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Stocks Go Stratospheric; Oxfam Apologizes for Sex Scandal. Aired 4- 5p ET

Aired February 12, 2018 - 16:00   ET

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

BIANNA GOLODRYGA, ANCHOR, CNN: The stocks go stratospheric as trading comes to an end. It's Monday the 12th of February. Tonight, the uproar at

one of the world's biggest charities. Oxfam apologizes for a sex crime scandal.

Just another manic Monday for the markets, however. The Dow surges more than 400 points and Donald Trump gets back into construction with a new

infrastructure plan.

I am Bianna Golodryga and this is "Quest Means Business."

The international charity, Oxfam, which responds to crises around the world, finds itself at the center of its own crisis. It stands to lose

millions of dollars in public funding amid claims its aid workers exploited children for sex in disaster zones.

Deputy Chief Executive Penny Lawrence has resigned over claims children were exploited in Haiti and in Chad. The UK government has called it

"horrific behavior," and promises a zero-tolerance response.

Oxfam could also face criminal charges in Haiti. And corporate sponsors like Visa and Heathrow airport are asking the charity serious questions

about the scandal. Oxfam has apologized. Phil Black has the latest from London. Phil? How big of a setback is this for Oxfam?

PHIL BLACK, CORRESPONDENT, CNN: Well, in terms of reputation, it is truly disastrous. For an organization that exists on the goodwill and the belief

that donors have that it is using its money to better the world. This is really about as bad as it can get. Such are the nature of the allegations

against this particular organization.

One head has already rolled, as you touched on, Penny Lawrence, the Deputy Chief Executive who was at the time, the director of programs around the

world. She said, she's leaving because it happened on her watch and she accepts full responsibility. But she expanded on that a little bit in a

statement. And in it, she said this. I am going to read it to you now. She said, "Over the last few days, we have become aware of the concerns

that were raised about the behavior of staff in Chad as well as Haiti that we failed to adequately act upon. It is now clear that these allegations

involving the use of prostitutes, and which related to the behavior of country directors and members of his team in Chad were raised before he

moved to Haiti."

What she's saying there is that Oxfam was aware of problems with these particular individuals and allegations involving the use of prostitutes and

so forth before they were moved into Haiti at their previous posting in Chad.

So, Oxfam's critics and there are many of them at the moment who will say that this shows a pattern of not dealing with these allegations correctly.

Now, more than that, the real issue here for Oxfam is not that these things were allowed to happen, but a lot of criticism is pointed to the way that

they have handled it since.

The accusation of a cover-up. Now, Oxfam denies that saying that it announced an investigation into sexual misconduct at the time that the

internal investigation began. But critics including the British Government say the details were not disclosed. There was not sufficient transparency.

The scale of what they were, and scope of what they were investigating was simply not made public. Not to an extent that was required.

So today, the head of Oxfam was pulled in before the relevant government minister and certainly, given something of a dressing down. You can

imagine and the government minister has sort of spoken at length and released a long lengthy statement talking about the need for Oxfam to get

its house in order.

When the Chief Executive of Oxfam left that meeting, this is the comment that he made. Take a listen.

(VIDEOCLIP STARTS)

MARK GOLDRING, CHIEF EXACUTIVE, OXFAM: I was very clear with the minister today that firstly we apologize to the British public and to the Haitian

public. Secondly, we've made major steps to improve since 2011; and thirdly, that we recommitted to take still more steps because we know we

have not done enough. I described what some of those were.

I think that the minister fairly captures the tone of the meeting, the overall commitment which is we need to be judged not by our actions, not by

our words, and also recognizes that this is a much bigger issue than Oxfam who are among the leading agencies in trying to address it.

Actually, it's an issue for the sector. Oxfam has failed, let me be clear on that, but it's a sector-wide concern.

(VIDEOCLIP ENDS)

BLACK: Now, the British government's anger is very much focused on Oxfam but not exclusively. As you heard there, the British government is also of

the belief that this is a sector-wide issue, and so, it is now promising to raise standards across the board among British-based charities to begin

with, but then also take that mission, if you like, internationally, to ensure, try and ensure, that all nongovernmental organizations and

charities that operate with vulnerable people around the world operate in such a way that these sorts of abuses cannot be repeated, Bianna.

GOLODRYGA: A huge blow for one of the world's best-known NGOs. Phil Black, thank you.

Now, Oxfam's income totaled $409 million in the last financial year. Most of the money came from the government and other public authorities.

Donations and legacies also contributes over a quarter. Mark Goldring is the current CEO.

In 2013, Oxfam defended its executives' salaries. At the time, it said its CEO made around $166,000.00. Oxfam's former head of counter fraud was

jailed in 2014 for stealing thousands of dollars that happened while investigating misconduct in Haiti.

Jonathan Katz is a former AP Bureau Chief in Haiti. He is also an author on Haiti disaster and he's joining us now. Great to have you with us.

Talk about what a setback this is for the people of Haiti there who depends so much on Oxfam's charity.

