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CONNECT THE WORLD

FIFA Communications Director Resigns; Spying Suspected At Iran Nuclear Talks; Rupert Murdoch Steps Down as CEO of 21st Century Fox; China's Silk Trade; Israel Vows To Strike Back At Boycott Group BDS. Aired 11:00a-12:00p ET

Aired June 11, 2015 - 11:00   ET

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


[11:00:36] JONATHAN MANN, HOST: Hello. I'm Jonathan Mann. We're following a number of moving stories this hour. In the business world word

that media titan Rupert Murdoch is stepping down as CEO of 21st Century Fox. We'll look at what that means for the empire he built.

Also claims of spying during the Iran nuclear talks that if true are astounding in their scope.

First, what could prove to be a major development in the hunt for two escaped fugitives in the United States, we join our sister network CNN USA

for that.

(SIMULCAST CNN USA)

[11:09:10] MANN: An extraordinary manhunt in the United States. Meantime, another story we're watching closely, one of the world's most

influential media executives is stepping down as the head of his largest company. CNN confirmed a short time ago that Rupert Murdoch is resigning

as CEO of 21st Century Fox. The 84 year old is expected to turn over control to his son James Murdoch.

CNN senior media correspondent Brian Stelter joins us now from New York.

This man is a titan. He is a giant. He's also 84. How much of the business is he giving up control over?

BRIAN STELTER, CNN MEDIA CORRESPONDENT: He is going to be taking over -- stepping aside from day-to-day responsibilities.

So what does that mean exactly? Well, he'll remain executive chairman of 21st Century Fox. And sources close to Murdoch say he will continue to

have the final say over all things related to the company.

But this is a generational shift that's been decades in the making, because his son James will have day-to-day responsibility. He'll be

running the company as CEO with his father as executive chairman weighing in whenever he wants to. For the moment, I suppose, there's no official

comment from the company. And the comments I'm getting on background from sources are that it's a title change.

But Jonathan, this is a title change that has huge consequences as you know.

[11:10:23] MANN: Well, he is most famous, I think, and perhaps even most powerful as a newspaper baron, as the head of News Corp. How does

this affect that?

STELTER: News Corp. will not have any moment -- you know, immediate change as a result of this. News Corporation is run by one of Murdoch's

lieutenants, Robert Thompson.

But Rupert Murdoch is intimately involved in it. He cares deeply about the publishing business, as you're saying. He cares deeply about his

print newspapers. And there will be no change currently with his role at News Corporation.

MANN: OK, fair enough.

Why is this happening now, do you think? He's 84, is that reason enough?

STELTER: That might be reason enough. It might also be that for a decade, at least a decade, there's been speculation and predictions about

when exactly this would happen and who exactly would be taking the reigns.

It's actually been a source of lots of family drama, something chronicled by Murdoch's rival tabloids and rival media outlets. James

Murdoch was involved in the hacking scandal -- well, I don't want to say involved, I want to be careful with my words here, but he stepped down from

his role in Britain after the hacking scandal there. You remember that phone hacking scandal that involved the Murdoch newspaper News of the

World.

But he's been able to rehabilitate himself so to speak by helping run 21st Century Fox working with his father there day to day. And so this

will be an increased position now as CEO, taking official control of 21st Century Fox.

Like I said, a big generational change.

MANN: Does this set up some kind of drama between the two Murdoch brothers?

STELTER: That's the big question that Murdoch waters are asking right now, because you've got James Murdoch who will be ascending to the CEO job,

taking over one of the biggest media empires in the whole world, but you also have Lachlan Murdoch, one of Murdoch's other children, who will be co-

executive chairman with their father.

So essentially the word from sources close to the family is that James and Lachlan will be working together. They will be jointly taking over the

family business. But obviously with James as CEO he will be the most public face of the company.

I suspect there will be much more written and talked about this family situation after a board meeting next week, because at a board meeting

they'll officially be putting these steps into motion.

