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NEWS STREAM
Fighting Back, Huawei Sues The U.S. And Stands Up To Washington's Accusations That Opposes A Global Security Threat; Escaping ISIS, Thousands Of People Leave The Last Remaining Militant Enclave, But It's Not Just The Survivors; A Big Course Correction, Facebook Founder Mark Zuckerberg Announces Big Plans To Make His Service More Secure. Aired: 8-9a ET
Aired March 07, 2019 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KRISTIE LU STOUT, HOST, "NEWS STREAM": I'm Kristie Lu Stout in Hong Kong and welcome to "News Stream." Fighting back, Huawei sues the U.S. and
stands up to Washington's accusations that opposes a global security threat. Escaping ISIS, thousands of people leave the last remaining
militant enclave, but it's not just the survivors. And a big course correction. Facebook founder Mark Zuckerberg announces big plans to make
his service more secure.
Huawei is fighting back against the U.S. in its biggest move yet. The Chinese telecom giant is now suing the U.S. government over a law banning
Federal agencies from buying its products. Now, Huawei says U.S. Congress acted as quote, "judge, jury, and executioner" when it passed the law.
Now, the company also claims the U.S. hacked its server and e-mails. Now, CNN business reporter Sherisse Pham filed this report from Huawei's
backyard in Shenzhen, China.
(BEGIN VIDEO TAPE)
SHERISSE PHAM, CORRESPONDENT, CNN (voice over): Huawei dropping a big announcement at their headquarters here in Shenzhen, China. Defending
their name and their global business. The tech giant suing the U.S. government saying restrictions on Huawei are unconstitutional, an act
against the interest of American consumers.
Huawei is challenging a specific section of the National Defense Authorization Act or NDAA. The law bans Federal agencies from buying
Huawei products.
(BEGIN VIDEO CLIP)
GUO PING, DEPUTY CHAIRMAN, HUAWEI: These sanctions strips Huawei of its due process, violate the separation of common principle, breaks U.S. legal
traditions and it goes against the very nature of Constitution.
Enacting the NDAA, Congress acted unconstitutionally as judge, jury and the executioner.
(END VIDEO CLIP)
PHAM (voice over): The tech giant even accusing the U.S. government of hypocrisy hacking their servers and source codes and stealing e-mails.
Huawei is the largest maker of telecommunications equipment and sells more smartphones than Apple. It is also the global leader in 5G technology.
The U.S. government says it believes the Chinese government would be able to use that tech to spy on others. It's been pressuring other countries to
restrict the use of Huawei.
(BEGIN VIDEO CLIP)
MIKE POMPEO, U.S. SECRETARY OF STATE: We believe that competition, whether it's in 5G or some other technology ought to open, free, transparent and we
worry that Huawei is not that, and so our task has been to share with the world the risks associated with that technology.
(END VIDEO CLIP)
PHAM (voice over): In January, the Department of Justice unsealed two indictments against Huawei accusing them of trying to steal trade secrets
from T-Mobile and skirting Iran sanctions.
Huawei has denied those allegations. All of this happening while Meng Wanzhou, Huawei's Chief Financial Officer and daughter of the founder faces
extradition to the U.S. from Canada. She was arrested in December and has since been charged with violating U.S. sanctions on Iran, claims the
company has rejected.
China has also detained and accused two Canadians of spying and stealing sensitive information. The arrests were widely viewed as a retaliatory
action for Canada's detainment of Meng. Canada has demanded the release of its citizens.
But when asked at the press conference, Huawei senior executives said they think the case against Meng is independent from the Canadians in China.
(END VIDEO TAPE)
PHAM (on camera): Huawei has always said that it is an employee owned company and has no ties to the Chinese government and that none of its
products pose any kind of a national security risk. But this new lawsuit, Kristie, takes the standoff against the United States government to a whole
new level.
LU STOUT: And Sherisse, we know that Europe is going to be watching this legal challenge in the U.S. very closely. What does this legal campaign,
as well as America's global pressure campaign to get U.S. allies to ban Huawei products, what impact is all of this going to have on the back of
this new legal challenge?
