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Quest Means Business
Interview with World Bank President; Interview with CEO of Ukraine's NAFTAGAS. Aired 4-5p ET
Aired November 25, 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]
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: You're hearing the bell, Wall Street, heads for the Thanksgiving holiday with some modest gains. Hello,
this is Wednesday, November the 25th.
(BEGIN VIDEO CLIP)
Tonight, Russia's relations with two neighbors Turkey and Ukraine slide deeper into an abyss. I'll be live with the head of Ukraine's national gas
company. The World Bank President tells me the world must show compassion to refugees. And police in Brazil arrest a billionaire over a giant
corruption scandal.
I'm Isa Soares, I'm in for Richard Quest. And like him, Isa means business.
(MUSIC PLAYING)
SOARES: A very good evening to you. The President of the World Bank says it is a moral imperative for the world's wealthiest countries to accept and
help Syrian refugees whatever the worries he says about security.
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SOARES: In many western countries, the attacks in Paris have reignited the debate over accepting refugees. Germany's Angela Merkel is defending her
country's open door policy to refugees. She says the way forward is to agree quotas of refugees to be accepted by each E.U. country.
The new Canadian Prime Minister, Justin Trudeau has announced plans to bring in 25,000 Syrians in the next three months. And then in the United
States, the issue has really become a political football. Governors of more than half of the 50 states say they are opposed to taking more refugees
from Syria. So that is the overall picture right across the continent.
Well earlier, I spoke to the World Bank President, Jim Yong Kim, and he told me when it comes to refugees, security and compassion are not mutually
exclusive.
JIM YONG KIM, PRESIDENT, WORLD BANK: This is a very personal issue for me because in 1964 I was an economic refugee from one of the poorest countries
in the world at the time that was riven with conflict. It was a post- conflict society. This was the Republic of Korea, South Korea.
So I think that compassion for refugees is extremely important. It's part of what makes us human. It's part of what makes us part of the world, you
know global citizens. I know that there are security concerns, but we simply have to not forget the compassion for refugees is, in fact, what has
marked entire civilizations. I mean the U.S. has been made up of refugees from all parts of the world, including people like me.
Now, it's not easy, but you cannot - you cannot go forward saying, you know, because of security, we should stop all influx of refugees. That does
not represent what countries like the U.S., Germany, the U.K. have been at their best.
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SOARES: Absolutely. There's also, as we know, many economic arguments for accepting refugees, is there not.
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KIM: The fact is that the high income countries are going to need workers from other parts of the world. So for us, we think that groups like the
World Bank, group, you know academics, political leaders have to begin generating a different kind of message.
(END VIDEO CLIP)
KIM: Meaning that tolerance, multiculturism, multilinguism, these are the hallmarks of the societies, the countries that will do the best in the
future in terms of economic growth, in terms of being able to deal with all the complexities of a rapidly globalizing world. And I don't think we've
done that well enough yet. We've got to be clear.
Tolerance and especially a welcoming of people who speak a different language, who look different than the majority population, this is not just
the right thing to do morally. It turns out that it is going to be the right thing to do economically.
SOARES: Late last week we heard from Prince Charles who suggested increase competition for really scarce resources behind the refugee crisis and re
the conflict we're seeing in Syria.
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SOARES: What do you make of those comments? Are you in agreement with him?
KIM: We would never point to one or another event as the reason for conflict.
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KIM: Conflicts are very complicated. But we would also point out, along with Prince Charles, that there's no question that the kind of impacts that
climate change is already having are contributing to instability and potentially to conflict.
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KIM: What we've shown in our report called "shock waves" is unless we take immediate action both in terms of mitigation, reducing the amount of carbon
we're putting in the air, but especially in the area of adaptation, fully 100 million more people could be plunged into poverty by 2030.
(END VIDEO CLIP)
KIM: Now, for us, we're focused on two things, any extreme poverty by 2030 and boosting shared prosperity.
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KIM: We realize that some time ago there will be no way for us to achieve our goals unless we tackle climate change.
SOARES: Let's talk about the plan because there is a way out as the report says, and that involves targeted work and action by many countries.
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[16:05:00]
SOARES: As we look ahead to COP21 that begins next week here in Europe, what are your
expectations from the 140 countries? Do you think their promises go far enough?
(BEGIN VIDEO CLIP)
KIM: More than 150 countries have put together really ambitious plans, plans the likes of which we've never seen before across so many countries.
