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Blatter Denies Facing FIFA Suspension; Boardroom Battle over Bud Brewery Bid; Volkswagen U.S. CEO to Testify before Congress Thursday. Aired 4-5:00p ET
Aired October 07, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
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MAGGIE LAKE, CNN HOST: The Dow claws its way to a fourth straight day of gains. It's Wednesday, October 7th.
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LAKE (voice-over): Tonight: extra time for Sepp Blatter. The FIFA president's lawyer denies he's facing a suspension.
A giant merger is brewing in the world of beer.
And a textbook example of people power: how one mother took on an education giant and won.
I'm Maggie Lake and this is QUEST MEANS BUSINESS.
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LAKE: Good evening.
Tonight Blatter's lawyers say he has not been notified of any action taken by the FIFA ethics committee. That following earlier reports from
his adviser that Mr. Blatter had been provisionally suspended from his post for 90 days by the committee.
It comes amidst a Swiss investigation into allegations that Blatter made a, quote, "disloyal payment" to the UEFA president, Michel Platini.
Let's go straight to CNN "WORLD SPORT" correspondent, Amanda Davies. She joins us from London.
Amanda, this is getting confusing.
Is he suspended?
What's going on?
AMANDA DAVIES, CNN CORRESPONDENT: Maggie, at the moment, bluntly, we don't know. We haven't heard anything official as things stand. But what
a busy couple of hours, which really typifies the last few months in terms of the goings-on at world football's governing body, FIFA, general this as
much being played out if not more behind the scenes as the amount that's being played out in the media.
If I take you back a couple of hours, the stories started emerging that the FIFA president, Sepp Blatter, had been provisionally suspended
from his post for 90 days by the ethics committee. That's the FIFA independent yet in-house regulatory body that was investigating their
president after the opening of those legal processes, the criminal investigation by the Swiss office of attorney general, some two weeks ago.
We -- I myself spoke to one of Sepp Blatter's closest advisers, a Swiss man by the name of Klaus Stohlker. And he said, yes, it has been
agreed that Blatter has been provisionally suspended. He has a very busy 12 hours, thinking about what his next move will be.
But we put in phone calls to the adjudicatory chamber of the ethics committee, the investigatory chamber of the ethics committee and both of
those bodies continued with their stance, "No comment."
They have said all along we will not officially confirm that Sepp Blatter is being investigated by the ethics committee. They're not allowed
to do that because of the processes called Article 36. That's a confidentiality clause of the FIFA Code of Ethics.
But our understanding is that that investigation is going on. But they have always said the first thing we will hear is if any action at all
is taken by the adjudicatory chamber.
So the only other thing we have officially heard is that statement, as you said, from Sepp Blatter's lawyers based in New York.
They say, "We issue this statement in response to press reports about the FIFA ethics committee. President Blatter has not been notified of any
action taken by the FIFA ethics committee.
"We would expect that the ethics committee would want to hear from the president and his counsel and conduct a thorough review of the evidence
before making any recommendation to take disciplinary action."
So where do we stand, Maggie?
Well, it's probably where we stood about four hours ago, which is still waiting for any statement from the FIFA adjudicatory chamber and
judge, Hans-Joachim Eckert, who is based in Munich.
LAKE: All right, Amanda, it's going to be a busy evening for you. Thank you so much, Amanda Davies.
Now Blatter has been defiant throughout the controversy but he's coming under increasing pressure ever since the allegations Amanda just
mentioned came to light.
In June, Sepp Blatter agreed to step down as the head of world football's governing body just days after being re-elected. He said he
would remain in charge until after a new election to be held next year.
In September Swiss authorities have opened an investigation against Blatter on, quote, "suspicion of criminal mismanagement."
Last week several major FIFA sponsors called for his immediate resignation.
Let's discuss this with Mark Palios, he is the former chief executive of English Football Association. He's also the owner of Tranmere Rovers
Football Club.
Mark, thanks very much for being with us this. This just sounds like FIFA in disarray.
MARK PALIOS, FORMER CEO, ENGLISH FOOTBALL ASSOCIATION: Yes. It's just another step in the process. I mean, you guys will recognize --
[16:05:00]
PALIOS: -- when you have a president in his last term, in the closing days of his last term or second term, you very much become lame duck
management. And I think clearly you're seeing this with Sepp Blatter.
I mean, a year ago, nobody would have even contemplated, I think, a creature of FIFA such as the ethics committee actually considering whether
to suspend Sepp Blatter. But here we find that this is the case. And I think this is just a natural conclusion to the events that occurred when
the FBI got involved at Baur au Lac hotel in May.
