gazprom looks into the case, they'll see that it's based on facts and the interpretation of fact and the evidence
that we have found that Gazprom has been abusing a very dominant position to get unfairly high prices. And that is, of course, what Gazprom has to
answer now, these preliminary views of ours.
LAKE: Europe is so dependent on Gazprom for gas. Do you really have the ability to enforce a ruling against them?
VESTAGER: Well, it is very early days. When we send a statement of objections, well, then we would like to hear the response of Gazprom. And
we will, of course, do that with an open mind. And from now, the case can take a number of different directions. What is guiding us is, of course,
that we would like consumers to have fair prices, as they have as Gazprom customers in other European countries.
LAKE: We're entering the summer season, which I supposes is a good thing when we're talking about this. What is the timeline we should be
looking at?
VESTAGER: Well, from now, Gazprom has 12 weeks to respond to the statement of objection. They can call an oral hearing to present their
case as they see it. And then we kind of take it from there. There can be negotiations of different kinds and discussions about the concerns that we
have.
So, it may take some time, but we're entering a new phase, because in a statement of objection, you'd find our concerns, you'd find them clearly
described, and you'd of course also find the fact that you need to see as a company being questioned in this case as Gazprom is.
LAKE: Speaking of a new phase, this comes just one week after the complaint about Google. Is this a -- is there a message here? Is this a
new, tougher EU antitrust environment? Are you putting companies on warning?
[16:05:01] VESTAGER: No, of course, not. We do our enforcement job in the way adjusted to the case in question. And I think it is a very sort
of straight way forward to say and to state also in writing these are our concerns. This is how we see the case.
And then, of course, let the companies come back t us and tell us how they see the case. And I think for every customers, this is important.
And I think it's important for companies to know that no matter your flag or your ownership, this is a straightforward competition case.
(END VIDEOTAPE)
HARLOW: Maggie Lake, thank you for that.
Well, as people around the world celebrate Earth Day, US business executives took to Capitol Hill to demand lower carbon emissions and
regulations.
(COMMERCIAL BREAK)
HARLOW: Organizers of Earth Day say this is the year, 2015 is the year when economic growth and stability -- sustainability, rather -- join
hands. In Washington, executives from 12 companies, including Unilever, Starbucks, and Nestle, all head to Capitol Hill. Congress wants to pass --
(AUDIO GAP)
HARLOW: -- want to pass more regulation on climate change. Others don't. It could lead to a major, major move in front of a major climate
conference about to happen in Paris in December.
In Germany, Adidas announced that it has partnered with an ocean charity to spread awareness about sustainability and reusing plastic waste.
Also, French finance minister Michel Sapin says that future generations will be in danger if action on climate change is not taken immediately.
(BEGIN VIDEO CLIP)
MICHEL SAPIN, FRENCH FINANCE MINISTER (through translator): If I were to go out of the realm of those questions about deficits and structural
reform, I would go to what is essential, which is climate change, that affects the future of our planet.
France will be seeking here at the IMF and at the World Bank and in other venues to make sure that we reach a successful conclusion at COP 21.
We cannot let the situation continue as such and put in danger countries and continents and future generations that are our children.
(END VIDEO CLIP)
HARLOW: You hear politicians all around the world talking about this. You hear corporations and their chief executives talking about it, some
going to Capitol Hill today in Washington. But will they do anything about it?
Jeffrey Sachs is the director of the Earth Institute, who joins me now via Skype from Arizona. Sir, it just comes to mind when I see these
executives going to Capitol Hill and when I see all of these leaders around the world.
The president, President Obama, just spoke about this in the Everglades in Florida, where there is a huge risk with rising sea levels.
But do you get the sense that actual change is going to happen this year?
JEFFREY SACHS, DIRECTOR, EARTH INSTITUTE: It is going to happen, because all over the world, climate change is not just a prediction or
something about the future, it's happening right now. I'm in Phoenix today, Phoenix, Arizona. They've had prolonged drought for quite a long
time. And next-door in California, there is, of course, a drought emergency right now. There is a drought in Brazil, very extreme.
[16:09:56] This past year was the hottest year in the instrument record history of the planet. That means going all the way back to the
beginning of the temperature measurements around 1880. So, we're in danger. People know it.
There are powerful vested interests, mainly the oil companies, especially Exxon Mobile, for example, resisting the change. The coal
companies resisting the change. But most of humanity is saying can we get to something soon?
HARLOW: But let me ask you this. Not everyone agrees with you. Most people do. Almost all scientists do. But there are even some potential
presidential candidates for the 2016 election in this country who do not believe that climate change is a problem.
SACHS: Well, I would say follow the money. If these candidates are on the take of coal, oil, and gas companies, which many of them are, then
they will tend to be skeptics. But if they're not on the take then, like the rest of humanity, they will say there's a serious problem.
Two thirds of Americans now in the latest survey say we've got to do something about climate change, and we're more likely to vote for a
candidate that acknowledges it than one who denies it. So, the American people are on the right side of it. But my advice is, follow the money.