JONATHAN KATZ, FORMER AP BUREAU CHIEF, HAITI: Well, it's interesting, I mean, I think this really points to, as we were hearing the segment before,

a larger problem in the sector. The humanitarian aid industry, and make no mistake, it is an industry, has been able to act without accountability in

Haiti and in other countries like Haiti for a very long time, and I think that this is something that people in Haiti have known for a long time and

now, it's coming to light in other parts of the world as well.

GOLODRYGA: What's the reaction on the ground there? You just mentioned that people in Haiti have been aware of this. What had you been hearing?

KATZ: I don't know. I mean, this really fits -- like I said, into this larger issue. I mean, I don't think there's a whole lot of surprise at the

moment. My understanding of it is that this, again, fits into a dialogue that's been going on in Haiti for a very long time about the

unaccountability that foreign aid groups, that NGOS have in acting there. And I think that in this case, and like in many cases before it,

expectations are actually rather low in Haiti that anybody's going to be held to account because that just typically doesn't happen.

GOLODRYGA: And, of course, what's been mentioned is that it doesn't just impact Oxfam, that there are other NGOs guilty of similar charges. What

does that say, and is there a concern on the ground about a cut in dollars and in aid that come in to the people of Haiti who desperately still need

it?

KATZ: Well, look, I mean, this is the problem, is that the way the entire aid apparatus works is that money comes into these NGOs and it is kept

inside the NGOs. It's kept inside the countries where the money is donated, but it very rarely actually reaches the people who are on the

ground, and so, I think in Haiti, this is seen as part of, again, a larger issue where you have outside groups, obviously, the most egregious example

is the United Nations bringing color to Haiti in 2010, but there are other examples like this one where you have people who come and they have more

power, they have more money.

They kind of look like they can do whatever they want and that's how they act. And I think that a lot of people in Haiti really want to see that

system reformed. I think that's the main thing that will improve people's outcomes and people's lives going forward.

GOLODRYGA: And of course, it comes to the time where sections of governments around the world -- England, obviously, the US as well, really

pushing for more domestic spending and less international aid. The President's comments, of course, come to mind on the subject of Haiti

calling it an s-hole country. What is the reaction on the ground there? How is morale?

I know you spent three years in Haiti.

KATZ: Yes, I mean, look, I think that this -- I think the conversation in the United States, in Europe, in other parts of the wealthier world, is

somewhat misguided. There's an idea that we're just giving these tremendous amounts of money to people in countries like Haiti and it's just

not true.

We have kept this money very close to the vest. The vast majority of the money that was spent after the earthquake, at least 93 percent of the money

that was spent in the immediate humanitarian effort that followed the disaster itself, was spent in organizations in the countries that gave them

money. So, it stayed in the United States. It didn't go to Haiti.

And so, the idea that the United States has been giving all of this money to Haitian people and they've just been sort of, like, rolling in all this

cash, and that they're worried that that flow is going to get cut off, it's really not true and I think people are angry about that situation. They're

angry about the blatant racism from the President of the United States and from others, and I think that this points to a lot of inequality and a

breakdown in communication that absolutely needs to change. Jonathan Katz, an important point to have you on to remind us of what life is like on a

daily basis in Haiti as well. Someone who spent a lot of time there. Thank you so much for joining us.

And later in the program, we have a CNN exclusive report. An affiliate of Al Qaeda is making millions of dollars each year by exploiting foreign aid

money sent by the West. We'll be live with CNN's Sam Kiley later this hour.

South Africa's ruling party is trying to break a deadlock over the political fate of President Jacob Zuma. The Africa National Congress held

an urgent meeting today. Mr. Zuma has been clinging to power amid corruption charges, despite efforts by senior officials to force his

resignation.

CNN's David McKenzie is outside the meeting in Pretoria. David, good evening.

DAVID MCKENZIE, CORRESPONDENT, CNN: Good evening, Bianna. Yes, it's been more than nine hours since this meeting started behind closed doors. Just

a short time ago, the motorcade of what we believe is Cyril Ramaphosa, the President of the ANC leaving the scene, but still, extremely unclear what

the result of that meeting is. They are meeting to try and decide the fate of Jacob Zuma, the President of South Africa, who has faced multiple

scandals over the years and now it seems like the leadership of the ANC is trying to push him out, trying to recall him.

But at this stage, and certainly for the past week or so, it seems like Jacob Zuma is defiant, wanted to dig in and it really is a question that

could be a very challenging moment for the party of Nelson Mandela and possibly lead to even more factionalism within that party.

Now, there has been a push from opposition leaders to really pile even more pressure on the ANC to try to get rid of the President. They want to hold

a no-confidence vote in Parliament as soon as this week. They are even talking about a new election or dissolving the Parliament entirely. This

matter is so important for South Africa that's had a real struggling economy and ongoing corruption scandals related to the President who's

denied that.

Now, at this hour, as we are approaching midnight in South Africa, the question is, will Jacob Zuma resign if they recall him, and will Cyril

Ramaphosa, the ANC President stand by or show his mettle, as it were, since he promised that the issue would be resolved today?

GOLODRYGA: Out of uncertainty, of course, this as you said, comes at a time when there is a lot of economic hardships there, environmental as well

with the water crisis in Capetown. How are the citizens of South Africa responding right now to this political stalemate?