And I think this is just another conclusion. Nothing's been proven. But even the concept of considering it would not have been thought possible
a year ago, I think.
LAKE: But Mark, I think there are a lot of people who wonder if FIFA is doing enough and really if Sepp Blatter isn't still running the show.
The suspension that they're talking about, if true, is only 90 days. He's saying he hasn't been notified, once again sort of taking control of the
narrative.
And sponsors have said very pointedly they want him out.
PALIOS: If I can take that last point first, I personally have never believed that the sponsors would be an agent for change. And they could
have said what they've said in the last few days four years ago. But the danger was, if they'd done that, they may well have had to back their words
with actions and risk losing the lucrative World Cup in Brazil. So I mean, I think it's opportunistic on behalf. I may be wrong. I may be cynical.
But I think it's opportunistic on behalf of the sponsors to jump in at this stage.
LAKE: Yes, Mark, I think you're not the only one who's brought that up. They haven't really walked the walk. They haven't pulled their
sponsorship or even come close to it.
PALIOS: Absolutely.
LAKE: But, yes, if you could address that other point. This is the time when FIFA needs confidence. It's supposed to have new candidates that
it's deciding on in three weeks. So far, it's hard to find anybody who's not coming under the cloud of some sort of part of this controversy.
PALIOS: Yes. I mean, it's not impossible for it to turn itself around, let me just say, because you point to what happened with the
Olympic Committee and the Salt Lake City incidents.
And for me, at the end of the day -- one point I would make and it is relevant and that is that football has succeeded -- you look at the last
World Cup in Brazil -- in spite of FIFA. FIFA should have been the most relevant organization on the planet. It touches more people than any other
organization, religion, et cetera.
So if you look at it, FIFA should be -- when you look at the World Cup, they had a fantastic world cup, irrespective of FIFA. So somewhat the
strength of the people at the top is that most people within football continue their lives, irrespective of what happens at FIFA.
Now of course, things could be done better if you get the top right. But that's the key thing. If you look at the sponsors, they, again,
understood that they were getting eyeballs on the tournament on football, not on FIFA. They were not backing FIFA. That's why it's been allowed to
continue until the point that the FBI got involved, because then you've got the law enforcement agencies involved.
Certainly FIFA and the people within FIFA realized they where within the law rather than without the law.
LAKE: Yes.
PALIOS: And that is, for me, the key point of this. It's not about the sponsors coming in.
But if you then looked at what damage he could do to football, taking that point further, I don't think there's a lot he could do as soon as the
die was cast earlier this year. And we just have to wait and see him out.
Whether he goes today or whether he goes in February next year, I think that makes no difference whatsoever to FIFA. And I really think that
he was never going to change anything. He wanted to go and leave a legacy of how he fixed the thing. But he deluded himself.
LAKE: Mark, I think you bring up a good point. The focus should be on football. I think a lot of people are going to agitate for some change
and swift change at FIFA to make sure that is the case once again. Thank you so much for joining us, Mark Palios, for us.
Now Budweiser is one of FIFA's biggest sponsors. Its parent company, AB InBev, has just been sent packing by SABMiller. That's right, even
after the third round of takeover offers, SABMiller says it's not ready to make a deal. But it's not the last call yet.
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LAKE: It is a boardroom bar brawl. SABMiller has rejected a $104 billion takeover bid from Anheuser-Busch InBev. But don't bet on the
bidders walking away just yet. SAB's board was split this time, whereas two previous offers were unanimously rejected.
Let's look at what's on tap in the global beer market. Now, AB InBev is already the biggest beermaker in the world with nearly 21 percent of
market share.
Put that together with SABMiller's 9.7 percent and you'd end up with a brewing empire, bigger than the next five companies combined.
Anheuser-Busch says the deal will make the most of the regional strengths of both companies; SABMiller dominates in Africa and India.
Those are shown in yellow on the map, while InBev, shown in red, is strong in the Americas and parts of Western Europe. Both are players in the areas
shown in orange.
The CEO of Anheuser-Busch says the deal is a chance to create a truly global beer company.
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CARLOS BRITO, CEO, AB INBEV: We're very excited about the prospects of creating the first truly global beer company. And we believe we could
achieve more together than we can apart. Together we have better growth prospects and an appealing mix of global and local brands that consumers
love.
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LAKE: Here for a night out?
CNNMoney's Cristina Alesci joins me.
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LAKE: -- lobbying for this for a long time.
But very seriously, this is a very big deal.
CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Huge.
LAKE: What's the sticking point?
ALESCI: Sticking point, as always -- and I've covered mergers and acquisitions for about six years -- is price. At the end of the day this
is the third time AB comes back.