Congress ought --
(CROSSTALK)
HARLOW: But Professor Sachs, I was -- I would just say that there are -- and I've interviewed a lot of chief executives of energy companies who
absolutely do believe in climate change and absolutely are doing what they can to reduce carbon emissions. I'd say that most probably do.
Let's make the business case. Help make the business case for me why it also makes business sense in the long run for these companies to really
cut their carbon footprint.
SACHS: They're going to be made to do so because the world is not going to stand by and have catastrophes of rising ocean levels, massive
heat waves, big food crises, drought, flood. That's what's ahead of us. It's already happening in some places. But that's what's ahead of us on a
large scale unless we head this off.
So, you take an oil company like Exxon Mobile, which recently said let's go drill in the Arctic. That's a huge mistake, not only from the
moral point of view, but from the financial point of view.
Because whether it's this year or three years from now or five or ten years from now, that company, like the rest of the industry, is going to be
told no, you can't do that anymore. And so, they're going to waste a lot of money if they don't heed the evidence.
And what you said, Poppy, is exactly right. Many companies get it. All through Europe -- Eni, Total, Shell, BP, Statoil -- they're saying, ah,
this is a big problem.
But in the United States, some of the biggest companies are still fighting hard with their powerful lobbying and their campaign contributions
to try to fight reality. They can't do it. If they try that way, they're going to waste their shareholders' money.
HARLOW: Some of them will make the argument counter to you and say look, we need to drill here, the energy needs are there for the growing
world and jobs. What about job creation, job creation, job creation? Looking ahead, sir, to Paris, the potential global deal at the UN Climate
Summit in December in Paris. What could it look like, and what would it mean to the average people?
SACHS: First, we're going to have a deal. The question is, how ambitious it is. Governments have said let's stop warming so that it
doesn't reach catastrophic levels. That's the true test of the deal in December. And most governments are on side. Some powerful interests are
trying to hold that back.
I think we're moving towards a good deal because the main countries involved, China and the United States and the European Union, are talking
to each other right now. President Obama and China's President Xi made an important announcement late last year that both countries would work
together towards a real agreement in December. That was great news, a true breakthrough.
HARLOW: Jeffrey Sachs of Columbia University's Earth Institute. Sir, thank you for joining me. Good to have you on the program this evening. I
appreciate it.
Coming up next, the man who was accused -- a man in his 30s, by the way -- accused of being involved in that 2010 Flash Crash. He appears in
court, and investigators say a trader working out of this very nondescript home in London helped wipe billions of dollars off of US markets in just
minutes. That's next.
[16:14:30] (COMMERCIAL BREAK)
HARLOW: A British stock trader appeared in a London court accused of triggering billions of dollars in market looses. Navinder Singh Sarao was
arrested at this home, this modest home in West London.
Investigators say it was here that he used a computer trading program to manipulate futures prices. They link those alleged actions to the 2010
Flash Crash that sent the Dow into a nosedive. Isa Soares reports from London.
(BEGIN VIDEOTAPE)
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT (voice-over): Fifteen minutes of chaos that shook the world's biggest markets.
LAKE: Nobody could believe their eyes. It's something that we just simply have never seen before.
UNIDENTIFIED ANCHOR: Fear came back into the market in a very big way.
SOARES: A day of confusion known as the Flash Crash is the day the Dow Industrial dropped nearly 9 percent of its value by the end of the day.
A trillion dollars lost in just minutes.
US prosecutors have now traced the scheme across the continent and have landed on one trader in the UK named Navinder Singh Sarao. They want
him extradited to Chicago to face charges.
SOARES (on camera): Well, they allege that he played the world's futures markets from the comfort of his home in what is a suburban area in
West London. It was here in his parents' home that he allegedly manipulated stock markets with bogus trades.
SOARES (voice-over): While using high-frequency computer programs to manipulate share prices, he allegedly flooded the market with sell orders,
which drove prices way down. But then, in a process called spoofing, he allegedly pulled the plug on those orders, making a large profit in the
process because he bought futures contracts low.
During this four years, US regulators claim he made about $40 million. Investors, meanwhile, saw almost a trillion dollars wiped off the market.
Appearing in court today, the 36-year-old heard the 22 charges read out against him, which include wire fraud, commodity fraud, commodity
manipulation, and spoofing. He did not enter a plea. His attorney told the court that he will fight extradition to the US.
It's a long list of charges that have baffled even his neighbors, who describe him as a well-educated young man.
H.S. JOHAL, NEIGHBOR: He's very, very nice. His wife's very nice. Very nice people. He'll show up anyway.
SOARES: Under conditions of his bail, Navinder Singh Sarao will not be able to access the internet for any purpose and will have to live at his
parents' house until he reappears in court in August.
Isa Soares, CNN, London.
