Return to Transcripts main page
Isa Soares Tonight
FTX Founder Sam Bankman-Fried Faces Criminal Charges; U.S. To Send Patriot Defense System To Ukraine; Croatia Faces Argentina At Qatar World Cup; Biden Addresses Better Than Expected Inflation Numbers; Greek MEP Stripped Of V.P. Role; Ukraine Trying To Protect From Potential Russian Attacks From Belarus. Aired 2-3p ET
Aired December 13, 2022 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ISA SOARES, HOST, ISA SOARES TONIGHT: A very warm welcome to the show, everyone, I'm Isa Soares. Tonight, it is a day of reckoning for the world
of crypto. U.S. authorities accuse Sam Bankman-Fried of defrauding investors and customers in his failed crypto exchange FTX. And then an
exclusive CNN report.
The Biden administration is finalizing plans to send the long-awaited Patriot Missiles Defense System to Ukraine. But the logistics of the
operation are immense. We'll be live from the Pentagon for you. And then Argentina takes on Croatia in the first semi-final of the 2022 World Cup in
Qatar. We'll have the latest scores for you.
But first, a house of cards built on a foundation of deception. That's how U.S. securities regulators are describing the collapse in crypto giant,
FTX, as its founder now faces multiple criminal charges. FTX's former CEO, Samuel Bankman-Fried has been appearing before a judge in the Bahamas after
his arrest on Monday night.
He is facing a battery of fraud and conspiracy charges from New York prosecutors and more from the U.S. Securities and Exchange Commission.
Meantime, the man who has taken over FTX, John Ray, told Congress today that the FTX collapsed because the people running it were grossly
incompetent. Have a listen.
(BEGIN VIDEO CLIP)
JOHN RAY, CEO, FTX GROUP: The FTX Group's collapse appears to stem from absolute concentration of control in the hands of a small group of grossly
inexperienced and unsophisticated individuals. They failed to implement virtually any of the systems or controls that are necessary for a company
entrusted with other people's money or assets.
Literally, you know, there's no record keeping whatsoever. The absence of record-keeping. Employees would communicate, you know, invoicing and
expenses on slack, which is, you know, essentially a -- you know, a way of communicating for chat rooms. They used QuickBooks, a multi-billion dollar
company using QuickBooks.
UNIDENTIFIED FEMALE: QuickBooks?
RAY: QuickBooks. Nothing against QuickBooks, it's a very nice tool, it's not just for a multi-billion dollar company.
(END VIDEO CLIP)
SOARES: Well, for his part, Bankman-Fried insists he didn't deliberately do anything wrong. But as FTX's investors worry about what will happen to
their billions of dollars, former CEO is facing an avalanche of trouble. Our Christine Romans explains the charges for you.
CHRISTINE ROMANS, CNN ANCHOR & BUSINESS CORRESPONDENT (voice-over): Bankman-Fried was once considered one of the most powerful figures in
crypto before his company suffered a liquidity crisis and filed for bankruptcy last month, leaving at least a million people without access to
their funds. He has denied defrauding his customers.
UNIDENTIFIED MALE: Once the dust has settled and once all the investigations have happened that you won't be arrested for fraud?
SAM BANKMAN-FRIED, FORMER FTX CEO: I don't think I will be. I don't think that I -- I don't think I tried to do anything wrong. I don't know if FTX
deposits is being used to pay off our immediate(ph) creditors. I normally commit fraud -- I don't think I committed fraud, I didn't want any of this
to happen. I was certainly not nearly as confident as I thought I was.
ROMANS: The former FTX CEO teamed up with a slew of high-profile celebrities and TV ads in Super Bowl commercials, promoting crypto. The key
question for investigators, whether FTX misappropriated customer funds when it made loans to Bankman-Fried's hedge fund, Alameda Research.
FTX's new CEO, John Ray paints a picture of a crypto empire with virtually no corporate controls and a shocking lack of financial and other record-
keeping. Ray wrote in a prepared statement, the collapse of FTX is due to power left in the hands of a very small group of grossly inexperienced and
BANKMAN-FRIED: There was no person who was chiefly in charge of positional risk of customers on FTX. And that feels pretty embarrassing in retrospect.
SOARES: Well, we are expecting to hear sometime this hour from the U.S. Attorney's Office regarding criminal charges here. Of course, as soon as
that gets underway, we shall bring that to you. But let's dig deeper in the meantime into this crypto disaster now with CNN's Anna Stewart. She's here
with me in London.
She was listening to what we heard today from the FTX new CEO, John Ray, who of course, as we saw there has been testifying. From what you heard
from him, just paint us a picture of how the operation, what was happening behind the scenes here, Anna?
