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Quest Means Business

Greece Rejects Eurogroup Debt Proposal; Delta CEO Criticizes Gulf Carriers; FAA Proposes New Drone Rules

Aired February 16, 2015 - 16:00   ET

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

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RICHARD QUEST, CNN HOST (voice-over): U.S. markets are closed; in Brussels it's where the drama is taking place. It's all about Greece and

the Eurogroup on Monday, the 16th of February. Tonight: The Greek debt talks collapse. Now Europe tells Greece it has less than a week to find a

solution.

The U.S. airlines are furious with their rivals in the Gulf. Delta's chief executive joins me tonight for an exclusive interview.

And $1 billion and all at the click of a button. Cyber criminals pull off one of the biggest heists in history.

It's Presidents' Day in the United States. I'm Richard Quest. And I mean business.

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QUEST: Good evening. It's make or break time for the talks on Greece and its debts. And those talks tonight: collapsed. Greek officials

rejected a Eurogroup proposal that would have extended the bailout. The Greek government says it has no authority to offer such an undertaking.

But the Eurogroup members told Greece key parts of the current bailout deal must stay in place while new Greek proposals are examined and that is

something the Greeks found unacceptable.

Any changes now have to be made within the existing framework and could not be made unilaterally. The Eurogroup president, Jeroen

Dijsselbloem, the loan says the extension isn't so different from the Greek proposal that they put forward for a bridge loan.

Now Mr. Djisselbloem opened.

(BEGIN VIDEO CLIP)

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: -- very strong opinion across the whole Eurogroup that the next step has to come from the Greek

authorities. They have to make up their minds to -- whether they will ask for an extension of the current program.

Given the timelines that we have and parliamentary deadlines, I think we can use this week but that is about it.

(END VIDEO CLIP)

QUEST: Now that's the head of the Eurogroup, who basically also admitted that there have been large amounts of support amongst the other

members of the Eurogroup for the hard line that was being taken.

The Greek finance minister Yanis Varoufakis blamed Mr. Dijsselbloem for the failure of the talks. He says an agreement will be reached very

soon.

(BEGIN VIDEO CLIP)

YANIS VAROUFAKIS, GREEK FINANCE MINISTER: I have no doubt that within the next 48 hours Europe is going to come together -- officially Europe is

going to come together -- and we shall find the phrasing that is necessary so that we can submit it and move on to doing the real work which is

necessary to establish common ground and to build a new contract between Greece and Europe which will be both good for Greece and for Europe.

(END VIDEO CLIP)

QUEST: A time ago I was joined by the Belgium finance minister, Johan Van Overtveldt. The minister was of course in the room. He's part of the

Eurozone Group. He was part of that support for Mr. Dijsselbloem. I put it to the minister that at the moment, since the collapse of the talks, the

parties seem very far apart.

(BEGIN VIDEOTAPE)

JOHAN VAN OVERTVELDT, BELGIUM FINANCE MINISTER: We agreed upon the following: the Greek government should ask for an extension of the

existing bailout program and should also clarify the exact commitments it wants to bring along. And we -- that's Dijsselbloem, the chairman of the

Eurogroup, asked for a Greek answer by Thursday and then we will see whether a new Eurogroup meeting will be called or not.

QUEST: Is the Eurogroup pretty much solid on this point?

Mr. Dijsselbloem said there was great support amongst the group for this position.

OVERTVELDT: I can confirm that and the reason of course is that we all feel very much that this is the line we have to hold or to -- the line

we have to take in order to keep this monetary union going and even to solidify it. And that's the reason why this -- there is quite large degree

of consensus among the Eurogroup members apart from Greece, of course.

QUEST: But when you have a tweet and you have comments such as the Greek defense minister saying we are not planning to apply for any

extension of the memorandum and you have the position that you've just said, where an extension is pretty much a mandatory requirement for the

Eurogroup.

How do you bridge that gap?

OVERTVELDT: Well, we've seen a lot of communication coming out of the new Greek government since they were elected and of course I can understand

they are new to the job, if I may put it that way.

And it has been quite confusing. So the only thing that we now really care about is the specific answer of the Greek government to the very

specific question that has been put on the table today. And once we see that and we also see what commitments the Greek government is prepared to

take, then we can move forward. And we'll know that by the end of the week at the earliest, beginning of next week.

QUEST: Mr. Varoufakis said in his newspaper editorial, he said that there were red lines that he would not cross, red lines were red lines.

Is the Eurogroup also saying that, that there are red lines and that you will face down this situation if you have to?

OVERTVELDT: Well, living in a monetary union means that you obey certain rules. And one of the most important rules is that you come

through on the engagements that you take or the commitments that you take once you're in a position like Greece. And that's a red line.