And so I think what we need to do is take everyone seriously, take them at their word, and then aggressively move forward to find the financing and
the momentum to get those plans done.
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KIM: I wouldn't expect 139 or so world leaders to be going to Paris especially after the tragic events of the last month in Paris if they
weren't serious about coming to an agreement. The leaders have to give us a framework. They have to give us a very strong message, and that message has
to be we're serious about climate change and we want both public sector and private sector groups like the World Bank and like many companies to take
action right now along with us to tackle this very, very serious challenge not only political - and not only a political challenge but a challenge to
the planet, a challenge to our ability to live on this planet.
SOARES: President of World Bank speaking to me here about refugees, also about COP21 which takes place here in Paris next week.
Still to come here on "Quest Means Business," as tensions between Turkey and Russia escalate a new energy dispute between Russia and Ukraine seems
to be boiling over.
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SOARES: I speak to the CEO of NAFTA gas after this.
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SOARES: Russia is lashing out at two of its biggest economic partners as tensions in the Middle East and Ukraine ratchet ever higher.
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SOARES: Russia has announced it will deploy antiaircraft missiles to Syria one day after Turkey shot down a Russian war plane. The Turkish military
meanwhile has released a recording of what it says is a warning to the plane. The crew member who survived the shoot-down insists there's was no
warning or contact at all. And back home, the Russian Foreign Minister went a step further saying the downing of the war plane may have been
premeditated. Take a listen.
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: (As translated) We have serious doubts about the facts that it was an unpremeditated act. It looks very
much like a planned provocation.
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[16:10:05]
SOARES: Now, the escalating tensions threaten the crucial energy partnership between Russia and Turkey. Russia is planning a new pipeline
across Turkey to carry Russian gas to customers in Europe. For Moscow, the attraction of the route is that it bypasses Ukraine.
Well on Wednesday, the dispute between Ukraine and Russia over gas pricing escalated even further. Ukraine said it would stop buying Russian gas and
take advantage of lower prices on offer from Europe. Take a listen.
(BEGIN VIDEO CLIP)
ARSENIY YATSENYUK, UKRAINIAN PRIME MINISTER: (As translated) The government has decided to order NAFTAGAS to stop buying Russian gas because they mixed
it up. It is not that they are not delivering enough gas. It is that we are not buying their gas. It was done primarily because the offers which we
received from our European partners price offers were significantly better than the offers from our Eastern neighbor.
(END VIDEO CLIP)
SOARES: Meanwhile gas from the Russian state energy company says it has stopped delivering gas because Ukraine hasn't paid. The gas from CEO said
the dispute could threaten gas deliveries to Europe.
Andry Kobolyev, CEO of Ukraine state run gas company NAFTAGAS and he joins me now from (inaudible).
Thank you very much for taking the time to speak to us tonight here on Quest Means Business. Tell us why Ukraine has decided to stop buying
Russian gas.
ANDRY KOBOLYEV, CEO NAFTAGAS: Good night and thank you for your (inaudible).
(BEGIN VIDEO CLIP)
KOBOLYEV: I would say that the efforts which was done by Ukrainian, new Ukrainian government and NAFTAGAS team for the last year and a half have
allowed us to have freedom of choice. To buy or not to buy.
And now when we are too diversified and now when we have ability to buy our gas not only from the Russian federation but also from different EU
directions, we have the freedom to choose the best price and the best conditions.
So a decision which was made today was made out of simple economic (inaudible) to buy the cheapest gas possible.
(END VIDEO CLIP)
SOARES: So let me just clarify this if I may. You're saying basically it's not that you're not paying for the gas, like (inaudible) is saying it's
simply because you've got better options in Europe, is that correct?
KOBOLYEV: Yes, because we have better options to buy from Europe, exactly.
SOARES: And where are you getting that from Europe? Where exactly? Because Europe gets quite a huge percentage of their gas, natural gas, from
Russia's via Ukraine. So if that's stopping, where exactly are you getting? What are your European partners, where are you getting it from?
(BEGIN VIDEO CLIP)
KOBOLYEV: We have more than ten counter parties which are selling gas to us, one of them is even U.S. origin company.
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KOBOLYEV: All of them are buying gas from different sources, but one must understand that the European gas market has changed a lot over the last
years. It has become truly flexible, new suppliers have come into play, new energy suppliers are coming this month to Europe. All of this allows us to
buy gas from various sources.