ANNA STEWART, CNN REPORTER: Before this morning, we already had his written remarks. We heard those read out. They were shocking enough, but
then came the Q&A. The questions, the answers, it was absolutely shocking how this company was run. This was a multi-billion dollar company. At one
stage, valued over $30 billion.
We are told by the current CEO overseeing this restructure, that $8 billion of customer money has been lost. He says he doesn't trust a single piece of
paper in the entire organization. Frankly, there isn't much paper there because he also said that when he compares it to Enron and other
restructures that he's been in charge of, he says we are dealing with a paperless bankruptcy.
It's difficult to trace and track assets. This is a company that used slack for expenses --
SOARES: Yes --
STEWART: Between employees. It is a company that used QuickBooks, a nice little bit of software --
SOARES: Yes --
STEWART: For a small business to do their accounts. A multi-billion dollar company was using QuickBooks. It's very hard to see how they're going to
recover the funds here.
SOARES: I have so many questions.
STEWART: Fair --
SOARES: For you that would probably take this whole show and probably wouldn't have answers to. But first of all, where was the oversight? Where
was -- did they even have a board? Who was keeping on top of this? Clearly no one. What do you understand from that?
STEWART: Almost no oversight, but perhaps --
SOARES: Yes --
STEWART: More within the U.S. silo, as he called it because --
SOARES: Yes --
STEWART: That was audit, although he doesn't trust the new CEO, any of the audits, so we're done. I'd say practically no oversight. No board, no
governance and really no experience from the top. And what was very clear today is this was a company controlled really by one man. And while we have
at the very heart of this issue --
SOARES: Yes --
STEWART: Alameda Research, the hedge fund, and we know now that the commingling of customers funds was happening between the two. But you have
one man essentially running both in terms of corporate governance.
SOARES: Wow. We've got one man, we've got so many people who were actually there, money disappeared, we don't know whether they're ever going to get
their money back, right? This is the other aspect of it where we haven't touched on. But you know, something that struck me when I heard from John
Ray III testifying, he hinted at the fact, and I think we played a little clip there, that maybe more people involved.
So, do you think this is just the first person here, one and done, or do you think there will be more to come in terms of this investigation?
STEWART: Within FTX --
SOARES: Yes --
STEWART: Started the focus right now is on SBF. I mean, I do feel like we're alphabet soup here, Sam Bankman-Fried. But yes, at this stage, you
would imagine that people within FTX are speaking to the authorities --
SOARES: Yes --
STEWART: For them to get this sort of information. But currently, the focus is on the one man. But this is early days, Isa. It's incredible how
swift this has been. This company around six weeks ago, was one of the biggest exchanges in the world. SBF was the poster boy of cryptocurrency.
The legitimate face of it, really.
SOARES: And he's been pretty outspoken prior to this, isn't he? About these allegations, prior to what happened overnight.
STEWART: Prior to the allegations and since the allegations --
SOARES: Yes --
STEWART: He hasn't actually stopped talking. And I wonder what his lawyer thinks about that. He has spoken to media outlets, he has tweeted, he has
the-end people, he has appeared on stage.
SOARES: What has he said post-allegations?
STEWART: Post allegations, he has in some sense has apologized. Some say he hasn't been contrite enough. What he hasn't said is that he committed
fraud knowingly. He says he's made mistakes. He says he's a bad CEO, and I think that's probably the only thing we all agree on. Whether or not it was
a lack of competence --
SOARES: Another statement -- yes --
STEWART: Or whether or not this was a knowing criminal act.
SOARES: As you were talking, I'm looking now at live pictures from New York. Of course, we are expecting U.S. Attorney's Office to talk more
about, you know, criminal charges here against the FTX Sam Bankman-Fried of course, that Ann was just talking about. Of course, as soon as that gets
underway, we'll of course bring it to you.
But Anna, going back to this case, and I know you've got some of the filings there with you. I mean, this -- does this destroy in many ways the
whole reputation that crypto has tried to build, which is safe, and that it's -- you know, it's an alternative, but it's a safe way model of
STEWART: I've been speaking a lot to people in the crypto community recently for (INAUDIBLE) for --
SOARES: Yes --
STEWART: And it's been devastating for them.
SOARES: Anna, I'm sorry to interrupt. Let's just listen to what the U.S. Attorney has to say.
DAMIAN WILLIAMS, U.S. ATTORNEY FOR THE SOUTHERN DISTRICT OF NEW YORK: Good afternoon everyone, my name is Damien Williams and I'm the U.S. Attorney
here in the Southern District of New York. One month ago, FTX, one of the world's largest cryptocurrency exchanges collapsed, destroying billions of
dollars in customer value overnight.