If we do cross that red line, the whole future of the monetary union can be in danger. So this is really a line we have to hold.

QUEST: There isn't -- finally, sir, tonight, there isn't much room for optimism.

OVERTVELDT: Well, let's say there is a lot of realism around the table and that realism dictates that we should ask Greece to take its

responsibility in terms of its being a member of this monetary union.

And of course we all do respect the results of the elections in Greece. But to a certain extent, the monetary union supersedes that in the

sense that when -- once you enter a monetary union, you lose part of your national sovereignty. That's a raw fact of life.

And so it cannot be the case that a newly elected government chooses to change the rules of the monetary union, which is in effect what the

Greek government or at least some members of the Greek government are asking. And that's a question that cannot be answered in an affirmative

way by the rest of the Eurogroup.

(END VIDEOTAPE)

QUEST: That's the Belgium finance minister, talking to me from Brussels a short while ago.

Christopher Pissarides is a Nobel Prize-winning economist and believes Greece needs debt relief to get its economy growing again. He joins me now

from London.

Good to have you, sir, thank you.

I read the letter that you and others signed, of course last month, basically that a growth strategy is needed for Greece. That's all fair and

good, but tonight, you heard the minister; you've heard the various parties. They're digging themselves in.

And as long as Greece is not prepared to sign an extension, I don't see a way out.

CHRISTOPHER PISSARIDES, NOBEL PRIZE-WINNING ECONOMIST: Well, I have to say I'm both depressed and angry or upset by what I hear. I mean, I've

always been a supporter of monetary union but I just do not understand how the minister and others can believe what he just said.

In fact, if you listen carefully to what he just said, is that the monetary union supersedes national elections. I mean, that's complete

nonsense. The monetary union is a union of democracies in Europe. If it (INAUDIBLE) union, let's go for a political union. Let's just stop these

European institutions and have European-wide elections.

But we live in democracies and a government in Greece has just been elected.

(CROSSTALK)

QUEST: Right, but --

PISSARIDES: -- (INAUDIBLE).

QUEST: -- right, but the fact that a government in Athens has been elected on that issue doesn't a priori, I mean, everybody else has to agree

with that position.

PISSARIDES: It doesn't, but what it's saying is that we respect the results of the elections but nothing can change with respect to Greece.

Well, I mean, what kind of Europe are we going to have? It's not only Greece that's going to suffer. It'll be the whole union will collapse if

they carry on like this.

I mean, imagine if something like this happened in Germany or in France next time. It could very easily happen. Then you sit and think and

economies, all economies I know that believe that the policy that was followed, we're dealing in entirely over four years, it hasn't worked. I

mean, it's just bad economics to say this is the only policy that is (INAUDIBLE) it's not.

(CROSSTALK)

QUEST: Let's --

PISSARIDES: -- destroying the monetary union.

QUEST: -- let's talk about how this plays out. If they -- because we need to look forward. Now there's going to be more talks. But at some

point, a deadline will be reached. If Greece does not have -- if Greece exits its program and doesn't have an extension of the bailout, then we're

looking at runs on Greek banks, aren't we?

PISSARIDES: Well, we're looking at two things. Because Greece has a surplus on the primary budget balance, which means that it can pay for all

its costs except for interest payments on the debt and repayments of the debt, it could very easily say, well, you know, we don't have the money to

pay the interest on the debt, we cannot repay the debt.

So but like to those (INAUDIBLE) this is a default. I mean, (INAUDIBLE) prime minister said he would not default. But if he is forced

-- if his arm is twisted to the extent that he's forced to default, there's no -- nothing that they can do.

The only danger from doing that is that there will be a run on the Greek banks. And in that case, you need to impose caveat (ph) controls of

the kind that (INAUDIBLE) imposed (INAUDIBLE), because there hasn't been a run on the banks. It's not a good outcome within the union. It makes it

(INAUDIBLE) monetary union but it's the only alternative.

QUEST: Let me ask you the question that I asked the minister to finish with, sir. Tonight not much room for optimism, is there?

PISSARIDES: Well, there isn't because all these policies that was adopted four years and they are saying no change, absolutely no change.

You know, there's no flexibility. We're not responding to events that we're seeing around us. So there's no optimism. In fact, not even

optimistic about the future of the monetary union. What will happen 10 years from now? It's a complete shambles.

QUEST: All right, sir. Thank you for joining us. We'll be talking more and we appreciate your expertise. It's one we'll talk about more in

the days ahead.

Thank you, sir.