MANN: What about the company itself? Obviously, you can't turn a cruise ship in a kilometer. This is going to take a big company even I

dramatic changes are expected.

But would we expect any?

STELTER: I think what we could envision from James Murdoch, and from Lachlan Murdoch is even more of a prioritization of digital efforts.

We say digital, what do we mean? What we mean is taking old analog media, whether it's television or the film business, or whether it's

newspapers and continuing to move them toward the internet in all its forms.

We've seen Murdochs other company, News Corporation, do that by seeking new iPad apps, new iPhone apps, by seeking online subscriptions.

And we've seen 21st Century Fox do that by making deals with Netflix and with Hulu and with other streaming services.

But those sorts of changes, that's sort of a revolution that's really happening from analog to digital is something that Lachlan and James are

perhaps better positioned to oversee, because they are younger, because they are more aware of these changes, whereas like I said Murdoch, he loves

his print newspapers. That's one of the most endearing things about him, but it's also been investors have not always loved about him.

It's one of the reasons why News Corporation and 21st Century Fox split up, because 21st Century Fox is a much bigger, faster growing

company. It's the company that owns Fox News and Fox Sports and the film studio. And there's a lot of growth ahead potentially for that company as

they pivot toward digital.

MANN: Are his sons as political as he is?

Here in the United States, and of course in the UK, Murdoch has had enormous influence either directly or through his media outlets.

STELTER: That's right. I think the short answer is no. The short answer is no, not to the extent that we're aware of, at least.

They seem to be more business minded than politics minded. However, you know, brands, their media outlet, some of them are known for political

bents or political tilt. Best example, perhaps in the United States, is Fox News, the hugely popular cable news channel that has a clear

conservative bent, especially in prime time with hosts like Bill O'Reilly and Sean Hannity.

What would happen to an outlet like Fox News if Rupert Murdoch is not in charge as much day-to-day? Well, probably not much in the short-term at

least, because these are run by, in Fox News's case Roger Ailes, who has a very clear control over Fox News.

But over the long-term, you have to wonder if an outlet like Fox News, or like the New York Post, if those outlets will moderate or otherwise

change their positions when it comes to politics.

MANN: Things could change a lot for that empire. It'll be fascinating to watch.

CNN senior media correspondent Brian Stelter, thank you so much for talking with us.

[11:15:05] STELTER: Thank you.

MANN: Once again, Rupert Murdoch stepping down as CEO of 21st Century Fox.

We'll have much more on this story in the hours ahead coming up on the International Desk with Robyn Curnow you'll hear from CNN's Paul La Monica,

someone who literally wrote the book about Murdoch titled "Inside Rupert's Brain." That starts in less than an hour.

Still to come tonight, we look at U.S. plans to send hundreds more military personnel to Iraq to boost training of Iraqis in their fight

against ISIS.

But first, investigating alleged spying on sensitive nuclear talks. Swiss and Austrian authorities open a probe. We'll tell you what Israel

has to say about the claims coming up.

(COMMERCIAL BREAK)

MANN: Welcome back. You're watching CNN. This is Connect the World. I'm Jonathan Mann.

Now to investigations into a reported high tech espionage at the international talks over Iran's nuclear program. Both Switzerland and

Austria are looking into allegations that hackers used a highly sophisticated computer virus to target hotels hosting the talks. Swiss

authorities have already raided a house in Geneva seizing computer equipment.

The Wall Street Journal reported months ago that U.S. officials Israel was spying on the talks to try to undermine the potential nuclear deal.

Israel's deputy foreign minister says there's no basis to the reports of Israeli involvement and in fact says as much to Israel army radio just a

short time ago.

"There is no basis to all the international reports about the involvement of Israel in this affair," Israeli deputy foreign minister

Tzipi Hotovely told Israel army radio this morning. What is far more important," I'm reading the remarks here, "is that we will prevent a bad

agreement or else at the end of the day we will find ourselves with an Iranian nuclear umbrella."

And so that's the word from Israel, but the word from European authorities and from published reports, an audacious attempt to eaves drop

in a sense at the site of some of the talks.