SOARES: Do you think -- are we -- is Europe really here in danger, do you think, sir, of seeing a scenario that we saw back in 2006 and 2009 where we
couldn't get much of its natural gas because of what was happening between yourselves and Russia?
KOBOLYEV: I would say the likelihood of such situation this winter is quite low. And the major reason for that is exactly what I mentioned before, that
the market has changed dramatically. There are a lot of suppliers who would like to replace, for example, GasPro if they try to repeat the gas prices
of 2009, for example.
And my expectations that if it happens it would be quite suicidal for this company. However, given the fact that Russian Federation is permanently
trying to push through the North Stream 2 project and is trying to convince European partners it's absolutely necessary for their security of gas
supply, they might try to play this game.
But I honestly hope that Europe is much more prepared at the moment not to buy their bluff.
SOARES: OK, thank you very much. Andry Kobolyev, the CEO of Ukraine state run gas company NAFTAGAS there saying about -- talking about this exchange
here, a bit of a game between Ukraine and Russia. Thank you very much, sir.
(END VIDEO CLIP)
SOARES: Now stocks across Europe really rose on Wednesday as the Euro weakened. Look at those numbers.
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SOARES: Paris CAC up almost 1.5%. Zurich a similar number. But look at the Xetra DAX doing particularly well more than 2% higher and that followed
reports really that The European Central Bank may increase stimulus. There's been a lot of talk here about that.
[16:15:07]
The German DAX as you can see really leading the pack there, exporters among the biggest increases of the day.
And then Volkswagen shares actually did particularly well for once, it rose more than 4% in Xetra DAX in Frankfurt after detailed a plan to fix some of
the diesel cars that were caught out cheating emission tests. But all these green arrows on the back of those reports the ECB may actually raise
interest rates when it comes to - cut interest rates in its next decision.
SOARES: Now, in the U.S., however, stocks were just about unchanged. Look at that, pretty flat to be completely honest the DOW narrowly avoided a
loss and ended the day with a 1-point gain.
The U.S. Treasury Department has placed sanctions on four people and six organizations accused of supporting Syrian President Bashar al Assad's
regime. Now some of those sanctioned are accused of helping Syria to buy oil from ISIS. One of the organizations being sanctioned is a Russian bank.
(END VIDEO CLIP)
SOARES: Iran meanwhile is preparing for international sanctions to be lifted. The country's oil industry stands to get a major boost. And as John
Defterios now reports businesses it seems are ready for the doors to open.
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JOHN DEFTERIOS, REPORTER: These are the faces of Tehran. They're unfamiliar to the outside world and carrying the burden of years of isolation. To take
the pulse of the people, I explore the beating heart of the old city around the grand bazaar. And receive a warm embrace.
California. You like that, huh? So California almonds, Iranian almonds. I'm surprised to see California almonds here. These are excellent. This is what
people get very excited about. The last major frontier market to open up. In fact, they call it the Germany of the Middle Cast. We can't forget for
the last three years it's been extremely painful, average incomes have dropped better than $2,000 and this country has been in recession.
Enter the Cavernous Bazaar, where traders have remained the same for centuries.
I've been in (inaudible) throughout the Middle East, but your first impression is it's hard not to be impressed. Deep inside, excited merchants
displaying their favorite offerings.
The so called bazaar rings a powerful force here in Tehran, in fact they're known to be on the conservative side and wanting not to be open in the past
to the outside world.
Not this generation of Bazaaries. While (Omid Ormivar) this man proudly rolled out his handmade carpet, he talks about the day expats will return
and Iran is no longer shut out of the global banking system.
(OMID ORMIVAR) In some part yes, it's was difficult, especially for transporting the money. Because there are so many customers here that were
tourists that had money to spend.
DEFTERIOS: Iranians have worked around sanctions to survive. How much? 20? With the currency that at one point was down 80%. Thanks very much. 20,000
rial, that's about 50 cents. Even as inflation hovered above 40%.
Through the city's grinding congestion, we make our way to an oasis of calm, a cafe of one of Iran's historic palaces. I find two friends, both
who work in industry but with very different visions of the future.
You two are actually having a debate before, right?
One wants to leave the country and doesn't see any hope. And one wants to stay in the country and sees hope.
(Inaudible)
(Cross-talk)
DEFTERIOS: Next door to the cafe, designer (Anahita Ostadi) makes jewelry featuring palace motifs.