PHAM: This lawsuit could come to bear on the issues that you just brought up. Analysts that I talked to said, "Look, it is very unlikely that the
outcome from this lawsuit will result in Huawei gaining any more market share in the United States. It is basically locked out of the United
States, very unlikely that that is going to change, but it could play a factor on the global stage.
It could sway officials in places like Germany and Canada and the United Kingdom who are all weighing restrictions on Huawei. It could sway them to
take another look at the company.
[08:05:07]
PHAM: Especially if this lawsuit goes in Huawei's way, in some way, shape or form. We will be watching. They have filed this lawsuit in Texas and
the U.S. government has 60 days to respond. We will be looking for what that response will be, Kristie.
LU STOUT: And will this go Huawei's way? What are the chances that Huawei can score a legal victory in America?
PHAM: Huawei would certainly like it to go its way, but if we are going with precedence, there is no exact past case that mirrors this, but a lot
of people have been referring to a case that Kaspersky brought against the United States government a little while earlier, a little while before and
it also challenged part of this law, the NDAA.
It is not exactly the same, but it is similar and in that case, the United States government ruled against Kaspersky saying that even though sanctions
are severe, they are not necessarily --
LU STOUT: Okay. Unfortunately, we just lost that connection with Sherisse Pham, but that was Sherisse reporting live from Shenzhen on the latest
legal challenge, a new legal challenge that Huawei is launching against the United States.
Now, after four long days of testimony, the U.S. President's former aide, Michael Cohen, has said his peace to Congress. But his last session is
raising a host of new questions. It's sparking this bizarre back and forth that is taking place in the news over whether Cohen ever sought a
presidential pardon.
Also sources say, Cohen gave new documents to the committee, edited versions of false statements he gave to Congress back in 2017, but he says
the edits weren't his.
Now to help unpack all of this, we have this report by our senior Washington correspondent, Joe Johns.
(BEGIN VIDEO TAPE)
JOE JOHNS, SENIOR WASHINGTON CORRESPONDENT, CNN (voice over): New questions about Michael Cohen's congressional testimony coming after a
second closed-door hearing before the House Intelligence Committee.
(BEGIN VIDEO CLIP)
MICHAEL COHEN, FORMER LAWYER FOR DONALD TRUMP: I believe they're happy. I'm here to cooperate and will continue to cooperate.
(END VIDEO CLIP)
JOHNS (voice over): "The Washington Post" reporting that Cohen told the committee he discussed a pardon with President Trump's lawyers, Jay Sekulow
and Rudy Giuliani. But the details of that conversation remain unclear.
Sekulow flatly denying that the discussion occurred. "The Wall Street Journal" reports that after the FBI raided Cohen's properties last year, he
directed his attorney to explore possibilities of a pardon with Giuliani and the President's other lawyers. Giuliani telling CNN that he never
offered anyone a pardon.
Both reports raising questions about whether Cohen misled Congress in public testimony last week.
(BEGIN VIDEO CLIP)
COHEN: I have never asked for, nor would I accept a pardon from President Trump.
(END VIDEO CLIP)
JOHNS (voice over): Lanny Davis insisting to CNN that his comment does not contradict Cohen's testimony, saying Cohen directed his attorney to discuss
a pardon with Mr. Trump's attorneys when they were in a joint defense agreement. Davis claims that Cohen was referring to the period after the
collapse of that agreement during last week's testimony.
Multiple sources tell CNN that Cohen also provided the committee with documents showing edits to the false written statement he delivered to
Congress in 2017 about the timing of negotiations over the Trump Tower Moscow project. Last week Cohen testified that Mr. Trump's lawyer made
changes to the statement.
(BEGIN VIDEO CLIP)
COHEN: There were several changes that were made, including how we were going to handle that message. Which was --
REP. ELIJAH CUMMINGS (D-MD), CHAIRMAN, OVERSIGHT COMMITTEE: Were you finished?
COHEN: Yes, the message, of course, being the length of time that the Trump Tower Moscow project stayed and remained alive.
(END VIDEO CLIP)
JOHNS (voice over): Davis tells CNN that Cohen authored the line lying about when discussions of the project ended, but a key question remains
whether any of the lawyers who signed off on the statement knew it was false.