And for every day of the past month, the dedicated prosecutors of this office and our partners at the FBI, SEC and CFTC, have been working around
the clock to figure out what happened and to begin the process of seeking justice. This morning, we unsealed an eight-count indictment, charging
Samuel Bankman-Fried, FTX's founder with a series of inter-related fraud schemes that contributed to FTX's collapse. I authorized these charges last
A grand jury here in Manhattan indicted Mr. Bankman-Fried last week, Friday. We obtained a warrant for his arrest. And that arrest was executed
yesterday in the Bahamas. And let me be clear, my remarks today are going to be limited. That is by design. This investigation is very much ongoing
and it is moving very quickly.
But I also want to be clear about something else. While this is our first public announcement, it will not be our last. The indictment has eight
counts, but effectively, it outlines four different areas of misconduct. First, Mr. Bankman-Fried defrauded customers at ftx.com, the cryptocurrency
exchange he founded. Second, with a -- private lender, Alameda Research, his proprietary hedge fund. Third, we allege that he defrauded investors in
FTX, and lastly, we allege that he violated campaign finance laws.
Now, we're going to say a little bit more about what we allege in the indictment. First, we charged that from 2019 until earlier this year,
Bankman-Fried and his co-conspirators sold billions of dollars from FTX customers. He used that money for his personal benefit, including to make
personal investments and to cover expenses and debts of his hedge fund Alameda Research.
Secondly, and relatedly, we charged that Bankman-Fried lied to Alameda's lenders about the source of the money that he was using to pay those debts.
Third, we charged that earlier this year, in the midst of the crypto crisis, Bankman-Fried lied to investors in FTX about the fact that he had
sent billions of dollars in FTX customer money to Alameda.
And fourth, we charged that Bankman-Fried violated federal campaign finance laws by causing tens of millions of dollars in illegal campaign
contributions to be made to candidates and committees associated with both Democrats and Republicans. These contributions were disguised to look like
they were coming from wealthy co-conspirators, when in fact, the contributions were funded by Alameda Research with stolen customer money.
In all of this, dirty money was used in service of Bankman-Fried's desire to buy bipartisan influence and impact the direction of public policy in
Washington. To anyone who is watching this or hears about this prosecution, if you believe that you have been a victim of these schemes or you have
information about the conduct that we've alleged in our indictment that we've unsealed today, please let us know.
To any person, entity or political campaign that has received stolen customer money, we ask that you work with us to return that money to the
innocent victims. And to anyone who participated in wrongdoing at FTX or Alameda Research, and who has not yet come forward, I would strongly
encourage you to come see us before we come see you.
Now, let me say a word about our partners at the FBI, the SEC and the CFTC. The women and men of the FBI are some of the finest public servants in this
country, and they have been with us since day one in this investigation. And there is no one, no one better to work with. I want to thank the
brilliant lawyers at the SEC and the CFTC.
This investigation is complex and it's sprawling. We embrace that kind of challenge here in the Southern District of New York. And we always want the
CFTC and the SEC by our side when we're doing that. And finally, I want to thank the career prosecutors from my office handling this case. Nicholas
Rose and Daniel Sassoon, and their supervisors, Scott Hartman and Matthew Parolski(ph), the Chiefs of our Securities and Commodities for our task
I want to acknowledge the contributions and hard work of the prosecutors from our Money Laundering and Transnational Criminal Enterprises Unit,
including Samuel Raymond and Fein Renn(ph) and their chiefs, Jessica Feinstein and Terry LaMore(ph). And I want to acknowledge the contributions
from the chief of our Public Corruption Unit, Rebecca Donnaleski(ph).
They should be very clear, it is an all hands on deck investigation here (INAUDIBLE). And I couldn't be prouder of the team that I'm privileged to
lead. And I want to invite up to the podium, FBI Assistant Director-in- Charge, Michael Driscoll.
MICHAEL DRISCOLL, ASISTANT DIRECTOR-IN-CHARGE, FBI NEW YORK: Thank you, Damian. So thank you all for joining us this afternoon for this important
announcement. This case came together at great speed, and such that it's only possible to be standing here today through tremendous coordination and
cooperation from many people and agencies.
As the indictment today alleges, Bankman-Fried knowingly defrauded customers of FTX through the misappropriation of customer deposits to pay
expenses and debts of a different company.
In addition, Bankman-Fried executed deliberate transactions designed to obscure and disguise the misuse of customer funds. He preyed on his
customers, the victims of this case, abusing the trust placed not only in his company, but in himself as the lead of that company. We are determined
to help the victims of this case get a sense of justice.
And we will continue to make every attempt to recover as much of their funds as possible. If you're willing to deceive customers and attempt to
hide your actions, we will be persistent in pursuing you and ensuring you are brought to justice. I want to thank Damian Williams and his team at the
Southern District for their cooperation and partnership on this case.
