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Quest Means Business
EU Orders Apple to Pay $14.6 Billion in Back Taxes; Farage: I'm Worried About Brexit Backsliding; U.S. Treasury Calls Apple Ruling "Unfair"; U.S. Markets Fall on Hawkish Fed Tone; Cork Mayor: Apple Supports 7,500 Jobs in Cork; Diddy Unveils New Ciroc Vodka Campaign; ISIS Claims Top Spokesman Killed in Syria; France Calls for Halt of TTIP Talks. Aired 4-5p ET
Aired August 30, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: Sean "Diddy" Combs ringing the closing bell on Wall Street. The Dow is off 54 points. No, no, not yet,
sir. Not yet. We're hoping to talk to him on the program in the course of this hour. They booed when it looks like he'll be doing something. I
think that was a rather wimpy gavel from Sean "Diddy". Yes, but you will be talking to him later, there's a good cheer. You can see how the day is
going to go. It's Tuesday. It's August the 30th.
Tonight the taxman cometh for Apple. Brussels demands $14 billion in back taxes.
And in the United States are furious, accusations of EU overreach. I'll talk to UKIP's Nigel Farage on this subject.
And as you saw at the exchange, raise a glass to Sean "Diddy" Combs. We'll be back on the floor with the hip-hop legend as he talks about vodka.
I'm Richard Quest. I'm exhausted before we started. But I still mean business.
Good evening. The European commission has accused Ireland of giving Apple billions of dollars in illegal state aid. It's a groundbreaking decision
that has rocked the business world. So today, of course, we're calling it the I-tax. It could cost up to $14.6 billion. That's how much Apple would
have to repay Ireland.
It's the EU's largest ruling for a single company on tax. Ireland allegedly helped Apple make its tax bill considerably thinner and lighter.
The numbers were staggering, as revealed from the commission. One percent or less of profits were paid in tax. The scheme was years in development,
two decades in execution. Of course that's not all. There is more as well. Apple and Ireland have pledged to appeal. Tim Cook says the
decision has no basis in fact or law. So an Apple, the decision that's quite monumental. For more, Samuel Burke is with us in London. How did
they do it?
SAMUEL BURKE, CNNMONEY BUSINESS AND TECH CORRESPONDENT: Richard, this dates back to the '90s. Plain and simple, Ireland became the really
international headquarters for Apple, for their sales in Europe, Middle East, Africa, even India. Why Ireland? Because the corporate tax was low
there. But the signature corporate tax in Ireland for businesses is 12.5 percent.
And just take a look at these numbers, Richard, it's so much lower, what Apple has been paying over the years. You go to 2003 and you see they were
paying just 1 percent. In 2011, down to 0.05 percent. By 2014, 0.005 percent. Now, the EU isn't giving them a penalty. They're saying these
are back taxes that you owe, plus the interest. So actually we could be talking about well over $14.6 billion when it's all said and done, Richard,
if it's all said and done.
QUEST: And of course the EU, even though this probably started in the early '90s, the EU is only allowed to go back ten years from the date they
started looking into this, isn't it, Samuel, which was 2013. That takes them back to 2003.
BURKE: And what's so fascinating about all this to me, is you're talking about huge amounts of money. You would think these governments would want
it. But of course Ireland doesn't want it. They're saying please, don't pay us. If you just take a look at this list of who has what to lose in
this whole thing, it seems like everybody has so much to lose. You have Apple who could lose way more than $14 billion, I don't think you or I or
anybody feels too bad for them, that's just about 5 percent of the cash reserves they have on hand.
You have Ireland though. They're very afraid. They could lose companies like Apple and of course the thousands of people that Apple does employ,
actually human beings with jobs. You have other EU countries like Netherlands and Luxembourg, which must be very frightened tonight as they
watch QUEST MEANS BUSINESS because they could lose the companies they have there. And of course oddly enough the U.S. federal budget could take a big
dent. Because any time an American corporation pays tax to a foreign government, they get a credit. And the United States never expected the
back taxes to be this high. All of a sudden they could have a very significant debt in the federal budget.
[16:05:00] QUEST: Samuel Burke in London with the big picture for us tonight. So what did Apple do? The European commission is accusing the
company of setting up a tax structure that in their words has no basis in economic reality. So we are going to allow you to follow the money.
You have to understand, the beginning of all of this is over here in the Apple stores, across the European Union. It doesn't matter where you
bought your Apple product. The way the contract was constructed, it wasn't with the store in that country. Oh, no. Instead, you were actually
contracting with Apple sales international. This Irish company recorded profits of $22 billion from across the European Union. But very little of
it was actually taxed in Ireland, because the tax rate had been manipulated.
