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Quest Means Business
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RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: An hour to go on Wall Street, 60 minutes of trade. And this pretty much tells the story
of the day. We have been down throughout the course of the session.
But interestingly, although down, holding our own. So we've never really moved out of this tight range of 120 -- minus 120 to 140. Look at the
winners and the losers. Mainly red, but there is some selective green in the market, which tells you it's not all bad. Those are the markets. And
these are the reasons why.
The layoffs have started at Deutsche Bank, as it ditches 18,000 jobs in a bid to restructure and save itself. Boeing bounces from bad to worse, a
snub from Saudi Arabia means billions of dollars in lost sales for the 737 MAX and Apple souring over an analyst bleak forecast.
We are live in the world's financial capital, New York City. It is Monday. It is the 8th of July. I'm Richard quest. And of course, I mean business.
Good evening, the ax has fallen at Deutsche Bank and the struggling financial giant has now begun an overhaul which will cost 18,000 jobs.
Roughly one in five of the workforce will go, starting in Asia and also affecting large swathes of staff around the world.
Deutsche show once dreamed of dominating the investment banking landscape, and now facing down the likes of Goldman Sachs and JPMorgan. It never made
it, struggling to find direction after the global financial crisis. And now the bank says the short-term pain is necessary to set the company to
set the bank on a new path.
(BEGIN VIDEO CLIP)
JOERG EIGENDORF, HEAD OF COMMUNICATIONS, DEUTSCHE BANK (through translator): The restructuring unfortunately will also cost jobs. It is
unavoidable, but we assume that we will manage this with our own power and don't need capital from our shareholders. But instead, in a few years,
we'll be able to give back capital to our shareholders. A new era starts for the Deutsche Bank.
(END VIDEO CLIP)
QUEST: Well, what a better way to profile it than through the window of the ATM as Deutsche restructures its banking profile. Now the bank says it
wants to grow in the corporate money management. But that won't come cheap.
The expenses related to the overhaul will lead to a loss of more than $3 billion in the second quarter. They're going to front load the losses.
But overall losses will still be absolutely huge for the restructuring. Overall it will be $8.3 billion by 2022. And it is the size and scale that
is giving most concern.
Over at the other ATM, you will get the analysts' reports on what they think. JPMorgan, for example, describes it as a bold plan, though
execution is key and it is execution which everybody is talking about. Credit Suisse, for example, calls it bold warning the execution risk is
high.
And some shareholders have voted with their wallets. Deutsche's stock is more than five percent off lower in Frankfurt. Those are slight blip on
the restructuring possibilities. And then it sort of went down again. Jack Ewing is the European economics correspondent for "The New York Times"
and he joins me from Frankfurt. He joins me via Skype. Jack, Deutsche had to do something, is this what they needed to do?
JACK EWING, EUROPEAN ECONOMICS CORRESPONDENT, ""THE NEW YORK TIMES" (via Skype): I think the plan is the right one, they definitely need to cut
costs. And there's no way to do that, except by cutting jobs. They needed to cut back on investment banking, which was not making money, it has not
been making money for several years. So it's the right plan.
I think the question is, is it the right plan too late? They probably should have done a lot of these things five years ago, or even 10 years
ago. And now it may just be too late.
QUEST: You are in Frankfurt. Now, nobody is suggesting or maybe that I know of that Deutsche goes out of business. It's Germany's largest bank.
And it would have huge systemic -- it's too big to fail, isn't it?
EWING: Yes. And I don't think the government could let it fail. I don't think the European Central Bank could let it fail. But that would be a
quandary because supposedly under the new regime that we have, since the crisis, taxpayers shouldn't have to pay for any more bailouts.
But I think in this case, they just couldn't let Deutsche Bank go down. It's the bank that symbolizes the German economy, there's too much at
stake.
[15:05:02] QUEST: The idea of moving out of all equity trading and to a large extent, they're still going to have to have some equity desks, if
only to facilitate existing customers. And what are you going to do? You've got all these retail customers in Germany, you're going to -- unless
they want to buy some shares in Daimler or Benz, where they're going to say, "We're sorry, we can't do it, go next door."
EWING: Well, they have a partnership with BNP Paribas that is going to handle some of that. They are retaining some equity functionality. But
this is a big business that they're letting go. It's around two billion euros a year in sales. So that is a legitimate question and you're hearing
that today.
Are they going to lose customers because they're no longer offering all the services that they did in the past?
QUEST: So what's left of Deutsche when this is all over? Is it sort of a middling to large size bank that's mainly retail focused in Germany?
EWING: Well, retail and they say their big business is going to be helping corporations, especially German corporations, handling financial
transactions abroad, payments, export financing, that kind of thing, which is all well and good, but not super high growth and super profitable.
QUEST: And finally, which European Bank can we now say, stands in the top tier? I mean, you've got HSBC. Well, that's Asia -- London and Asia.