(END VIDEOTAPE)
HARLOW: Isa, thank you for that. Stocks rose on Wall Street Wednesday. The Dow closed 88 points higher, and in the past few minutes,
we have just gotten Facebook's results, and the company came in ahead of what Wall Street expected, beating estimates.
Paul La Monica of CNN Money joins me now to talk about it. Another really strong quarter for Facebook. You dug into the numbers, I know that
they're just into us. What are they telling us?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, the earnings beat forecasts, which is nice. Obviously, investors want to see more
evidence that Facebook is really this grown-up company. Forget about Zuckerberg wearing the hoodie and all the imagery from the "Social Network"
movie.
Revenues were a touch light, a little bit below forecasts. At last check, the stock was down slightly after hours. Doesn't look like a huge
reaction either way, though, and this is stock that's not far from its all- time highs.
HARLOW: Let's talk about the numbers.
LA MONICA: Yes.
HARLOW: Just how big they are, here, though, because you're dealing with huge numbers, and I think some people take a little step back and they
say how much more can this company grow and where? And where can it grow?
LA MONICA: Yes, it's a great question. They've got 1.44 billion monthly active users, one of the key metrics that they use. A lot of them
are on mobile, so all the criticism of the company about not getting mobile when they first went public --
(CROSSTALK)
HARLOW: They've totally turned it around.
LA MONICA: -- obviously completely turned it around. You've got to give them credit there. So, where do they go from here? They're going to
try and, I think, go in even more international markets. They're going into new product extensions. They bought Instagram, they bought WhatsApp
obviously, now, as well.
[16:20:04] And I think they've been savvy to keep those brands separate from the core Facebook.
(CROSSTALK)
HARLOW: But for a huge price tag. I mean, they paid a billion dollars for Instagram. Didn't they pay $18 billion for WhatsApp?
LA MONICA: They paid a lot for WhatsApp. I think the jury's still out on whether or not that deal will pay off, but when you think about a
billion for Instagram --
HARLOW: That made sense.
LA MONICA: -- considering that Instagram now has more users or is rivaling Twitter, which has a market cap well above a billion, I think they
got Instagram for a steal at $1 billion, or there were a lot of people at the time wondering why the heck did they do this?
HARLOW: You bring up international markets, and that is so important for everyone. I was meeting with a chief executive of a totally different
industry today who was talking about just how important international expansion is for them. China for Facebook did not work, right?
LA MONICA: Well, China's going to be tough because of the restrictions --
HARLOW: Right. LA MONICA: -- that are there. So, that's a market that maybe they can eventually dip their toe, but that's going to be a very difficult one -
-
(CROSSTALK)
HARLOW: So, where do you think, Paul, their greatest growth can be?
LA MONICA: I think that growth is probably not going to be adding that many more users, because you're almost getting to a saturation point.
They obviously want to connect the developing world, and I think that that is admirable from an altruistic standpoint, but also there could be profits
many, many years, probably decades down the road.
HARLOW: Sure.
LA MONICA: But you're probably going to just see them continue to launch new products, try and generate more ad revenue than they already
are. And then, you know, other deals. Oculus, the virtual reality headset, that's something that maybe that's a product they can start
selling and generating revenue beyond advertising as well.
HARLOW: I do want to ask you about some other earnings. Coca-Cola, Boeing -- big, sort of more traditional companies coming in better than
expected as well?
LA MONICA: Yes. Coke is a nice win for them, because they've been struggling, as you know --
HARLOW: Yes.
LA MONICA: -- for some time. We're going to hear more about Coke, probably, when we both go to Omaha next week. Berkshire Hathaway, the big
shareholder meeting, Warren Buffett loves the company.
Coke finally reported a gain in revenue. It was the first time in a long time that they did that on a year-over-year basis. What's interesting
is that Diet Coke sales are plunging.
HARLOW: Yes.
LA MONICA: They seem to be maybe cannibalizing that product with Coke Zero. But all-in-all, I think investors were happy that profits beat and
that sales are finally starting to turn around.
Boeing a bit of a disappointment. McDonald's was the key winner, though, today. They're still really struggling, but there's hope with a
new CEO that maybe they will finally get on the right track.
HARLOW: I think it's interesting in sort of the thick of earnings season, one of the concerns -- the question marks about the US economy in
the last month or so has been would these earnings -- first quarter earnings disappoint? And sort of across the board, they haven't as much.
LA MONICA: No, definitely not. It's been hit and miss. Broadly, I think, companies have been beating lowered expectations.
HARLOW: There you go.
LA MONICA: Heading into here, we were expecting S&P 500 earnings growth would be down 5 percent.
HARLOW: Yes.
LA MONICA: So, that is one reason why these numbers look better than they are. People were really expecting some lousy results --
HARLOW: There you go.
LA MONICA: -- and we're getting mediocre results.
HARLOW: Putting it into perspective, tempering our expectations.
LA MONICA: Yes, sorry to be the buzz kill.