(ANAHITA OSTADI, OWNER): This one is the window of the main palace.
DEFTERIOS: Her way of offering a taste of Persia.
(OSTADI): I hope that in the future we have a country that is open to everyone. Everybody, especially United States and the other countries, yes.
DEFTERIOS: Division is apparent all across Iran. The country's younger generation half under the age of 24 is at odds with the country's hard-
liners.
Iran's supreme leader recently declared he wanted to seriously avoid importing consumer goods from the United States. But Iranians are yearning
for change and are ready for business.
This is an ultra-modern mall opened 15 months ago with over 500 stores. Up to 40,000 shoppers pass through each day.
One of the first retailers in was (Ali Rezai) who was importing clothing from Turkey.
UNIDENTIFIED MALE: This is my brand. This is completely made in (inaudible) - but the material completely from Italy.
[16:20:07]
DEFTERIOS: And you think the market is ready for this sort of taste?
UNIDENTIFIED MALE: Yes.
DEFTERIOS: Do they want U.S. products, for example
UNIDENTIFIED MALE: In my opinion, yes. They want U.S. Products.
DEFTERIOS: And that will be the challenge for the government, opening its doors to the outside world but trying to keep firm boundaries in place.
John Defterios, CNN, Tehran.
(END VIDEO CLIP)
SOARES: Up next on Quest Means Business. Britain's Chancellor of the Exchequer reveals an unexpected windfall.
(BEGIN VIDEO CLIP)
SOARES: I ask one of his ministers why the U.K. appears to be in better financial shape than we all thought. That's next.
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(COMMERCIAL BREAK)
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SOARES: The British government has announced a major U-turn on one of its most controversial austerity measures. Chancellor of the Exchequer, George
Osborne, says he's reversing plans to cut welfare benefits for people on low pay because government finance have improved and the savings are no
longer essential, that's what he says.
The Chancellor says he listened to the criticism of the cuts and will ease up on austerity. Take a listen.
(BEGIN VIDEO CLIP)
GEORGE OSBORNE, U.K. CHANCELLOR OF THE EXCHEQUER: I've been asked to help in the transition as Britain moves to the higher wage/lower welfare, lower
tax society that the country wants to see. I've had representations that these changes to tax credits should be phased in. I've listened to the
concerns. I hear and understand them. And because I've been able to announce today an improvement in the public finances, the simplest thing to
do is not to phase these changes in but to avoid them altogether.
(END VIDEO CLIP)
SOARES: Well I'm sure many people in the U.K. will be cheering. I've been speaking to one of George Osborne's treasury ministers. You'll be familiar
with Lord O'Neil, if you're a regular viewer here of Quest Means Business. He spoke to us many times when he was a chief economist at Goldman Sachs
back when he was simply just Jim O'Neil. He's now known as Lord O'Neil. I asked him about the chancellor's about-face on those welfare cuts and
really what prompted it.
JIM O'NEIL, U.K. TREASURY: The critical factor was that the OBR, the Independent Office of Budget Responsibility, suddenly become more cheerful
about life. So much so that the baseline for the outlook going forward was more than - or 27 billion pounds stronger than a lot of people have been
analyzing what was possible ahead of this. So of course it gave the Chancellor considerable more flexibility to think about which particular
policies to focus on more or less than before within the overall framework of wanting to stick to declining budget deficits, lower debts, and of
course a fiscal surplus around 10 billion pounds by the end of the parliament. So it did give him a lot more flexibility to choose.
[16:25:26]
SOARES: It did indeed. But if you remember, Jim, only last week public finance records show that George Osborne's efforts to really reduce the
U.K. budget deficit were running what they called off-track with borrowing in October the highest month since I believe 2009. So this is quite a
considerable U-turn is it not?
O'NEIL: Well, I don't think so. Far from be it from me to sort of criticize my old community. But the speed at which the consensus appeared to
extrapolate the number into assuming there was underling deterioration in the fiscal was a bit of a surprise.
(BEGIN VIDEO CLIP)
O'NEIL: From what they've seen themselves of the October numbers, they retain quite a bit of optimism that the profile for this fiscal year on
receipts is stronger than the consensus was now thought.
(END VIDEO CLIP)
O'NEIL: So I would imagine for the consensus analytical community that part of today was a bit of a shock. But importantly, the OBR was separately more
optimistic about GDP growth for the future as well as believing that the relationship between nominal GDP growth and various forms of revenue would
be stronger than they previously had been working on.