Let's get the very latest from Phil Black following developments from London.

How much do we know about what's said to have happened?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Well, what we know, Jonathan, comes from an investigation conducted by a private computer

security company, The Kaspersky Lab, based in Russia. They are the ones that claimed to have detected this virus, which they effectively describe

as pretty much the most sophisticated cyber espionage weapon ever developed.

And they found it because they found it on their own systems first. That was where it was first detected. They carried out a wider

investigation. And from there, they say they detected victims of this particular malicious software across a huge geographic area. They say

western countries, Middle Eastern countries, Asian countries as well.

And it is they who first made the claim, and stand by it, they believe that some of these locations include hotels that were used as venues for

negotiations and talks for that Iran nuclear negotiation process.

They say also that they found a similar attack at the commemorations, the recent commemorations for the 70th anniversary of the liberation of

Auschwitz.

So, they believe very clearly that this is a state sponsored attack, a weapon developed by a nation state. They say it is so sophisticated, so

capable, so clever at avoiding detection, and that would be so expensive to develop that really there is no other way.

So, they sum it up as saying that this was used to attack a complex range of targets at the highest levels with similarly varied geopolitical

interests. They don't name a nation state specifically, but as you've been talking about, the cloud of suspicion in this clearly hangs over Israel --

Jonathan.

[11:20:49] MANN: Let me understand this better, why would anyone, Israel or otherwise, want to eaves drop or tap in to hotel computers? What

would they learn from that?

BLACK: Well, remember, so these hotels were used as venues for these talks. But it's about the capability of this virus that is so interesting.

It was explained to me by Kaspersky lab that you have to imagine as if this was your own computer. Anything you can do on that computer once

it is infected, the person controlling that infection can also do.

And as well as that it wouldn't have just stayed on the hotel computers themselves, it would have moved on very easily to other computers

in the vicinity using the same networks and so forth.

So, to put it simply, this is a piece of software through which it is capable to control pretty much anything in your computer, that means

cameras, microphones. It gives you the ability to steal almost anything that's on there, all the information, the data and so forth, is at the

disposal, pretty much, of the people controlling the virus.

But what makes this so sophisticated not just those capabilities, because they've been present in previous incarnations of this particular

virus, but it's inability -- or it's very clever way that it covers its tracks, the very difficulty -- its ability to stay hidden, essentially, on

systems that it has infected.

Kaspersky believes that whoever was behind this thought it was incapable of detecting its presence on a computer. They say that they've

disproven that, but they do believe that this is incredibly powerful, incredibly capable and there is no doubt they believe that it was a nation

state behind its development and its command and control, Jonathan.

MANN: Clearly an apparently astonishing bit of espionage. Phil Black, thanks very much.

Silk production heads into the 21st Century. We'll explain why that makes some people nervous coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

SUMNIMA UDAS, CNN INTERNATIONAL CORRESPONDENT: Lin Hui is busy making one of China's oldest commodities: silk. Hui, or Eric as he's known,

manages operations at this family-owned silk factory outside Hangzhou. The 28-year-old's family has been in this business for as long as they can

remember.

"Silk is a tradition for Chinese people. It's the essence of our culture. I hope that our work spreads good silk into the world," he says.

Weaving pure silk takes a long time. It begins with raw material. First, each delicate strand is strung out. It's separated onto rolls and

eventually woven on automated looms.

Eric's factory runs 24 hours a day, 7 days a week, producing nearly 1 million meters of silk each year to sell as far away as the U.S. and

Europe.

This is just one of hundreds of silk manufacturers in this province. The owners here say almost every single family here is somehow involved in

this business. They've done it for generations. It's their lifeline (ph).

Even with automation, Eric still needs 130 employees for quality control, but silk manufacturing, like other industries in China is

changing. To stay competitive, many companies are going high tech if they can afford it.

Well Lam bought 100 computerized looms for his silk factory, each replaces six workers, but costs around $200,000.