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LAKE: It's a lot of money to leave on the table, though. It's sounding like that price is getting more where people want it to be.
ALESCI: Oh, absolutely. This latest price of $64 a share is a 15 percent premium above SAB's all-time high and 44 percent higher than the
closing price before speculation of the deal.
So we're talking about major premiums here, right?
But SAB is playing hardball. And the reason why it can play hardball is because AB needs growth. That's because a lot of the growth in this
industry is actually not represented by any of the brands that either of the companies own.
A lot of younger consumers are going for craft beers. They're not really drinking the brands that we know so well.
LAKE: Like the traditional -- more traditional.
ALESCI: Exactly.
LAKE: Do they have the money to pay up?
They've got to be betting they can do it. But their shareholders aren't going to like it if they overpay.
ALESCI: That is an excellent question. And there is significant risk here for AB because they're taking on a lot of debt to get to the price of
SAB.
LAKE: But interest rates are low.
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ALESCI: Interest rates are low but you still can't trust their balance sheet that much.
LAKE: That's right. So they've got to be getting close.
Is it going to get through regulators?
So investors all want to see it happen. They're going to keep pushing. But regulators are going to look at this. We just showed that
map. This covers a lot of the market.
ALESCI: Yes. Especially here in the U.S. you're talking about 70 percent of the market share. So they would have to divest a lot of the
brands that we're talking about in certain markets and the really different brands and different markets, it could be so complex it will take them a
year to sort out all the things that will make regulators --
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ALESCI: -- happy. And again, that's part of the risk, too, right? Because you can't even begin to estimate how much money you're taking in to
repay that debt because you don't know what you're going to have to divest at the end of the day. A lot of risks in this deal.
LAKE: End of the day, do people think that there's enough momentum to get this done?
ALESCI: Yes. The street thinks that there's enough momentum to get this done. The time is ticking, though. They've got seven more days,
according to U.K. takeover law. They have to come back, AB has to come back with another proposal or walk away for six months.
LAKE: All right.
ALESCI: So...
LAKE: We've got another date at the bar to toast that, if it happens, you can explain then what happens.
(CROSSTALK)
ALESCI: Every time I say SAB I take a shot.
LAKE: All right, all right. You heard her right here.
That could get dangerous. Christina, thank you so much.
SABMiller shares fell 2 percent after the company announced it would reject the Anheuser-Busch bid. The stock later climbed back to close just
fractionally higher.
In London, the FTSE edged higher with big gains for mining companies outweighing losses for airlines. In Frankfurt, the DAX closed 0.7 percent
higher. Volkswagen shares rose nearly 10 percent.
Now Volkswagen has begun to lay out how it will refit millions of cars to ensure that they will comply with emission standards in the worst
commercial crisis the company has ever faced. The automaker's new CEO Matthias Muller says recalls will begin in January. Details regarding how
the cars will be fixed will be given to authorities in the coming days.
Volkswagen will face U.S. lawmakers this week. The CEO of VW America, Michael Horn, is set to testify before Congress on Thursday. And the
company's board of directors has elected a new chairman, Hans Dieter Poetsch, effective immediately. Poetsch says he understands what needs to
be done.
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HANS DIETER POETSCH, CHAIRMAN, VOLKSWAGEN (through translator): It is my personal wish to do everything to throw light on everything that
happened. The supervisory board and its chairmen have a special responsibility. I'm aware of this responsibility.
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LAKE: Throwing light on everything that's happened at Volkswagen may not be enough to satisfy Congress or restore the company's reputation. As
Isa Soares reports, the fallout could spread far beyond VW.
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ISA SOARES, CNN CORRESPONDENT (voice-over): Scathing and damning.
UNIDENTIFIED MALE: There's suddenly an unprecedented crisis.
UNIDENTIFIED MALE: So this really does cast a negative light on a company like Volkswagen.
UNIDENTIFIED MALE: Put the spotlight on the industry. And the industry has to respond to reassure the public.
UNIDENTIFIED MALE: There's a big price to pay if they don't get it right as an industry.
UNIDENTIFIED MALE: And it's catastrophic to their reputation.
SOARES (voice-over): The verdict on Volkswagen's credibility. As the company admits 11 million of its cars worldwide could have cheated emission
tests, the manufacturers set aside $7.3 billion to deal with the fallout.
But some are placing the true costs nearer to $87 billion. The scandal, though, is just the latest in a series of incidents damaging the
credibility of the car industry.
General Motors had to pay $900 million to settle criminal charges related to its flawed ignition switches which caused at least 124 deaths.