(END VIDEO TAPE)
JOHNS (on camera): So these allegations about the dangling of a pardon are potentially explosive in the United States because, here the definition of
political corruption is essentially the offering of a thing of value in exchange for an official act, like a pardon.
So it's really a question of who said what and when, what was their intent, and what's the proof -- Kristie.
LU STOUT: Yes, and that's the information that Congress is trying to glean right now, and on top of that, more bad news for the U.S. President,
despite the fact that he has focused so much on the economy and the trade deficit, and narrowing the trade deficit. It's widening.
JOHNS: Absolutely, it is widening, and it's a problem for the President politically. Frankly, it's seen as not that big a problem, sometimes trade
deficits can be a good idea, depending on the economic posture of the United States. But the problem for the President is he's seeing trade
deficits as an anathema, and it's been a big enemy of his, and now he's got one to deal with of his own, Kristie.
[08:10:10]
LU STOUT: Absolutely. The trade deficit now the highest level in history. Joe Johns reporting live from the White House, thank you.
Now, former Trump campaign chairman, Paul Manafort will soon face sentencing in Virginia Federal Court. He was found guilty of defrauding
both banks and the U.S. government while failing to pay taxes on the millions he earned consulting in Ukraine. Prosecutors are looking to give
him up to 25 years in prison along with financial penalties worth tens of millions.
Manafort is the first case brought to trial as part of the special counsel's Russia investigation.
You're watching "News Stream" and we have a lot more ahead, including Mark Zuckerberg, his plan to transform Facebook and his number one priority he
says is privacy. We've got all the details next. And the Windsor's take on the web. How the British Royals are taking action to stop online abuse.
(COMMERCIAL BREAK)
LU STOUT: Coming to you live from Hong Kong. Welcome back, this is "News Stream." Now, Facebook's CEO is laying out his vision for the future and
that includes a bigger focus on privacy.
In a Facebook post on Wednesday, Mark Zuckerberg revealed his plans to make the service more secure, including encrypted messages and an option for
some things to delete automatically after a short period of time.
Part of his post reads this, quote, "People should be comfortable being themselves and should not have to worry about what they share coming back
to hurt them later. So we won't keep messages or stories around for longer than necessary to deliver the service longer than people want it."
Now, Zuckerberg also teased plans to integrate other platforms including WhatsApp, Instagram and Facebook Messenger. Now, Issie Lapowsky is a
senior writer for "WIRED" magazine and she joins us now from New York. Issie, thank you so much for joining us. In "WIRED," you write that
Facebook's pivot to privacy is missing something crucial. What is it missing?
ISSIE LAPOWSKY, SENIOR WRITER, WIRED MAGAZINE: It is missing any discussion of Facebook's underlying business model, which is of course,
collecting tons of data on all of its users, allowing advertisers to tap into that data to target ads at you and then also separately, which they've
gotten in a lot of trouble for over the last year, sharing data with developers, with app developers.
We remember the Cambridge Analytica scandal. It happened a year ago this month, we found out that Facebook had, for years, been sharing tons and
tons of data with third party developers without people's knowledge. And so Mark Zuckerberg is pretty much silent on those issues in this blog post.
He is talking about encryption which is hugely important. He is talking about data security not having servers in countries that have human rights
abuse histories, that's really important, but ultimately Facebook's underlying business model relies on data collection and he didn't talk
about that at all.
[08:05:07]
LU STOUT: And that's it because Facebook's entire business model would have to change if Zuckerberg is serious about data privacy. Is there a
model that exists out there for Facebook to stay in the advertising game? The data game? While protecting user privacy?
LAPOWSKY: Well, I think what Mark Zuckerberg is sort of envisioning are two different environments. One would be the one we know about Facebook
which is the News Feed, sort of this public town square as he calls it. And then another would have to do -- it would be more like a living room,
he is saying. It will be more where you got to have your private conversations.
So he says that is what Messenger and WhatsApp and Instagram Direct are today and he wants to make all of those platforms talk to each other,
right? So imagine if you only had e-mail and your Gmail could only talk to other Gmail users. You know, Messenger, WhatsApp, Instagram Direct,
they're kind of like that. You can't talk to people between platforms. He wants to change that.