SOARES: When you look at the country's books, Jim, do you see a major improvement? What's your assessment?
O'NEIL: So I have to be careful in how I answer here. So the OBR was set up to make sure that there was an independent organization that essentially
constrained the governments of the day from trying to play around with the underlying base of the finances as it might otherwise do.
And so that process needs to be respected, and it could well be that by March or by this time next year the OBR is less optimistic than they are
today. But with that caveat, I would say from my own perspective, one of the things that I thought may happen is indeed aspects of what we've seen
as the background today.
Because the past couple of years, despite very strong GDP growth finally coming through for the U.K. from the mess 08-and 09, we haven't seen the
tax revenues until recently. And I think that's caused the OBR, you'd probably have to interview them but I'm guessing that's caused them to
review the modeling approach that they've taken for the future. But it doesn't completely surprise me. I think it's hinting at a slightly more
virtuous circle between the performance of the economy and the growth tax receipts.
SOARES: Still to come right here on Quest Means Business. And he's one of Brazil's richest citizens. Now Andre Esteves is fighting for his reputation
and possibly his freedom as a Petrobas corruption scandal widens. We'll take you live to (inaudible) in Brazil just ahead.
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[16:31:51] ISA SOARES, CNN ANCHOR AND CORRESPONDENT, FILLING IN ON "QUEST MEANS BUSINESS" SHOW: Hello, I'm Isa Soares. There will be more "Quest
Means Business" in a moment when one of Brazil richest businessmen has been arrested. We'll be live from Rio de Janeiro.
And Adele smashes more music industry records. We find out how she did it.
Before that, this is CNN and on this network the news always comes first.
A Russian airman who survived being shot down by a Turkish warplane says he received no warning that he was violating Turkey's airspace.
Turkey has released a recording that it says shows the Russian plane being warned that it was approaching Turkish airspace.
The Russian navigator says he received no communication at all.
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KOSTANTIN MURAKHTIN, RUSSIAN NAVIGATOR, VIA INTERPRETER: In reality there were no warnings, not via the radio, not visually. That's why we were
keeping our combat course as usual.
You have to understand, if they wanted to warn us they could have shown themselves, but there was nothing. The rocket hit our tail completely
unexpectedly. We didn't even see it in time to take evasive maneuvers.
(END VIDEOCLIP)
SOARES: Ukraine says it will stop buying Russian gas and get cheaper energy from Europe instead. Vas (ph) Gazprom, the Russian state gas
company says it stopped delivering gas because Ukraine hasn't paid.
Authorities in Brussels are beginning to ease the partial lockdown of the city. Much of the metro system reopened on Wednesday after anti-terrorist
raids by police on Sunday and Monday.
The city will remain at the highest terror level until at least next week.
U.S. President Barack Obama has spoken about the security situation as Americans get ready to celebrate Thanksgiving.
He said there was no specific or credible intelligence of any imminent attack on the United States, but he said the entire country would stay
vigilant.
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BARACK OBAMA, U.S. PRESIDENT: I want the American people to know entering the holidays that the combined resources of our military, our intelligence
and our homeland security agencies are on the case.
They're vigilant, relentless and effective. In the event of a specific credible threat, the public will be informed.
(END VIDEOCLIP)
SOARES: Now one of Brazil's richest men has been arrested over a corruption scandal that is hitting the country's highest levels of business
and indeed of politics.
Andre Esteves is the billionaire chief of BTG Pactual, a major investment bank.
Now according to Brazil's Supreme Court, there is evidence he tried to silence a key witness in the corruption probe.
Shares at BTG closed down more than 20 percent. The (Inaudible) has even joked that BTG stood for "better than Goldman."
A short time ago BTG announced it was appointing an interim CEO Persio Arida. Now allegations of corruption surrounding the state-run oil giant
in (ph) Petrobras have really entangled a host of top people in Brazilian politics and as well in Brazilian business.
[16:35:06] There is even a campaign to have President Dilma Rousseff re- impeached briefly. Here's what prosecutors say about this case. I'll talk you through.
Now, Petrobras officials took company money by overcharging for contracts. Now, investigators say contracts were awarded to construction companies who
were in on the scam.
And then kickbacks apparently were given to politicians to ensure they looked the other way. So you see how deep this scandal goes.