Now the deadlock pushed European stocks lower. The Greek stocks were down nearly 4 percent. Look at the absence general (ph) down 3.8 percent,

priors (ph) in the National Bank of Greece down more than 12 percent. U.S. stock markets are closed. It's Presidents' Day in the United States. And

that's presidents with an S apostrophe. There's more than one of them.

When we come back, the U.S. carriers American, United and Delta have gone on the warpath against the Gulf 3. We'll be talking exclusively to

Delta's chief executive, Richard Anderson, joins me after the break.

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QUEST: The battle to control the skies has turned into an all-out brawl and it's threatening to undo decades of treaties that were designed

to ensure open competition in the aviation industry.

What we have here are the three largest legacy carriers in the United States, Delta, American and United and they are taking on Etihad, Qatar and

Emirates, the Gulf 3 in the Middle East, accusing them of taking state aid that distorts the marketplace.

So at the one side, we have the Americans; the other, you have the Gulf carriers. Seconds away, round one: the Gulf, the U.S. players say

that the Gulf airlines are receiving up to $40 billion in subsidies and have done for many years if not decades.

As a result, they want to reopen the open skies treaties. They want to have consultations, negotiations and, if necessary, a repudiation of the

open skies because, they say, the Gulf airlines are not playing by the selfsame rules.

On the sort of examples they give, take this one. Take Emirates, with its massive fleet, over 140 A380s, SuperJumbos. They point out that by

2020, the Gulf 3 will have more wide-bodied planes than the entire U.S. fleet, period. And yet the Gulf only has 4 percent of the population of

the United States.

In the case of Etihad, they put through -- oh -- government handouts, which they say have enabled the funding of new routes, new aircraft and

especially the subsidy money that has been poured into Air Berlin, Air Seychelles and more recently Alitalia.

As for Qatar Airways, one of the other Gulf 3, the report alleges that the new airport, for example, the charges being paid to carriers is below

cost of the airport. It is, in effect, an illegal subsidy, so says the U.S. 3. Also they point out that airlines like Qatar have specific

agreements for things like the provision of alcohol in the region; therefore, making further benefits.

All in all, what they are alleging is that it's a vertical integration. What do the Gulf 3 say back? What's their response?

They say offer a better service to the U.S. carriers and according to the -- according to the chairman of Emirates Group, Sheikh Ahmed, he says

offer a better service and we deny that there are any bailouts.

Let's talk about this.

Richard Anderson is the chief executive of Delta Airlines, joins me now from the CNN Center.

Mr. Anderson, thank you, sir. The first core question, why now?

These three airlines have been around for years; they've been getting bigger throughout.

Why now?

RICHARD ANDERSON, CEO, DELTA: They actually haven't been around for years. One of those carriers in the United Arab Emirates is just about 10

years old. And we have spent two years analyzing their financials and we have found evidence of their actual financial statements from other places

in the world that provide documented evidence that can't be refuted of tens of billions of dollars in direct government subsidies.

QUEST: So what do you want the U.S. government to do? Because the open skies treaties are there and maybe these other airlines and their

governments have vertically integrated their industry to their advantage.

So what do you want the U.S. government to do?

ANDERSON: Well, first of all, the United Arab Emirates and Qatar Airways, they are not airlines. They are governments. And what we're

asking our government to do first is stand by the open skies agreements around the world. We have been great beneficiaries of open skies

agreements. So this is not an argument by American, United and Delta against open skies agreements. We, in fact, are big supporters of open

skies agreements. And in fact, just last December, Delta was instrumental in obtaining a new open skies agreements between Mexico and the U.S.

So this is about a very narrow issue and it's about a narrow issue coverage the bilateral agreements between the United Arab Emirates and

Qatar.

QUEST: But the --

ANDERSON: Under those agreements -- and those agreements can stay in place -- is for our government to go in and request negotiations and

negotiate a way to level the playing field to set off against $40 billion in subsidies, much of which is just direct cash subsidy.

QUEST: Now the Gulf 3 and we've invited them and they will be on the program in the days ahead -- the Gulf 3 turn -- you've heard their

arguments, Mr. Anderson -- they say stop complaining, just compete.

ANDERSON: Well, we do compete. But the way open skies agreement -- and the Obama administration's been very strong about this -- the Middle

East carriers, the United Arab Emirates and Qatar cannot deny huge government subsidies. And those government subsidies are the issue. And

they're violations of the WTO definition of subsidy. And they're violation of U.S. open skies agreements.

So let's not be detracted (sic) by the huffing arguments that the United Arab Emirates make.

QUEST: One of the problems -- look, I cover aviation for a while -- and one of the problems in this issue is you and your report say one thing

but then you immediately go to the Gulf 3 and they deny specifically in words of one or other syllables, we do not, have not had bailouts.