You've got Barclays. Well, it's not in that sort of league. Which European bank, if any, can rank pari passu with the JPMorgan's, with the
Citi's, Bank of Americas.
EWING: There isn't one and that's kind of the sad thing that there really is no European bank that is in the same league as those big American mega
banks. And, you know, whether that's healthy or not, I don't know. Probably not.
QUEST: Good to talk to you tonight, Jack, as always. Thank you, sir, giving us time. Jack Ewing in Frankfurt tonight. The multimillionaire
hedge fund manager, Jeffrey Epstein has pleaded not guilty to charges of paying dozens of underage girls for sex.
This is the indictment that has just been published by the United States Southern District of New York. Epstein is the prominent financier who is
known to have close connection to Donald Trump, Bill Clinton and Britain's Prince Andrew.
The Federal prosecutors have charged him with operating a sex trafficking network. They say some of the girls he exploited was as young as 14. Now
Epstein faced a similar investigation in 2008. And on that occasion, he avoided a trial on Federal charges by pleading guilty to less serious
offenses.
As part of that deal, he had to register as a sex offender and serve 13 months in prison. CNN's Shimon Prokupecz joins me now. The defense
basically says Shimon, that this is a rerun of the issues in 2008. That this was all dealt with back then and even the -- so why are they wrong?
SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Well, they're wrong in one way. But they're not wrong in terms of the investigation. This is --
this does not appear that right now that we have any charges in connection with new victims who have come forward, at least not today. And
prosecutors explained that. They said that these are victims from the time period of 2002 and 2005. So Epstein's attorneys are right in one way that
this is just -- it is still that same investigation.
The difference here, though in what the Southern District of New York is saying, the prosecutors is that they were allowed to do this, because this
non-prosecution agreement that Epstein entered into with the Florida U.S. Attorney and authorities there back in 2008, did not include this
jurisdiction, the Southern District of New York.
And so therefore, it was because of the work by "The Miami Herald" and their investigative journalism that brought forth all of this information.
They started looking at this, the U.S. Attorney here and they decided, you know what, we have enough here, we're not bound by this agreement, we're
going to go ahead and bring charges.
Because as they said today, this is really about victims, victims who never got a chance to have their voices heard, never got a chance to come to
court. And the way this deal was structured was quite simply shady. And so prosecutors here in New York wanted to bring charges. So that's for
these victims.
So that's is their argument. They're saying we did not have to be bound by this agreement, and therefore, we are bringing charges. His attorneys, you
know, they're saying, hey, this was a do over. This has been done already. Not so much.
The other thing, though, I suspect what's going to happen is, is that prosecutors are going to find other victims and we learned today in court,
that actually since his arrest, a number of people have called them and said, "Hey, I'm a victim."
[15:10:10] PROKUPECZ: So they think they may have some new victims that will -- what could happen is obviously superseding indictments, more
charges against Epstein.
So we could come down here in terms of -- come down to that this becomes a legal argument. We're seeing that play out already by his attorney. This
is almost like double jeopardy.
QUEST: Shimon, I've read the indictment. I mean, I won't distress our viewers with the details. But there's a lot of extremely unpleasant
allegations of the way -- of activities that took place, allegedly in New York and Miami. He is in detention tonight. But the prosecution has made
it clear they do not they oppose bail very strongly.
PROKUPECZ: They do a post bail very strongly. It's his wealth, his access to jets, his access to cars. He has homes all across the world that he can
access. And that is what they're worried about. The other point that they're making is that he's a danger to the community because they have
indications and evidence based on stuff that they recovered at his home, his mansion, his $77 million mansion, they found photos -- nude photos of
underage girls, women naked, some fully naked, some partially covered. They're concerned.
And they're saying that he has not learned his lesson in all this by finding these photos, by finding other evidence at his home. You know
what? This guy is a danger and so we need to keep him in jail because of that.
And then obviously, his wealth and his access to resources. He could flee the country. That's where they're arguing. So the judge is going to give
his attorneys, Epstein's attorneys a couple of days to argue a bail package. And then we'll know on July 15, it will be a big moment whether
or not Epstein gets bail.
QUEST: Shimon, thank you, down in the courthouse. John Connolly is with me. He investigated Jeffrey Epstein since his days as a contributing
editor of "Vanity Fair," a decade ago, one of the authors of "Filthy Rich: The Shocking True Story of Jeffrey Epstein." He joins me now. Good to
see, sir.
JOHN CONNOLLY, AUTHOR: Good to see you.
QUEST: Are you surprised that the Southern District decided to do this?
CONNOLLY: Yes. Absolutely. The fix was in Florida, and how -- we wrote the book and we're going to write -- I'm going to write another chapter on
this. But why he didn't go to jail the first time? It was because certain people in Florida, U.S. government gave him a pass. That's what this was.