So basically, Facebook wants to own the town square and the living room and the question is whether people are going to trust a company that's already
done quite a number on the town square to own their living room as well.
Now, the advantage they have is that there are already quite a lot of people sitting in these living rooms. You know, Instagram and WhatsApp and
Messenger, they all have over a billion users each already.
So Facebook has the market size, the market dominance to make some moves here, and when it does, it will make some big strides in protecting
people's privacy in private messaging.
LU STOUT: So Facebook -- and Mark Zuckerberg in writing this privacy manifesto is generally saying, "Trust us," and we know why he's doing this.
It's because of this scandal, the tech lash, the scrutiny that Facebook has been under by regulators around the world and from California to
Washington, D.C., across Europe, will this pivot to privacy change the way lawmakers around the world look at Facebook?
LAPOWSKY: Well, it's interesting because we are already seeing regulators, particularly in Germany saying, "No, Facebook, you can't just combine
Instagram and WhatsApp and Facebook with the snap of a finger. You need to get users' consent before you do that." And that would really complicate
Facebook's plans if a lot of users don't agree to have their data merged like this.
So in some ways, you know, Facebook is responding to the scrutiny that's out there around privacy, and also trying to entrench its market size,
right? So if they create this one megalith of a company, this monolith of a company of a messaging company, then you know, it becomes a lot harder
for regulators to disentangle them.
LU STOUT: Incredible, the changes ahead for Facebook. Is this going to affect regulators around the world? Governments? The media industry, as
well? Issie, we're going to leave it at that, but thank you so much for joining us. Issie Lapowsky of "WIRED" joining us live from New York. Take
care.
When Meghan Markle married Prince Harry on that sparkling summer's day, it felt like a fairy tale had come true, but it turned out that in their fairy
tale, yes, there would be trolls. Trolls not hiding under bridges, but behind their keyboards at home ready to post racist and offensive abuse
online. But now the Palace is fighting back. Max Foster has the story.
(BEGIN VIDEO TAPE)
MAX FOSTER, ANCHOR, CNN (voice over): One of the most talked about women of our time, a fashion icon ...
(BEGIN VIDEO CLIP)
MEGHAN MARKLE, DUCHESS OF SUSSEX: The winner this evening is Clare Waight Keller.
(END VIDEO CLIP)
FOSTER: ... and role model, earning her this homage from pop royalty.
The Duchess of Sussex bringing something completely new to the very top of the British establishment. Yet, from the moment their relationship became
public, Prince Harry and former American actress Meghan Markle detected racial and sexist undertones in parts of the press.
There were the references to the Duchess's rich and exotic DNA. How her family had gone from cotton slaves to royalty. And this piece suggesting
the Los Angeles native was almost 'straight outta Compton', a reference to a song by NWA.
The authors of these stories deny racism, but the couple saw underlying prejudice, which they articulated with this palace statement from 2016
calling out "the racial undertones of comment pieces and the outright sexism and racism of social media trolls and web article comments."
FOSTER (on camera): What the regular members of the Royal press pack will tell you is that they are just doing their job, reporting the news without
prejudice and that they actually do far more positive stories about Meghan than negative. The problem they say is when digital news sites pick up on
their first hand reporting and then sensationalize it.
FOSTER (voice over): A typical example is the ongoing narrative that the Duchess of Sussex is at war with her sister-in-law, the Duchess of
Cambridge. This is based on just one report in a respected newspaper that Meghan made Kate cry at a bridesmaid dress fitting just before last year's
wedding.
[08:20:10]
FOSTER (voice over): And even that story is disputed by the Palace. The two women have endured constant comparisons.
(BEGIN VIDEO CLIP)
YOMI ADEGOKE, JOURNALIST AND AUTHOR: Essentially, Kate is no deviation of the norm. She's very much the quintessential sort of British girl-next-
door.
(END VIDEO CLIP)
FOSTER (voice over): Where Kate is now celebrated for wearing an off-the- shoulder dress, Meghan is accused of breaking Royal protocol. When Meghan wears dark nail polish, she breaks Royal protocol again with "vulgar
fashion move." The comparisons are as awkward for Kate as they are for Meghan.