(LAUGHTER)
HARLOW: Thank you, Paul.
LA MONICA: Thank you.
HARLOW: I appreciate it. Well, in Europe, mixed corporate earnings sent stocks in different directions. Volvo shares peaked 15 percent higher
after the truck maker named its new chief executive officer.
Also, Tesco stock dropped more than 5 percent on the day following the British supermarket chain's worst-ever results. And reports the ECB has
raised its emergency lending cap for Greek banks pushed stocks in Athens more than 2 percent higher.
It was one of the most brazen jewelry raids in history. Thieves who broke into the vault of a security company in London's jewelry district two
weeks ago may have gotten away with up to $300 million in gems. Now, London's Metropolitan Police have released new pictures that show the
extreme lengths they went to in order to just get inside. Our Erin McLaughlin has more.
(BEGIN VIDEOTAPE)
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): New images tell the story of a well-planned, well-executed heist for the
history books. The target: the vault of London's Hatton Garden Safe Deposit, Ltd., where customers store valuables in private boxes. During
the --
(AUDIO GAP)
MCLAUGHLIN: -- Hatton safe was anything but. This CCTV footage shows the burglars in action. Over a four-day period, the suspects broke into 72
of the 999 deposit boxes. Police have released these pictures of what they left behind: boxes, power tools, and crowbars strewn across the vault
floor.
Here is the gaping hole the perpetrators drilled to break into the vault. It measures over one and a half feet deep and almost three feet
tall, the handiwork of what investors say was a heavy-duty drill, specifically the Hilti DD 350.
Police released this diagram showing how the heist went down. The burglars enter the building using a side door. Hatton Garden is located in
the basement, so they disable the elevator on the second floor and climb down the shaft from the ground floor. From there, they force open metal
shutters to the basement and make their way to the vault. Incredibly, no one noticed this was happening until it was too late.
[16:25:00] MCLAUGHLIN (on camera): Investigators now say that during the heist, an alarm did go off to notify police of a potential intruder,
but for some reason, a computer categorized the alarm as "no response required." The Met says an internal investigation is ongoing to figure out
why.
MCLAUGHLIN (voice-over): So far, there have been no arrests, and police are appealing to the public for information --
(AUDIO GAP)
MCLAUGHLIN: -- London.
(END VIDEOTAPE)
HARLOW: Well, coming up after the break, the world's biggest hedge fund says investors can lower their carbon footprint while not completely
divesting in those lucrative energy stocks. We'll speak with the managing director from BlackRock next.
(COMMERCIAL BREAK)
HARLOW: Hello, I'm Poppy Harlow. Coming up in the next half hour of QUEST MEANS BUSINESS, Lithuania's foreign minister tells me what is in
store for the rest of Europe after the EU's decision to take on Russian giant Gazprom.
And the NFL reaches a major deal with its own players over those concussions.
Before that, these are your top business headlines we're following this hour.
Italy's prime minister has called on European nations to take a collective stand on the migrant crisis in the Mediterranean. He says the
EU needs to rethink its response to the latest wave of migrants risking their lives on dangerous journeys trying to flee their homeland. EU
leaders are holding talks -- those emergency talks on Thursday.
(BEGIN VIDEO CLIP)
MATTEO RENZI, PRIME MINISTER OF ITALY (through translator): This type of priority is something which we must ask of the European Union. We want
something different from an assembly of a group of countries that are members in an economic club.
We want something that is different from a club of technical specialists that all know the principle of geopolitical dynamics, but
forget to give any reply at the moment of pain. I am very optimistic that the European Union can finally change tact.
(END VIDEO CLIP)
HARLOW: An Algerian national has been arrested in France for allegedly planning to attack a church in Paris. A Paris prosecutor says
the 24-year-old was detained after accidentally shooting himself in the leg. Police responded to his call for an ambulance and later found weapons
in his car. They discovered even more evidence at the suspect's home.
(BEGIN VIDEO CLIP)
FRANCOIS MOINS, PARIS PROSECUTOR (through translator): And the search was carried out at his home, which allowed the discovery at his home of
three Kalashnikov guns, a charger, three -- fireproof vests, police armbands, a camera, a hard disc, 2,000 euros in cash, as well as SIM cards,
documents in Arabic mentioning al Qaeda and IS.
(END VIDEO CLIP)
[16:30:04] HARLOW: The Saudi ambassador to the United States warns that any, quote, "aggression" by Houthi rebels in Yemen will get a
response. Saudi Arabia yesterday announced an end to its weeks-long bombing campaign. But less than 24 hours later, warplanes targeted rebels
after they seized an army base in Yemen.
The E.U. has filed antitrust charges against the world's largest energy producer Gazprom. The company stands accused of inflating prices
and preventing the free flow of gas between nations.
Lithuania's president says Gazprom's alleged actions were tantamount to quote "economic blackmail by the Kremlin." Gazprom says those charges
are completely unfounded.