Fourteen million vehicles were recalled by 11 manufacturers after exploding airbags made by Japanese firm Takata were linked to the deaths of
eight people.
In 2012, Toyota agreed to pay a $1.2 billion fine. That's the largest for a car manufacturer for problems with accelerator pedals.
While it was revealed that Toyota and General Motors knew about their vehicle defects for years before acting, Volkswagen, on the other hand,
admitted to deliberately installing and covering up illegal software in its cars.
As more discrepancies in fuel consumption emissions testing emerge, consumers remain suspicious that other car companies may also be cutting
corners.
UNIDENTIFIED MALE: Well, up until the scandal with Volkswagen, I would have said yes. Now I suspect they're all asses.
UNIDENTIFIED FEMALE: Obviously, it does reflect badly on them. But I don't know enough about whether it's the automotive industry generally or
Volkswagen.
SOARES (voice-over): So how does a car industry restore its credibility?
UNIDENTIFIED FEMALE: The way forward is, A, to have more transparency. That's going to be increasingly critical. But B, in this
case in particular, a real look at the emission regulation.
SOARES: In the same way the LIBOR scandal revealed further malpractice in the banking sector here in London, the fear is the VW crisis
has the potential to do the same to the auto industry. So, for the time being, expect further regulation and more scrutiny -- Isa Soares, CNN,
London.
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LAKE: Clarence Ditlow is executive director of the Center for Auto Safety. He joins me from Washington.
Clarence, thanks for being with us. I want you to address what one of the people in that piece said, that I suspect they're all doing it now.
What does the industry need to do or what do the other brands need to do to assure the consumers that this is not a problem that is rampant
throughout the --
[16:20:00]
LAKE: -- auto industry?
CLARENCE DITLOW, EXECUTIVE DIRECTOR, CENTER FOR AUTO SAFETY: Well, unfortunately, when you look at the industry as a whole, it's been one
scandal after another. And with Volkswagen, there is no question but that it was a deliberate act.
The other manufacturers have said, well, we made mistakes. But mistakes cost lives. But now what we have to do is to put everybody on the
spot, elevate their ethics within the industry and be sure that obeying the law is their primary purpose.
LAKE: Do we have to put more cops on the beat, so to speak?
I mean, is this an industry that is in need of much stricter oversight?
DITLOW: Oh, it clearly is an industry in need of stricter oversight.
But where do you get the cops from?
The U.S. Congress won't give the agencies enough money to hire more people. And I think the global auto regulators, as a whole, have to meet,
come together and say how are we going to handle this industry, which worldwide is in the trillions of dollars?
That's what they're up against.
LAKE: Clarence, what's the responsibility of consumers, I wonder? Because time after time we talk about damage to the brand but sales bounce
back very quickly after these sorts of crises, which sort of underscores the fact that the damage doesn't linger.
DITLOW: Yes. That's one of the dilemmas. It seems like you're in the doghouse for a couple of years and then you recover.
But what -- consumers are generally skeptical of the industry but the problem is, where do you turn?
Who's the honest manufacturer?
And when all manufacturers seem to be in trouble at one time or another, the consumer says, well, it's just six of one, a half dozen of the
other. But I think what we need within the industry is for a leader to emerge, who says our brand stands for trustworthiness and confidence, clean
air, safety -- and if you want to buy that vehicle, buy from us.
LAKE: Yes. And it is getting to be an increasingly competitive environment.
Do you think we need more competitors?
I mean, there are rumors that Apple may be mulling getting in on the action, Google.
Would that make the situation better?
Or does that just complicate it, having even harder, more people to keep track of?
DITLOW: Well, one thing that's coming out of GM, Takata and Volkswagen is a huge opportunity for new manufacturers like Apple or Google
to come onto the marketplace and who will say we're different; we're not the old auto companies. We're the new ones and you can trust us.
So I'm afraid for the auto companies that are out there today, they are in a pile of trouble and no one's in worse trouble than Volkswagen.
LAKE: And let's not forget about Elon Musk and his plans for Tesla in that mix as well.
Clarence, a pleasure to catch up with you. Thank you so much, Clarence Ditlow for us.
We will be back with more QUEST MEANS BUSINESS in just a moment.
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LAKE: It is the reserve currency of the world. With the U.S. dollar growing in strength, markets around the globe are feeling the ripple
effect. Max Foster takes a look at the power of the greenback in today's "Market Movers and Shakers."
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MAX FOSTER, CNN CORRESPONDENT (voice-over): America's dollar has seen its fastest rise in 40 years.
But is a strong greenback good or bad for the global economy?
