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Quest Means Business
U.K. Health Secretary Says 100,00 New Cases A Day Possible This Summer; More Countries Press On With Full Reopening; DiDi Shares Fall On China's Data Collection Crackdown; Global Minimum Tax Rate Uncertainty; Interview With French Finance Minister Bruno Le Maire On National Economy And Vaccination; White House Meeting On Ransomware Attack; Hawaii To Lift Restrictions For Vaccinated Travelers. Aired 3-4p ET
Aired July 06, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: First day trading after a long holiday weekend, and we would see that the record-breaking streak on Wall
Street is coming to an end.
An hour to go. We are off the lows of the day, but we are still down three quarters of a percent on the Dow Jones. All the major indices are lower, so
no records obviously, but let's see how we go over the next hour.
The main events of this day: Britain is predicting gargantuan COVID case numbers as part of its new strategy. The W.H.O.'s top European official --
is this the new reality of living with COVID?
[15:00:00]
Shares in DiDi down 20 percent. China is turning the screws on its tech sector.
And Bruno Le Maire, France's Finance Minister, on this program tonight, Europe's holdouts have no other choice but to join a deal on corporate
taxes.
You and I, well, I'm live in New York. It is Tuesday, It is July 6th. I'm Richard Quest, I mean business.
Good evening. The pandemic is entering a new phase as countries like the United Kingdom are putting in policies to learn to live with COVID, setting
out rules that could lead to more cases. For instance, the British Health Secretary, Sajid Javid says the U.K. could see as many as 100,000 new cases
a day as restrictions in England fall by the wayside over the next few weeks.
From July 19th, school children no longer sent home if a classmate has COVID. On August 16th, fully vaccinated people won't necessarily self-
isolate after close contact with COVID. Javid told Parliament, vaccinations have built a strong wall of defense to allow these changes.
(BEGIN VIDEO CLIP)
SAJID JAVID, U.K. HEALTH SECRETARY: Almost two-thirds of adults, that's 64 percent have had both doses of a vaccine, and so have got the maximum
protection that the vaccine can offer.
As a result, we will soon be able to take a risk-based approach that recognizes the huge benefits that the vaccines provide, both to people who
get the jab and their loved ones, too.
(END VIDEO CLIP)
QUEST: Nina dos Santos is with me from London, this is a statement of reality in that you can't continue to shield and to sort of guard against
in the narrow ways that we've done so far.
NINA DOS SANTOS, CNN EUROPE EDITOR: Yes. That's right, Richard. And it is also a statement that it is up to people themselves now to act responsibly.
The government doesn't want to bear the responsibility of having to dictate how people should run their lives at a time when many more people are
getting two doses of the COVID vaccine, and therefore, won't necessarily get as sick from COVID as they might have done before.
When you hear the exponential rises in cases, 100,000, he is talking about there, Sajid Javid, that's double the figure, by the way, that Boris
Johnson mentioned just yesterday when he said in two weeks' time, by the time, Richard, they loosen these restrictions, they loosen them, it could
be 50,000. That is also again double what we are seeing at the moment projected.
So, the idea here is that the U.K. is potentially entering a third wave. But nonetheless, they believe that in a few weeks' time, they will be able
to withstand that storm because people won't get as sick from COVID as before and fewer people will die.
QUEST: I mean, this is a -- this has to be surely the way forward or are we discussing and arguing about the margins. For instance, masks on the
subway. Certain sort of key -- I won't say niche, but certain key scenarios where there could still be a low protection.
DOS SANTOS: The reality is this is all about balancing health against wealth and the U.K. has had a sort of potted history, if you like, of doing
that over the last year and a half of this pandemic. Now, they feel that with the vaccination rate, a pace they can more or less lift all of these
restrictions.
On July 19th, as you were saying before, we are going to have thing like concerts taking places, big gatherings are allowed et cetera et cetera and
masks are no longer going to be obligatory, including on public transport.
Now, this is something of a political hot potato for the Mayor of London who of course has jurisdiction over the subway system of the largest
metropolis anywhere in the country. He says broadly speaking, Richard, he agrees with a lot of what the government is trying to do. He doesn't want
to see the City of London stay as a defective ghost town as it has been now. He wants to get people back into big venues and on the streets, but he
wants to do so safely and that is why he is lobbying the government to rethink this and to make sure that masks are still mandatory in crowded
places.
This is what he told me earlier.
(BEGIN VIDEO CLIP)
SADIQ KHAN, LONDON MAYOR: The science tells us, wearing a facemask reduces the chances of you passing the virus on, particularly if you not showing
symptoms. And so, me wearing a facemask keeps others safe, others wearing a facemask keeps me safe.
So, we need to have enough people wearing a facemask in order to make a difference. So, I'm hopeful that the government will work with us to
understand that actually, making it a requirement to wear facemasks in public transport not just makes people safer, but encourages public
confidence, which means people return to the heart of our city which supports our economy.