MCKENZIE: Well, I think people are fed up, and they're taking to social media to express that and their frustrations with the ANC's inability, it

seems, to quickly wrap up a transition they say has to happen.

Ordinary South Africans are less concerned, perhaps, about the top echelons of power. They are more worried about getting a job. The unemployment in

this country, youth unemployment particularly is astronomically higher; while technically, the country's moved out of a recession, still it is

struggling economically to get beyond the questions from investors overseas about the leadership of the country, and that translates into the real

economy.

And you mentioned the Capetown water crisis, yes, there are people in that part of the country say what they need is leadership now and not political

infighting. I think many in this country just wants to move on from the embattled Presidency of Jacob Zuma, but ultimately it is up to the 80 or so

men and women in the hotel behind me to come up with that decision and it's a political one at this stage, but, you know, we could see another fight or

Zuma to live -- to fight another day as he has in the past, but his options are certainly diminishing by the hour, Bianna.

GOLODRYGA: More uncertainty, of course the last thing the people of South Africa need at this moment. David, thank you so much.

And the market celebrates, meantime, with a new weekend. A big gain. Still some analysts warn volatility is here to stay. We'll get the view

from the floor of the New York Stock Exchange coming up next.

Well, the Dow went up and it stayed up. A new week brought some relief for investors battered by last week's extreme volatility. The Dow closed

Monday's session up more than 400 points combined with Friday's gains, this marks the Dow's best two-day performance since June of 2016. All but two

of the Dow 30 stocks closed positive for the day, and every single sector saw gains. Volatility, meantime, fell off around10 percent.

Joining me now from the stock exchange, Peter Tuchman is a floor broker with Quattro M. Securities. Peter, great to see you. What was behind

today's big rally?

PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: You know, what, look, I don't think we were an oversold note after five days of quite a radical

selloff that we saw. But, I think it fell like the market felt like it was time to get back in. You know, volatility is back and that's a big deal.

You know, and I think people's fears that rising interest rates, Fed's squeezing a little bit more, it's not that big a deal, perhaps, you know, 3

percent is not that big a deal.

You know, we saw the market breakthrough a bunch of technical levels last week. You know, we were down 2,600 points. Friday's show basically felt

like some people were talking about this algorithmic stuff. I really think it feels really like a human injection of money coming into this market.

The turnaround on Friday afternoon, the rally of about 700 points coming into the closing bell, we ended up closing up 300 points and today's rally

was significant, right?

As you said, across all sectors. So, it feels like such money coming back in, people are really feeling that you know, I don't know if this is --

look, this could be a short-term bottom. You know, we're going to see moves that are huge. The volume at $1.1 billion. Last week, we saw volume

over $1 billion every single day.

Money is clearly moving and moving sectors, coming in and out. Some funds are probably preadjusting. I think it's a really good show for the market.

GOLODRYGA: There had been talks last week after a massive selloff of a technical correction in the markets. Is that your take as well?

TUCHMAN: You know what, I don't really feel it. These are terms, these are words. I don't necessarily think it's a correction. I think it's a

pause. I feel like it's some profit taking. You know, we saw, markets will respond to one bit of different information and respond to it.

This interest rate thing has been around for the last year, they had a discussion about it. It sort of started with a perfect storm last Friday

with the wage growth and the jobs number and all of that, and then we saw the bonds spike and that sort of signified a bit of a top of the market.

We saw five days consecutively of massive selloffs but also a huge volatility.

We saw the market go up and down thousands of points in a period of three or four days. Friday's show, this show, really feels -- I don't know if

you'd call it a correction. You know, the anomaly is not the four or five days of selling, it's the fact that we had -- there were 400 days of rally

coming into that, right? So, I don't think we need to overreact to this. It happened in a really orderly fashion. right? Besides that one day where

we sold off from down 500 to down 1,500, the selloff has been orderly.

So, in my opinion, that's a profit taking situation, not really a correction.

GOLODRYGA: Still.

TUCHMAH: You know, it's -- go ahead.

GOLODRYGA: Still huge swings in either direction and you know, for 18 months we had relative market stability. I think a lot of investors felt

this is something they didn't see coming even though as you said we've been going up and up and up. It is something that was baked into the equation

at some point.

Let me ask you a final question, what is it you're going to be paying most attention to this week?

TUCHMAN: You know what, for me, every day is different. We don't really know what's going to happen. It is a matter of what everybody is going to

focus on. Is it going to be interest rates? Is it going -- you know, whatever news -- people are really watching the headlines, you know and

you're going to see the retail investor get involved. You're going to see the hedge fund institutional investor get involved. I think every day,

it's a fascinating market. It's really hard to know what to focus on. It's really going to be what's going to come across the table. I think we

saw, look, the market opened up strong this morning. Definitely, about a follow through from Friday's close, but then we saw it sell off.

Some people who did not get a chance to take profits on Friday did this morning. But what happened around10:30 which I think is significant is,

news came out about the government putting in $400 billion into an infrastructure play. You know, over ten years, $1.3 trillion coming into

the market that took the market back up again.