[11:26:17] WELL LAM, SILK MANUFACTURER: If we don't put innovation, don't put creativity, don't put technology inside it, which means

everything will be leveraged on people, which is not possible, because it's getting more and more expensive.

In this case, future 15 years, the silk industry will be no more in China.

UDAS: That kind of talk makes Xia Meili, Eric's mother-in-law, worried. She still remembers the 1960s when everything was done by hand.

But times are changing and she knows they have to adjust to preserve the tradition and to keep the company afloat.

"This is a struggle for us mentally. One the one hand, we want to stay in the business and keep this factory going, but the costs of

upgrading is too high compared with what we make. On the other hand, we don't want to shut down," she says.

Eric is now looking to make synthetic silk. He sees more money in it. His mom may disagree. But Eric is not focused on China's centuries of

tradition, he's looking to the future, because adapting to change, he says, is the only way to keep a business alive on the new silk road.

Sumnima Udas, CNN, Hangzhou, China.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

[11:30:13] MANN: This is Connect the World. I'm Jonathan Mann with the top stories this hour.

An extraordinary manhunt in the northeastern U.S. Sources say that dogs have picked up the scent of two convicted murderers who have been on

the run after escaping from prison nearly a week ago. The dogs picked up a scent around three miles from the prison. A food wrapper and the imprint

of a shoe or a boot were also found, according to a source.

Israel's deputy foreign minister says there is no basis to claims that Israel is involved in spying on international nuclear talks with Iran. A

security firm says hackers used a highly sophisticated computer virus to target hotels hosting the talks. Plus, Switzerland and Austria are

investigating the allegations.

Rupert Murdoch is resigning as CEO of 21st Century Fox, his largest media company. Sources tell CNN that the 84-year-old will stay on as co-

executive chairman, a position he'll share with his son Lachlan. Murdoch's son James is expected to assume day-to-day control of the company.

Sir Christopher Lee, best known for playing Dracula over and over as well as roles in Lord of the Rings and Star Wars, has died. He played more

than 150 film roles in a long career that began in 1948. In 2009, he was named a knight of the British empire.

The U.S. decision to send several hundred more troops to Iraq is facing criticism on several fronts today. President Barack Obama is

ordering the deployment at 450 additional military advisers and support personnel to Anbar province. They are not to have a combat role, but will

instead train and assist joint Iraqi forces battling ISIS. Many Iraqis believe the plan is too little, too late. Some critics in the U.S. worry

it could be a new case of mission creep, a slippery slope towards greater involvement for American forces.

Senior international correspondent Ben Wedeman has been talking to Iraqi commanders in the field. And he joins us now from Baghdad.

Ben, where have you been? What have you seen? And who have you been hearing from?

BEN WEDEMAN, CNN INTERNATIONAL CORRESPONDENT: Yeah, we were in the area of B Baiji where there is currently a battle raging between pro-

government forces and ISIS. And it's very much the closer you get to the front line, you really get a much better idea of what the Iraqi army needs.

And certainly many of the commanders I spoke to said what they need is better equipment and better air cover by the U.S.-led international

coalition.

You know, at the moment there are about 3,200 Iraqi soldiers currently receiving training from the 3,100 U.S. troops here in Iraq to provide

training to these forces. But really what they need, according to these Iraqi commanders, is much more practical support in the war on ISIS.

(BEGIN VIDEOTAPE)

WEDEMAN: The crew of this Iraqi army 155 millimeter self-propelled Howitzer prepares to fire. The target is the ISIS-held town of Siniyeh

(ph) west of Baiji where the battle rages on. The Howitzer and its ammunition are American made.

The United States says it's going to send an additional 400 troops in the effort to train the Iraqi army, but when you speak to Iraqi military

officers, they say that that's just a drop in the bucket of what they actually need.

Iraqi forces, a combination of government troops and members of the Shia-led paramilitary group Hashd al-Shaabi have been battling to retake

Baiji and the nearby refinery from ISIS.