How did they do that? Simple. They created a fictitious head office. This head office seemingly had no tax domicile. The EU says it only
existed on paper. And what the Irish agreed, the Irish basically agreed to allow Apple to apportion the revenues between Ireland, small bit, and the
head office, big bit. And since there was no tax payable here, that's how billions and billions of euros went without being taxed.
Then there is of course over here the $2 billion a year that Apple paid for research and development to the parent company in the United States.
You're seeing a picture of how they did this. Whether it was the internal transfer for R&D to the U.S., or the use of it fictitious head office, or
the Irish subsidiary, or the sales in the Apple store, you put it all together, and you have a construct with acquiescence by the Irish. Now the
commissioner told CNN this is not about the EU being tone deaf to the realities of the business world. This is way more serious.
(BEGIN VIDEOTAPE)
MARGRETHE VESTAGER, EUROPEAN COMPETITION COMMISSIONER: I think it's a question of corporate ethics. You have a very, very good business
environment in Europe and in Ireland. If you only want to come here, if you can be allowed to pay 0.05 or 0.005 percent in taxation, I think you
come here for the wrong reasons. Because this is a beautiful place to do business. You can have a very good business here. And this is a question
about profits made in Europe. Profits made in sales in Europe, in Africa, in the Middle East, in India, all recorded in Ireland.
This is a question about profits being made here. And therefore, of course, it's a question also for EU legislation. And I think that is the
core of things. And I think it is very important to remember all of the businesses, hundreds and thousands of businesses who pay their taxes,
because they do, because they can't help it, because they can have no tax ruling to allow them not to pay their taxes. That is the question that
ought to be discussed. And that is the question which also ought to be discussed in boardrooms, in corporate business.
(END VIDEOTAPE)
QUEST: That's the commissioner. Joining me now from Brussels is Nigel Farage, the former leader of the U.K. Independence Party, good to see you,
Nigel, as always. Thanks for joining us. We have been talking about the business side of it. But you have a view, and I've been looking at your
tweets today, that the commission has overreached itself in making this ruling. But I ask you, sir, surely the commission does have a
responsibility to ensure a level playing field in the single market.
NIGEL FARAGE, FORMER LEADER, UK INDEPENDENCE PARTY: Well, you know, if you believe in level playing fields, that's fine. Actually what we have within
the tax structures of the European Union is competition. And I say that because the European commission does not have any authority, any
jurisdiction over corporation tax rates at all. It has some over VAT, but none, none, directly over corporation tax rates.
So what they've done is not having the authority to deal with this, they've gone through the competition rules and said that it's basically unfair and
that it equates to state aid. I completely understand that most people watching this program will say, well how could it be that these giant
corporations, you know, choose their domiciles, often switch them, and avoid paying tax?
[16:10:05] But the real point here is that a sovereign Irish government, at least they thought they were sovereign, did a deal with a company. What
the Irish did is they chose jobs, OK, over tax. You said earlier that it was a fictitious head office. Hang on. There are 5,000 people working for
Apple in Ireland.
QUEST: Right, there are 5000 people working for the Irish company. But in which case, Nigel, the revenues should have been booked to the Irish
company and tax paid on all the revenues, not with an agreement, as the commission says, to hide it off to this company that pays no tax
whatsoever.
FARAGE: Well, I think to be honest with you, we've seen similar deals done in Luxembourg and other countries like that. Look, I'm not sitting here
and defending multinationals not paying their taxes, far, far from it. But what I am saying is the European Commission has reached way beyond, what I
think it's legal authority to be. And I suspect there will be a court case here that will go on for many, many years.
But the real kicker is this, that this is all retrospective. And that sends a message to business that if you invest with the European Union, if
you're tax domiciled with the European Union, the fact that you've shaken hands with a government actually means nothing.
QUEST: Strong point there. But I want to turn to a couple of other points, because were lucky to have you this evening and I'm grateful that
we've got you this evening. First of all, I'm hearing reports out of the U.K. that there could be talk of some sort of Brexit lite. I'm sure you're
hearing similar reports that Theresa May had a cabinet meeting at Chequers. Are you worried there could be back sliding?
FARAGE: Yes, I am. We heard Sargaso Donnell, who was the biggest civil servant in Downing Street for years, saying at the weekend, oh, we don't
really need to leave. And there are various ministers lining up saying, well, we want to be part of a single market. Let's be clear, in what was
the greatest democratic exercise in the history of our nation, 17.4 million people voted to get back political control. To leave the customs union
that is the single market. And to take back control of our fishing waters.
And anything less than that, I promise you, will lead to political anger the likes of which we've never seen in this country. So I would say to
Prime Minister May, who is 50 days into her premiership and who started off saying some good, strong, positive things about Brexit being Brexit, I
would say to her that if she does not hold faith with the majority that voted for Brexit, then this issue will destroy her career as it did David
Cameron's.