I also want to thank our partners at the SEC and the CFTC for their outstanding work. A word of thanks to DEA's Aviation Division, their
Foreign Operations Group for their logistics and resources, assistance over the past few days. Our field officers in Boston, Miami, Washington D.C. and
our legal office in Bridgetown.
FBI headquarters components that fed and worked on this case from Criminal Investigative Division, our CIR team, Crisis Incidents Response group and
our international operations division. And of course, and special agents from -- and forensic accountants from our Securities Fraud Squad as well as
the Money Laundering squad.
The Justice Department Office of International Affairs has been an important partner in this. And of course, as Damian noted before, his team
in Securities and Commodities fraud, Money Laundering and Transnational Criminal Enterprise Unit has been a true partner in this case.
I also want to thank our international law enforcement partners. These kind of cases do not happen without that kind of coordination. And I
specifically want to note the assistance provided by the Royal Bahamas Police Force. And I want to be clear, this case is about fraud. Fraud is
fraud. It does not matter the complexity of the investment scheme, it does not matter the amount of money involved.
If you mislead and deceive to take what does not belong to you, we will hold you accountable. And I'd like to thank everyone who's been working on
this case for helping us adhere to that principle today. Thank you.
GURBIR GREWAL, DIRECTOR OF ENFORCEMENT, SECURITIES & EXCHANGE COMMISSION: Good afternoon, everyone, I am Gurbir Grewal; the director of the SEC's
Division of Enforcement. Today, in a parallel civil complaint, the SEC filed charges against Sam-Bankman-Fried, alleging that he orchestrated a
years-long scheme to defraud equity investors in FTX Trading Limited.
A company that he co-founded and led as CEO until its collapse last month. As alleged in our complaints, starting in 2019 and continuing through
November 2022, Bankman-Fried raised more than $1.8 billion from equity investors on the basis of lies. You see, FTX operated behind a veneer of
legitimacy that Bankman-Fried created by among other things, repeatedly touting to investors FTX's top-notch automated risk controls that he
claimed protected customer assets and by repeatedly claiming that those assets were at all times safe, segregated and secure.
But as we allege in our complaint, that veneer wasn't just thin, it was also fraudulent. Because in reality, from FTX's inception in 2019, Bankman-
Fried began secretly and improperly diverting FTX customer funds to his crypto hedge fund, Alameda Research. And it is alleged in our complaint he
then misused those funds to make undisclosed venture investments, lavish real estate purchases and large political donations.
Bankman-Fried's claims about FTX's sophisticated risk controls and other customer protections were simply bogus. Similarly, his representations to
FTX investors and trading customers concerning Alameda were also part of that carefully-crafted veneer that were similarly false and misleading.
He frequently claimed that Alameda was just another customer with no special privileges at FTX. But in truth, Bankman-Fried directed that
Almeida be exempt from the very risk management measures that he touted to FTX investors and to its customers. He also provided Alameda a virtually
unlimited line of credit funded by FTX customers.
And he also diverted billions of dollars in customer funds from FTX to Alameda. Bankman-Fried's entire house of cards started to crumble as crypto
asset prices plummeted in May of 2022. And as Alameda's lenders demanded repayment on billions of dollars in loans.
But to continue propping up his empire, we allege that Bankman-Fried diverted billions more and FTX customer assets to Alameda. Even as it was
increasingly clear that Alameda and FTX could not make those customers whole. In fact, through the Summer of 2022, he diverted hundreds of
millions more in FTX customer funds to Alameda, which he then used for additional venture investments and for loans to himself and to other FTX
All the while, he continue to make misleading statements to investors about FTX's financial condition and about its risk management. And even in
November, 2022, faced with billions of dollars in customer withdrawal requests that FTX could not fulfill, Bankman-Fried misled investors from
whom he sought still more money to plug the multi-billion dollar holes that he had created.
His brazen multi-year scheme finally came to an end when FTX, Alameda, and their tangled web of affiliates filed for bankruptcy on November 11th,
2022. That collapse has had far-reaching consequences for FTX customers, for its investors, and for its counter-parties. And our investigation into
those consequences and to those individuals and entities involved remains ongoing.
But one the media take away from today's announcement should be that non- complying trading platforms pose dramatic risks to both their investors and to their customers. Among other things, they don't provide them with the
same robust level of disclosures and protections against fraud and conflicts of interest.
That's what traditional U.S. registered Securities Exchanges provide. So, it's imperative that non-compliant platforms come into compliance. But as
Chair Gensler has made clear, the runway is getting shorter for them to come in and to register with us. And for those who do not, the enforcement
division stands ready to take action.