I mean, no evidence has changed. Nothing else has happened. And I'm quite surprised and Jeffrey should be in jail forever. But I'm surprised that
the U.S. Attorney who is a decent man in New York -- Berman -- that he did this. I mean --
QUEST: Well, why do you think he did it? Because at the end of the day, by doing this, he is expressly criticizing a former U.S. Attorney Acosta,
who is now the Labor Secretary of the United States.
CONNOLLY: He was appointed by Donald Trump. I mean, does Berman want to get fired? There's something else going on here and I'm not quite sure
what it is yet.
But for another U.S. Attorney to come along 15 years later and indict this guy again, now, there's something -- I believe that at least two people who
worked for Jeffrey have rolled over on him. Not a question in my mind.
You don't go into a guy's house and with no search warrant, unless you know what you're looking for. And I think they know what they were looking for.
QUEST: And these are described as -- I mean, in the indictment, they described them as Employee 1 and Employee 2, now whether they are the ones
who are now turning evidence, we don't know. But it begs the question, Epstein clearly thought that the earlier plea agreement or the earlier
nolle prosequi agreement had protected him because he is still clearly -- according to what Shimon is saying, had various dubious items of evidence.
Naked photos of women --
CONNOLLY: But he had been in Florida and he got rid of most of them I think before the prosecutors in Florida went to his home. I guess, he just
moved them.
QUEST: What's he like?
CONNOLLY: I've never met him. He called me once out of the blue. And I guess somebody -- I guess he was trying to trap me or something stupid.
And he said, "What advice would you give me?" I said, "Don't talk to people like me. I'm an investigative journalist. I want to put you in
jail."
And he is pleasantly smart. But he is a thug. Not a question. He's a bad guy. Really bad. I know he's threatened people's lives and I'll say that
right in front of him.
QUEST: Now of course, one way or the other, it appears he will have his day in court.
CONNOLLY: Well, he had his day in court, he paid people not to go to jail.
QUEST: Good to see.
CONNOLLY: Thank you.
QUEST: We will need your help when this trial starts.
CONNOLLY: Call me.
[15:15:05] QUEST: Thank you very much, indeed. Still to come, British Airways is facing an extremely high fine over a data breach affecting half
a million passengers and a fresh off their World Cup victory, the U.S. women's team is up for another fight. They want to equal pay for equal
play. In a moment.
(COMMERCIAL BREAK)
QUEST: Boeing share price down very sharply today. There is more trouble for the manufacturer, as the Saudi Arabian airline, Flyadeal has reversed
this decision to buy up to 50 of Boeing's troubled 737 MAX planes. Clare Sebastian is with me. Do we know why they've decided to? I mean, do we
know whether there is a connection between the 737 MAX problems and their decision?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: We haven't -- they haven't spelled that out. We know that the timeline would support that. They
originally committed to buy the Boeing 373 MAX jets in December. So that was after the Lion Air crash, but before the Ethiopian Air crash, and since
then, they have now decided to reverse that decision.
But we know that there wasn't finalized deal. We know that before they committed to buy the Boeing planes they were wavering between the two.
This is a very new airline which is the low cost airline owned by Saudia which is the Saudi national carrier --
QUEST: Which has Boeing in its fleet.
SEBASTIAN: Right and they're less than two years old. So unlike other airlines, which would require a lot of changes, a lot of retraining and all
of that, this airline is a little bit more nimble to make the change.
QUEST: Was this commercial or was it MAX related? I mean, did Airbus give them a better deal do we think?
SEBASTIAN: We don't know, but what we do know is for Boeing, this isn't as commercially damaging as it is reputationally damaging. So Boeing has a
backlog of about four and a half thousand Boeing 737 MAX's, so a lot of their customers are sticking with them for the moment and are waiting this
out.
So reputationally, this is really the first time we've seen a public defection from Boeing to Airbus. But in terms of commercial, it's really
just a small order.
QUEST: And the story going around about pilots suing Boeing, why?
SEBASTIAN: So this is -- we've got two more class action lawsuits that have been announced today. We had one back in June. We now have pilots X,
Y and Z and with them, potential class action lawsuits and they're basically saying the Boeing engaged in what they're calling an
unprecedented cover up of known design flaws that they knew there were problems with the 737 MAX and because they didn't do anything about it,
that has now inflicted financial damages because the pilots earn a lot of money when they fly, you know, whereas when they don't fly and mental --
severe emotional and mental distress, they put it as well.
So these are going into the U.S. courts. And, you know, Boeing hasn't commented on this yet.
[15:20:16] QUEST: No, but I mean, one wonders when a pilot losing money because he is not flying or she is not flying the 737 MAX. Arguably, it's
a matter for the airlines and the airlines would pay them. And then the airlines will claim the money back from Boeing.
SEBASTIAN: Right. And we know that the airlines are demanding compensation from Boeing.
QUEST: Absolutely.
SEBASTIAN: So maybe, possibly, that's the way Boeing will go with this. They'll say that this is -- we're going to wrap this all into the
compensation for the airlines.