It's certainly good for U.S. consumers. They'll pay less for French wine, Italian leather and other imports. It also means cheaper gasoline,
since the rising dollar puts pressure on oil prices.
A strong dollar isn't so good for U.S. companies having to sell more expensive products overseas. Profits suffer and so do stock prices.
Of course, what's bad for U.S. multinationals can be good for European and Asian companies. A strong dollar makes those products more competitive
against American goods, resulting in a more balanced global marketplace.
For emerging markets, a strong dollar can be really tough. Debt is often in dollars and paying it back with weaker local currency can be more
expensive. In the early 1980s, the dollar's rally helped trigger Latin America's debt crisis. Fifteen years later, another surge helped spark the
Asian financial crisis.
So is a strong U.S. dollar good for the global economy?
The answer isn't yes or no. It's yes and no.
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LAKE: Ramping up the trade opportunities, we speak to the U.S. Secretary of Commerce as she visits Cuba.
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[16:30:39] LAKE: Hello, I'm Maggie Lake. Coming up on the next half hour of "Quest Means Business," the IMF warns of new risks for markets on
the eve of its big meeting in Peru.
And a controversial textbook forces an apology from one of the world's biggest education companies. The CEO of McGraw-Hill Education will be
joining me live in the studio.
Before that, these are the tope news headlines we're following for you this hour.
Russia has begun naval strikes against ISIS targets in Syria. Officials in Moscow say four ships fired more than two dozen missiles from
the Caspian Sea.
Russian forces also appearing to be coordinating airstrikes with a regime of Syrian President Bashar al-Assad. U.S. Defense Secretary Ash
Carter says he is concerned about Russia's motives in the region.
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ASH CARTER, U.S. DEFENSE SECRETARY: We believe Russia has the wrong strategy. They continue to hit targets that are not ISIL.
We believe this is a fundamental mistake. Despite what the Russians say, we have not agreed to cooperate with Russia so long as they continue
to pursue a mistaken strategy.
(END VIDEOCLIP)
LAKE: U.S. President Barack Obama has called the president of Doctors Without Borders to apologize after the U.S. bombed one of its hospitals in
Afghanistan.
The group is demanding an independent investigation into possible war crimes. At least 22 people were killed in Saturday's attack.
The commander of U.S. forces in Afghanistan said the hospital was hit by mistake. The group's president said it should have been obvious what
the building was.
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DR. JOANNE LIU, PRESIDENT, MSF INTERNATIONAL: Millions of people don't have access to this kind of care. We had 13 surgeons and physicians
in this hospital. We had eight ICU beds, you know, with ventilator. This was high tech medicine. This was not the little bush hospital.
You could not miss it.
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LAKE: Lawyers for FIFA's president Sepp Blatter have denied a report that he has been provisionally suspended. They say FIFA's ethics committee
hasn't notified Blatter of any action taken against him.
It comes as FIFA is trying to deal with allegations of corruption.
The FBI has helped authorities in Eastern Europe thwart the smuggling of radioactive and nuclear material. That's according to a U.S. law
enforcement source.
The sting operations took place several years ago in Moldova and are just coming to light. There were concerns the material would be sold to
extremist groups.
Parts of Northeastern China are choking on thick smog. The country's National Meteorological Center issued an alert warning people to reduce
outdoor activities.
And the U.S. Embassy in Beijing said the air quality there has reached hazardous levels.
U.S. stocks closed higher on Wednesday. The Dow ended the session up 122 points. U.S. indices were lifted by a surge in biotech shares.
The IMF warns global markets are facing new threats. The Fund is warning of a quote "triad" of risks. Emerging markets are particularly
vulnerable to turmoil in China and rising rates in the U.S.
The IMF also warned of high debt in advanced economies like Europe and weak markets which are still suffering from a lack of liquidity.
Jose Vinals is the director of the IMF Monetary and Capital Markets Department. He says that if those risks aren't handled properly, it could
set back global growth. Mr. Vinals joins me now from Lima.
Thank you so much for being with us today. Let me ask you, is this a situation when we're looking at emerging markets, do these governments have
the tools to be able to do something to weather this combination of a slowing China and possibly rising rates in the U.S.?
JOSE VINALS, DIRECTOR, IMF MONETARY AND CAPITAL MARKETS DEPARTMENT: Emerging markets are now confronted with important challenges.
And the best thing they can do now is to make sure that their financial systems are resilient in a context where their companies had
borrowed quite a bit.
[16:35:10] And a lot of this borrowing - the majority of it - has been from local banking systems. So enhancing the resilience of the banks is
very important.