I'd like to recognize the incredible team from our crypto assets and cyber unit, and from across our division responsible for today's action. Devlin
Sue(ph), Ivan Schneider(ph), David Brown(ph), Brian Hackrell(ph), Portia Salimi(ph) investigated this matter under the supervision of Amy Hartman,
Michael Brennan, Jorge Tenreiro --
SOARES: Right, you have been listening there to the SEC, before that, you heard from the FBI as well as the U.S. Attorney -- U.S. Attorney General,
Damian Williams, who really just outlined some of the charges against Sam Bankman-Fried, SBF, and really how they came about. He said FTX collapsed
one month ago, since then, every day, they have begun really the process of seeking justice.
There are four areas though of misconduct they seem to all be looking at. They said that he defrauded customers at ftx.com, defrauded lenders within
the crypto hedge fund, Alameda and as well as defrauded investors. Then he went -- in fact -- they talked about violations, campaign finance
violations, basically saying that he made illegal campaign contributions here to Democrats and Republicans with stolen customer money, dirty money
as they said.
That he raised $1.8 billion online. Some money raised online. He's talked about how complex and sprawling this investigation is, and really directed
the comments and their attention to those still working within the industry. Said, you know, if you've done -- if you've committed any
wrongdoing, come to us before we come to you.
Well, listening to that press conference here with me was Anna Stewart. Anna, it seems this is the very beginning, right? Beginning of
investigation that is moving rather quickly. What stood out to you from what you heard just now?
STEWART: It's incredible coordination --
SOARES: Yes --
STEWART: Between all these different bodies. And I think the main theme if we can pull a thread through all of it, is that they are all saying that
SBF lied, committed fraud, and did so knowingly. And that is the exact opposite of course, of what we have heard from SBF up to this point. And I
have to say, we have had a response from SBF today, from his lawyer saying he will review the charges with his legal team, and he's considering all of
his legal options.
The bit that really stood out to me though In terms of adding more flesh perhaps to what we already had was about campaign finance --
SOARES: Yes --
STEWART: Laws and the violations there, saying that tens of millions of dollars in illegal campaign finance and violations were committed in excess
of legal limits, going to both Republican and Democratic candidates, no one's been named at this stage. I wonder whether they will go further down
the line of this investigation.
But essentially, it's saying that these funds were coming from Alameda, from customers funds, customers who may have just put their money into FTX
and have no idea --
SOARES: Yes --
STEWART: He's been lending to this hedge fund. And it looks like it was coming from different names. That is incredibly shady and quite
extraordinary that all of these things are only coming up now.
SOARES: Yes, I know, what they paint -- the image they painted, not only he did so knowingly, but he was preying on his customers, which is
something we heard from the SEC. Just explain very quickly where he is right now, Sam Bankman-Fried, and when perhaps we may see him in the U.S.
if he's extradited here.
STEWART: I don't really know about the timeline, but right now he is in the Bahamas. Today was the extradition hearing. We know that the judge
wanted to have a break to consider the terms of bail or if they will grant SBF bail, whether or not he's a flight risk, all of these matters are to be
I am told that instead of wearing his usual, you know, T-shirt, shorts and hoodie, he is wearing a blue suit. Whether we will see him in his suit
coming to the U.S. remains to be seen.
SOARES: Well, it sounds as if we're not far away, very far away from the end of this. We'll find out more details as we heard there from the U.S.
Attorney. They will keep us abreast of all the developments. Anna Stewart, thank you very much.
Now, for the first time ever, U.S. scientists have successfully produced a nuclear fusion reactor replicating conditions only found in the stars and
the sun. It's an engineering marvel, really, that scientists have been trying to get a hand on for years.
(BEGIN VIDEO CLIP)
JENNIFER GRANHOLM, SECRETARY OF ENERGY, UNITED STATES: This milestone moves us one significant step closer to the possibility of zero carbon,
abundant fusion energy powering our society.
(END VIDEO CLIP)
SOARES: CNN's Rene Marsh joins me now from Washington D.C. with more on what this breakthrough means. Rene, great to see you. So limitless clean
energy, that would be clearly a game-changer. How far away are we from generating this kind on a commercial scale?
RENE MARSH, CNN CORRESPONDENT: Yes, you know, that's a big question. And there is this great deal of excitement, but although this was such a
critical milestone, we wouldn't see this sort of technology being used or this energy source being used for decades to come. We spoke with Department
of Energy Secretary Jennifer Granholm today, she had an aspirational goal of the next ten years, seeing this on a wide scale-use, but many
researchers and scientists that we've been speaking to say it is more like 2 to 3 decades.