QUEST: Do we have any idea yet when the 737 MAX testing will take place?
SEBASTIAN: We don't know at the moment, Richard. We know that the software fix has not yet been submitted to the F.A.A. That has now been
pushed out to September and we know that sources have told CNN that it might not just be about the software, there might be a hardware problem as
well with a microprocessor.
And if there is a hardware problem, that is much more difficult and much more time consuming to fix than the software problem.
QUEST: Good. Good to see you, thank you. Now, the markets, Boeing stock right now, I have two stocks to show you at the moment. Boeing is down
around one and a third percent, $351.00. It's actually the lowest. It's lost about 15 percent since the March 10th Ethiopian crash.
And also it's important to note, it has been lower in recent months, but this is the lowest point for some weeks now. But it wasn't only Boeing
pulling down the Dow.
Apple is another one. Apple is down more than two percent of after analysts at Rosenblatt Securities downgraded the stock, not just to hold or
neutral to sell.
According to data provider, Refinitiv, three analysts now rate Apple as a sell, and Rosenblatt says they expect sales of the new iPhone to be
disappointing. Two major stocks pulling down the Dow, but that also explains why the Dow is holding its own down around about 120 to 140
because as long as these remain in this sort of area, the Dow remains underwater by that amount.
Paul La Monica is with me. Paul, the issue of Apple and sell. Very rare do you get a sell order for -- or a sell recommendation for Boeing?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, for Apple or Boeing or any major stock.
QUEST: I'm sorry, for Apple. Apple, sorry.
LA MONICA: Yes, yes, definitely sorry. For any major stock for that matter. Obviously, a lot of the big investment banks are cautious with
what they say because they want to still do business relationships with these firms, be it merger and advisory work, selling new stock, selling
debt.
So a lot of these companies are cautious and that's why neutral is often viewed is equivalent to a sell. So for an analyst to come out and
specifically say they think that a stock should be outright sold. It is a pretty blunt and rare sign on Wall Street.
QUEST: What is it predicated upon? I mean, what's the reason why they think -- is it just iPhone related?
LA MONICA: It is. This particular analyst at Rosenblatt is very concerned about the slowing momentum in iPhone sales. That is a big problem. We
know, Apple is trying to transition itself into more of a services company, with the hopes that people will have more Apple Music subscriptions and
things alike, and that will drive new revenue, even if people are holding on to their phones for a lot longer than they are, than they used to.
People just aren't upgrading the devices as much and that's a big problem right now.
QUEST: But it's been a problem for some time. I mean, is this just a case of the financial world waking up towards everybody, what we've seen in
recent results. Apple has not only had slowing sales, but also had to make incentives as it did in China and now elsewhere.
LA MONICA: Yes, I think that this most recent sell call is a reflection of the fact that remember, in January, Apple shocked the market when it said
that sales in China were going to be really falling off a cliff. The stock plunged, the entire market tanked. Since then Apple has come roaring back
as people have bought into this Tim Cook notion of we're a services company, don't worry about the slowing device sales, and the stock is still
up about 25 percent this year.
So I think this particular analyst is saying, "Hey, let's take a step back." Apple shares have more than rebounded from the January doldrums.
This is a time where you need to be having a little bit of a reality check. Does it deserve to have gone up this much after that January slump?
QUEST: It's worth just also taking a second or two. The market was off today also because it's worried about whether the interest rates will take
place. The market is still pricing a Fed cut, but perhaps not this month.
LA MONICA: Yes.
QUEST: What do you think?
LA MONICA: I still think that the Fed is going to cut rates this month. I mean, the market is still factoring in a rate cut. It's just a quarter
point cut. People got way too excited a few weeks ago before the jobs report, thinking that oh, maybe we're going to have a half point cut. The
Fed is going to be really aggressive because there were concerns about the China trade tension and all the political criticism. That's probably off
the table now.
I still think a quarter point cut happens, but then it is wait and see. With a quarter point cut, that's essentially Jerome Powell saying, "You
know what? We hear you, President Trump, we hear you Wall Street, we shouldn't have raised in December. Our bad. We're taking that one back.
But don't expect another one yet."
QUEST: Good to see you, sir.
LA MONICA: Good to see you.
QUEST: Thank you.
QUEST: Greece has a new Prime Minister, and one who is promising to create jobs and attract investors. Now, we will be talking to the head of the
Athens Chamber of Commerce on those expectations and the ability to deliver. It's QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS in just a moment. Big changes ahead for Greece turning its back on the policies of
the left. And now we ask what's next. And calling for level playing field. Football fans get behind equal pay for women.
As you and I continue our conversation tonight. This is CNN, and on this network, the facts always come first.
Donald Trump is tweeting that he'll no longer deal with Britain's Ambassador to the United States. It follows the memos being written by the
Ambassador having been leaked and published in "The Daily Mail" newspaper.