ANDERSON: That is false. And we have the evidence and we have shared that evidence with their actual certified financial statements that we

found in other territories around the world that are certified by the big accounting firms that you would recognize.

QUEST: In all of this, the -- what is the downside from your point of view? Because the passenger says, well, I've got more choice when I'm

flying around the world through these airlines that give, frankly, I think everybody would accept they give superb service and quality of flight.

So you're not exactly going to have the consumer necessarily on your side here, are you?

ANDERSON: Well, the consumer in the United States wants competition. And that's really what this is about, is fair competition. And when

governments dump subsidies, that's a huge violation of U.S. trade policy. It's no different than Chinese companies dumping steel in the U.S. market

or other industries, agricultural industries in Europe or South America trying to dump agricultural products in our market. It's just against fair

trade policies.

And in the end, the U.S. is a big loser because it's all about jobs.

QUEST: And to the allegation that, well, you restructured under Chapter 11. You -- the U.S. fleet certainly gains benefits from the civil

defense fleet. American has just restructured. The argument is that you in your own ways have had your hand in the bailout trough.

ANDERSON: That is categorically false. And it's a great irony to have the United Arab Emirates from the Arabian Peninsula talk about that,

given the fact that our industry was really shocked by the terrorism of 9/11, which came from terrorists from the Arabian Peninsula, that caused us

to go through a massive restructuring.

And in the United States, our restructuring process is transparent and there is no government subsidy. And in fact, there were billions of

dollars of equity and unsecured debt that were wiped out through that process.

QUEST: Finally, briefly, do you have hope that you're going to be heard on Capitol Hill and in the White House?

ANDERSON: Absolutely, because if the United States cannot correct a blatant case of huge direct cash subsidies then it's going to be very

difficult to proceed with the TPA agreement and the Pacific Trade Agreement and the fast-track authority. This is a prime example; if we can't fix

this one, then it seems that it makes it very difficult to go forward with the remaining trade deals that are on the table because the main issue in

those trade deals are state subsidies to state-owned enterprises.

QUEST: Mr. Anderson, thank you, sir, for joining us. Thank you, I appreciate it.

ANDERSON: Thank you, Richard.

QUEST: Thank you.

And just to point out, we have certainly been in touch with both Qatar, Emirates and Etihad and are discussing with their chief execs when

they'll come on the program to answer the rebuttal.

Coming up in a moment, aviation of a very different kind. Amazon says why can't we release the drones? It wants the shackles on unmanned

aircraft removed but so far that's not about to happen -- QUEST MEANS BUSINESS.

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QUEST: Amazon is disappointed that U.S. safety regulators want to keep tight restrictions on the use of drones, too tight to allow companies

like Amazon to deliver parcels by drones.

Now commercial use of the vehicles is almost entirely banned at the moment in the United States. The FAA, the regulators proposing to loosen

the rules but not enough to satisfy Amazon and others.

Operators -- you've basically got to be able to see the drone at all times and drones are not allowed to drop off anything. And you've got to

be -- you can't fly higher than 500 feet, which is about the height of the Washington Monument. Many companies hoping to incorporate drones like

Amazon Prime Air, Google[x], GoPro, Intel -- look at them all. They are the ones; they all say these rules are -- do not go far enough in letting

them do their enterprises.

Rene Marsh is in Washington for us.

Really, all -- as I see these new rules, Rene, and you've looked at them much more closely, they basically allow a bit of aerial photography

and a bit of this, that and the other.

But nothing really more than that, is there?

RENE MARSH, CNN CORRESPONDENT: Right. Well, there are some limitations. You said it yourself: Amazon not very happy about the rules

because it essentially stops them dead in their tracks. What they wanted to do was drone by delivery, so essentially using a drone to deliver

packages to your front step within 30 minutes.

Well, under these proposed rules, that is not possible. So there are some limitations here. Other companies have some issues with the

limitations as far as you can only fly during daylight hours. You can only fly this drone if it is within the operator's line of sight. I spoke with

several people today who say with those sort of restrictions, it prevents certain types of services, certain types of businesses may want to do

certain things and they just can't under those restrictions.

That being said, there are a lot of other companies who are happy that at least we have the ball rolling. They have been waiting for these

proposed rules for quite some time now. So at least the ball is starting to roll.

QUEST: As fellow aviation correspondent, I mean, you know better than -- as anybody, the big fear of course is when people start flying these

dreaded things at their airports and this is a situation that is getting worse, isn't it?

MARSH: It is. I mean, there have been numerous events in which pilots have spotted a drone just too close for comfort or it's a situation

where we had a near collision between a drone and a passenger plane.