QUEST: And you, sir, have been extremely busy on this side of the Atlantic. You were at the convention and recently, don't be so modest,
because we're going to show a clip of you addressing a Donald Trump rally recently, in Mississippi, I think it was. Let's enjoy what you said at
that rally for a second.
(BEGIN VIDEO CLIP)
FARAGE: If I was an American citizen, I wouldn't vote for Hillary Clinton if you paid me.
(END VIDEO CLIP)
QUEST: Now, you've made it clear you won't endorse a candidate because that's what Barack Obama did when he -- on the referendum.
FARAGE: Yes.
QUEST: But let me ask you. I read your blog and you say you're finding favor in Donald Trump, the man and the policies.
FARAGE: Well, I mean, look. The point is this. Hillary Clinton is part of that same political established across the western world who over the
last couple of decades have led us into an endless series of civil wars. Who have worked hand in glove with big banks and big businesses. Have seen
living standards decline for ordinary workers. And frankly, what Hillary represents is no change. If you vote for her, you get no change.
Now, the reason I was in the states is the big message of Brexit is simply this. The 2.5 million people who don't normally vote or who had never
voted in their lives who felt motivated to go out to vote. And I think, I think, there's a similar audience in America who feel Washington is a long
way away from them and want to shake things up.
QUEST: But you say in your article, "I was astonished that everybody I met wanted to talk about Brexit. Not just the delegates at the convention, but
ordinary people." So do you think that this Brexit-eering in the U.K. fuels an element of Trump-ism in the U.S.?
[16:15:00] FARAGE: I think what it fuels is an element of perhaps change, real change, radical change across the western world. Brexit is the first
fight back. You know, against the kind of global corporatism that gives ordinary people a bad deal. And I think that if the Republican campaign
can go and focus on those nonvoters. Go and focus on those people who feel politics is hopeless because nothing ever changes. If they do that, then I
think the pollsters could be wrong in America as they were about Brexit.
QUEST: And you're sure you don't want to endorse a candidate on our program tonight, Nigel?
QUEST: No, I'm not going to do that, very kind of you to ask me, but I've made my position about Hillary pretty clear. And she of course has
reciprocated in kind.
QUEST: I think we can simply say there's not a huge amount of love lost in either direction. Good to see you, sir. Thank you for joining us from
Brussels tonight.
FARAGE: Thank you.
QUEST: Nigel Farage. Now, Nigel was talking there about the Irish and shaking hands with the Irish government and the retrospective nature of
this. The Irish are up in arms, foaming at the mouth at what they see as an extraterritorial move by the EU in a sovereign area of tax policy.
We'll talk about that after the break.
(COMMERCIAL BREAK)
QUEST: Designed by Apple in California and taxed by Ireland in Cork. Or not taxed at all. Now Ireland's government insists the company has done
nothing wrong. Apple is headquartered in Cupertino, California. And in fact that's inscribed on every one of company's products. This is what the
campus looks like. This is Cupertino. It's a rather nice place in Silicon Valley. But we must travel about 8,000 kilometers from Cupertino across
the Atlantic Ocean, well we're going to go north over the pole, and we go into Cork in Southwestern Ireland, to an industrial estate at this office.
But the Competition Commission says the agreement was made in 1991 that allowed Apple to get a better tax deal than other companies. If true, it
would be illegal, which is what the commission says, illegal state aid. The commission says it's not questioning Ireland's tax system in general,
just this particular deal. But Owen Murphy is the Irish minister of state. He joined me earlier from Dublin. He said his country did not cut a
sweetheart deal and that the commission has overreached.
(BEGIN VIDEOTAPE)
EOGHAN MURPHY, IRISH MINISTER FOR FINANCIAL SERVICES: We didn't give any state aid to Apple or any other company in Ireland. We're unable to do
special deals with individual companies. We have a very consistent, transparent, and legally binding tax rate in this country. And the revenue
commissioners responsible for collecting taxes in Ireland do not have the possibility of arranging special deals with any company or acting within
the law or outside the law to arrange special deals.
[16:20:04] And of course he is wrong. We believe it's being inconsistent in its findings and is overreaching outside its authority.
QUEST: How do you then justify the tax ruling that allowed Apple to apportion the profits, the majority of the profits, to a headquarters
company that was based nowhere and paid no tax?
MURPHY: Ireland isn't responsible for Apple's international taxes. It's not possible to be mistake this for tax purposes in this country. We work
with the OEDC best practices guidelines in that regard. Was happening in this instance is the commission is trying to make Ireland or Apple
operating in Ireland and the Irish Revenue Commissioners responsible for collecting taxes on activity that didn't happen in this country. We don't
believe that is our responsibility. We believe in working with the OECD guidelines to make sure we are working to best international practices.