(END VIDEO CLIP)
[15:05:05]
DOS SANTOS: And Richard, the statistics back up what Sadiq Khan has been saying there. About 65 percent of people polled recently said that they
would like to see people still being obliged to wear masks in crowded places like the London subway system, prominently known as the Tube.
The reality though here, more broadly speaking is that this is a gamble the government feel that they are now able to make and they kind of have to
make during the summer months when people spend more time outdoors, and it is being proven that the virus is less transmissible when people socialize
outdoors rather than indoors later on in the fall and autumn -- Richard.
QUEST: Nina dos Santos. Nina, thank you in London.
As vaccines are protecting more lives, governments across Europe are starting to approach COVID-19 as a chronic, but manageable threat.
France has lifted most of its indoor restrictions last week. The Health Minister is warning of a fourth wave. Greece, you're aware, welcoming
tourists. Masks are no longer mandatory in Hungary. And Germany is to allow vaccinated travelers from the U.K., Portugal and a few other countries to
enter without quarantine.
Other countries are proceeding cautiously. In Ireland, they've postponed the return of indoor dining at restaurants. While Norway is delaying full
reopening until at least next month.
Whilst in Spain, Catalonia has reintroduced -- is reintroducing nighttime restrictions in response to a sharp rise in cases.
Dr. Hans Kluge is the Regional Director for Europe at the World Health Organization. He is with me via Skype from Belgium.
Doctor, thank you. What we are now seeing, and particularly from the U.K. is a statement, some would say of the obvious, and the reality that we have
to live with COVID and therefore, we need to treat it as a chronic disease, which will accept more cases, but lower deaths and serious health injuries
because of vaccinations.
DR. HANS KLUGE, REGIONAL DIRECTOR FOR EUROPE AT THE WORLD HEALTH ORGANIZATION: I would say, Richard that we passed that bridge because after
a 10-week consecutive decrease in trends of COVID-19, unfortunately, last week we have seen a 10 percent increase.
We are always thinking about the resurgence by the fall or the winter. No, we are thinking about the resurgence before, because there are three
factors for resurgence are in place. There is lifting of social restrictions, there is a fast spread of the delta variant, and still, from
a pan-European perspective, a deficit in vaccine uptake.
QUEST: Do you think the governments are lifting too many restrictions too quickly?
KLUGE: Generically speaking, any old controls, ground opening to unleash mobility is not the time to do so.
But if your public health system can quickly detect outbreaks and mitigate it, that is another issue. But if we speak about large gatherings where
people particularly are gathering without masks in an epidemiologic situation, where the caseload is increasing, then it is not time to go for
more and more, let's say, loosening of restrictions.
But I do understand that no one wants to give up another summer. But no one, Richard, wants to lose another relocked winter, either.
QUEST: Okay, but the Israeli government, for instance, says the overall efficacy rate of the vaccines against the delta variant is not as great.
The Pfizer vaccine is much lower when challenged by delta, down to 64 percent.
It remains highly effective against severe disease at 93 percent. We don't know how or the where's and why's, so this idea that the delta variant can
get through Pfizer, but Pfizer still prevents the worst effects. Isn't that how we are going to have to live our lives?
KLUGE: You have a good point, Richard. So, what is the main objective of the vaccination? It is to decrease the severe diseases and
hospitalizations, so our health systems don't collapse, and deaths. But basically, the delta variant unmasks the Achilles' heel of Europe, only 24
percent, from a regional perspective is vaccinated, half the elderly, 40 percent of the healthcare workers are still unprotected in a context of
increased summer mobility.
And that is why, I repeat three messages. If you decide to travel and to gather, do it safely, number one. Number two, if it is your turn, take the
jab. Don't doubt, but take it. Two times because the delta variant doesn't really break through the second dose.
[15:10:05]
KLUGE: And third, let's get finally the vaccines to those who need it most based on solidarity.
QUEST: As I understand you right, this idea of returning to some normality, I don't want to be depressing about it, but it is just not going to happen.
I mean, there are those -- I'm here in New York where life is pretty much normal. The delta variant, when it gets here in any large numbers, one
hopes that sufficient people are vaccinated, that it won't have dramatic effects on the healthcare system.
But you're saying by the time we get to winter, we could be not back to square one, but still in a pretty bad way.
KLUGE: Definitely, we're not out of the woods. But I am also an optimist. So what we need basically, Richard, is I call it the VIP approach. The "V"
from variants. Scale up genomic sequencing and we are getting much more better in this, the "I" from immunization to scale the vaccination and
really decrease vaccine hesitancy, and the third is the "P" of the people. We need civil responsibility.
In a nutshell, civil responsibility and political decisiveness.
QUEST: Doctor, we will talk more because there's one thing we're certain, as these policies happen, we will see the effects within days -- well,
within weeks. Thank you, sir.
KLUGE: My pleasure.
QUEST: Right now, MSC cruise ships are firing up new routes across Europe where the Chairman says things are looking promising.