So it's a long way off, but still, it doesn't take away from this massive achievement. However, the importance and significance of all this is the
need to pivot away from those dirty fossil --
SOARES: Yes --
MARSH: Fuel type energy sources. The problem is that maybe in another 20 to 30 years, the climate crisis could very well be at a tipping point. So,
these are all things to weigh, but nevertheless, today, a huge step forward in this space of trying to create this absolutely clean energy source.
SOARES: Yes, a huge step forward indeed. Do we know at this point what the next steps are here? Because I know we heard from the Energy Department.
Did they outline like a plan for the next kind of 10, 20 years or so?
MARSH: Yes, so the plan is to continue to replicate this. The problem is - - and I don't want to say problem, because again, that sounds like I'm downplaying what happened here --
SOARES: Yes --
MARSH: But the issue here was that they were able to generate this power, but not nearly enough that would be necessarily --necessary to truly power
our lives. So, they need to sustain that for a longer period of time. The next hurdle is how do you harvest that energy and then move it to a power
grid that would then get to our homes?
So, there are many hurdles to still cross. Of course, there's also the regulatory hurdles --
SOARES: Yes --
MARSH: That would still need to be crossed. So, that is next, but I think they will all say that the work continues and they still have a long way to
SOARES: Well, I was totally geeking out and I have been totally geeking out on this story for the past two days, really appreciate it --
MARSH: Exactly --
SOARES: Rene Marsh, great to see --
MARSH: Sure --
SOARES: You. Thanks, Rene. We're taking a short break, we'll be back after this.
SOARES: Welcome back, everyone.
There's a reason for optimism, that is the message from the U.S. President, Joe Biden, today, offered on the back of America's strong inflation
numbers. The country's CPI was 7.1 percent in November, as you can see on the graphic, a sign that measures state integral U.S. economy (ph) may be
Speaking earlier, Biden welcomed the latest figures but conceded there is still a lot of work to be done. Have a listen.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: where inflation is rising at double digits in many major economies around the world, inflation is
coming down in America.
In fact, this new report is the fifth month in a row where annual inflation has fallen in the United States. Make no mistake: prices are still too
high. We have a lot more work to do. But things are getting better, headed in the right direction.
(END VIDEO CLIP)
SOARES: So heading in the right direction. U.S. markets seem to be celebrating the news. The major stocks opened high on Tuesday and have
stayed broadly up as, you can see there throughout the day. The Dow Jones up almost two tenths of a percent. Nasdaq, 1 percent. S&P just over half a
percent. Keep an eye on all this as CNN's Richard Quest joining me from New York.
Richard, suppose the question becomes, what does this mean for the Fed?
Will they ease their foot off the brake as you and I have discussed before?
RICHARD QUEST, CNN HOST: I think it's a question, rightly put, of whether or not the expected plan takes place. If this number had been bad, then
they would have gone to something different.
But the market is basically saying we have been looking for a half a percentage point. This inflation number is good. It does not scare the
horses. Therefore, we expect the Fed will raise rates but only by -- I say only -- by only half a percentage point. If the Fed goes for three quarter
percent tomorrow, that will send -- will push everybody out of bed.
SOARES: Some positive news. But the road ahead is long.
QUEST: Oh. Oh. To those who've been around this a few times, first of all, inflation takes, interest rates take 6 to 9 months to work through.
Secondly, we've had this most enormous rise in interest rates. It's not gone like that; it's gone like that.
So we are looking at the effects of the interest rate rises now. They won't be fully felt until the middle of next year, which is why, if a recession
is on the cards, it will happen in Q2 and Q3 of next year.
Inflation is -- I don't want to say being tamed because it's not being tamed yet -- inflation is being wrangled. They are getting the lasso around
inflation. They are starting to pull on it. But it is far from being tamed.
SOARES: So good news but don't bring out the champagne or the caviar just yet. We shall see. Richard Quest, thank you very much. Back at the top of
SOARES: Thank you, Richard.
Richard is back at the top of the hour in less than 30 minutes.
I want to stay in Europe.
The European Parliament is staring now down the barrel of a major corruption scandal. It has just voted to strip Greek lawmaker Eva Kaili of
her role as vice president after she was arrested by Belgian police.
She is one of four people targeted as part of a probe into alleged payments and gifts made by Qatar to parliament members. Earlier, the prosecutor's
office released this video, showing piles of money, as you can see there, seized during the investigation.
She is maintaining her innocence and denying the charges. But she was voted out of the E.U. office by 625 votes to 1. European parliament president
Roberta Metsola promised a thorough investigation.
(BEGIN VIDEO CLIP)
ROBERTA METSOLA, EUROPEAN PARLIAMENT PRESIDENT: There will be no impunity. There will be no sweeping under the carpet. Our internal investigation will
look at what has happened and how our systems can be made more watertight. Our house is on the side of the law.