And in addition, I think that if emerging markets can make sure that their inflation remains under control, and that the public finances in
those cases were designated (ph) move towards a path of consolidation, this will give them more degrees of freedom in order to, you know, to counter
negative situations in the future.
LAKE: Are we talking about a risk to the entire global system?
I mean, when you lay out that scenario, it makes people very nervous that we're looking at another Asian financial crisis, something that is
exported throughout the world.
VINALS: No, I don't think that we are on the verge of another Asian financial crisis. And in fact, if you look at the emerging markets now and
compared to where we were before the Asian financial crisis, emerging markets have come a long way.
In terms of better macroeconomic policy frameworks, much more resilient financial systems, there is a lot more floating exchange rates
which is a very good first line of defense.
And they also have a lot more foreign exchange reserves.
But it's true that there are vulnerabilities which have built up in the form of a lot of leverage in the private sector. And this is something
that needs to be taken care of, especially by safeguarding the stability of the local domestic banking systems which, as I mentioned before, are the
worlds (ph) ahead provided more of the lending - most of the lending - to his corporates (ph).
LAKE: As you probably point out, this is all happening at a time when global markets are very volatile. Investors are very, very nervous, we've
seen very big swings.
So much pressure has been on central banks - they have done all they can do some people feel. Where are we going to get the safeguards?
What - where are the policy prescriptions going to come from in order to prevent some of these risks, in order to boost global growth?
VINALS: Well I think that for global growth we are calling in these meetings at the IMF for an urgent upgrade of policies worldwide, going well
beyond monetary policies.
Monetary policies can no longer be left home alone. You need the structural reforms to be there, you need supported fiscal policies to be
there, consistently with debt sustainability and you also need that some key countries like China which are now at the center of many concerns
manage the challenges that they have before them in a successful - in a successful way.
So there are many things that go beyond monetary policy and they need to happen both in advanced economies and in emerging markets.
Even in Europe where the situation is now far better than it used to be a few years ago, still there are issues to complete the financial
architecture of the UA area (ph) in terms of the banking union and to address the non-performing loan issues which remains in the banking
systems.
In advanced economies like the United States, you still need to normalize monetary policies and do that in a way which is both gradual,
non-traumatic and therefore it has to be well communicated to the markets.
So there are plenty of things to do, not just for emerging markets but also for advanced economies.
LAKE: The list of challenges for you to talk about there in Lima, Peru is high indeed. Jose Vinals, we're going to let you get back work.
Thank you so much for joining us.
Now, Richard will be hosting Thursday's show live from Lima at the IMF annual meeting. He'll chairing a panel with managing director Christine
Lagarde as well as the Bank of England governor Mark Carney and Brazil's finance minister Joaquim Levy.
You can see that at the same time, same place right here on CNN. You won't want to miss it.
Now the U.S. Commerce Secretary Penny Pritzker tells CNN Cubans are eagerly awaiting U.S. investment. She is in Cuba to ramp up business
opportunities for American companies. Pritzker is the first commerce secretary to visit the country since 1950.
Let's go to CNN's Patrick Oppmann who is in Havana. I mean, Patrick you had a chance to come up - catch up - with the commerce secretary.
A lot of opportunity but I know a lot of that opportunity is something that Cuban companies want to seize for themselves.
PATRICK OPPMANN, CNN'S HAVANA-BASED CORRESPONDENT: Oh absolutely. But, you know, Maggie, let's just back up for a minute. It seems
incredible, almost unthinkable that we're talking about a U.S. cabinet secretary. Not just any cabinet secretary, but the secretary of commerce
of all things visiting Communist-run Cuba.
[16:40:08] But that's what's been happening the last two days. Commerce Secretary Penny Pritzker has been traveling around Havana seeing a
wide range of Cubans, meeting with Cuban officials. And she told us they're not only welcoming her, they're welcoming the prospect of U.S.
investment in Cuba.
(BEGIN VIDEOCLIP)
PENNY PRITZKER, UNITED STATES SECRETARY OF COMMERCE: -- that I've met with have been very forward-leaning and wanting more American foreign
direct investment.
We obviously have limitations on what we can do today under our own laws, and so we're trying to find places where we can do things together
now, where we can make progress around now within the limitations that both our governments have
And then see as we build more trust, more confidence, do more together, see then where we can go with all of that.
(END VIDEOCLIP)
OPPMANN: And, Maggie, a lot needs to change before you will have Starbucks, McDonald's, U.S. hotel chains opening up in Cuba. For one,
Penny Pritzker was fairly outspoken today, meeting with Cuban officials, talking about the need for U.S. companies to hire Cubans directly.