Iraqi officials in Baghdad told CNN most of the town is in pro- government hands, but when we got near it, through the haze, it didn't seem so secure.

"You can hear gunfire," says local Sunni commander Khalid Awaa (ph). "Until now there are skirmishes with the remnants of ISIS while others are

fleeing toward Mosul."

Field commanders say ISIS, while on the defensive, still holds 50 percent of Baiji.

Major General Jamaa Aned (ph) has been in the Iraqi army for 37 years. He says what Iraq needs urgently is weapons, not training. And he insists

the American response to ISIS has been at best halfhearted.

"When the United States wants to do something it does it," he says. "We fought them twice, in 1991 and 2003. They have incredible

capabilities. If they were serious, they could crush ISIS."

An opinion shared by Abu Mehdi Mohandis (ph), the powerful commander of the Hashd al-Shaabi, which is partially armed and trained by Iran.

"It's clear," he tells me, "the international coalition isn't serious in its operations. That's why Ramadi fell."

U.S. officials suggest it was the shortcomings of an overstretched Iraqi army that were behind the fall.

Whatever the case, after more than a year of battling ISIS, Iraq can ill-afford more defeats.

(END VIDEOTAPE)

[11:35:32] WEDEMAN: And U.S. officials say that these 450 trainers and support staff won't actually get to Iraq until some time later this

summer. The Iraqis say that they need help, but they need it now -- John.

MANN: Ben Wedeman live in Baghdad, thanks very much.

A movement to boycott Israel and businesses there appears to be gaining momentum. It's called BDS, which stands for boycott, divestment

and sanctions. The group behind it says it will continue to target Israel, in its words, until Israel complies with international law and Palestinian

rights. Israeli businesses, supporters and even Prime Minister Benjamin Netanyahu are fighting back.

CNN's Oren Liebermann has more.

(BEGIN VIDEOTAPE)

OREN LIEBERMANN, CNN CORRESPONDENT: The latest harvest is ready for bottling at Psagot, an Israeli winery in the West Bank. Owner Jacob Berg

says business is growing, but so is a boycott movement against his wine produced in the settlements.

JACOB BERG, OWNER, PSAGOT WINERY: It's not the final customer, it's not the majority of the world that believe in those things, it's really a

very, very small organization, a few organization. The problem is that they have a lot of power and a lot of money.

LIEBERMANN: That organization is BDS, the boycott, divestment and sanctions movement. Co-founder Omar Barghouti started BDS a decade ago to

force Israel to end what he says is a system of discrimination against Palestinians.

His movement has activists in many countries and tens of thousands of followers on social media, growing at least in part, he says, because of

Netanyahu's right-wing government.

OMAR BARGHOUTI, BDS MOVEMENT CO-FOUNDER: Israel is realizing, perhaps a bit late, that BDS is quite serious as a human rights movement based on

international law as a non-violent, non-sectarian movement it is quite effective.

LIEBERMANN: Last week, the CEO of Orange, a telecommunications company owned in part by the French government, said in Cairo that he would

pull Orange out of Israel if he could.

BDS activists called his remarks a success.

But within days, he apologized saying his remarks were misinterpreted. And that he opposes any boycott of Israel.

In Las Vegas, Jewish-American billionaires and political megadonors Sheldon Adelson and Haim Saban (ph) pledged to fight BDS. Saban spoke with

Channel 2 Israel about the Orange CEO and the boycott movement.

HAIM SABAN, ISRAEL SUPPOTER: This is no -- this is the beginning. And any company that chooses to boycott business in Israel is going to look

at this case and once we're done they're going to think twice whether they want to take on Israel or not.

LIEBERMANN: Israeli politicians have united against BDS. Prime Minister Benjamin Netanyahu promised to go on the offensive against the

movement.

"We will gather forces in Israel and around the world to shatter the lies of our enemies," he says. "And we will fight for Israel's right to

live in peace and security, to live at all."

Anti-BDS activists have accused Barghouti and his followers of racism and anti-Semitism, charges Barghouti denies.