And this is why this is such a big deal because as far as we know, our airspace is open to commercial passenger planes, police choppers, things of

that sort. But this is different in that it totally transform what our airspace will look like. And now you have thousands of these things that

don't have a pilot on board -- we're talking about unmanned drones here -- that will be sharing the airspace with these passenger planes.

So that's why the FAA says they're being so slow and careful in unrolling these rules. But some people say they're moving a little bit too

slow.

QUEST: Next time you are in New York, Rene, come and visit us here.

MARSH: I will.

QUEST: Let's get some drones and we will prove just how difficult it is actually to fly these things.

MARSH: They are tough.

QUEST: They are. Thank you, Rene Marsh in Washington.

In a moment, the hack that had ATM machines around the world literally spitting out large amounts of cash -- it's QUEST MEANS BUSINESS.

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(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in a moment. When the head of Europol tells me about the game of

cat and mouse between the police and the cybercriminals - who's got the cheese?

And he's Russia's answer to old blue eyes himself. But now Moscow's favorite crooner is hit by European sanctions. What sort of song will he

be singing?

You're going to hear it all before the top of the hour, but before any of it, this is CNN and on this network the news always comes first.

Egypt has launched two waves of airstrikes against ISIS positions in Libya according to Egypt's state-run media. The Egyptian military says

earlier the attacks hit at ISIS camps, training areas and weapons depot. It follows the release of a video by ISIS apparently showing the beheading

of 21 Egyptian Christians.

And estimated 42,000 people attended a vigil in Copenhagen commemorating the victims of the weekend's terror attacks. Memorial

tributes were laid by the mourners at the two places where a gunman attacked. A Danish government source told CNN the suspected gunman was

Omar Abdel Hamid El-Hussein. It was - one of his victims was killed in a cafe where a forum on free speech is being held. The second died at the

synagogue. The attacker was then killed by police.

Talks between Greece and its European creditors have collapsed. After meeting in Brussels, Greek officials are - rejected a proposal that would

have extended the country's bailout. They called the group's offer absurd. The Belgian finance minister Johan Van Overtveldt told "Quest Means

Business" Greece is putting the future of the Eurozone at risk.

(BEGIN VIDEOCLIP)

JOHAN VAN OVERTVELDT, BELGIAN FINANCE MINISTER: Living in a monetary union means that you obey certain rules. And one of the most important

rules is that you come through on the engagements that you take or the commitments that you take once you are in a position like Greece. And

that's a red line. If we do a cross debt redline, the whole future of the monetary union can be in danger. So this is really a line we have to tow.

(END VIDEOCLIP)

QUEST: Hungarian demonstrators have turned out to protest against Vladimir Putin's planned visit to Budapest on Tuesday. The Russian

president expected to discuss gas supplies to Hungary. There the trip has irked some members of the E.U. in NATO. President Orban - Prime Minister

Orban - says Hungary cannot turn its back on an important supplier of energy.

The director of Europol says a wave of cyber thefts from more than 100 banks shows a dangerous level of sophistication. Hackers have stolen about

$1 billion, and it could be one of the largest bank heists ever. The digital security firm says criminals manage to place malware inside the

bank's electronic systems. They could then transfer funds into their own accounts, alter balances, even program ATMs to spew out cash. Laurie

Segall has followed this story. How did they do it?

LAURIE SEGALL, TECHNOLOGY CORRESPONDENT FOR CNNMONEY: This is - isn't -- unprecedented. Today - actually they did it, it was very simple. They

sent phishing e-mails and people thought that it was someone they knew - they clicked on it - people - bank employees - and then they were able to

install the spyware under their computer.

Here's what's different about this hack - they actually waited. They were very patient and they monitored what the bankers were doing. They

monitored, they got credentials and then they attacked --

QUEST: Right, but so what -

SEGALL: -- at the (inaudible) time.

QUEST: -- but how many people were involved here?

SEGALL: A lot of people. What's actually very unique about this is it wasn't just one hacker group. This is a hacker group in China. This is

hacker groups in Eastern Europe - in Russia. And I actually spoke to one of the guys who uncovered this hack and I wanted to specifically ask him

about ATMs spewing out money because that's probably the most fascinating part of this whole hack. This is what he said.

(BEGIN VIDEOCLIP)

CHRIS DOGGETT, MANAGING DIRECTOR, KASPERSKY LAB NORTH AMERICA: We refer to them as money mules. These are basically members of the organized

crime ring that was doing this - whose job it was to go pick up money and then deliver it at a specified location. And we saw instances where the

criminal didn't - the money mule didn't even touch the ATM machine, they just walked up to it, the money came out and they walked away.