(END VIDEO CLIP)
SOARES: CNN's Nic Robertson is with me now.
So much we don't know but this could potentially be a huge corruption scandal within the E.U.
What are we learning here?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: There are many ways this could go. Roberta Metsola referenced that in the conference. She says
she doesn't know where this could stop. This is really concerning.
When you look at the investigation there's, the police investigation, the (INAUDIBLE) they had at the weekend. They recovered 600,000 euros in cash
and there may be more yet to find. Bags of cash in one location was 150,000 euro.
This is a significant amount of money given in cash to significant people, four people detained.
The question will be, for the police, who else is tainted by this, which other doors should they be knocking on?
That's the police investigation.
The concern for the E.U. is how long has this been going on and what political decisions have been taken?
Qatar is accused of being the one providing the cash here. They deny that. But it's going to raise the question at the E.U. and in domestic
parliaments as well.
If this nation that's accused has been handing out cash, what has happened in other capitals around Europe?
But to the E.U.'s issue, what has been influenced there?
It's significant that Eva Kaili herself, just within the past month, not only visited Qatar just before the World Cup but also spoke very favorably
about Qatar and even then, heading down, heading off rumors that they were in fact involved in bribery. This is what she said.
(BEGIN VIDEO CLIP)
EVA KAILI, FORMER V.P., EUROPEAN PARLIAMENT: Some Qataris approve actually of house post diplomacy (INAUDIBLE) the country with reforms that inspired
we uphold. I have long said that Qatar is a strong (INAUDIBLE) in labor rights.
They are committed to a vision by choice and they opened to the world. Still some here are calling to discriminate them. They bully them and
accuse everyone that talks to them or engages of corruption.
(END VIDEO CLIP)
ROBERTSON: So key studiers of everything that Qatar has been accused of, of corruption, of bad labor practices, here she is, using her platform, as
a vice president of the European Parliament, to tell positive things about Qatar.
It's not a pretty look for the E.U.
But of course, the core thing is what decisions have been made based on that influence?
SOARES: Important to note that Qatar has denied any involvement here. Nic Robertson, thank you very much.
Let me get more on this story. Emily O'Reilly is the ombudsman, a role which gives her impartial oversight of the E.U. institutions and agencies.
She's calling for a major overhaul of the E.U. ethics system in the wake of this growing scandal.
Nic and I were discussing. She joins me now from Strasbourg.
Great to have you on the show. I'm not sure if you heard what Nic and I were discussing just now but it's important to note that there is a lot we
do not know. Let me start with how concerned you are about what you are hearing has unfolded here.
EMILY O'REILLY, EUROPEAN OMBUDSMAN: I'm here in Strasbourg. It's the week when the parliament moves from Brussels to Strasbourg for its primary week
to pass legislation. There is no other topic on people's lips in relation to this.
I think what most people are asking is this, have we seen the tip of the iceberg or is this the entire iceberg?
What's interesting is that, even today, there have been offices belonging to parliamentary systems, parliamentary aides, people who work for members
of the European Parliament. And 10 of their offices have been sealed off.
So the investigation is continuing. Obviously, there is a very long way to go in relation to this story. It's not really good news for the European
Parliament in terms of its own image.
SOARES: And the revelations -- from what I understand, Emily -- have been greeted with some shock but some are not surprised, I would say that.
What did you make of that?
Did you think this was predictable in your view?
O'REILLY: I think the reaction was predictable. Shock, horror; we've got to bring in all kinds of new ethics rules and transparency rules. Over the
last, while when they've had the opportunity to do that, they have not done it.
Being a journalist, it's usually a scandal that moves these things along, not always in the normal rub of things. But I think it's interesting
listening to the president, Roberta Metsola, saying there will be no stone left unturned.
The point is that the E.U. has its own investigators, it has its anti fraud agency and so on. But it's the Belgian police who uncovered this, not the
E.U. itself. I think most of the investigation is probably going to be done by the Belgian police.
The point your correspondent made about what decisions have been made on the back of this, to what extent has what's been going on influenced the
E.U. policy or thinking in relation to Qatar or other issues, I think that really is something that the E.U. Parliament and indeed other institutions
could well investigate.
SOARES: We are hearing from media, European media, that Qatar, the country that we mentioned, is this what you are hearing?
Can you confirm this at all, Emily?
O'REILLY: Qatar is constantly mentioned. Qatar says we are not involved. I don't think the Belgian police have formally named that. The fact that it's
being spoken about so openly, I think people accept that it is Qatar that we are talking about.
Today as well, the number of MEPs have talked about how they were cajoled by representatives of the Qatari government, the Qatari administration to
visit Qatar, to come to the hotel in Brussels and discuss Qatar and so on.