(BEGIN VIDEO CLIP)
ADEGOKE: She's very much what you envisioned when you think of the word princess. And, you know, frankly, she's white. Whereas someone like
Meghan is very much a deviation. She's foreign, not just by being American, but she's got black heritage. She's a divorcee. She's just a
very different type of person and somebody that I don't think your average British member of the public sort of thinks of when they think of the word
Duchess or Royal Family at all.
(END VIDEO CLIP)
FOSTER (voice over): A CNN royal source accepts the Duchesses aren't best friends. They may not hang out or call each other, but they are friendly
and they text.
Stories about a rift are just clickbait, the source adds. But it's that clickbait that online trolls are linking to and using against Meghan.
On Twitter, we investigated the most commonly used anti-Meghan hashtags from the beginning of January to the middle of February. In total, we
analyzed 5,204 tweets and discovered 20 accounts were behind 70% of the posts. Their profile descriptions typically contain Meghan-related
hashtags like "megxit" but also political hashtags such as "BREXIT" and "MAGA" -- Make America Great Again.
We don't know how many people are behind the accounts and we found no evidence of a coordinated right-wing campaign against the Duchess. But --
(BEGIN VIDEO CLIP)
PATRIK HERMANSSON, RESEARCHER, HOPE NOT HATE: Meghan Markle fits into this bigger idea of the West and the U.K. in decline. And here, it's symbolized
by Meghan who kind of corrupts this old institution of the Buckingham Palace.
(END VIDEO CLIP)
FOSTER (voice over): CNN has been told the trolling escalated when the Duchess announced her pregnancy. That was at the beginning of the high-
profile tour of Australia. The Palace staff were having to spend more time deleting comments on their social media platforms. Also, blocking accounts
and reporting abuses.
(BEGIN VIDEO CLIP)
ADEGOKE: There's definitely sort of an unspoken sort of interest in what the baby will look like. You know, there's been a lot of talk on Twitter
not just from racists, but also from people who are very pro- Meghan, about recessive genes, about whether the baby will have an afro, whether the baby
will have its mother's nose. There's all these kind of coded conversations happening about what the baby will look like.
And it sounds sort of really horrible to think, but a lot of people have sort of offered up the idea that the blacker the baby looks, the worse its
treatment will be.
(END VIDEO CLIP)
FOSTER (voice over): Our royal source tells us they even had to pre-block the "n" word on Instagram -- plus, emojis of knives and guns.
FOSTER (on camera): It was celebrated as the wedding that united Britain and cemented the American alliance, but it also exposed divisions that a
small group of haters are trying to exploit.
The Royal Family are determined to starve them of that platform. Max Foster, CNN, Windsor Castle.
(END VIDEO TAPE)
LU STOUT: R. Kelly is back in jail. The singer was taken into custody Wednesday for failing to pay $161,000.00 in child support. Kelly had been
free on bail after being indicted last month on ten counts of aggravated sexual abuse. Meanwhile, Detroit police are now looking into another
allegation against the singer from 2001 involving a 13-year-old. This comes the same day CBS aired Kelly's first interview since his arrest.
(BEGIN VIDEO CLIP)
R. KELLY, AMERICAN ARTIST: I didn't do this stuff. This is not me. I'm fighting for my [bleep] life. Y'all killing me with this [bleep]. I can't
have 30 years of my [bleep] career.
GAYLE KING, ANCHOR, CBS: Robert --
R. KELLY: Thirty years of my career and you are all trying to kill me. You're killing me, man. Y'all just don't want to believe the truth. You
don't want to believe it.
(END VIDEO CLIP)
LU STOUT: R. Kelly is due back in court for the child support case next week. In Australia, a civil lawsuit has been filed against George Pell,
the Catholic Cardinal who was convicted of sexually abusing minors. It is not known who the plaintiff is or what allegations are covered in the
lawsuit.
Pell, who was one of the most senior figures in the Vatican hierarchy after the Pope, is currently appealing his guilty conviction.