That's something right now that's impossible. International companies have to hire through the Cuban government all of their employees. That
makes it very difficult, very cumbersome.
So the number of regulations that certainly the U.S. would like to see change, the Cubans of course have been continuously pushing for the U.S.
trade embargo to be lifted. But, again, she told us that she cautioned them that it's up to Congress.
But there's a lot changing. There's more and more openings for U.S. companies to get here, to do business. And for every company that is
opening up operations in Cuba, there are many more that want to do it that are so far restricted by U.S. law.
But Penny Pritzker told me that U.S. companies need to start coming up with Cuba plans because the day is coming when very soon they should be
able to have that opportunity for the first time in over a half century where they could potentially invest in Cuba.
And that will be certainly a historic day when that happens, Maggie.
LAKE: That certainly will. Very interesting that she said that. Changing so rapidly there. Patrick, thank you so much for that. Patrick
Oppmann.
Now, faster than a speeding bullet - we'll take you onboard Japan's world famous bullet trains after this super quick break.
(COMMERCIAL BREAK)
[16:45:02] LAKE: All aboard. We are going to take a trip on the Shinkansen. For more than 50 years Japan's famous bullet trains have been
transporting commuters and tourists alike.
Prime Minister Shinzo Abe aims to boost Japan's lagging economy by exporting the Shinkansen technology to other countries including the U.S.
As Kristie Lu Stout reports it remains the envy of many around the world.
(BEGIN VIDEOCLIP)
KRISTIE LU STOUT, ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: In a city of skyscrapers, steel and concrete, Tokyo Station stands apart with
its old-world charm, red brick facade and elaborately adorned rooftop domes, this 100-year-old train station is considered one of Japan's
architectural gems.
Every day more than 400,000 people move through here on their way to the Tokyo Metro, the Airport Express, regional train lines and of course
the crown jewel - the Shinkansen.
Japan was the first country to build a dedicated high-speed rail system in 1964, and the trains are still a source of national pride.
The route that connects Tokyo to Osaka is Japan's oldest and most popular. During peak times, they run up to 15 trains an hour in each
direction.
Though there is a cart on the train selling snacks and drinks, it's customary in Japan to buy a bento box before you board.
Do you have chicken wings? Chicken wings?
Female: Wings.
STOUT: Wings? Yes. OK, very good.
A food lover's dream - salls (ph) of fresh intricately-presented boxes packed with everything from succulent sushi to fresh grilled meats and
vegetables.
On the route from Tokyo to Osaka, the bullet train is clearly king. Eight-five percent of travelers ticket while only 15 percent fly.
The most impressive thing about the Shinkansen is its speed and reliability. With (inaudible) up to 280 kilometers an hour, getting me
from Tokyo to Osaka in just under two hours and 22 minutes.
And the average delay last year was just 36 seconds. That's factoring in natural disaster and weather. Not bad.
One of the first things I'm struck by after boarding the Shinkansen is how quiet it is. Talking on cell phones is discouraged and people keep
their voices low.
I'm riding in the green car, the first class compartment on the Shinkansen. Each seat has its own built-in light, charging station.
It's pretty roomy - it costs about $150 U.S. dollars. I'm feeling kind of situated now, ready to have lunch.
There is Wi-Fi on some trains, but riders need to buy a network pass from one of Japan's telecom companies before they get on.
Japan rail takes privacy and efficiency very seriously. So seriously in fact, they would not allow CNN to film any passengers or staff onboard
the train.
In the future, this journey will become a whole lot quicker. Japan Rail is currently developing a Maglev train that would cut travel time
between Tokyo and Osaka to 67 minutes.
But don't hold your breath waiting for a ticket. Phase one, which will connect Tokyo to Nagoya is planned for 2027. The Tokyo to Osaka route
won't start running until 2045.
ANNOUNCER: Ladies and gentlemen, we will arrive at Shin-Osaka Station terminal in a few minutes.
STOUT: So now I'm in Osaka. As expected, we pulled in right on time, so the only question now - where to go for dinner?
Kristie Lu Stout, CNN Osaka, Japan.
(END VIDEOCLIP)
LAKE: Next, a textbook problem for one publisher - when slaves are referred to simply as workers. The CEO of McGraw-Hill Education will join
me after the break.
(COMMERCIAL BREAK)
[16:51:15] LAKE: U.S. textbook publisher McGraw-Hill Education has apologized for referring to slaves as workers in a world geography book.
LAKE: Ronnie Dean Burren, the mother of a student in Texas, posted this snapshot to Facebook after her son sent it to her. The caption
states, "The Atlantic slave trade brought millions of workers from Africa to the Southern United States."