Covering this for us is Shasta Darlington, she's joining us now from Rio de Janeiro.
And, Shasta, this is an investigation as we have outlined here that has been going on for some two years and more than 100 people arrested -
politicians as well as former executives of Petrobras.
And now it seems we have a banker. What do we know about Andre Esteves and his involvement in this case?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT BASED IN SAO PAULO, BRAZIL: That's right, Isa, and that is what's important here.
This is the first time that a bank has been implicated in this scandal. It has been construction companies, it has been platform builders, this kind
of thing.
So to have a bank now being implicated has really sent ripples through the economy because it just - what it has people asking is what - who could be
next? What could be next?
Now, in the case of Andre Esteves, this is this billionaire CEO who really turned around BTG Pactual, made it the - Latin America's - biggest
independent investment bank - made it what it is today.
And what he's being accused of isn't so much the bribery. What this judge of the Supreme Court says is that he tried to obstruct justice, that they
have evidence that he was trying along with the governing party's leader in senate that they were trying to prevent or to stop a key witness from
giving testimony, from turning state's evidence.
And in the case of this - the governing party's leader in senate - we're talking about Senator Delcidio do Amaral. He's actually been arrested on
suspicion that he was offering a monthly allowance of some 50,000 reais and a jet ride out of Brazil to not provide this evidence in the case.
That hasn't, however, been linked directly to Esteves, but the idea is they were working together to prevent this witness from providing this
testimony.
It's really sent shock waves not only to the economy but through the government because this is a senator. This is the first time that a
sitting senator has been arrested.
So, as I was saying, it just has people asking well who could be implicated next? Who could we see behind bars? And what's going to happen to a
government that has already seen massive protests, people demanding the impeachment of President Dilma Rousseff? Can things get worse at all, Isa.
SOARES: Absolutely. Especially because the leader of - he's the leader of President Dilma Rousseff's government in the senate. And like you said,
it's not just a political it's also economic. We've got the economy also in deep recession, on top of that global commodity prices really falling
and all this makes a much tougher picture, doesn't it, Shasta, for Dilma Rousseff?
Shasta Darlington for us there in Rio de Janeiro. Thanks very much, Shasta, good to see you.
Now, across the border in Peru, the economic picture is sunnier it seems. That's partly thanks to the travel and tourism sector and there are two
airlines looking to cash in. We'll explain after this.
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[16:41:09] SOARES: Right now millions of Americans are leaving work and beginning the journey home for Thanksgiving. And 3.6 million will be
traveling by air.
For those who fancy a trip to South America, there are two airlines that have grown rapidly and hoping to win more international travelers.
LATAM and AVIANCA are both banking on an economic boom in Peru as Richard Quest discovered.
(BEGIN VIDEOCLIP)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: The continent's airlines are now dominated by two newly-
formed carriers - the result of mergers.
Avianca and LATAM are everywhere on the continent, each is a parent company that controls many smaller airlines in individual countries.
NANI GARRUES, CEO, AVIANCA PERU: Since I as a little girl I loved the planes, I liked to come to the airport.
Who doesn't love this? You'll love this.
QUEST: Nani Garrues is the head of Avianca Peru.
GARRUES: Richard Quest, business traveler.
QUEST: Part of the Avianca Group, the second largest airline in Latin America. And Nani's goal is to fly the Avianca flag in Peru and beyond.
GARRUES: My role is to participate actively in those - in positions of - where we can fly but my role is to keep a high standard here in Peru
operational excellence.
QUEST: So where's your growth in the future?
GARRUES: Our growth in the future is in long hauls and we have to improve and expand domestic markets.
QUEST: It's a similar story of merger and expansion at the recently renamed LATAM Group, made up of the old TAM of Brazil and LAN.
Felix Antelo, the CEO of LAN Peru, is Nani's counterpart. And just like Avianca, his airline is one part of the larger regional group.
It's a vital piece of the LATAM jigsaw.
Where is the growth?
FELIX ANTELO, CEO, LAN PERU: Today the growth is basically try to capture more international traffic to these countries.
QUEST: Within the group, you've obviously got Brazil and you've got Chile. But where does Peru fit into it?
ANTELO: Peru is absolutely strategic for the group for many reasons. We are the main hub today for LATAM. Lima is crucial for our international
business because we are in the middle of South America, so we're in a position where we take traffic from Argentina, Chile, Uruguay and take it
to the Caribbean and North America and the States.