We've collected all of the tax that Apple was due to pay in this country. I think the commission has made a mistake in this regard and been
inconsistent in its ruling which we find, quite frankly, to be bizarre.
QUEST: The two tax rulings, the one in 1991 and the one in 2007 that allowed Apple to book its profits to this head office which the commission
says has no economic or financial justification, you say that's nothing to do with the Irish.
MURPHY: No, what I'm saying is the two corporate entities that operated in this country and the very real activities that we have happening here from
Apple, over 5,000 people working and producing, those activities are taxed appropriately. And the advisory opinions that were given by revenue
commissioners in relation to the activities of Apple in that regard.
Our tax system is based on a self-assessment model and in certain circumstances you can go to the revenue commissioners and ask for an
advisory opinion. Again, it's only an advisory opinion. But that was given in those two instances. And what we are saying to the commission who
are saying that we are responsible for collecting taxes from Apple for activity that didn't happen here over a ten-year period. We're not
responsible. This issue is not for us. We're going to fight to protect our international reputation. We did not do anything illegal.
(END VIDEOTAPE)
QUEST: Now, they're all at it in one way or another, some would arguably say. In Luxembourg, investigations are still under way against Amazon and
McDonald's regarding concerns over tax rulings. Also in Luxembourg it's been determined that Fiat was granted selective tax advantages. The same
goes for Starbucks in the Netherlands. AB InBev is one of the companies that may have breached the rules in Belgium.
Because all these countries are desperate to get the companies and therefore are prepared to stretch, perhaps to the point of breaking, the
interpretation of what is a legitimate tax agreement. The United States Treasury says the partnership between America and the European Union is now
in jeopardy. Only last week the Treasury warned there would be consequences if Europe bit off too much of Apple. And today, the treasury
said the commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of
economic partnership between the U.S. and the EU. Paul la Monica is with me. Paul, but surely the treasury doesn't want to have tax avoidance
schemes. So what are they getting at in this situation?
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT They clearly don't want to have tax avoidance schemes. That is one reason why the Treasury has cracked
down on a lot of these, quote unquote, inversions where companies have to pay less to the U.S. than when they go abroad. I think the issue now is
that if the EU were able to get significantly more money from Apple because of the taxes that they think are being avoided in Ireland, that is money
that the U.S. IRS would not be able to get from Apple and many other large U.S. multinationals if there all of a sudden pain these giant tax bills.
QUEST: If the tax, if the tax was legitimately paid in the EU in the first place, whether it be to individual countries or to Ireland, the U.S.
wouldn't get it anyway, it would always get a tax credit against the European tax burden.
LA MONICA: Right: But it's an obviously a much higher amount right now. We're talking about significantly lower levels of taxes that are being paid
abroad. If all of a sudden the EU is able to get some sort of agreement or settlement with Apple where we're talking about billions or tens of
billions of dollars, that's much more than the very small amount in taxes that Apple pays to Ireland, which still allows the U.S. treasury to tax
Apple at a much higher rate and get more money.
[16:25:00] QUEST: Except the U.S. never gets its hands on the money, because Apple, along with most other multinationals, keeps billions
offshore, overseas.
LA MONICA: The amount of money that Apple has overseas is staggering.
QUEST: Explain why they don't bring it back to the U.S.
LA MONICA: Apple doesn't bring it back to the U.S. for precisely the reasons of taxes. They don't want to have to pay the larger percentage tax
rate they would on that cash if it were on the balance sheet in the U.S. This is why Apple has a lion's share of its $235 billion in cash sitting in
banks in Europe.
QUEST: How serious is it, and the argument that says whatever the legitimate position of the commission, they shouldn't ask for the tax back
from Apple because it's retrospective. Apple was performing under what it understood the law to be and it had a handshake from a government about
that.
LA MONICA: That I think is going to be the key sticking point here, Richard. It's not as if the Irish government was strong armed into
accepting lower tax revenue. They willingly set up this situation with Apple because it meant thousands of jobs for cities like Cork and other
struggling cities in Ireland. And that is obviously a tradeoff they were willing to accept. Of course you can only tax your own people when they're
making more money and they have jobs, their tax rates go up as well.
QUEST: Paul, good to see you, sir, thank you very much indeed. This question of what Apple has done is the subject of our newsletter tonight.
And I asked the question in the newsletter, obviously Apple is liable, at one level is guilty, however you want to use it, and at the other level,
the Irish government acquiesced it. But my question is, should Apple pay the bill? They relied on the Irish. They did whatever they did to do in
the way they did it. And now is it fair that Apple gets the bill? CNNmoney.com/quest. It's the newsletter. We'll have your thoughts on
that.