Thirty-six-year-old Navinder Singh Sarao was in a London court Wednesday charged in the United States with several counts of fraud. U.S.
authorities are linking him to the flash crash back in 2010 that sent the Dow instantly tumbling hundreds and hundreds of points, really almost 1,000
points. Sarao is fighting efforts to extradite him to the United States.
We're turning to our top story this evening. Lithuania's president says the era of Kremlin-backed political and economic blackmail is drawing
to a close with the U.S. decision to file charges against Gazprom.
Lithuania is one of the five nations where Gazprom is accused of charging prices up to 40 percent higher than normal market rate. It's one
of eight countries where Gazprom alleged - allegedly - hinders competition by imposing territorial restrictions on those gas supplies.
Europe gets around 30 percent of its gas from Russia and some nations are entirely dependent on supply directly from Gazprom. Lithuania though
says it is prepared to break off its dependence on Russia if need be. Speaking to me earlier Lithuania's foreign minister says that nobody can
abuse a monopoly.
(BEGIN VIDEOCLIP)
LINAS LINKEVIUS, LITHUANIAN FOREIGN MINISTER: I believe it's important not only for my country, it's important
for a whole process to have it transparent. And I believe no one can abuse a monopoly or dominate its position. Everyone who can have - doing
business in Europe -- should comply to the rules.
So this is really everyone should be equal in the market.
HARLOW: Lithuania is the only country I believe that publically complains to the E.U. competition
regulators about Gazprom's behavior. Reuters is reporting that the Kremlin spokesperson told journalists on Wednesday, quote, "We hope a compromise
will be found." Do you believe a compromise can be found?
LINKEVIUS: An American judge before had then to say that nothing is possible. I believe they have the rights
and possibility to respond as far as I know three months for that and then maybe we can find some solution. So let's see what'll be the reaction.
HARLOW: But the Kremlin's using the word `compromise.' Do you believe there should be a compromise or do you
believe there should be a compromise or do you believe here that Gazprom is guilty and do you believe that they should pay up to the $10 billion euro
fine and have other - have other - really punishment for this behavior if they are indeed found guilty?
LINKEVIUS: We believe in this legal process. It should be really transparent, clear, based on facts,
technical, pushing aside for the politics and I believe this is very important. So we are not jumping to any conclusion, and as I said, they
have a possibility to respond, to clarify their position and more - probably then the European Union will also come up with a different
position - everything is possible.
But so far facts are quite clear and I'm happy that it was confirmed by the Commission.
HARLOW: Can you tell me, what has the impact been of these - do you argue higher gas price? Significantly at
some point higher gas prices - the Lithuanian people - to the average citizen?
LINKEVIUS: It's not only for average citizens. It's also for industry for everyone, you know. If you
have monopoly if they're a single source of supplies, maybe always possibility to have a pressure to us this as a political leverage and this
is really it reflects the situation. So I believe very important to have this process transparent based on the rules and everyone will win -- and
first of all simple citizens.
HARLOW: What is your ultimate goals here for the people of Lithuania in being so vocal about this? Because we
know that Gazprom faces a potential fine of up to $10 billion if found guilty. Would you also want to see it forced to allow more competition
into the market - some of those markets where it has really long been in control?
[16:35:03] LINKEVIUS: As I already said, everyone can take part in the market. All partners are equal and the
one condition they should comply with the rules. Gazprom also could be our partner and will be I believe our partner, but succinctly there should be
rules.
So our goal is just to prove that this is really the process which is not political at all, and I hope that
in the future will be less attempts -
HARLOW: But -
LINKEVIUS: -- or temptations (ph) that use energy as a tool for pressure.
HARLOW: Let me ask you this finally, sir. There have also been this accusation by the European
Commission that Gazprom may have been supplying gas to Bulgaria and Poland conditionally - on the condition that those countries agree to build a new
pipeline to Europe underneath the Black Sea.
Was Lithuania ever asked for any sort of quid pro quo move in order to receive gas?
LINKEVIUS: No, Lithuania was never asked for that. It was no trade-off suggested and I believe we really
should be consistent in this - not just us, Lithuania, but I believe all the European Union should show some solidarity and consistent behavior.
(END VIDEOCLIP)
HARLOW: Well, BlackRock, the world's biggest fund manager out to show that investing with a smaller
carbon footprint can be very good business. BlackRock iShares rang the opening bell in New York on Wednesday.
(BEGIN VIDEOCLIP)
(NYSE OPENING BELL RINGING)
(END VIDEOCLIP)
HARLOW: It has created a fund for investors concerned with environmental sustainability including the United
Nations. It is a low-carbon ETF that tracks a lot of green investments, but also has exposure to energy companies that over-weight companies with
lower carbon emissions.
The fund is currently up more than 4 percent year to date. That's a far better return than the Dow which is up
just about 1 percent. I spoke with BlackRock managing director Ravi Goutam, and I asked him where they are and what they're putting their money
into. And also whether there are any companies that pollute in this fund.