QUEST: The new merged airlines have been formed and renamed. And now management has to make them work. What's more important do you think?
That the airline is seen as Peru - within Peru - or that it's seen as a Latin American carrier.
GARRUES: No, we're a Latin American carrier and we treat our passenger in a warm way and all the countries we fly in.
QUEST: With LAN and TAM, you haven't really yet faced the core difficulty of actually merging the operations, merging the reservation systems?
ANTELO: We've made some advances. I would say we unified our onboard service for example, but the huge turnover will be next year when we get
these two brands together and we'll be just LATAM.
QUEST: Two powerful competitors in a powerhouse region. These new Latin American behemoths have merged at the corporate levels and now the battle
is joined in every country where they fly.
ANTELO: Our number one priority is to keep growing in Peru and adding to the network of the group.
QUEST: Do you want to be CEO of the bigger, larger group?
[16:45:01] ANTELO: I would lie if I say no. I mean, absolutely. But the competition is tough.
(END VIDEOCLIP)
SOARES: Quest doesn't seem to shy away from always asking the big questions, does he? (Inaudible) right here on "Quest Means Business,"
Adele's new offering needed just three days to become the best-selling album of 2015. Now she's breaking records some people thought would never
be beaten. We'll have that story after a highlight from "Make, Create, Innovate."
(COMMERCIAL BREAK)
SOARES: I never thought I would have to read this but it seems "My Heart Will Go On," but Celine Dion's place in the record books it seems will not.
The Canadian diva has just been toppled by Britain's Adele who has now sold the most albums in Canada in under a week.
Adele's also tearing up the hearts of NSYNC. She's pushed past Justin Timberlake's boy band to break the record in the United States. These are
both records that stood for the better part of really two decades.
To tell us more, Samuel Burke is here. And, Samuel, I think she really is a tour de force. I mean, she's taken a break and she's come back and look
what she's doing - breaking records already.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well it's funny you use the word 'tour' because we've heard from the experts if you want to make money in
the recording industry, you don't sell records anymore. You go on endless tours, you endorse products.
Adele has done exactly the opposite, defying gravity and proving along the way that the only thing bigger than her pipes are her blockbuster sales.
(ADELE SINGING "HELLO")
BURKE: The week isn't even over yet and Adele is already saying hello to the biggest first-week album sales in all of history.
The powerful lyrics and soaring vocals for the album's first single are propelling her third studio album - 25, her age when writing these songs,
to hit these record-breaking heights.
Now forecast to sell nearly three million albums in the U.S. alone, Adele's easily saying "Bye Bye Bye" to the previous fastest-selling record holders.
(NSYNC SINGING "BYE BYE BYE")
BURKE: NSYNC's album "No Strings Attached" which sold 2.4 million in its first week 15 years ago.
To record bosses, no doubt pleasantly surprised but likely nobody more stunned than the singer herself. Adele considered walking away from the
spotlight after her last record "21" which sold more than 11 million copies.
[16:50:03] Fearing she'd never repeat the sales and critical acclaim, she thought it might be better to leave it all behind on a high note.
(ADELE SINGING "SOMEONE LIKE YOU")
ADELE, SINGER: This one was me kind of on my knees with you.
BURKE: "21" was a breakup album the singer says. She calls "25" a makeup record. "I'm making up with myself, making up for lost time, making up
with everything I ever did and never did."
And the phenomenal albums sales are easily making up for any money Adele would have received from streaming music services like Spotify. Taking
Taylor Swift's game plan one step further, Adele also kept the new record off of Apple Music, a strategy that's clearly driving people to buy the
album.
JAYSON GREENE, SENIOR EDITOR, PITCHFORK: The fact that Adele is able to reject streaming places her in the one percent of the one percent of the
music industry.
It has become its own music industry status symbol.
BURKE: Adele doesn't just do sad songs, she can also make us laugh, joining in with a group of Adele impersonators on the BBC.
The world's watched her grow, singing her way from "19" to "21" and now "25" is taking her right into the record books.
And, Isa, she's done it all facing major vocal problems and giving birth to a child along the way.
SOARES: She's extraordinary. She sounds beautiful as well. But what I found fascinating listening to the story was that she's somehow snubbing -
well to a certain extent - she's snubbing streaming and yet she's still breaking records.
Tell us a bit more about that.