In the cables, Sir Kim Darroch calls U.S. President inept, insecure and incompetent amongst other things. Britain says it is investigating, but so
far, it seems to be standing by the Ambassador.
New York's Governor has signed a bill requiring his state to comply with requests by certain Members of Congress to see Donald Trump's state tax
returns.
The Governor says it gives Congress the ability to fulfill its constitutional duties and ensure no one is above the law. A lawsuit filed
by a House panel to see the President's Federal return is still ongoing.
The former wife of Sir Paul McCartney says she and her sister have won a substantial settlement from Rupert Murdoch's newspapers. Heather Mills as
they were victims of a decade --
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Former wife of Sir Paul McCartney says she and her sister have won a substantial settlement
from Rupert Murdoch's news group papers. Heather Mills says they were victims of a decade-old target smear campaign that included phone hacking,
invasion of privacy and the publication of lies.
It's the end of a sports Cinderella story. The American teenager Cori 'Coco' Gauff ended her fairytale run at Wimbledon. She lost to seventh-
seeded Simona Halep of Romania. The 15-year-old Gauff had taken the tournament by storm after her first-round win against Venus Williams.
And the man who would have become the first black African in space has died. The family of Mandla Maseko says he died suddenly on Saturday in a
motor bike crash. The 30-year-old beat a million other contestants in 2014 to win a trip into space.
The Turkish lira weakened against the U.S. dollar after Turkey's president fired the head of the Central Bank. The lira has dropped more than 8
percent this year, a tussle worsening between the president and the man responsible for steering monetary policy. Matt Egan is with me. Matt,
first of all, why is there this tussle between Erdogan and the governor?
MATT EGAN, CNN BUSINESS SENIOR WRITER: You know, it's almost like Erdogan saw President Trump's bullying of the Federal Reserve and just decided to
one-up him by taking out the Central Bank chief altogether. Now, there's no official reason why they decided to oust the Central Bank chief in
Turkey.
But it's no secret that Erdogan is not a fan of higher interest rates, he calls himself the enemy of interest rates. He believes that higher rates
actually cause higher inflation which, of course, isn't the case. And so that certainly appears to be why he decided to make a change here.
QUEST: But if you do that, I mean, and you call into question unless it's obviously misconduct or criminal activity, you call into question the
independence of your central bank.
EGAN: Of course, of course. I think there's two big problems here with what they just did in Turkey. One, it's causing the lira to lose value and
it could cause capital to leave the country which actually would hurt the Central Bank's ability to do the very rate cuts that Erdogan wants. Two
though, the bigger and more important issue is this idea of Central Bank independence.
You know, there's already a negative perception of the Turkey Central Bank, and that will only be increased now. People now feel like Erdogan is
calling the shots there, which is never a good sign.
QUEST: Right, but the last time of course where the Central Bank put off raising rates again and again and again, and because the fear was they were
acquiescing in Erdogan's demands, but they finally had to.
EGAN: Exactly, they finally had to. They had -- no, inflation went up to 25 percent on an annual basis in Turkey, we had the lira, the crash to an
all-time low, the stock market there fell and capital was leaving. So, they finally had to act, they raised interest rates very significantly,
more than 6 -- more than 6 percentage points, but Erdogan is not happy with that, and so now he has replaced this Central Bank chief, and you know, he
seems to be taking a page out of President Trump's playbook here of really, you know, meddling with the Central Bank policy.
QUEST: OK, the Finance Minister or the economic policy of Turkey has been questionable for some time. Now, you have the Central Bank governor fired.
Are investors -- besides the lira, which could be sort of here today and gone tomorrow and back up again, is there any evidence that investors are
shunning the country?
EGAN: Not yet. I mean, listen, the stock market fell, but not significantly. The bond market fell, but again not really all that
dramatically. But here's an interesting spin on why that might be because investors are desperate for yields right now. We have the U.S. ten-year at
2 percent, we've got German and French bonds in negative territory.
And so when you have Turkey's ten-year yield at about 16 percent, people are willing to take a gamble on Turkey, at least for now.
QUEST: Right, that's a great gamble. Think about it, let's just work it out. If you've got -- so the U.S. is -- I saw today --
EGAN: It was about 2, 2 percent --
QUEST: Two percent, the bond is --
EGAN: I think slightly negative the last time I saw it --
QUEST: Right, same way, and GILD(ph) is just about 1 percent to 2 percent. And Turkey is giving --
EGAN: Sixteen --
QUEST: Sixteen percent. So even allowing for a currency risk of 8 percent to 10 percent.
EGAN: Sure, right. Then people are saying that listen, it might be worth a gamble. It's just sort of ironic that the reason why that is, is because
of all of this really unorthodox Central Bank policy elsewhere, most notably --
QUEST: Yes --
EGAN: In Europe.
QUEST: Good to see you, sir, thank you very much.
EGAN: Thank you, Richard.