European markets closed mostly higher on Tuesday. With Europe boosting exporters. Investors preparing for a possibility of a rate hike in
September. Three were up, one was down. And the U.S. markets, they were lower, straight out of the gate, they went down and never looked back.
It's interesting, it's the rate hike in the opposite direction. Or the hawks are coming back in.
A few moments ago you saw Diageo ringing the closing bell. Well, actually you saw its most famous branding executive doing the ringing on a very firm
gavel. Sean "Diddy" Combs has formed a new company Ciroc vodka and young entrepreneurs. And he will be with us after the bell. Break. Bell-break.
You know what I mean.
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. The mayor of Cork in Ireland tells me why his
city deserves the big slice of the Apple tax pie. That's more wishful thinking than reality. But he'll be justifying his position in just a
moment or two.
France's tourism minister tells us why he's honored to welcome tourists.
Before that, this is CNN, and on this network the news always comes first.
The official ISIS news agency has announced the death of its spokesman. Abu Mohammad al-Adnani was the public face of the terror group. The
statement says he was killed in the Syrian city of Aleppo. It's unprecedented for ISIS to make such an announcement.
Europe's Competition Commissioner has denied any political motivations behind the rulings on Apple's tax affairs in Ireland. The EU is demanding
Apple pays back more than $14 billion in back taxes. Margrethe Vestager told CNN companies like Apple should expect to pay their fair share.
(BEGIN VIDEO CLIP)
VESTAGER: You have a very, very good business environment in Europe and in Ireland. And if you only want to come here if you can be allowed to pay
0.05 or 0.005 percent in taxation, well, I think you come here for the wrong reasons.
(END VIDEO CLIP)
QUEST: Nigel Farage, a member of the European parliament and a well-known Eurosceptic, speaking to me on QUEST MEANS BUSINESS. He said the European
commission has reached far beyond its legal authority.
(BEGIN VIDEO CLIP)
FARAGE: I suspect there will be a court case here that will go on for many, many years. But the real kicker is this, that this is all
retrospective. And that sends a message to business that if you invest within the European Union, if you're tax domiciled within the European
Union, the fact that you've shaken hands with a government actually means nothing.
(END VIDEO CLIP)
QUEST: Now, more on the unprecedented announcement. ISIS says one of its top spokesman has been killed in Syria. Nick Paton Walsh will be joining
us from Gaziantep to talk about this in just a moment. While we wait to hear from Nick, who is obviously having some connection difficulties for
the moment.
The Irish government, we'll talk more about the Apple decision. The Irish government finds itself in an unusual predicament tonight. It may be the
only government in history trying to stop someone from paying a tax bill. And a tax bill of $14 billion. The European commission ordered Ireland to
recover the whopping sum from Apple. Tim Cook has said, "The most profound and harmful effect of this ruling will be on investment and job creation in
Europe."
The mayor of Cork says the lion's share of the money collected should go to his city. Des Cahill claims it's only right, since Cork bore the brunt
during Ireland's recession and EU bailout. The mayor Des Cahill joins me now. Lord Mayor, good to see you, sir. I admire your inventive
suggestion, and indeed your optimistic, sir, that you should get the lion's share of the $14 billion. But you're not really expecting to get it, are
you?
DES CAHILL, LORD MAYOR OF CORK CITY: No, Richard, I suppose it's fair to say that I believe the appeals will be successful. The relationship
between Cork and Apple and Apple and Cork is a very strong one. I think that -- I'm confident both the government and Apple in their state and stay
will be correct that the commission has gone beyond its remit. But my point really was that if there is an outcome, a cash outcome, and part of
that money should be used for direct investment for capital projects within our city that are needed.
QUEST: On this point, because obviously, unless you're a tax expert, and I'm certainly not, but on this point, sir, don't you find it slightly
galling though that Apple didn't pay more tax, having set up the structure for everything to be run through Ireland. Because if they had paid more
tax, there would be more money for your local government needs,
CAHILL: Well, no, I don't agree. I think the tax relationship between Apple and the revenue is a correct relationship. The revenue in Ireland
are people [16:35:00] charged with collecting the tax, not the government. The last seven years in Ireland has been a difficult time. The decisions
that were made were difficult. What the government has done has been hugely successful. The key point in that journey was when we regained our
financial sovereignty. And I don't believe that what has happened is incorrect. But equally, I think our financial sovereignty and our tax
sovereignty should take precedence over any commission's reports.
QUEST: I just want to read you again what Tim Cook wrote today. He says, "The most profound and harmful effects of this ruling will be on investment
and job creation in Europe." Have you had any word from Apple today that the 5 or 6,000 jobs that Apple has in your area are secure?