BURKE: So she's snubbing streaming for the most part. She's not making her album available on Apple Music or Spotify, but she is making the lead
single "Hello," which we're seeing here, available.
So she's kind of teasing us, getting everybody to listen to it but then forcing us to fork out the $10.99 for the album. Are you going to buy it?
SOARES: I will buy it. But I was actually reading that some argued that the reason that she has such great success is because she has a much older
following - people who still buy CDs like myself.
BURKE: Well, yes, she might bring some of the older folks out to buy a CD but she's selling albums on iTunes which aren't real albums. I can't
believe you're going to buy a CD - don't do that to your poor family.
SOARES: Of course I'm going to buy CDs. (LAUGHTER).
BURKE: Buy an iTunes gift card, come on.
SOARES: That's your Christmas present. Samuel, thank you very much.
BURKE: Merry Christmas.
SOARES: Now, Adele has racked up billions of YouTube hits. Now YouTube is facing a complaint that kids are being bombarded with ads for junk food.
For example, this clip showing an Oreo taste test. Take a look.
(BEGIN VIDEOCLIP)
BOY: Peanut butter.
GIRL: Ah, man, my mouth is dry, I need some milk.
CHILD ANNOUNCER: Nothing better than milk and Oreos.
(END VIDEOCLIP)
SOARES: Now this isn't an Oreo ad, it's a segment from the YouTube start (ph) even (ph) tube more than two million subscribers.
Now two consumer groups have complained to regulators that clips like this break the rules about marketing junk food to young children.
Angela Campbell is a director of the Campaign for a Commercial -Free Childhood and she joins me now live from Washington. Angela, thank you
very much for taking the time to speak to us here on "Quest Means Business."
Your group, the Campaign for a Commercial-Free Childhood has found really promotional videos (as I was) reading for products for about 17 food and
drink manufacturers.
How shocked and how worried are you by this?
ANGELA CAMPBELL, DIRECTOR, CAMPAIGN FOR A COMMERCIAL-FREE CHILDHOOD: Well we're quite worried because young children are spending more and more time
watching videos on hand-held mobile devices like tablets and smartphones than they are watching on television.
These kinds of programly (ph) commercials on endorsements like the clip you showed could not be shown on - in - the United States on regular television
or on cable television.
But because the law hasn't really kept up, this is a huge loophole that these companies can market their products on YouTube without having to
comply with the rules that would apply to television.
SOARES: But Angela, could parents not just simply - and I'm just throwing it out there - simply switch off the search function to help reblock
content that they do not want their children to see.
It is something that would probably be more practical.
CAMPBELL: No, it wouldn't be because we tried that. And when we turned off the search function, we still got those programs and then once you've
watched one, you start watching more and more because they automatically feed the next video to you.
So Google says --
SOARES: What would you like to see -
CAMPBELL: -- that that will prevent it but in fact that is not true.
SOARES: What would you like in that case, Angela, what would you like to see be done? I mean, I know that a lot of criticism's been directed at
YouTube, but surely big brands should also face some sort of responsibility for this.
[16:55:00] CAMPBELL: Well that's right and here in the United States we have something called the Consumer Food and Beverage Advertising Initiative
and 18 of the major food advertisers are members.
And they have pledged not to advertise, in some cases, any of their products to children under age 12 and in some cases only if they meet
certain nutritional standards which these Oreo cookies do not meet those standards.
So we've asked the Federal Trade Commission to force these companies to live up to their pledges. So they're saying to the public we won't
advertise that stuff to kids and yet they are.
Now, the tricky part here is of course it's not entirely clear how those videos got onto YouTube Kids as opposed to YouTube.
And so that's one of the reasons why we are asking the Federal Trade Commission to conduct an investigation of these relationships about who's
paying whom and how those videos end up on the service intended for children five and under.
SOARES: Angela Campbell, thank you very much for taking time to speak to us. I'll have much more "Quest Means Business" after this.
(COMMERCIAL BREAK)
SOARES: You could call it the "Stars Wars" bump (ph). "The Force Awakens" doesn't hit theaters until the end of next month and Apple has already
acquired a visual technology company that helped to make the film.
Now it's called Faceshift and it specializes in technology that can take pictures of human faces and then turn them into life-like digital copies.
Faceshift may be of use to Apple if it makes the push of course into the virtual reality market.
And that does it for "Quest Means Business." Thank you very much for joining me. I'm Isa Soares. The news continues right here on CNN, the
world news leader.
END