(BEGIN VIDEOCLIP)
RAVI GOUTAM, MANAGING DIRECTOR, BLACKROCK: There's a number of different approaches to low carbon
investment. One approach is to completely divest away from any company that has fossil fuel reserves.
HARLOW: And you're not doing that.
GOUTAM: That's not what this fund does. When our clients talk to us - I'll use the example of the United
Nations - so they came to us last fall and said, so we have this issue that if you can help solve, it would be great.
And they said we want to make sure that you reduce the carbon footprint of our pension investments but we also
make sure - want to make sure - that we have a fiduciary obligation to maximize our return for a short (ph) benchmark.
So we work with MSCI, our partner, to develop a fund that does both these requirements.
HARLOW: Interesting fact - 180 U.S. institutions recently and in recent years have pledged to sell their
investments in fossil fuels, adding up to some $50 billion.
It got big headlines when it came out. Is the hope here that big pension funds, endowments, foundations will
increasingly look for something that sort of walks the line between the two? -- getting the returns they want, not completely pulling out of fossil
funds but investing in a way that they believe is more sustainable.
GOUTAM: Yes, increasingly pension plans and foundations look at themselves as good stewards of their assets.
They also want to be good stewards of the environment.
So they want to make sure they have access to investments but have low carbon footprint but also meet the
economic objectives of a meaningful return for their pensioners. So walking that balance is what this product does.
HARLOW: But some would say how does that really push change? If you still have people investing in these
companies that have a high carbon footprint, just let, you know, less so - how is that really going to push them to change and to meet the carbon
goals going forward into the lesser footprint?
GOUTAM: Yes. We think one important part of this product is to make sure we are engaging with
companies that have higher carbon footprint. By completely divesting, it will reduce their engagement completely. So we think a good balance of
lower carbon footprint and high engagement is the right way to go for a lot of investors.
HARLOW: How do you engage investor interests to see if this is sustainable in terms of a business model and a
product for you guys?
GOUTAM: Yes, we are having a number of conversations, especially at university foundation levels. So a lot of
universities and foundations in California for example - some of the large pension plans - are looking to see how they can reduce their carbon content
of their investments.
So when we have conversations with many of these pension plans and foundations, they find it very interesting
to find it balancing their - you know - their economic interests and their environmental focus.
HARLOW: So far have you been able to pull some people over from other institutions or competitors to
BlackRock as a result of a fund like this?
GOUTAM: We've seen like the University of Maryland for example. They were one of the partners for us
in the very beginning and they helped seed this fund. We're in conversations with a number of other universities who actually looked at
the divestment approach and they actually favor the low carbon footprint approach.
In fact, by going with the approach we just talked about, it reduces their carbon footprint even more than the
divestment approach.
(END VIDEOCLIP)
[16:40:05] HARLOW: Well we've talked about major corporations pressuring lawmakers to put some sort of
regulation on carbon emissions in the face of climate change so they know what they're up against in the coming years and where to make investments.
Well students have been doing the same thing by challenging their universities to stop investment in fossil
fuels altogether. Claire Sebastian reports.
(BEGIN VIDEOCLIP)
(CROWD SHOUTING): What do we want? Divestment! When do we want it? Now!
CLAIRE SEBASTIAN, CNN PRODUCER: To these students at one of London's top universities, one thing matters more
than their studies. This protest is part of a broader effort that began in the United States and it spreads to Europe.
Students pulling for their universities to get rid of their assets in fossil fuel companies, and in
some cases campaigns like this have paid off.
Glasgow University in Scotland and Stanford in the U.S. are among those who've already divested. And it's not
just universities.
DANIELLE PAFFARD, U.K. DIVESTMENT ORGANIZER, 50.ORG: The British Medical Association which is the union that
represents every doctor in this country. They decided to divest. The Quakers of Britain decided to divest.
If you care about climate change, you shouldn't be funding it. It's wrong to wreck the planet, it's wrong to
profit from that wreckage.
SEBASTIAN: Despite the movement's best effort, not everyone is convinced. For Paul Ekins, deputy director of
the U.K. Energy Research Center, divestment is just one way of tackling this growing crisis.
PAUL EKINS, DEPUTY DIRECTOR, U.K. ENERGY RESEARCH CENTRE: I think that engagement with companies is a
perfectly reasonable alternative to divestment, provided looks as if the company is going to be responsive and is going to take its climate
responsibility seriously.
SEBASTIAN: He's the co-author of new research that shows around 2/3rds of oil, gas and coal should not be
used in order to fend off climate change.
EKINS: if already we're going to have to leave 2/3rds of the known reserves unburnt, there seems to me to be
little point spending a lot of money trying to find more.
SEBASTIAN: But in a world powered by fossils fuels, that's no small task. This university has around two and
a quarter million dollars invested in fossil fuel companies. Even if it does decide to divest this week, it would barely scratch the surface of a
four and a half trillion-dollar industry.