[08:25:00]
LU STOUT: A U.S. senator reveals a stunning story of sexual assault while serving her country. Republican lawmaker Martha McSally was speaking at a
Senate hearing on sexual assault in the military when she said that she was raped while in the Air Force.
McSally was the first American woman to fly in combat after a ban on women was lifted. And here is part of her emotional testimony.
(BEGIN VIDEO CLIP)
SEN. MARTHA MCSALLY (R), ARIZONA: I was preyed upon and then raped by a superior officer. I stayed silent for many years, but later in my career,
as the military grappled with scandals and their wholly inadequate responses, I felt the need to let some people know I, too, was a survivor.
I was horrified at how my attempt to share generally my experiences were handled. I almost separated from the Air Force at 18 years over my
despair. Like many victims, I felt the system was raping me all over again.
(END VIDEO CLIP)
LU STOUT: In January, the highest ranking female Republican senator and Army combat veteran, Joni Ernst publicly admitted she was a survivor of
mental and physical abuse by her former husband. Ernst also revealed that she was raped in college.
You're watching "News Stream" and still ahead, U.S. President Donald Trump responds to reports that North Korea seems to be rebuilding a rocket launch
site. Just what he said, next.
(COMMERCIAL BREAK)
LU STOUT: I'm Kristie Lu Stout in Hong Kong. You're watching "News Stream" and these are your world headlines. Huawei says the U.S. Congress
acted as judge, jury and executioner when it passed a law banning Federal agencies from buying its projects. The Chinese tech giant is now suing the
U.S. government over the ban and claims the U.S. hacked its servers and e- mails. Beijing says Huawei's lawsuit against the U.S. is entirely appropriate.
American freelance reporter, Cody Weddle and his Venezuelan assistant had been released from custody. They were reportedly detained early on
Wednesday after Venezuelan authorities raided the reporter's home in Caracas. His mother told CNN she spoke with her son via Facebook and he is
on his way to Miami.
At least one person is dead and 30 wounded after a grenade explosion at a bus station in Indian state of Jammu in Kashmir. Police say that some
people have been detained for questioning. The attack comes just weeks after a Pakistan-based militant group killed 40 Indian paramilitary police
in Kashmir almost sparking a war.
In Eastern Syria, 9,500 people have fled Baghouz in the past three days as U.S.-backed forces close in on the last sliver of territory held by ISIS.
The Syrian Democratic Forces say 30,000 civilians have fled since the offensive began on February 31st. Camps are overwhelmed with the influx of
women and children ...
[08:30:10]
LU STOUT: ... including many expectant mothers and newborn babies. The U.S. President says he would be disappointed if reports that North Korea
seems to be rebuilding a missile testing center confirmed.
On Wednesday, we showed you new satellite images that suggest Pyongyang has started restoring its main missile engine testing site. North Korea had
started to dismantle the facility last year, as part of the nuclear talks with the U.S.
Barbara Starr has more.
(BEGIN VIDEO TAPE)
BARBARA STARR, PENTAGON CORRESPONDENT, CNN (voice over): For the first time in months, new satellite images show North Korea working at a launch
site rebuilding a portion of a key facility once used to test missile engines.
The Tongchang-ri satellite launch facility has been dormant since August, but images indicate restoration work at an engine test stand and a launch
pad. President Trump warning Kim not to break a promise by rebuilding the site.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I would be very disappointed if that were happening. It's a very early report. We're the ones that put
it out. But I would by very, very disappointed in Chairman Kim.
JENNY TOWN, 38 NORTH/STIMSON CENTER: There's nothing here that indicates a launch is being prepared.
(END VIDEO CLIP)
STARR (voice over): This may all be Kim's answer to last week's Summit failure.
(BEGIN VIDEO CLIP)
SEN. MIKE ROUNDS (R-SD), CHAIR U.S. SENATE ARMED SERVICES COMMITTEE: They clearly understand that we can see what they are doing, so it may be as
much a part of messaging as it is anything else.
(END VIDEO CLIP)
STARR: Or Kim may simply be running out of patience with the U.S.
(BEGIN VIDEO CLIP)
TOWN: I think it's more of a political signal, a frustration, a reversal of decision on these unilateral confidence building measures.