(END VIDEOCLIP)

SEGALL: It's unbelievable that this went for so long undetected, but they were so smart about it, Richard. They only took certain amounts of

money, but, I want to go back to the idea of hacking an ATM because this isn't something that's completely new, although we're all sitting here in

awe, right? There was a famous hacker a couple of years ago who's since passed away - his name was Barnaby Jack and he spoke about how there were

capabilities for this.

And I actually spoke with another hacker named Nico Sell who learned from Barnaby, and she actually went to Abu Dabhi to show the government how

these hacks could happen, and she's got a fascinating story so I want you to hear it.

(BEGIN VIDEOCLIP)

NICO SELL, CEO, WICKR: You know we were in the Palace Hotel at Abu Dhabi - all these hackers building a human shield around the gold machine

because there's camera's everywhere acting like we're tourists taking pictures. And have to unplug the machine because that's usually how you

get the IP address

SEGALL: OK.

SELL: And then you wait until it restarts, you plug it back in. You could get the IP address other ways, but we would have had - really had to

disrupt the entire network at the Palace. So, and that was about the point where security guards realized something funny was going on and came over

and we all had to run and disperse.

(END VIDEOCLIP)

SEGALL: And Nico, she has a tradition wearing sunglasses. She believes in facial recognition, she thinks, you know - but it's this idea

that hacker communities have been talking about this for quite some time, but they're doing this in an ethical way. Now we're seeing for the first

time people able to do this from afar, and they've been able to get a lot of money doing it.

QUEST: We're becoming immune to this. I mean, I don't want to be blase about it, but health care companies, banks. Now we're at the point,

Laurie, where people like you have to tell me why I need to care about it.

SEGALL: You know it's such a good question. I think the reason I looked at this particular story, and I was just like, this means something

is happening big. This is something completely new. The idea that you have ATMs spewing out cash - we need - you have President Obama say we need

more transparency, we need the banks to be talking to the governments, people need to be - there need to be ways that the banks are actually

looking constantly and testing for this kind of thing.

Because what could've simply stopped this kind of attack? It's had they updated their Microsoft Office. Because hackers were able to exploit

the fact that they just hadn't updated Microsoft Office. I mean, that is just unfair to a lot of customers.

QUEST: Thank you very much.

SEGALL: Thank you.

QUEST: We'll talk more about this because what Laurie was just saying was made clear. The banks are effectively playing catch up with the

cybercriminals, trying to make their systems secure enough to withstand the attack.

Example (RINGS BELL) - JP Morgan revealed last year it's spending a quarter of a billion dollars every year on cybersecurity (RINGS BELL). The

Bank of England set up a study to work out how to defend against cyberattacks. The goal is to identify vulnerabilities in the sector (RINGS

BELL). The British Banking Authority set up a new alert system helping banks and law enforcement warn each other about the attacks. So I asked

the director of Europol, Robert Wainwright how this hack was different from previous financial thefts.

(BEGIN VIDEOCLIP)

ROB WAINWRIGHT, DIRECTOR, EUROPOL: I think it's a relatively new phenomena that we've seen emerging. In terms of the scale, it's

significant given the amount of illicit profits generated. I think, Richard, also the level of sophistication used in the attack was

particularly notable for us.

This is an advanced cybercrime technique, carefully developed over an extended period of time to attack the defenses of the banking

infrastructure, and indeed to replicate the access rights of the bank's most privileged users.

And that gave the criminals in many cases direct control over bank transfer payments for example on the ATM network. So a dangerous attack, a

very sophisticated one and one that we're quite concerned about in law enforcement.

QUEST: Was this one group of people. I mean, you know, the way it's being portrayed in the - there were Russians and Ukrainians and there were

people from all parts of the globe. But were they acting in concert?

WAINWRIGHT: We think so, yes, probably. A group of criminals - cybercriminals - almost certainly Russian-speaking in terms of their

background. We haven't yet seen of course the extent to which this might be replicated by other groups in that part of the world or indeed other

parts of the world, and that's something -

QUEST: Right.

WAINWRIGHT: -- which is a top priority for us right now.

QUEST: If they were - I mean - there was obviously quite a lot of them. This isn't like three bank robbers with a sawn-off shotgun going up

to High Street. There was quite a few of them involved which makes it even more worrying that law enforcement wasn't able to get wind of this.

WAINWRIGHT: Well it tells you I think something about the nature of cybercrime, the way in which the cybercrime groups themselves are so

adaptable, seeking out and exploiting new opportunities. It tells you something as well about how quickly the cybercrime for instance themselves

can evolve. We're in a cat and mouse game actually between industry and law enforcement on one side and these cyber crooks on the other.

And the freedoms on the internet that we all enjoy every day and on which commerce depends of course are being abused by cybercrime groups

every single day. And it's a significant problem that we face.