QUEST: Thank you very much. A lot more to come, we're going to talk about Greece and the election that took place and as a result a new Prime
Minister. But the policies, of course, they were also changed. We need to find out where they'll be in a moment, this is QUEST MEANS BUSINESS live
from New York.
[15:35:00] (COMMERCIAL BREAK)
QUEST: Piracy pure and simple says Iran's Foreign Minister who had slammed the U.K.'s decision to seize an oil tanker from Gibraltar. CNN's Nic
Robertson is in Gibraltar.
(BEGIN VIDEOTAPE)
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (on camera): Well, this is the vessel, the great one that the Iranians demanding that the British
and Gibraltar authorities release immediately. They say it was detained as an act of piracy. A former member of Iran's Revolutionary Guard Corps has
threatened that a British vessel in the Straits of Hormuz should be captured if you will to sort of hold while the British and Gibraltar
authorities keep the Grace one here.
But a contention here, Iran says they don't believe the Gibraltar authorities. The Gibraltar authorities say they had reason to believe that
this vessel was headed to a Syrian oil refinery, breaching EU sanctions, and that's why they detained it. Now, the Iranians are saying that they
think that Britain was requested by the United States to stop this vessel because they say it's got their oil on board, and that it wasn't ever going
to the refinery.
So, this currently is a big diplomatic standoff, the threat that this must be released or a British vessel will be taken captive is essentially what
the Iranians are saying. Meanwhile, British and Gibraltar authorities saying that they continue to investigate this vessel where it was going and
what it was doing. And it seems as if it's going to be here for quite some time more -- a big international diplomatic standoff. Nic Robertson, CNN,
off the coast of Gibraltar.
(END VIDEOTAPE)
QUEST: Well, jobs and more investment. It's the promise from Greece's new Prime Minister on his first day in office. Kyriakos Mitsotakis and his
center-right new democracy won 158 seats out of available 300 absolute majority. He's now picked his cabinet. It means an end to the left-wing
populism of Alexis Tsipras who is promising his party will return at some point in the future.
One who is back is the former Finance Minister Yanis Varoufakis who has won seats with his new party. Constantine Michalos is the president of the
Athens Chamber of Commerce and Industry joins me now from Athens. Good to see you as always, Constantine. What policies or you -- real policies are
you expecting to see changed, bearing in mind that Cericia(ph) and the current government or the previous government effectively followed all the
same policies on austerity.
[15:40:00] CONSTANTINE MICHALOS, PRESIDENT, ATHENS CHAMBER OF COMMERCE & INDUSTRY: Well, Richard, what I need to say is that the expectations of
the great voters are very high, and of course, the same goes for the business community. Mr. Mitsotakis has advocated that he would be reducing
business tax, it's currently running at 28 percent, and we're looking at a two-fold reduction by 2021 down to 20 percent.
Also dividend tax is currently at 10 percent and Mr. Mitsotakis has promised that this would be reduced down to 5 percent. But what we need to
do at the moment, what the new government needs to do is to be able to re- activate new investments so that we bring this added value --
QUEST: But --
MICHALOS: To the Greek economy as soon as possible. And also to have the international business community confidence regained once again. We need
to encourage PPP's private and public partnerships, and of course reduce bureaucracy which still is a problem in Greece. And I think that this can
be achieved through digitalizing the public sector which will help immensely --
QUEST: OK --
MICHALOS: Those are the basic requirements of the business community.
QUEST: But everybody is seeming to forget the public threw out this lot, only three or four years ago, now -- four years ago, now, they are back.
These were the people who failed to deal properly with the crisis post- 2008, 2009, 2010. Surely, the Greek voter is set for a disappointment.
MICHALOS: Well, you see in the old years, ten years ago, I think that election results came through ideological spectrums. There was either the
left or the right. I think that this has now changed because of the crisis, because of the depth and the austerity that we had to live through
throughout these crisis years.
And everyone seems to be judging the situation according to the weight of the coins in his pocket, if I can put it as simply as that. And although
Mr. Tsipras promised a number of policies that would be completed within his term, it seems that the --
QUEST: Right --
MICHALOS: Greek electorate decided that this was not enough, and therefore they're turning the page, they're providing the opportunity to a liberal
leader like Mr. Mitsotakis who has made promises not to be effectively performed immediately, but --
QUEST: Right --
MICHALOS: Within the next six to eight months. So, I think that he's providing more hope than Mr. Tsipras did.
QUEST: Good to see you, sir, thank you for joining us and taking the time to --
MICHALOS: Thank you very much, Richard.
QUEST: Thank you as always. British Airways is facing a record $230 million fine, it's over the data breach last year. Prosecutors say the
airline failed to ensure its website was secure, and when hackers broke into it, they stole a host of sensitive data on BA customers.
Half a million people's worth of data was taken. The airline says it's surprised and disappointed it plans to fight the penalty. Hadas Gold is
following the story in London. This is a lot of money, I mean, this is -- this number, 230 million is the maximum, isn't it and as I see. I mean,
what's the realistic number people are talking about?