So, whatever headline is going to come in to this, people are going to grab ahold of, and hold on to it and react to, whether it's negative or whether

it is positive. I think this is a healthy market. If the selloff was healthy, the rally back is even healthier.

GOLODRYGA: Peter Tuchman, the voice of reason. The most famous face on the floor of the New York Stock Exchange. Great to see you. Thank you.

TUCHMAN: Thank you. Great to see you.

GOLODRYGA: Well, the White House has rolled out its long-awaited infrastructure plan that Peter was just talking about and here's the idea.

To turn $200 billion of Federal money into $1.5 trillion. President Trump expects states and local governments to make up the difference.

Now, the needs are obvious. Infrastructure earns a D-plus grade from the American Society of Civil Engineers. Aviation infrastructure scores even

lower, and bottom of it, airport barrel, York's own la Guardia Airport.

The poster child for failing infrastructure during the campaign. Second, it's rail. This gets a B. Here in New York, the Gateway Project would

relieve congestion in the tunnel under the Hudson River. The President's plan includes $20 billion for so-called projects of national significance.

And finally, roads. Last year's fire and subsequent collapse of a major highway in Atlanta only served to highlight their sorry state in some

areas. The President says the red tape that has held America back will go away.

(VIDEOCLIP STARTS)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Washington will no longer be a road block to progress. Washington will now be your partner. We will be

your partner. A lot of money, up to $1.7 trillion that's bigger than people thought, and we're going to have a lot of great people working.

We're going to also have great companies investing and building and they'll build for you because sometimes the states aren't able to do it like we can

do it or like other people can do it.

(VIDEOCLIP ENDS)

GOLODRYGA: And Clare Sebastian has been digging into the numbers. Clare, $200 billion brought to the table by the government, right? Everything

else expected to be paid by local state and city municipalities and the private sector. You would think this is a subject that would get

bipartisan support, but not a lot of people are liking these numbers.

CLARE SEBASTIAN, CORRESPONDENT, CNN: No, and that is because of the huge gap between those two numbers. Between $200 billion and $1.5 trillion,

$1.7 trillion -- I think at some point he said, $1.8 trillion of the Fiscal alchemy that's going to have to go into planning $200 million into that

amount of money. We had a few things today, some of which we already knew, frankly, about how he plans to do that. I think we can throw up a list to

our public-private partnerships, as one way that he wants states in particular to try to increase the amount of funding they can put into

infrastructure -- highway tolls, they were adding flexibility for states to add and increase tolls on highways.

Privatization -- there are a couple of key Federal assets that they were looking at privatizing including Reagan and Dallas Airports in DC that

would bring in revenue. And then the speculation is that, perhaps, in order to bring in that $200 billion in federal investment, they may have to

raise the gas tax. That hasn't been done since 1993, but it does have support from the Chamber of Commerce, from the American Society for Civil

Engineers. So, that is something that we could be looking at.

But as you said, bipartisan support is sorely lacking from this. Take a listen to what Senate Minority Leader Chuck Schumer said a short while ago.

(VIDEOCLIP STARTS)

CHUCK SCHUMER, SENATE MINORITY LEADER: The Trump infrastructure plan relies on private parties or state and localities to put up the lion's

share of the money. In turn, those entities would either have to charge local taxpayers, new tolls, or raise taxes and other fees to pay for the

new infrastructure.

So, a word that describes so much of the President's bill, probably about 80 percent of it is Trump tolls.

(VIDEOCLIP ENDS)

SEBASTIAN: So, clearly not much support from the other side of the aisle. But there is one other element to this infrastructure plan and that is that

the Trump Administration wants to cut the permitting time for big projects down from five or ten years which it currently takes to two years and

streamline it under kind of one agency. The tag line for that is, "One Federal Decision" that they want to make it easier for people to get these

projects up and running.

GOLODRYGA: Yes, that makes sense and a lot of people would support that, but the question is, is it feasible? But my question to you right now

given what we just heard from Chuck Schumer, is this bill dead on arrival in this form?

SEBASTIAN: I think they're going to really struggle to get it through Congress. I think there's not only a lot of opposition from Democrats, but

a lot of concerns from some in the Republican party as well because this is essentially a stimulus package at a time when the economy doesn't need one.

Not only is it a stimulus package when the economy doesn't need one, but when they've just brought in a tax cut which will make it even more

difficult for states to come up with the money that they are supposed to come up with to fund these infrastructure projects. You know, the gateway

was one of projects that you mentioned just now, they released a statement today saying, yes, they're very happy that this debate has started up about

infrastructure, but they say that we have substantially increased direct federal investment in infrastructure, but they don't believe that, you

know, 20 percent which is what the Trump plan would be summing up for each of these projects is enough.

GOLODRYGA: That's right. And a lot of these die-hard conservative, fiscal hawks are raising their hands right now, objecting to it as well. And as

you mentioned, state and local officials are not really liking it from either side of either party. Clare Sebastian, great to have you. Thank

you.

Well, infrastructure is about more than just roads and railways; 5G technology is gradually being rolled out, too, and faster networks mean new

possibilities.