(END VIDEO CLIP)
STARR (voice over): CNN has learned just how much both sides miscalculated each other over the Summit. Before President Trump landed in Hanoi,
Secretary of State, Mike Pompeo was there hoping to meet with North Korea's Chief Negotiator, Kim Jung-chol, a critical player that President Trump has
twice welcomed to the Oval Office.
But Kim Jing-chol refused to meet, an early sign the North Koreans were not prepared to agree to full denuclearization. Then as President Trump
prepared to leave Hanoi, a last minute North Korean proposal for the U.S. to loosen sanctions in return for North Korea dismantling the crucial
Yongbyon nuclear complex
The U.S. declined and the President left Vietnam. Now National Security adviser, John Bolton says, President Trump might decide to increase
sanctions on the regime if Kim doesn't give up his nuclear weapons.
(BEGIN VIDEO CLIP)
JOHN BOLTON, U.S. NATIONAL SECURITY ADVISER: If they're not willing to do it, then I think President Trump has been very clear that they're not going
to get relief from the crushing economic sanctions that have been imposed on them and we'll look at ramping those sanctions up, in fact.
(END VIDEO CLIP)
STARR (on camera): Right now, no indication that the North Koreans are preparing for another missile launch, but if they were, that could be a
game changer between President Trump and Kim Jong-un. Barbara Starr, CNN, The Pentagon.
(END VIDEO TAPE)
LU STOUT: And to a story that we've been watching very closely here on "News Stream," two sisters who fled Saudi Arabia will be allowed to stay in
Hong Kong for another month while they seek asylum.
The women say that they were abused by family in Saudi Arabia and decided to flee to Australia via Hong Kong, but when they tried to leave for
Melbourne from here in Hong Kong, they were stopped by authorities who rebooked them on a flight to Riyadh.
The women refused to go and they have been in hidings here in Hong Kong ever since. A human rights attorney fears that the sisters could be
prosecuted before they can get asylum elsewhere. You're watching "News Stream" and still to come, ahead of International Women's Day, there's new
evidence that women are good for business.
Just ahead, a new study shows gender balanced investment teams actually rake in more returns, much more. Stay with us.
(COMMERCIAL BREAK)
[08:35:00]
LU STOUT: It is Thursday night here in Hong Kong. Welcome back. You are watching "News Stream" and now the world is getting ready to celebrate
International Women's Day. It's happening tomorrow and today, there is new evidence that in business, it's better to have both men and women on the
team.
Now, a new study by the International Finance Corporation, a member of the World Bank Group, it looked at private equity and venture capital funds.
And it found that performance with gender balanced senior investment teams generated 10% to even up to 20% higher returns as compared with funds that
had a majority of male or female leaders. So it's all about the balance.
Joining me now is the head of SMS Ventures at the IFC, Shruti Chandrasekhar. She joins us from New York. Shruti, thank you for joining
us here in the program. Sorry, you're joining us from Washington, D.C. Now, according to your study, funds with gender balanced leadership
generate up to 20% higher returns. Tell us about the study and how did you reach this finding?
SHRUTI CHANDRASEKHAR, HEAD, SME VENTURES, IFC/WORLD BANK GROUP: Kristie, thank you so much for having me here today. So what we did is we looked at
the financial returns in over 800 private equity funds and venture capital funds across emerging markets and looked at the teams that were making the
investment decisions at those funds.
And we looked at the teams by saying, you know, is this a diverse team or is this not a diverse team? And we thought a lot about how we categorized
it and finally we used the rule of 30%. And we said if more than 30% of the team are members of the opposite gender, we categorize them as gender
diverse teams and we looked at the return of that subgroup of funds versus those that were not as diverse and what we found is the funds that were
diverse had up to 20% higher return for their investors.
LU STOUT: So the key takeaway here from your study is it pays to have gender balanced leadership. But why? What is it about greater gender
diversity that brings about higher returns in private equity and venture capital?
CHANDRASEKHAR: So the other part of the study that we found is when we looked at the companies that these private equity and venture capital funds
were investing in, if those companies were more gender diverse on a similar measure, we found that those companies provided up to 25% better returns
for their investors.