There was a big, big lobbying campaign going on. For a long time, myself as European ombudswoman and other civil society actors, NGOs, have been
calling for foreign agents, foreign representatives to declare themselves, to register themselves in what we call the transparency register. That has
So OK, everybody was expressing a lot of shock and horror and all of that yesterday. Again, when they had the opportunity to do things, they did not
do it. So hopefully, out of this scandal, whenever it finishes, will emerge good things, that the E.U. Parliament can do its best to restore its
I don't think the E.U. Parliament as well as the people who have been corrupted and been bribed, that there is a leakiness in the system that
allows bad actors to come in and influence people for whatever reasons.
SOARES: Really appreciate you taking the time to speak to us. Thank you, Emily.
Back after this short break.
SOARES: And now to a CNN exclusive, the White House is finalizing plans to send the Patriot defense missile system to Ukraine. Once approved, pardon
me, they will ship quickly. That's according to several U.S. officials.
The advanced long range air defense system is highly effective at intercepting ballistic as well as cruise missiles, which Russia has been
using to attack Ukraine's vital energy infrastructure for the past several months.
Belarus is calling snap military drills and has moved troops closer to Ukraine. This mirrors what we saw earlier this year right before Russia
invaded Ukraine. This time the Ukrainians are prepared this time, as Will Ripley now shows us.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: We have just arrived at a Ukrainian military forward operating base near the Belarusian border.
They're going to show us the fortifications they put in place to protect against the potential Russian ground invasion.
A few miles away, in neighboring, Belarus an ominous show of force; Russian and Belarusian troops holding joint combat drills like they did earlier
this year just before the invasion.
RIPLEY: Are you concerned about the troop buildup on the Belarusian border?
OLEKSIY REZNIKOV, UKRAINIAN DEFENSE MINISTER: We have to be concerned because we have not friendly neighbor but we have 2,500 kilometers, not
friendly borders. Belarus, Russia, and temporarily occupied -- we have to be ready here.
RIPLEY (voice-over): Defense minister Oleksiy Reznikov tells CNN that Ukraine is preparing in case the Russians invade from Belarus again. He
says they urgently need more weapons, anti tank systems, more advanced missile defense.
"We are not afraid of them," says the captain, Dimitri.
"We don't expect them to come here but, if they do, we will be ready."
These soldiers are constantly rehearsing, ready at a moment's notice.
RIPLEY: Do you think the Russians are going to try to come again?
RIPLEY (voice-over): "Let them try," says Igor (ph).
Before the war, he prepared sewing machines. Now, he drives this.
RIPLEY: How quickly can you get guys to the front if you need to?
RIPLEY (voice-over): "It will be very fast," he says.
They started building these trenches in early April, reinforcing them ever since, getting ready for the Russians. They overpowered Ukrainian defenses
at the start of the war. Six weeks and thousands of deaths nationwide later, soldiers from this battalion helped force them out.
RIPLEY: Was there ever a point where it was overwhelming?
Where you thought, we cannot do this, we cannot fight them off?
RIPLEY (voice-over): "I never felt like that," says Teddy (ph), "because I know there is no way back. We have families at home, we have children."
RIPLEY: He says that 2,500 Russian vehicles actually passed right down this road.
RIPLEY (voice-over): Now we are driving down the same road to a bridge near the border, well within Russian artillery range.
RIPLEY: When the Russians invaded more than nine months ago, they just drove down this road, right over this bridge. But now the bridge has been
rigged with explosives. And these swamplands, which are frozen over, are full of mines.
RIPLEY (voice-over): When the first convoy of an estimated 30,000 Russians came in February, the Ukrainians were unprepared and outnumbered 6:1. Now,
like soldiers from a century ago, they hunker down in the trenches, waiting for whatever comes down the road -- Will Ripley, CNN, near the Ukrainian-
SOARES: And still to come tonight, last chances: a historic first and underdogs defying the odds. Argentina takes on Croatia for the first
semifinal of the World Cup. That is after the break.
SOARES: Now for some animals behaving badly. The silly and heart warming winners in this year's Comedy Wildlife photography awards are out.
This clumsy cub, as you can see here, bagged the overall prize. The photographer snapped the three-month old lion falling out of the tree. This
is in Serengeti in Tanzania.
A bit of a chuckle today we wanted to share them with you. She says he righted himself just in time. A happy ending for a hapless kitty who didn't
quite know how to get down from the tree.
I have a feeling he's not going to have this problem for the rest of his life.
That's it for me here tonight. Thanks very much for your company. Do stay right here. "QUEST MEANS BUSINESS" with Richard Quest is up next. I shall
see you tomorrow. Bye-bye.