QUEST: Well, in fact, if you read through Tim Cook's statement today, he reiterates the commitment to Cork, and the reading into that which was my
primary concern when this happened, that the jobs would be secure in Cork. In fact, permission is granted and there are plans to expand in the next 12
months which will create an additional thousand jobs. So no, I don't believe that they're going to have a negative effect currently. But
obviously it's an issue for Apple. But very welcome, Tim Cook's response today to the situation.
QUEST: Good to see you, Mr. Mayor, thank you for joining us. We certainly look forward to visiting Cork and seeing your wonderful city. It looks
very busy and thriving tonight. We wish you well. Thank you, sir, for joining us from Cork tonight.
CAHILL: Thank you.
QUEST: Now a few moments ago at the New York Stock Exchange -- I've got me own bell -- you saw Diageo ringing the closing bell. It had the most
famous branding executive out there, Sean "Diddy" Combs launching a new campaign for Ciroc vodka. The campaign focuses on young entrepreneurs.
And Sean "Diddy" Combs joins me now from the New York Stock Exchange. First of all, can you hear me, sir?
SEAN "DIDDY" COMBS, CHAIRMAN, COMBS ENTERPRISES: I always wanted to do this. Yes, I can hear you.
QUEST: You always wanted to do it.
COMBS: Yes.
QUEST: Come on. It's a world of difference from rap, from music, from fashion, even from vodka, to being on the floor of the exchange tonight and
ringing the closing bell. What was it like?
COMBS: Oh, it's fun. I meant I always wanted to do an interview with you though with an earpiece in my ear. I actually did ring the opening bell
before, but coming back to ring the closing bell is better.
QUEST: 2002 I think it was when you ring. Ok, look, you have -- we'll talk about Ciroc vodka first. What's so special about this vodka? There's
vodka, there's vodka, you drink it, you get drunk. What's so special about this vodka?
COMBS: Number one is the smoothness, number two is that it's gluten-free. And also innovations in the way that we market. We market to a certain
sector, and that's the millennial community. We're the best at it. We go from different platforms of digital platforms. We stay untraditional.
QUEST: Now when you decide that you're going to put your name to something, you have to be very careful, don't you? So you better be jolly
sure it's a product you want to be associated with? Is that right?
COMBS: I mean, yes, without a doubt. That's the number one thing that attracted me to this brand. I inherited the brand at 40,000 cases. It's
now close to 3 million cases worldwide. And number one is the product. The product is exceptional and superior to most vodkas that are out there.
The different innovations and the flavors, it's something that constantly recreates the brand.
The biggest thing also is our marketing. The way we really connect with the consumer. And this new campaign we have is about just really
empowering entrepreneurs and just different businessmen and women around the world who want to be somebody.
QUEST: Do you find it interesting and maybe even a little unusual that a man like yourself, known for his music, so a new generation, now known for
something completely different, whether it be clothes or vodka? It's a tremendous shift for you, isn't it?
COMBS: Yes. I mean, I've always had different businesses going on. I started out as an entrepreneur. So music was one of the things I've had
success in. Then I went to apparel with Sean John, and you know, I have Revolt TV, my own television network, and just opened up a charter school
in Harlem. That's the type of entrepreneur I am. I really create lifestyle and culture. Everything from education to clothing to music to,
you know, even spirits.
QUEST: So here is the deal, Sean. I've got a deal for you. I'm not the coolest in the world. But I'll go on your network if you come to my studio
someday and talk to me on the program.
[16:40:00] COMBS: I would love to. Thank you for having me.
QUEST: I spot a deal in the making, from the original deal maker. Sean [16:40:00] "Diddy" Combs joining me from the New York Stock Exchange.
Always wanted to have Sean on the program.
Proving that this business program is like none other, after all, who takes you from Nigel Farage to the Mayor of Cork to Sean "Diddy" Combs to Mohamed
el-Erian, all of whom have something to add in our nightly conversation on business and economics. Its QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: More on that unprecedented announcement. ISIS says one of its top spokesman has been killed in Syria. Nick Paton Walsh is in southern
Turkey. Nick, apologies we weren't able to get to you a second or two ago when we tried. I just really need to know why do you think they've taken
this unprecedented step in announcing this death?
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: I don't see what they have to gain at this stage. One potential explanation is that in
fact, they're faking his death to buy him cover to move around more cautiously. We have in fact just heard from a spokesman in the pentagon
suggesting that in fact an ISIS senior leader was targeted by an air strike in a town called Al-Bab, which fits geographically the place where ISIS
accept. In these two statements, that Mr. Adnani was in fact killed. That's in the area of Aleppo. It is also quite likely that they wanted to
get perhaps ahead of the message here to some degree.