The post sparked an outcry. McGraw-Hill says it will now change the wording and said the caption was a regrettable mistake.
In a note to employees, CEO David Levin said, "While the book was reviewed by many people inside and outside the company, and was made
available for public review, no one raised concerns about the caption. Yet, clearly, something went wrong and must and will do better."
David Levin joins us now in the studio. David, thanks for coming in. Do you feel confident that this was an isolated incident?
DAVID LEVIN, CEO, MCGRAW-HILL EDUCATION: Well I believe so, Maggie. Thank you for having us here. You know, Cody and his mom did us a great
favor by bringing it to our attention so we were able to try and correct it as quickly as we could.
LAKE: Have you now made changes in the review process based on the fact that this got through the net?
LEVIN: Yes, we've made a number of changes - important changes. I mean, most of all of course the concern is for schools and pupils and
children.
So the first thing that we've done is made an absolute commitment to make certain that we can replace any books that any school wants to do and
that's underway.
But we also alongside of that, you know, as a learning company, we've taken the opportunity to use this as a teaching moment. So we're issuing a
set of teaching notes on cultural sensitivity and how to use language, and we're offering that to schools as a part of the solution as well.
LAKE: Now, the company is rumored to be going public at the end of this year. But it's happening at a time when things are changing so
rapidly. I laugh as I look at this and remember the weight of having to carry around those textbooks.
And we know that children are moving to tablets, things are happening digitally now. My kids do some of their elementary work off a Chromebook.
How are you grappling with those rapid changes?
LEVIN: Well that's a great question. In fact this book is the physical manifestation of what is actually a much richer digital program.
So the way this whole program was constructed, was entirely digitally with lots of primary resources, lots of video, and it's actually designed
that the - over the life of the adoption which, you know, could be eight to ten years, we're assuming that 80 percent of the use is going to be the
online versions.
It's just that right now we need a physical manifestation - a book - to start with.
LAKE: And how does that change pricing in the education world? We know sort of in the commercial world, it brings the prices down, you lose
the pricing power in digital.
How does it work in education?
LEVIN: Well, I think the same broad trends apply. Normally when people think about pricing in textbooks they're talking about the higher
rate market which is bought by individuals.
The K-12 business is bought by whole districts and it's a very, very tough, competitive business where the prices are very, very - you know -
affordable.
But nonetheless, going to digital is making things lower-cost for the system. It's also better for us because we can do - where there are errors
- we can correct them immediately -
LAKE: Yes.
LEVIN: -- we can add things. It's a better -
LAKE: That's right. And so many have been calling for lower costs for textbooks whether it's parents or whether it's school districts who are
under stress.
How do you differentiate from the competitors if you're duking it out on price? If you need to sort of attract as much business and you're going
to be under the public pressure quarter on quarter, you know, results now - how do you differentiate?
LEVIN: Well, the exciting thing is moving the company to think about what we call adaptive and personalized learning. And the opportunity here
is to use software to bring content to life so that each student has a very personal experience with that content.
And somebody who gets one question wrong sees relevant material and so when he gets it right, goes in a different path. And we think - and what
we've done is spent a huge amount of effort in putting together effectively now a 500-person engineering team building high-quality software which will
just help students get better grades.
[16:55:07] So it's changed what we do in education. We think we can actually contribute to helping people do better.
LAKE: And that is something that people are probably willing to pay for. I know sometimes I watch my daughter do her homework and I'm sort of
fascinated at all that's available now in that sort of multi-platform learning environment.
David, thank you so much for coming in. Best of luck to you as you begin the roadshow to the rumored IPO. You'll come back and talk to us.
LEVIN: Thank you very much, Maggie.
LAKE: Thank you. Well, Germany has just told the world where it keeps its gold. You might be surprised on how little of it is actually on
the home turf.
We'll reveal where it's stashed next.
(COMMERCIAL BREAK)
LAKE: The Bundesbank has revealed exactly where it's keeping Germany's gold - all 3,384 tons of it. It follows years of controversy
about how much of it is stored abroad.
And the Bank says most of its holdings are still kept in foreign banks.
At the start of this year, 43 percent of the country's gold was held right here in New York, 35 percent in Frankfurt, 13 percent in London and 9
percent in Paris.
The Bundesbank says things are changing though in response to a campaign to repatriate German gold. It's moving hundreds of tons of
bullion out of New York and Paris and back to Frankfurt by 2020.
It expects at least half of Germany's gold to be back on home soil. But don't expect any exact dates on those deliveries. That is "Quest Means
Business." I'm Maggie Lake. The news continues right here on CNN.
END