Neil Curry has more in Biz Frontiers.

NEIL CURRY, HOST, BIZ FRONTIERS: Meet Professor Misha Dola, musician and technician performing one of his own compositions at Kings College Chapel

in London. Such a level of virtuosity takes years to accomplish, but Misha's team believe 5G technology can transform the way we learn new

skills.

MISHA DOLA, PROFESSOR, KINGS COLLEGE CHAPEL, LONDON: So, what we do is we put a haptic glove on my hand. That glove is recording every single

movement of my fingers and my hand position. That's being stored on the skills database or standardized other musicians can contribute.

Now, when a child wants to practice the scales or some piece of music, they would download that in real-time onto an exoskeleton which would start to

move their fingers until the muscle memory is trained.

CURRY: The lightning speed of 5G is essential to make this work. The technology could form the basis of a new network, the internet of skills.

DOLA: So, the most exciting application at the moment is in surgery. By digitizing his skills using the glove and all we can to record the

movements, we put that on a surgery database and then, we can actually train students at scale all around the world not only here in the UK and

Africa, South America and Asia, everywhere you want.

CURRY: The telecoms giant Ericsson has teamed up with Kings College London to work with experts in artificial intelligence, education and robotics.

DOLA: You have to realize that 5G is just not another G. It's got a lot more about it than the 4Gs or 3Gs and @Gs. What we've realized that has

got such a universal platform that can provide so many benefits to industry and society.

CURRY: The technology is also exciting creative talents working across the arts.

DOLA: Another thing that 5G is going to do is enable a convergence of cinema and theater or of live performance and recorded performance.

CURRY: Ali worked with composer, Paola Prestini to combine video walls with live performance on a work titled "Epiphany." With 5G technology, the

choir wouldn't even need to be in the same room.

DOLA: What 5G will enable us to do is bring the feeling or presence of this choir wherever they happen to be performing, wherever the piece is

installed. So, the choir could be in New York, or it could be in London, the piece could be in Rio De Janeiro, Taipei, or Beijing.

So, it really enables us to bring the whole world together.

CURRY: After virtual reality and augmented reality, this is what's being referred to as synchronized reality and we are likely to see a lot more of

it when 5G, itself, becomes reality just a few years from now. Neil Curry, CNN. London.

(VIDEOCLIP ENDS)

GOLODRYGA: 5G helping to bring the choir to you wherever you are, I love it.

Well, coming up, foreign aid under fire. An exclusive report from Somalia where some aid money is ending up in the hands of terrorists.

Hello, I am Bianna Golodryga. Coming up the next half hour of "Quest Means Business," Christine Lagarde tells CNN why she is not too surprised by the

recent market moves.

And the Weinstein Company still faces an uncertain future as New York's Attorney General slams the group once again. But first, these are the top

headlines we're following this hour.

The Deputy CEO of Oxfam has resigned following revelations of sex crimes by its workers in Haiti and similar allegations in Chad. There are claims the

charity trying cover up the misconduct and that children were involved.

Oxfam has apologized, but could lose more than $40 million in annual funding from the UK.

South Africa's ruling ANC Party is trying to break a deadlock over the fate of President Jacob Zuma. The party is holding a special meeting in

Pretoria. Mr. Zuma has been clincing to power despite corruption charges. Senior party officials requested he resign one week ago.

US officials tell CNN that the leader of ISIS, Abu Bakr Al-Baghdadi was wounded in an air strike last May. The strike happened near Raqqa, Syria.

Al-Baghdadi's injuries apparently forced him to hand over control of ISIS operations for about five months. Russia had claimed back in June to have

killed or injured the ISIS leader in air strike.

It is money aimed at helping the poorest and most vulnerable people in one of Africa's most volatile countries. But a CNN investigation has found

that millions of dollars in foreign aid to Somalia is actually being used to fund terrorism. The Al Qaeda affiliate Al Shabaab is extorting

thousands of dollars every day. Much of it coming from the same countries fighting against the terrorist group.

Sam Kiley has the details from Abu Dhabi. Sam, this is very alarming. How does this even happen?

SAM KILEY, CORRESPONDENT, CNN: Well, it's been happening and it has been going on now for more than two decades and the reason for that is that as

Somalia, a country with very few resources, aid, itself, has become a resource and, therefore, is something to be fought over.

Of course, you'll recall that the United States led an international intervention into Somalia to put an end to the systematic starvation

effectively farming of starving people by warlords in the early1990s. It's now got a lot more sophisticated and no matter how hard the United Nations

tries to prevent this, groups like Al Shabaab, the terrorist organization, find their way around.

And this is the latest way that they do that. This is my report from Baidoa.

(VIDEO TAPE STARTS)

KILEY: Baidoa, the center of Somalia's humanitarian disaster. A source of ready cash for Al Shabaab terrorists. First of all, we need to talk to the

guy who is the -- who knows much about the financing.

UNIDENTIFIED MALE: Okay.

KILEY: Yes.

UNIDENTIFIED MALE: Okay, fine.

KILEY: Somali national intelligence officers are taking us inside a secret prison for Al Shabaab. How many prisoners do you have in here?