They have nothing to gain in announcing the death of such a high profile figure. This is a man who spearheaded attacks against the west, who came
up with the formula, that is so redolent in ISIS attacks in European capitals. You don't really have to get direct instructions from us, the
ISIS main body. You can go off and do what you wish and subsequently we may take credit for that. That's become a warped model of the lone wolf
terrorist idea that's caught on. Certainly you seen in the last summer here. So they are in a very bad...
I'm not at all sure what happened there. But we clearly lost Nick Paton Walsh. And we got an early view of Mohamed El-Erian, which is also nice to
see.
And all follows the day after France's trade minister told CNN that the situation with the Transatlantic trade deal was unacceptable. France now
says talks should be stopped. He plans to ask for a halt at next month's EU meeting in Bratislava.
Mohammed is with me. He's the chief economic advisor at Allianz. Mohammed, good to see you. Let's check, first of all that we can see you
and that you can hear me. Are you there, sir? It's turning into one of those days. When things go wrong, they go wrong on a giant scale. The
Chinese state media says next week's G20 summit will be a vital opportunity to get trade talks going again.
[16:45:00] The Brexit vote has made the picture far more complicated. Now, with a bit of luck and the following wind, and assuming things are working
as they should be, and we've paid the electricity bill, Isa Soares has a report.
(BEGIN VIDEOTAPE)
QUEST: The British people have voted to leave the European Union.
UNIDENTIFIED CORRESPONDENT: It was a decision that made headlines right around the world.
CHRISTIANE AMANPOUR, CNN ANCHOR: The sun has risen on a completely different U.K. and a completely different EU. ISA SOARES
UNIDENTIFIED CORRESPONDENT: Sending shock waves through the global financial market.
UNIDENTIFIED CORRESPONDENT: When it comes to the British pound, that is the 35-year low.
QUEST: Tonight Brexit has won.
, CNN CORRESPONDENT (voice-over): Generating and dominating meetings among the international community. But fast forward two months. And with world
leader preparing to meet the G20 summit in China, does Brexit still matter?
ALAN WHEATLEY, ASSOCIATE FELLOW, CHATHAM HOUSE: I do think this is an issue that is going to detain the G20, as long as Brexit, and this is an
important caveat, as long as Brexit doesn't lead to a big recession in the U.K. that then spills over into Europe and into the rest of the world
economy.
SOARES: On her first day as the U.K.'s new prime minister, Theresa May sought to put mind at ease that Britain is still relevant, both at home as
well as abroad.
THERESA MAY, BRITISH PRIME MINISTER: Following the referendum, we face a time of great national change. And I know, because we're Great Britain,
that we will rise to the challenge. As we leave the European Union, we will forge a bold, new, positive role for ourselves in the world.
SOARES (on camera): A bold pledge made right here a few weeks ago and one that may face some difficulties in the months ahead. Sure, Britain is
still one of the world's leading economies and a major player when it comes to its military. The challenge for the new prime minister, Theresa May, is
whether she can convince other countries of a vision of Britain on the international stage.
One man who knows how to navigate the world of diplomacy is Rupert Harrison.
RUPERT HARRISON, CHIEF MACRO-STRATEGIST, BLACKROCK: A lot of what's really being decided is not actually happening in the room.
SOARES (voice-over): He attended many G20 summits with former chancellor George Osborne.
HARRISON: Our main goal at this G20 is to get to know her counterparts, establish those relationships, and then also to send a message about the
U.K. I think an important message she needs to send and will want to send is that the U.K. is still open for business. We want to be a global
trading nation, that leaving the European Union doesn't mean we're going to pull up the drawbridge or that we don't want to be key players in the
global economy anymore.
SOARES: That may well be the strategy going into this summit. But with the process of exiting the European Union taking at least two years,
Britain will fight hard not to burn any bridges. Isa Soares, CNN, London.
(END VIDEOTAPE)
QUEST: It is QUEST MEANS BUSINESS on a Tuesday. We'll have more after the break. If we're still here.
(COMMERCIAL BREAK)
[16:50:00] QUEST: It's very simple, Germany and France both say TTIP is in trouble. We know that TPP is already on the ropes with Clinton and
Trump both saying they don't like it. Mohamed el-Erian is out on the West Coast. Good to see you, sorry about that, sir. But we've paid the
electricity bill and we can now see you and hear you. So let me ask you -- well, let's do TPP first. Do you think TPP, the Trans-Pacific Partnership,
actually gets through by the end of the year?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: It's going to be very hard. This is not a Congress that wants to be seen voting for a new trade
arrangement. It's going to be very heavy lifting for the administration to get it through Congress.
QUEST: Right. Now, then related to that, we've now got the Germans and the French both saying TTIP, the European version of the same thing, is in
trouble. What are you hearing about TTIP?