HADAS GOLD, CNN BUSINESS REPORTER: Well, Richard, it's actually not the full maximum --
QUEST: Right --
GOLD: Penalty that the ICO could have levied against British Airways, that's 4 percent of their annual revenues would be the maximum under GDP.
This number, $230 million represents 1.5 percent of British Airways revenue in 2018, but it is -- if it is actually issued because this was just an
intention -- a notice that they intend to issue this fine, if it is issued, it would be a record fine for the data commissioner in the U.K., the
highest fine they've ever issued.
Because up until just recently, their limit was about 500,000 pounds, that's how much Facebook was fined over Cambridge Analytica. So, you're
seeing now the teeth that these regulators now have, and they are using it to their best ability. However, I do have to say, both Facebook has
already appealed their fine and the British Airways has said that if this fine is actually leaving, they will be appealing as well.
So, the ICO here, the data commissioner is going to be tested in court to see whether this can be upheld. But it just goes to show you that these
data breaches that we have seeing in previous years, there used to be this big PR disaster as you might lose some customers. But now, there's
actually some substantial --
QUEST: Good point --
GOLD: Fines that can hurt some of these companies in their pockets.
QUEST: I mean, that's the idea, isn't it? That's what the ICO would say certainly, but I wonder about the practicality -- the EU has fined some
very large companies, Google and the likes, hundreds of millions, and seemingly to no great effort or success, but I guess this would be
different.
[15:45:00] GOLD: This would be different for British Airways, and I think as you see the data commissioner starting to use their power, use these
teeth that these new regulations give them with these fines. I mean, going up to 4 percent, this was just 1.5 percent, it was $230 million.
Now, multiply that to get you up to 4 percent. This can make a dent, and if you keep getting these fines because this was just one security breach,
Richard, keep that in mind, yes, five hundred thousand people were affected, it was a bit of malware on their website that redirected people
to a fraudulent website, that's how they got information like addresses and credit card payment details.
These breaches are really important to consumers, and now they're obviously very important to regulators, and the regulators are hoping that by
slapping these fines on that are more than just the 500,000 pounds that's nothing for a company like British Airways, $230 million though, I think
that causes people to pay attention.
QUEST: I always wonder, though, I mean, that's the idea, isn't it? If you make the fine painful enough, they will actually do something about it.
But is the evidence there that British Airways actually did -- you know, could have prevented this, was negligent in the way they managed their
systems?
GOLD: Well, what the ICO is saying is that British Airways should have protected their user data more. They should have made sure that malware
couldn't get on to the website that could somehow redirect this information. And it is up to British Airways who is handling quite
sensitive data to make sure that user data is not somehow inadvertently stolen or redirected in a way that hurts their consumers.
QUEST: Good to see you, Hadas, thank you. The markets in Europe ended the day generally lower. Deutsch, of course, weighed on the Dax, and it's not
surprising meander -- I mean, not a huge amount like all things considered. There were concerns over U.S. interest rates and what's going to happen, we
talked about them earlier in the program.
After winning their fourth World Cup, the U.S. Women's football team now have a new prize in mind -- equal pay.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
(CHANTING)
CROWD: Equal pay! Equal pay! Equal play! Equal play! Equal pay!
(END VIDEO CLIP)
QUEST: Equal pay, equal pay. Seconds after the final whistle blew at the Women's World Cup, chants for "equal pay" could be heard filling the
stadium in Lyon. A stark reminder that the American champions, their biggest fighters perhaps not the pitch, it's waiting for them back in the
courts in the United States.
[15:50:00] The U.S. women's team is suing their employers, the U.S. Soccer Foundation -- federation, I beg your pardon. The lawsuit alleges that in
effect, their male counterparts earn more when they lose than the women get when they win. Now, in a hypothetical, if the men and women each won 20
games, a female player makes $99,000, a man would make over $250,000, $263,000 to be precise.
The U.S. women's team has undeniably had much more success. Four World Cup wins, four Olympic gold medals, the men, nada, nothing, no trophies at all.
They didn't even qualify for the last World Cup. There are many complicating factors, women, of course get a basic salary, a base salary,
men get paid per match, the tournaments have different bonus structures.
The men's World Cup makes much more money globally sponsorship and television rights, and it's difficult to calculate the sponsorships. The
women say they're also denied equal trading and travel conditions as well as equal promotion for their games. The U.S. team Captain Megan Rapinoe
says it's time for the federation to set things right.
(BEGIN VIDEO CLIP)
MEGAN RAPINOE, CO-CAPTAIN, TEAM USA: Not good for them, is it?
(LAUGHTER)
I mean, I think obviously, it's huge. You know, I think we've been a little shy to say that, you know, putting so much pressure on ourselves
because I think we have a case no matter what. And obviously, we brought the lawsuit, but this is, you know, sort of blows it otherwise. Like is it
even about that anymore, is it just kind of about doing the right thing.