UNIDENTIFIED MALE: I have just only four -- eight.

KILEY: Eight?

UNIDENTIFIED MALE: Yes.

KILEY: Captured a few days earlier, this former Al Shabaab fighter was on the front line of this fund-raising. Collecting thousands of dollars in

road tolls. Much of it taken from trucks delivering food for refugees.

So, each day, quite a lot of money coming in.

UNIDENTIFIED MALE: There's no doubt about it. Yes, every second. You can imagine.

KILEY: It is a cycle of exploitation that has victims at its very core. Hundreds of thousands of them. Many in receipt of money from foreign

donors.

This is (Sudan) refugee camp. There is steady flow of refugees coming in here every day. It is impossible to access without an escort from the

African Union and the people fleeing into here are fleeing drought and they are fleeing conflict; and, of course, it's those two combinations that are

so profitable for group like Al Shabaab and other warlords.

Fatima's family once owned dozens of goats and seven cows. Drought and conflict with Al Shabaab forced them on the road. Now, she has nothing.

Now destitute, she's still a source income for Al Shabaab. 270,000 refugees now live in Baidoa and more come every day. And this is where the

terrorist group profits. Now, an agent for the government, this man was a Shabaab tax collector for eight years.

Merchants bringing food for sale to refugees pay Al Shabaab to get to Baidoa and they are taked their too. Even know?

UNIDENTIFIED MALE: Even now, we have (inaudible).

KILEY: And you don't pay?

UNIDENTIFIED MALE: We are captured and killed.

UNIDENTIFIED MALE: Tell us how they get the money? When it comes here, the business people, I mean, for example, those people there, they become -

- those are given cash cards from the UN, they go into the market. They buy $25.00 in a stack of rice. So, that $25.00 include the taxation of Al

Shabaab, includes the transportation, includes the profit of the business people.

KILEY: And then Shabaab come along once a year and tax the businessmen.

UNIDENTIFIED MALE: Tax the businessmen, yes. Once a year.

KILEY: On top of that. So, this doesn't work, you're saying, it doesn't work. UN is still indirectly paying tax.

UNIDENTIFIED MALE: Absolutely.

KILEY: To Al Shabaab.

UNIDENTIFIED MALE: Absolutely, for the sale of food products.

KILEY: Baido is at the center of manmade famines that killed 300,000 in 1992, and a quarter of a million in 2012 and one that was headed of by aid

last year.

To avoid (negative) supplies, the UN switched to directly transferring cash to refugees last year, and that shifted responsibility for moving food to

merchants, but Al Shabaab has continued to profit.

UNIDENTIFIED MALE: Putting the owners on the private sector, it helped re- enforce the economy rather than making aid an alternative to the economy.

Arguably then, there's actually an incentive for Al Shabaab to concentrate people in Baido, focus the aid delivery there and scoop up three bucks a

bag.

UNIDENTIFIED MALE: I think that's probably right and the thing is how do you mitigate and manage those kinds of problems? I mean, what is the

alternative?

KILEY: The UN estimates a single Al Shabaab road block along the profitable Mogadishu to Baidoa route generates $5,000 a day for the

terrorist group. The country's roads have become Al Shabaab's financial blood supply.

This is the bridge over the Shebelle River. It marks the extent of the African Union's capability to safely patrol. Down that road to Baidoa is

Somalia's hungry interior.

22,000 African troops have been fighting Al Shabaab but they are due to pull out in two years.

CHRIS OGWALI, BATTLE GROUP XXI COMMANDER: We are now just conducting minor offensive operations. If reduced, that will affect the general operations

negatively.

KILEY: That will leave a vacuum that Al Shabaab could step into.

OGWALI: Absolutely. It will leave a vacuum.

KILEY: And the vacuum will leave Al Shabaab better able to exploit refugees.

UNIDENTIFIED MALE: Unfortunately, those in need, the most -- are going to be targeted by humanitarian organizations to receive assistance do become

attractive for those who are trying to make money and there will be all sorts of scams going on.

KILEY: Using force to recapture roads might be a solution, but that's been tried by the African Union and US-led military interventions for nearly 30

years and still the chaos reigns.

(VIDEO TAPE ENDS)

KILEY: Now, the thing about chaos is that it means that warlords can thrive and whether you look at Somalia, Sudan, Syria, the many, many

conflicts around the world, as soon as there is humanitarian intervention, it becomes a resource in and of itself that gets fought over, gets

exploited and arguably, adds fuel to the flames of conflict to ultimately, a lot of critics of this cycle say that the focus should be on development

aid and a way from humanitarian interventions but, of course, that means that the world has to look away when people are dying.

GOLODRYGA: Tim Kiley, it's very important and eye-opening reporting. Thank you so much.

After the break, they've gone unregulated for years and now, the IMF is saying that they're ready to move on. Christine Lagarde will be speaking

out to our reporter and she is telling us it's just a matter of time before the world cracks down on cryptocurrencies.

It was another extraordinary day on the markets. US stocks staged an impressive comeback following their worst week in 10 years. The Dow has

now seen triple-digit gains in three of the past five sessions.