EL-ERIAN: I think if TPP, the U.S./Asia is facing headwind. TTIP, U.S./Europe, is having huge difficulties. They're further behind in
negotiations. If they don't get it done quickly, the window will close. And I think this speaks to a bigger issue, Richard, which is we're seeing
the tide swing against globalization, against regionalization. You spoke about Brexit in your show, that's an issue, so is what's happening between
Ireland and the EU over Apple.
QUEST: Let's talk about this Apple issue. The EU says, look, we're just having a level playing field here, you can't have companies receiving
unfair state aid. But the Irish say, look, this is taxation. Is this another if not nail in the coffin of the EU, is it unraveling of the glue -
- to mix my metaphors -- that holds the whole thing together?
EL-ERIAN: Yes, it is a problem, because, like you said earlier, there was a handshake between Ireland and Apple, and Apple is seeking to tax
optimize. In a perfect world it wouldn't get away with what it was getting away with. But this was perfectly legal until the EU comes in and says,
uh-uh, it's not. Is it national rules? Is it regional rules? This is going to fuel the debate that is going on in Europe right now. But
inconsistencies between domestic objectives and regional objectives.
QUEST: And on this we saw the Dohar around collapse, except they will never admit it. TPP is in trouble, TTIP is on the ropes. Do you ever
foresee a multilateral giant trade agreement ever being able to be put together again?
EL-ERIAN: Not for a while. You've heard me say on this show over and over again, when you run the global economy at low growth for a long time, and
when the benefits of that growth go to a small segment of the population, things start to break, economically, politically, financially, and
socially. What you're seeing on the trade side is a reflection of a protracted period of insufficient growth and high inequality.
QUEST: Good to have you talking to us tonight, sir. Lovely to see you, sir, thank you, Mohamed el-Erian.
Now we're going to put this into all perspective for you as we finish tonight's Spain's tours. The numbers have increase more than 10 percent so
far this year compared to last. Visitors are choosing that destination over others nearby that have been targeted by terrorist attacks. France is
on the other side of the equation. The tourism minister told Jim Bittermann, the country is investing $1 billion. Why? Because it needs to
win those tourists back.
(BEGIN VIDEOTAPE)
MATTHIAS FEKL, FRENCH TOURISM MINISTER: It's a difficult year, because we have the terrorist attacks, which struck France in 2015, again this year.
We also had events that had nothing to do with it, but complicated things, some strikes. Also the climate. And if you put things together, you have
the numbers, which means a decrease of 7 percent of international tourism, but nevertheless, we remain the world's first tourism destination.
JOHN BITTERMANN, CNN SENIOR EUROPEAN CORRESPONDENT: Seven percent doesn't sound like much. But to France, it's important.
FEKL: Of course, especially because we are number one tourism destination. That means lot of people come.
BITTERMANN: How much money comes in from tourism?
FEKL: This depends on how you look at the numbers. But 85 million international tourists came to France in 2015. And we will see at the end
of this year, what is the number for 2016. But first it's an honor to welcome these persons from around the world who come. Who love France.
Who continue to love France even in difficult times. So we are working. We implemented for example, a fund of EUR 1 billion for investment in the
tourism sector.
How to train people? Two million people in France work in tourism. It's 8 percent of our national wealth. We're working with the tourism
professionals. We're working invest, to have always better hotels to welcome people, to diversify experiences you can have.
[16:55:00] And when you are in France, you can go to the mountain, you can go to the sea, you can go to the countryside, to the cities. You can have
culture. You can have sports. You can have nature, whatever you want, it's possible here, and people know it very well.
BITTERMANN: You're a good salesman.
FEKL: It's my job. But it's true. The numbers are there.
BITTERMANN: When you look at the numbers though, minister, it must be very depressing, American tourism is off by 57,000, English tourists by 79,000,
international clientele down 650 million euros, 135 million euros down in French tourism. These are just figures for Paris. It must be as a
minister, an uphill battle you're fighting.
FEKL: We know it's difficult times. And we're working closely with everybody, including with our partner countries, with tourists all around
the world, professionals on the ground, to see how we can improve things. Even in difficult times, people continue to come, and we want them to come
even more.
(END VIDEOTAPE)
QUEST: And we will have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. When is a handshake not a handshake for a deal? When is my word not my bond? When can the rules be changed
towards the end of the game? Oh, that's very simple. When the European Commission decides that it was an illegal tax subsidy and therefore you of
to pay back $12 billion. Like other guests on this program have said, I have no truck for Apple's rather naked, grotesque agreement in terms of its
tax policies. But the reality is they were legal when they did it and they should be legal now, or at least they shouldn't have to pay back the money.
That's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. Up the
stairs and off to bed.
END