Claire Sebastian CNN, London.
(END VIDEOCLIP)
HARLOW: Well in Brazil the oil giant Petrobras is preparing to announce earnings that could finally show
how damaging the corruption scandal at the company really was. Shasta Darlington joins me now live in Sao Paulo.
I know we don't have the numbers yet, but what's expected?
SHASTA DARLINGTON, CNN CORRESPONDENT BASED IN SAO PAULO, BRAZIL: Well, Poppy, we are expected to get them any
minute and this will be a big deal because we haven't had any financial results from Petrobras since last August.
So we're waiting for a third quarter of last year and also the full 2014 year. And as you mentioned, the big
number that most people will be looking for is to write down the losses as a result of a corruption scandal, not so much the profits and the sales but
how much money did Petrobras lose as a result of this huge bribery scandal.
And analysts have thrown out estimates that vary anywhere from $10 billion to $30 billion. So that'll
be the big figure, and yet just getting it out there is expected to be a bit of good news for Petrobras. Because as we've said, it's taken them so
long to get auditors to sign off on these figures, it'll show investors that they're really beginning to move forward.
They had a deadline - they have to get these numbers out there by April 30th. They'll show that they're
beating their deadline and obviously the idea is to send a signal they're putting the corruption scandal behind them, and they're really focusing on
how to get the company back on track -- obviously easier said than done.
This is something that went on for over a decade. According to investigators, construction companies were
paying huge bribes under the table to executives at Petrobras as well as politicians. So they need to show that they've moved on and also that they
won't be allowing so much micromanaging from the government.
But if there's any - if the share price is any indication, it really has bounced back. It shows that
investors are optimistic about these results coming out.
We saw the share price lose more than half of its value when the scandal really broke October/November.
But in the last few weeks, it's climbed back almost to its pre-crisis level. So there is some confidence
building out there, Poppy.
HARLOW: Absolutely, and we'll wait for those numbers due out any moment. Shasta, thanks so much, we
appreciate it.
Coming up next on the program, Northern Ireland wants to raise an army of fans who seek the iron throne.
They're being tempted with dragon eggs, no less. Tourism chiefs are hoping travelers will follow the signs to join the Game of Thrones, next.
(COMMERCIAL BREAK)
(MUSIC PLAYS)
[16:46:57] HARLOW: You know what that music means - Game of Thrones. Northern Ireland is looking for
travelers with an appetite for dragon's eggs. As the (AUDIO GAP) they're trying to (AUDIO GAP) shot. One local market offered up the eggs of -
dragon eggs - priced with the local currency from the Game of Thrones to sort of attract tourists.
Tourism Ireland is showing potential visitors the castles where poisonous intrigues, political maneuvering and
deadly battles have played out. Those wanting an authentic experience can slip into costume and practice their skills with a weapon - you can do
that.
They're unlikely though to be forged from Valyrian steel. More active travelers can tour the Game of Thrones
locations by bike, by boat or by backpack, and that is not even all of it.
Niall Gibbons joins me now. He's the CEO of Tourism Ireland and Enterprise. He joins me now from Dublin.
Sir, it makes me want to go just hearing all of that. I'd like to know though looking at the numbers -
because that's what you do, you dig into all of these numbers.
How much actually do you believe that the popularity of Game of Thrones has increased the popularity of
going Ireland and spending tourist money in Ireland?
NIALL GIBBONS, CEO OF TOURISM IRELAND: Well first of all, greetings from Dublin. Thank you for having
me on the show, delighted to be here.
Tourism is big business here in Ireland. It's one of our biggest industries. And for an island with a
population of about six and a half million people, we will welcome nine million visitors this year - it's a big number.
HARLOW: Wow.
GIBBONS: And even when you look at the business from the United States in particular, Ireland now commands 10
percent of all U.S. outbound traffic to Europe. And when you look at the competition that we're up against - Italy, Germany, the U.K., countries
with populations of 50/60/70 million, -- we, you know, it means an awful lot to us.
So this is quite a clever little campaign actually because as most people know, Game of Thrones is the most
successful series that HBO ever produced and we are really keen to capitalize on that because our research does tell us that film or screen
tourism has a capacity to influence an awful lot of people in their destination choice.
Thirty percent of our customers are telling us that they have been influenced by film in terms of choosing
their destinations. So with a film like this and with their position on social media, -- I think they have 15 million fans on Facebook, about three
million on Twitter.
We have a campaign that'll run in ten different markets over the next 12 weeks which will capitalize on the
Game of Thrones show. And it's building on the great relationship we've built up with HBO actually last year when we ran this campaign for the
first time. And we were bowled over by the fact that we had 100 million impressions on Twitter. For a small country, that's pretty good.
HARLOW: Those are very impressive numbers. So tell me, you did this last year, it worked, you're doing it
again and amping it up this year. What surprises do you have in store for people making the trek to Ireland, and how's it going to be different than
last year?