I think the federation is in a unique position to, you know, kind of ride this wave of good fortune and get on board and hopefully set things right
for the future.
(END VIDEO CLIP)
QUEST: So, with the conversation that you're joining, do you think the U.S. Women's football team is being treated unfairly? Now, this is not just
a basic question of should there be equal pay or not? This is a quest because obviously, people doing the same money for the same job should get
the same amount of money.
But this is in the totality of the situation including, of course, sponsorship, basic pay, all the various issues, at the moment bearing in
mind what we know about the numbers and the viewers and the sponsorship. Are they being treated fairly? Your phones and go to cnn.com-slash-join.
Rebecca Smith was the captain of the New Zealand Women's football team, she's now 90s global executive director of the women's game, she joins us
on the phone.
Equal, it is an interesting one, isn't it? Equal pay for equal work seems to be the mantra, but is it comparing with apples and apples in this case?
REBECCA SMITH, FORMER NEW ZEALAND WOMEN'S FOOTBALL TEAM CAPTAIN (via telephone): Yes, that's a very good point, actually, Richard, and I think
that's exactly at the heart of the matter that it's not apples to apples when we're comparing the men's and women's game, especially when you look
at the foundations of the U.S. national team verses the U.S. men's national team.
And you plant a seed in the ground, you water and want to put it outside in your backyard, you give it sunlight, you talk to it, you nurture it, you
put the other one in a closet, don't ever see it. And then ten years later, you look at one and say it's a beautiful tree and the other, and you
say it looks like a weed.
I think that's the biggest difference between the men's and the women's national team. And under those conditions, I think that the women's
national team still tries and it still wins, and I think that's a very good point that you have to look at the two entities that's -- totally
differently.
QUEST: Right, and so the prize money, of course, is dealt with by FIFA, but in this case, we're talking about the collective bargaining agreement
that is going to be put in place. And there, I suppose even if you don't get to equality immediately, certainly a more -- a more equitable
distribution of resources would suggest the women get more.
SMITH: Absolutely, and I think we have to be careful when talking about equality and whether we're talking about equity. And I think you nailed it
on the head again that we're talking about equity because when the women have more success rate than the men do, then you could even argue that they
should be paid more than the men.
And when you look at, you know, day rates or bonuses that are given, it should be the federation --
QUEST: Right --
SMITH: They get a certain amount of funding from FIFA, and they choose how they want to distribute that money as well.
QUEST: Well, you can't argue against success in this sense. Briefly, Rebecca, is women's football, talk of who brings just the sheer delight at
the way this tournament went?
SMITH: Absolutely. I think when you look at the broadcast numbers, "BBC", breaking numbers -- breaking records, in Brazil, we had 59 million people
watching the Brazil versus France game, USA saw -- when you look at all the numbers and all of the sponsors and just the positive rhetoric --
QUEST: Right --
SMITH: Around the women's game, and so many people seeing it for the very first time, the visibility has been such a tremendous -- has such a
tremendous uplift globally, and --
QUEST: All right --
SMITH: From that standpoint we were successful.
[15:55:00] QUEST: Sixty can't be -- my eyes certainly is not as good as it might be, 61 percent say that the team's being treated unfairly. Thank
you, Rebecca, for joining us, 61 percent of you say it is unfair. Talking of fair is fair, let's take a look at the markets and how they are
traveling at the moment.
The Dow Jones Industrials, as you can see is down 114 points, Apple is off at the bottom, Nike is up at the top and we are 110 points down for the
moment. It's mostly red for the Dow, the stocks have been focusing on particular Boeing and Apple, they are what's pulling the market down at the
moment. We will take our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, scenes of thousands of bankers leaving with boxes under their arm. I suppose at Deutsche Bank, you can arguably
say as the bank gets rid of 18,000 members of staff over the next few years is perhaps hard to have too much sympathy if they've been earning large
amounts of money.
But I think there is call to have sympathy, bearing in mind this was a bank that went on a massive expansion effort into the United States. Arguably,
Germany's largest bank thought it could take on Wall Street, JPMorgan, Morgan Stanley, Citi, all -- Bank of America, all the big players and beat
them on their own grounds.
Well, the one thing I know from having covered this industry for the last 30 years is that foreign banks coming into the United States do very badly.
Now, west U.K. lost a fortune here, Barclays in the past has lost a fortune, BNP Paribas has had difficulties, HSBC has had to retrench, NICO
has had to fall back.
Time and again, overseas banks come into the U.S. and think it's going to be easy pickings and they lose a bundle. And now Deutsche Bank is the
latest to understand that Wall Street is not that easy, it's not simple there just for the picking, which means back to basics for Deutsche and
unfortunately, for those who have also lost their jobs.
For those, we regret and we mourn. And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.
(BELL RINGING)
Whatever you're up to in the hours ahead, I hope it's profitable. We are down, not by that much, the day is over, the bell is ringing.
END