But fears over rising inflation remain. Christine Lagarde says the situation has been a long time coming.

(VIDEOCLIP STARTS)

CHRISTINE LAGARDE, MANAGING DIRECTOR OF THE INTERNATIONAL MONETARY FUND: It only goes to show that people get used to things so quickly. You know,

deflation was the story of the day and there was not much movement. The fact that wages in the US went 0.2 percent higher than what they were

expected and everybody suddenly woke up and thought, "Oh my goodness, there is inflation onsite," but everybody has been waiting for a little bit of

inflation, and, you know, a way to return to more traditional monetary policy gradually well-communicated ahead of time and all the rest of it, so

our recommendations is hopefully that it continues to be that way.

UNIDENTIFIED MALE: The $1.5 trillion tax cut and a huge spending package out of the United States sends a very opposite signal. President Trump is

aiming for 4 percent growth or more. You are projecting 2.6 percent for 2018. This doesn't square with the mentality of the market.

LAGARDE: Well, we are certainly forecasting an increase of growth in the short term, this year, next year, there will clearly be an impact on

growth. If only because a lot of investments are going to be anticipated because of the full deduction of expenditure.

UNIDENTIFIED MALE: But also inflation -- that's a big (inaudible).

(CROSSTALK)

LAGARDE: And then we will see how it goes. Well, the risk of inflation would be linked to the fact that growth is being pushed, that salaries are

higher, because the US economy is working well and on many cylinders at the moment.

UNIDENTIFIED MALE: The bitcoin crash that we have seen so far, you say we cannot ignore the trend, but the speculation people are wanting to go into

a cryptocurrency looking for higher returns, what does that tell us about the mentality in global markets and the starvation for high returns?

LAGARDE: Well, I think it tells us a bit about the hurt mentality, number one. It tells us a lot about the fact that people are very much looking

for these high-yield products and there is an element of speculation about that. It also tells us that there is probably quite a bit of dark

activities behind that particular scene and you know, we are actively engaged in our anti-money laundering and countering the financing of

terrorism and that reinforces our determination to work on those in those two directions.

UNIDENTIFIED MALE: The first hint of regulation in the cryptocurrency market and we have this huge correction. They don't want the government

arms reaching into that market, but it's inevitable, is it not?

LAGARDE: I believe that it is inevitable. We have had an entity-based regulation over the course of the last ten years after the financial

crisis. We clearly have to move into an activity based regulations. Forget about the entities. Work on the activities themselves and who does

what and who is licensed to do what and who is properly regulated and supervised.

(VIDEO TAPE ENDS)

GOLODRYGA: In London, meantime, Unilever shares rose after it threatened to pull billions of dollars in advertising from companies like Google and

Facebook. The consumer goods giant says it will not work with platforms that create divisions or fail to protect young people.

CNN's Samuel Burk is following this story from London and quite an unexpected announcement from Unilever?

SAMUEL BURK, CORRESPONDENT, CNN: Bianna, this is stunning because you are talking about the second biggest advertiser in the entire world. Unilever

has a marketing budget of about $9 billion a year for their various products, from Lipton, to Hellman's Mayonnaise. So, if you're one of the

digital platforms, you must be shaking in your boots right now. And if look at what the CMO of this company said, it's really twofold.

On the one hand, they don't even want to be seen as helping Facebook and Google giving them their ad dollars, and on the other hand, anybody who

works in a platform like TV or digital knows that brand association is so important. And what he is saying is that they have a fear of even

associating their very well-known and respected brands with these companies.

Look at what the Chief Marketing Officer said, "We cannot continue to prop up a digital supply chain which at time is a little better than a swamp,"

Bianna, ".in terms of its transparency." Man, if you're Facebook and Google, you do not want to be called a swamp. It is exactly the opposite

of what they want. So, certainly, these are just threats right now but using a word like that makes it clear I think that this could be action any

time soon.

GOLODRYGA: Yes, and these are the do no harm companies. What has been the response been thus far if any from Facebook and Google executives?

BURK: Well, we haven't heard directly from them, but we know over the past year or so what they've been saying is that they're going to ramp up, that

they're going to rely more on human beings, but they've been saying this and it hasn't been working.

About a year ago, all the focus was on terrorism on those platforms, but if you think back now, it's so much more than that. It's the fake news and

that was actually named by Unilever here. It is the toxic culture. It is the terrorism.

But as we look more and more, and we're getting a better understanding of how Facebook and Google work, we're understanding that even they don't

understand how their algorithms work. So,, I think this is an incredibly difficult if not perilous situation for these companies to be in and at the

end of the day, they have 60 percent of the digital ad market.

So, where exactly is Unilever going to go? Well, I spoke to an expert in advertising who said, "Look, they're unlikely to pull all of their ads, but

a company like Unilever has so many brands that they can pull them one by one and experiment and see what works, but I think this gives you a very

clear picture of exactly what Mark Zuckerberg and the other CEOs are having to deal with right now as they rethink their entire platforms.

GOLODRYGA: Good question of who needs whom more, right? These social network sites continue to gain new users every quarter and yet, they are

raising so many questions as well. Very interesting to follow this story. Sam, thank you so much for joining us.