So I think what ends up happening is most private equity and venture capital funds are sourcing their investments from their networks. When we
surveyed over 500 investors, that's what we identified and when you have a more diverse team, you're sourcing from a wider network of deals and so
you're able to tap into those more diverse teams and achieve better returns.
LU STOUT: We know that women are woefully underrepresented in private equity and in venture capital, do you think your study, which focuses on
the money, the bottom line, is that going to help entice companies to think differently and to bring more women into these sectors?
CHANDRASEKHAR: I hope so. I think a lot of firms are already on that path like firms are thinking about it given the trends that we've been seeing in
the news and in the market over the past year or two. So there are some firms that are already on that trend and we've showcased some of those
firms. There are a lot of others who are doing interesting things. But the percentage are still so low.
And so, as we were having conversations with institutional investors, other players in the investors, the resounding statement that we kept hearing is
that, "Oh, you know, it's great. It's a good thing to have a more diverse team, but does it actually help you make money?"
And so what we said is you know, as IFC, as the World Bank Group, let's see if we can help answer this question and that's what we spent the few months
working on.
LU STOUT: Yes, that's what you've done at IFC. Do you think other organizations should do the same therefore, in the greater fight for gender
equality? Do you think these types of studies that emphasize the bottom line, the money factor will ultimately tip the balance for women?
CHANDRASEKHAR: Absolutely. So when we embarked on this journey, we wanted to find like-minded partners who would help us in our analysis and in
disseminating our findings and so we worked with Rock Creek, a very large, female-founded investment firm based out of Washington, D.C. and Oliver
Wyman, a management consulting firm that has done a fair bit of work on women in financial services.
And so we found like-minded partners and the goal is over the next few months to use these findings to encourage limited partners, those who
invest in funds to have the conversation with their fund manager.
[08:40:10]
CHANDRASEKHAR: To say, hey, you know, if your team is more diverse, historical correlations show that the returns are better and for fund
managers to have those conversations with the companies that they invest in, encouraging them to build diverse teams from the start.
LU STOUT: Yes, embrace gender diversity because it simply makes good business sense. Shruti, thank you so much for doing this finding and
sharing this with us. Thank you so much and take care.
CHANDRASEKHAR: Thank you so much, Kristie and if anyone wants to look at the report --
LU STOUT: I will tag the report on social media a little bit later so you can be able to find the report there.
Now, I want to look ahead at what's going to happen next. It's a giant leap for women-kind. It is really exciting because this month, these two
women, they are scheduled to carry out the first all-female space walk in history.
Anne McClain, shown there on the left and Christina Koch on the right. McClain is already there on the International Space Station and Koch is
blasting off to join the crew next week. NASA says that the Flight Director and Controller are women as well. The all-women spacewalk is
scheduled for March 29th.
Now, here are arguably two of the most famous men in the world. You've got Tim Cook, head of Apple, and of course, the U.S. President Donald Trump.
Neither of those names are that difficult to remember. So it begs the question, this moment, why did it happen and it's taking people by
surprise.
(BEGIN VIDEO CLIP)
TRUMP: Tim, you've got to start doing it over here and you really have, I mean, you've really put a big investment in our country. We appreciate it
very much, Tim Apple.
(END VIDEO CLIP)
LU STOUT: Yes, he said it quite clearly. He called Tim Cook, Tim Apple. Now, we are all guilty of this, the odd slip of the tongue, but when you're
President of the United States and you've invited business leaders to the White House to talk about jobs and education, things are kind of slightly
different and that's something Jimmy Kimmel was quick to jump on.
(BEGIN VIDEO CLIP)
JIMMY KIMMEL, LATE NIGHT SHOW HOWST: How is your daughter, Fiona, doing, Tim? Oh, look who else we have here, Craig Costco, how are those hot dogs
selling? He got confused after meeting Ronald McDonald last weekend.
(END VIDEO CLIP)
LU STOUT: And that is "News Stream." I am Kristie "News Stream" but don't go anywhere, Amanda Sport, "World Sport" is next.
(SPORTS)
[09:00:00]
END