GIBBONS: Well the campaign this year is really building on the success of last year's one. Can't tell you
all about it, but it just really broke yesterday.
But you mentioned the dragon's eggs that we have placed there. These are all tinted dragon's eggs now which
were placed in food markets and when people went to touch them, they actually vibrated - created a real sense of surprise, and that's something
that's been amplified throughout social media.
[16:50:11] Just today alone there were about 100,000 views of that video. So we see it's been a really
successful campaign. And for Northern Ireland in particular, which is how the troubled past it's got a great future.
And from a tourism perspective, what we've seen over the last two years alone are Game of Thrones tours now
starting up and we had 130 international buyers in last week into Northern Ireland and it's really a new destination for them.
And to have a product like this, it's really capturing the imagination. This is taking on a cult status. I
mean the fact that HBO led it to series 6 and perhaps beyond is really good news for us.
HARLOW: And, you know, of course as the miniseries that you have - one after the next after the next, the more
it can help and then you have to sustain the tourism coming even beyond Game of Thrones.
Thank you so much for coming on the program, Niall Gibbons. We appreciate it of course. I should note here
that HBO is owned by our parent company Time Warner.
Well coming up next, retired American football players are now eligible for compensation for those
concussions - those head injuries. We're talking about potential settlements up to $5 million. We'll have more on that straight after the
break.
(COMMERCIAL BREAK)
HARLOW: A judge here in the United States has approved a provision to pay up to $5 million to former American
football players with head injuries - those concussions we've heard so much about. "World Sport"'s anchor Don Riddell joins me now with more.
We've been waiting for this for a long time because there was a lot of talk, Don, over whether or not the
judge would agree to this - sign off on this deal. They didn't want it to look like too sweet a deal for the NFL, so give us the details.
DON RIDDELL, CNN "WORLD SPORT": Yes, well the deal was actually reached back in 2013, but this district
federal judge Anita Brody wanted to make some revisions and I guess those have now been put into place, but that's taken another two years for that
to happen, Poppy.
But this has been a major problem for the NFL for a very, very long time. Of course the number of cases have
become more prominent, the more understanding we have of the injuries, concussions and the long-term implications of that have really been
something we've all been learning about over the last few years.
And I think the NFL are now hoping that they can draw a line under this. And some of the players will be
happy with today's announcement, but certainly not all, Poppy.
HARLOW: And why is that? Why is it, Don, that you say some will be happy with it, not all? They think it
doesn't go far enough?
RIDDELL: Well the NFL has only agreed to actually quite a small number for neurological disorders for
which players will be able to claim compensation in the future. So crucially these are Alzheimer's, dementia, Parkinson's and ALS.
But there's a whole range of other complications that could come from repeated concussions. For example,
paranoia, sleep deprivation, irritability. And crucially CTE - chronic traumatic encephalopathy -
HARLOW: Right.
RIDDELL: -- which you can only prove after a post-mortem has been conducted. That is not - that is not
covered. So, you know, a lot of players - for example CNN's own Coy Wire who spent nine years in the NFL. He's a good friend of mine. He says he
worries about this every day. Every single time he gets a headache, he thinks oh no, I hope this isn't going to be as a result of my time in the
NFL.
HARLOW: Right.
RIDDELL: So, you know, and we're talking about up to $5 million for players. A lot of the critics of this
agreement think that in truth or in practice it's only going to be about $200,000 on average that you're able to claim.
[16:55:07] HARLOW: Wow.
RIDDELL: And it's going to take months and years to work that out.
HARLOW: Absolutely. This is really just the beginning of the compensation for these players. Don Riddell,
thank you so much. I appreciate it.
We'll be back with more "Quest Means Business" in just a moment.
(COMMERCIAL BREAK)
HARLOW: Well the shares in Tesco dropped more than 5 percent in London after the British grocery and retail
giant posted record losses. The company swung to a loss of almost $10 billion last year. That is one of the biggest losses in British corporate
history.
The company as you know had been losing customers for a while. It also wrote down the value of its assets
by about $10 billion and it also faces hefty pension liabilities. The CEO of the company issued a video statement asking investors to put their
results into perspective.
(BEGIN VIDEOCLIP)
DAVE LEWIS, CEO, TESCO: -- separate out those one/worn (ph) off adjustments which recognize our poor
performance of the past and focus on the improvement that we are seeing in our business performance in the fourth quarter and what's happened since
actually since October where we've steadily improved our underlying performance of the business.
(END VIDEOCLIP)
HARLOW: As for the broader markets in Europe, mixed corporate earnings sent stocks in different directions.
Volvo shares rose 15 percent after the truck maker named its new chief executive officer. Also reports that the ECB has raised its emergency
lending cap for Greek banks helped to push stocks in Athens more than 2 percent higher on the day.
That is "Quest Means Business." I'm Poppy Harlow in New York. Thanks so much for joining me this evening.
I'll see you again right here tomorrow.
END