BARGHOUTI: We are targeting a system of injustice. This should never be conflated with an attack on any group of people based on their identity.

BDS targets institutions, complicit institutions, not individuals.

LIEBERMANN: Israel's economy will take a hit from the BDS movement and similar non-violent resistance, a $15 billion hit according to a new

study by the Rand Corporation. The study says the Palestinians will also take a hit, nearly $2.5 billion, a price Barghouti says is worth it.

Oren Liebermann, CNN, Jerusalem.

(END VIDEOTAPE)

MANN: You can always follow the stories the team is working on throughout the day by going to our Facebook page, Facebook.com/CNNConnect

and get in tough on Twitter. Tweet me @JonathanMannCNN.

There has been another high profile resignation at scandal hit FIFA. This time it's Walter de Gregorio, the director of communications and

public affairs. FIFA said in a statement that de Gregorio would continue to work in a consulting role until the end of the year.

So like Sepp Blatter he's announced his resignation, but he's still there.

Let's go to London now and get the latest from CNN World Sport's Alex Thomas.

What should we make of this?

ALEX THOMAS, CNN SPORTS CORRESPONDENT: Jonathan, it's more mayhem, isn't it, at the governing body for the planet's most popular sport.

They're obviously painting it as just someone moving on, but it's awfully coincidental, isn't it, considering what's been going on at FIFA in recent

weeks.

de Gregorio, someone that joined in 2011, so part of the new breed that have come to FIFA to help reform it and probably a bit shocked as to

what he may have found there.

He's someone that I've known not well, but have spoken to a lot sort of off the record as much as on the record as he's been part of the team at

FIFA trying to build bridges away from the public eye between FIFA and the media and a bid to improve its image. The problem with that has always

been the man at the top, Sepp Blatter. And we don't yet know for sure how much a part he has played into de Gregorio's exit. There are rumors that

de Gregorio was upset by some of the private PR consultants that we know FIFA hire to try and help with the organization's image and Blatter's in

particular.

But it's interesting it comes just days after a joke that de Gregorio made on Swiss TV on their prime time chat show where he said, you know, if

you've got FIFA's president, general secretary and director of communications in a car who is driving, answer: the police.

[11:40:58] MANN: There are several figures, I don't have to tell you, Alex, in FIFA who are accused of crimes. I hate to darken the

reputation of a man who doesn't seem to have done anything wrong, but is he being accused of any wrongdoing? We should just be clear about this.

THOMAS: We've not seen that de Gregorio himself is involved in any of the corruption scandals or the FBI investigation, or the separate one

happening in Switzerland, although maybe that could emerge.

As I said, he was someone that joined in 2011. So not one of these FIFA lifers, if you like, Jonathan, where we saw particularly with the FBI

investigation. They're looking back towards the early 1990s, which really just outlines how endemic the systematic problems at FIFA have been.

And FIFA is such a big organization, full of red tape, and it's important for us to always remember there are plenty of good people at FIFA

doing very good work. And the organization as a governing body is run very well. You speak to former marketing directors at the Olympic movement that

has reformed, of course, and they say when it comes to the marketing team at FIFA that put on the World Cup, deal with major broadcasters, they are

amongst the most professional in the business on this planet.

So, we can't tar the whole organization with the same brush. I've always thought de Gregorio has handled himself very well in very difficult

circumstances at some of the most high profile news conferences we've seen. But now he's gone. So whether he's going to be advising in a consultancy

rule, yet again it's another strong voice at the heart of FIFA that's on their way out the door, Jonathan.

MANN: Alex Thomas, thanks very much.

And just before we leave, we wanted to remind you that all next week Connect the World will be in the Egyptian capital Cairo. And we invite you

to share your pictures of Cairo on Twitter or Instagram, using the hashtag #onlyinCairo. Get involved. Start sharing.

I'm Jonathan Mann. You've been watching Connect the World. Thanks for joining us. Marketplace Middle East is next. Followed by the

International Desk with Robyn Curnow.

END