QUEST: There is a view of course now that this is the new norm. Yes, they get more outrageous and they get more outlandish, but we're now

becoming almost - I suggest to you, sir, -- dangerously immune to another story on cybercrime.

WAINWRIGHT: I think the scale of the threat is significant, we appreciate that. And those of us in law enforcement and with our partners

in industry are certainly aware of it. They're certainly taking information security now much more important as they should do and we are

fighting back. And what you see in this operation also is the extent to which there have been police successes against this and indeed other

cybercrime threats a well. So this is by no way traffic, but it is a challenging area for law enforcement to get right.

(END VIDEOCLIP)

QUEST: That's the head of Europol, talking on the hack. Now he's been called a Soviet-era Sinatra - not the head of Europol by the way -

this chap. He among many others has been hit with the sanctions. We'll explain what the sanctions are and how he's been hit after the break.

(MALE SINGING)

(COMMERCIAL BREAK)

QUEST: The European Union has hit Russia with a whole raft of new sanctions and the response was one of mild amusement. The first Communist

lawmaker, Valery Rashkin, who's accused of supporting Ukrainian separatists, he tweeted, "Oh, they included me in the sanctions list. I am

now banned. I am proud. It is simply a present for my birthday."

Also added to the list is the man described as Russia's 'Frank Sinatra.'

(BEGIN VIDEOCLIP)

(MALE SINGING IN RUSSIAN)

(END VIDEOCLIP)

QUEST: Now he's Joseph Kobzon. He was a singer and he's famous for his patriotic songs. But the reason he's on the list is not because he's a

crooner par excellence, it's because he's a member of the Russian parliament, the Duma.

The Russian foreign ministry isn't laughing. Officials there called the new sanctions counterproductive. CNN's Matthew Chance reports for us

tonight from Moscow.

(BEGIN VIDEOCLIP)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well there's been a sharp reaction to the latest European Union sanctions in Russia

which target 19 individuals, including two Russian deputy defense ministers.

In a strongly-worded statement, the Russian Foreign Ministry says it's bewildered by them. "Such decisions look especially ridiculous against the

background of the Minsk Agreement," the statement adds.

All members of armed separatist groups in Ukraine are also targeted by the new sanctions, including a number of Cossack paramilitaries fighting in

the region. Those listed and they're subject to visa bans and asset freezes across the E.U."

Well one of the more controversial Russians to be sanctioned this time is 77-year-old Joseph Kobzon, a celebrity singer and M.P. known to many

Russians as the Soviet Frank Sinatra. Kobzon who regularly entertains Soviet troops in decades past recently gave a performance in Donetsk. As a

Russian M.P. he also voted for the annexation of Crimea last year which is why he may have found himself on this latest sanctions list. Matthew

Chance, CNN Moscow.

(END VIDEOCLIP)

QUEST: The vice president of the European Central Bank says now that quantitative easing is underway, the bank has the tools it needs to stamp

out inflation in Europe - or even deflation if I was reading correctly. He says it won't happen overnight, it's a medium-term goal. In the second

part of our exclusive interview, I asked Vitor Constancio why the ECB waited so long, bearing in mind that prices had already look weak, growth

was non-existent, inflation - the unemployment -- remained high. Why it took so long to institute full-scale bond buying?

(BEGIN VIDEOCLIP)

VITOR CONSTANCIO, VICE-PRESIDENT, EUROPEAN CENTRAL BANK: The stock of eligible ABSs of covered bonds that we could buy head up to $1 trillion.

There is in the market a stock of $600 billion of covered bonds and a stock of $400 billion of ABSs that would be eligible according to our criteria

for us to buy.

OK, we knew that we could never attain such numbers, but there was also the liquidity facility for the banks and we hoping that we could buy

indeed more which then after a few months we realized it was not the case. So we were adjusting as we concluded from the developments of the program.

QUEST: The governor of the Bank of Japan who'll you'll be familiar with - at Davos I asked him what's the solution of deflation? And we can

argue whether the Eurozone's in deflation or just disinflation or negative inflation. But he said - he said - fundamentally do it fast, do it big.

Do you now believe his open-ended virtual checkbook that you've got is going to be - you're really going to hammer it hard to get inflation going

again?

CONSTANCIO: Yes, of course in the medium term. In the short term, the price of oil prevails and inflation is not controlled by monetary

policy or on a quarterly basis or even on a yearly basis. So, it's a medium-term objective, but indeed as you said, the way we announced our

program shows that it is very sizable that shows the determination to do whatever it takes for in the medium term.

We're going back to levels of inflation closer to our targets. And monetary policy can achieve it on the medium term if it continues to be

persistent and determined in getting to that objective.