And when we return, New York's Attorney General says he doesn't oppose, the selloff of the Weinstein Company in theory. But he is against what's on

the table right now. We'll break it down for you coming up.

New York's Attorney General says victims of Harvey Weinstein must be compensated. The employees protected and enablers of sexual misconduct

must not be made unjustly richer. Eric Schneiderman is suing Harvey Weinstein and his former company in a move which complicates the sale of

the disgraced mogul's film studio.

(VIDEOCLIP STARTS)

ERIC SCHNEIRDERMAN, NEW YORK ATTORNEY GENERAL: Whatever deal is consummated has to take into account the serious allegation of our petition

and the facts that we set forth in that petition which are shocking. We have investigated other companies for patterns of sexual discrimination or

harassment. We've never seen anything as despicable as what we've seen here.

(VIDEOCLIP ENDS)

GOLODRYGA: Brian Stelter was at the Attorney General's news conference. He's joining us now, and Brian, this sale seemed to have been everything

but a done deal for around $275 million it was valued at. Now it seems to be hanging by a thread. What happened?

BRIAN STELTER, CORRESPONDENT, CNN: That's right. And the people involved in this sale are blaming Schneiderman saying he's getting involved here,

risking a bankruptcy proceeding because if the sale doesn't go through, then the Weinstein Company will go bankrupt.

You know, go back to October, this was a successful TV and movie studio, but now it has this Weinstein stain, a result of Harvey Weinstein's conduct

and all the revelations about his behavior.

So, a woman named Maria Contreras-Sweet has swept in with a proposal to take over the assets, give it a new name, create a new company; what she

says is a woman-led company that will also have a fund for victims.

Schneiderman says not so fast, the proposal we've seen does not make those promises. The proposal we've seen would keep some of the executives in

place who knew about Weinstein's behavior and let it go on for years. So, he's really calling foul on this deal and saying it does not cast the kind

of test that he thinks should be applied.

GOLODRYGA: That's right. The original board was called sort of a boy's club, a frat house, right? Harvey Weinstein would not profit from this

deal. He stepped down. His brother as well, as well as others on the board. But still a lot of questions remain about who knew what and when.

STELTER: And Schneiderman's team, his office, they said, they found more evidence that the management was complicit in what was an extensive cover-

up. Now, the question is, who's going to come in and buy this company if they are being sued by the New York Attorney General? The idea is that

Maria Contreras-Sweet's group has backed away saying we can't go ahead with this deal because now it's under suit.

I asked Schneiderman at the press conference, are you in talks with these investors? Are you looking to meet with them? Here's the answer he gave.

(VIDEOCLIP STARTS)

SCHNEIRDERMAN: I'm not saying I won't meet with them, but there's no meeting that have been scheduled. There is no effort that have been made

on their part to cooperate with us at all. In fact, their attorney said why should we talk with you?

(VIDEOCLIP ENDS)

STELTER: So, this is a war of words. That being one of the examples. The feedback from the investor group here is this deal's pretty much dead, it's

hanging on by a thread. We will see what happens. I think, Bianna, both sides are negotiating in public a little bit trying to figure out how to

get to a settlement so there is some agreement here about, for example, how much money will go to the victims of Harvey Weinstein? How much money from

the proceeds of this sale?

There are those sorts of questions certainly on the table, but my sense from Schneiderman is that he is open to a settlement. He wants to reach a

deal with the Weinstein Company Board, you know, but there's a lot of complicated issues here about exactly what happens to these assets and how

they go forward.

GOLODRYGA: You so clearly has a lot of a lot of questions left. A lot, you know, it's hard to find sympathy for this company and even its board

members, right? I mean, new revelations, you seem to think that nothing could shock you until you hear more and more about the revelations and

allegations against Harvey Weinstein and the way he would treat employees, people even that would drive him around.

I mean, some of these details were quite stunning. Could that, in fact, impact the sale of the company, too?

STELTER: Well, Schneiderman says he wanted to get this information out to the public through the lawsuit because he thought the buyers should know,

that the buyers should know what this alleged cover-up looked like, and that's the reality of the situation.

Almost five months after "The New York Times" and the "New Yorker" published those original exposes about Weinstein, we are still learning

more about exactly how Weinstein operated the company, according to the Attorney General, the office was used, the staffers were basically employed

to set up these sexual encounters. You know, Schneiderman's office, they've got lawyers who are able to get access to information that

journalists couldn't. So, here we are still learning more about this alleged predatory behavior, that was really a system that Harvey Weinstein

set up to pull it off.

By the way, his lawyers are getting more aggressive about denying these allegations and saying that he will someday be cleared. They say there's

no criminal wrongdoing here, even though he admits to some inappropriate behavior.

GOLODRYGA: So, we'll hear more accusations from famous actresses on a weekly basis. Brian, thank you.

STELTER: On a weekly basis.

GOLODRYGA: Thank you so much.

STELTER: Thanks.

GOLODRYGA: And that is "Quest Means Business." I am Bianna Golodryga and I will see you here again tomorrow.

END