QUEST: One final thought - every time I hear the President at his press conference, he says - he sounds almost forlorn as he says monetary

policy could only do so much, monetary policy can only go so far. Do you ever get the feeling that the government - I know this is taking you into

political waters, so swim deeply, sir - but do you ever get the feeling that, frankly, they're not listening, the governments -- they want you to

do all the hard work?

CONSTANCIO: Well, yes and no. We have the case that in several countries in the periphery deep reforms have been made, that these

countries went through a big adjustment in their economies, and now they have much lower public deficits that they are all in subholes (ph) in what

regards their external accounts. So from that (inaudible) been made.

Others are necessary and we hope very much of course that monetary policy could be helped in particular for - by - the initiative of the

Commission to embark into these investment program of $300 billion down to we hope can really jumpstart other types of private investment in Europe.

(END VIDEOCLIP)

QUEST: You hear the top names on "Quest Means Business," and that was the vice president of the European Central Bank. One man's mission - to

turn unwanted food into desirable dishes. We're going to visit the Junk Food Cafe in a moment.

(COMMERCIAL BREAK)

QUEST: Now, look at the mess, look at the food, look at the potential waste. When restaurants and supermarkets are done for the day, leftover or

expired food usually goes straight into the garbage bin. The U.N. Food and Agricultural Organization says around 1.3 billion tons of food are wasted

each and every year, and a billion people around the world are going hungry at the same time.

It's a scandal. Isa Soares spoke to an enterprising chef who's had an idea that addresses both sides of this problem.

(BEGIN VIDEOCLIP)

ADAM SMITH, FOUNDER, THE REAL JUNK FOOD PROJECT: We've got apple crumble, I've got a roasted chicken going on, (inaudible) taters, chicken

jambalaya.

ISA SOARES, REPORTER AT CNN INTERNATIONAL: The ingredients behind these dishes are considered junk - at least to those who threw them out.

But to Adam Smith who is passionate about food, they make perfectly healthy meals.

SMITH: Just because it's expired doesn't mean it's not safe. And even if they are expired, we can still make it safe. You know, you can

cook it correctly, store it correctly, transport it correctly, you know, reheat it, cool it correctly - everything.

SOARES: So on a daily basis, he intercepts unwanted food from restaurants, supermarkets, food banks and even bins and then cook them at

his cafe.

SMITH: Supermarkets are the worst culprits in all of this, so the majority of the food that we get actually comes from their bins and we see

in their bins. Not just the quantities but also the quality of the food that they're throwing away - bottles of extra virgin olive oil, bottles of

wine, cheese that still in wheels. We've got caviar that they've thrown away.

SOARES: We join him as he goes to collect huge batches of dried food that had been abandoned in a warehouse because the owner could no longer

afford to pay rent. Stacked to the brim with juices, flours, fajita bread, he feels vindicated.

He has reason to feel this way. In 2014 alone, he cooked with 23 tons of unwanted food and fed 10,000 people. Well on the menu here today they

have a variety of meat dishes, vegetarian dishes as well as soups and several, several desserts. And the concept here is they have a policy of

pay as you feel. In other words, if you feel it's not worth paying for, well you don't have to. All you have to do is walk up those stairs and

help out washing dishes or even cleaning the floors.

The majority of people, many lower income, do just that. Lending a hand in whichever way they can.

Female: Eating out is a very difficult thing. We come here for lunch and then the children can earn some way a lot more. And then I volunteer

here a couple of days a week in the kitchen.

SOARES: An inspirational cafe led by a founder who's true to his beliefs.

SMITH: You know, just be able to apply my skill and feed people and seeing people just being grateful for having a meal. It's much, much more

than somebody giving me money. This makes me happier than anything we've - I've - ever done before.

SOARES: Junk or no junk. There's plenty of food for thought here. Isa Soares, CNN Leeds, England.

(END VIDEOCLIP)

QUEST: What a marvelous story and I love an apple crumble. A "Profitable Moment" (RINGS BELL) next.

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." On this program you heard the chief exec of Delta Airlines categorically claim that the Gulf 3 airlines

are subsidized. The Gulf 3 say absolutely, definitively they are not. And for many years, that has been the situation. The U.S. says one thing, the

Gulf 3 say another. And where does the truth lie? Somewhere in the middle. It's hard to tell exactly who is subsidized and who isn't. But

during the course of this week, hopefully you're going to hear from both sides of the airline equation. And that's "Quest Means Business" tonight.

I'm Richard Quest in New York as we start a new week together. Whatever you're up to in the week ahead, (RINGS BELL) hope it's profitable. I'll

see you tomorrow.

END