Look at the map. This is where the fleet is at the moment. The Armonia and the Meraviglia are off the coast of Florida on the Western Atlantic. The
Bellissima is in Gulf, whilst the Mediterranean as you can see, that is a hive of activity with the MSC Seaview way up there in Scandinavia.
Routes in Germany have started as well, which is why you're seeing a cluster all around that area.
When I spoke to the Executive Chairman last week, he says at last, there's light at the end of the tunnel.
(BEGIN VIDEOTAPE)
PIERFRANCESCO VAGO, EXECUTIVE CHAIRMAN, MSC CRUISES: We've been through quite a period. You know, we started 15 months ago with the emergency and
obviously, we have success. The cruise industry succeeded, so all the media and fingers were looking at us then. We came a long way. We did an
incredible job.
We brought back safely all our passenger and crew and we sat together with the big scientists, virologists, to create a new protocol. And we started
applying this protocol ahead of many other industries, ahead certainly in the tourism and generally in the hospitality industry.
And at MSC, we started having MSC Grandiosa up and running, back in operation testing all the passenger already in August 2020. So, an
incredible achievement.
QUEST: And this idea of vaccination policies which again can prove extremely tricky. Whereas, for example, in some places, you can demand
vaccinations, but sailing out of Florida has an entirely different set of regulations.
VAGO: Yes. Obviously, every part of the world, like I was saying has got different rules and we adapted very naturally. We engaged and we talked to
the authorities like we have talked into C.D.C.
Florida, there is a case going on between Governor of Florida and obviously, the C.D.C. We are watching. At the same time, there are ways to
engage with the passengers to ensure that they still, whether they are vaccinated or not can enjoy a safe trip, a safe cruise.
That to us is the most important thing, is to test people to ensure that they come either through the vaccine or through testing, we can prove that
we can have a sterile, we can have the bubble approach that cruises have proven to be so effective to offer such a unique bubble holiday.
QUEST: We know the pent-up demand is there. We know that people will start cruising again. I have heard this in different ways from everybody. When do
you think you'll be back to full steam?
VAGO: Well, Europe is looking promising. Eighty percent of the fleet operating globally today are operating in Europe.
Greece, Barcelona, Rome, Piraeus, Genova, Civitavecchia, Marseilles, there is an opening up in all the major ports. We see Germany opening up as well
next week.
So, we will be having -- we have an advantage there again because we will actually have nine ships fully operating this summer.
So far, the industry generally has carried in excess of 600,000 passengers. I have actually seen 20 ships in the home port in Piraeus and we actually
see more flights now into Athens from the United States than we actually had in 2019.
[15:15:18]
VAGO: So, Europe is on the right track. America, North America will follow through. We have a ship that is going through the simulated voyage, now the
beginning of August. So, slowly but surely America will also follow through, and this is looking very positive.
It will take some time, but certainly, the tunnel is getting shorter and the light is getting brighter.
(END VIDEOTAPE)
QUEST: The Executive Chairman of MSC Cruises.
As we continue tonight, the French Finance Minister tell me, his country needs to step up its vaccination campaign if its economy is to see a swift
recovery.
And after going public in the U.S., the ride-hailing company DiDi is swept up in a Chinese data crackdown, in a moment.
(COMMERCIAL BREAK)
QUEST: The major U.S. averages are getting a bout of the jitters after a boisterous start to the month. The Dow has been off more than 300 points at
the low point. Now, it has rallied back up again, it is still down. The NASDAQ and the S&P are off -- that's the triple stack so you can just see.
Actually, the NASDAQ has come up a bit, but let's not worry about that too much.
To Amazon shares, which are up nearly five percent. Amazon was already higher during the day and then it got an extra lift when The Pentagon
canceled the $10 billion contract awarded last year to rival, Microsoft. You'll remember, this is all about web services.
Amazon claims it was being penalized because Jeff Bezos, owner of the "Washington Post" and bete noire of the former President, Donald Trump is
of course, was involved.
Anyway, that's the way the market is -- Amazon up five percent.
Shares of the Chinese ride-hailing company DiDi tanking. The app is no longer available to new people in China. It is off 20 percent in New York.
It went public last week at $14.00 a share. Then Beijing announced the crackdown on its data collection.
David Culver is our correspondent in Shanghai.
[15:20:00]
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN CORRESPONDENT: DiDi facing mounting pressure from China's regulators and a nationalistic pushback on Chinese social media. The
massive ride-hailing company went public on the U.S. Stock Exchange last week and it was followed by a swift rebuke from Beijing.
China's Cyberspace Administration citing national data security concerns and suspended DiDi from adding new users for its app.
It also banned app stores from offering DiDi for download.
DiDi is like the Uber of China, and it boasts some 377 million users here on Mainland China alone. The Chinese regulatory agency says that DiDi
quote, "Severely violated laws by illegally collecting and using personal information."
DiDi says it is going to comply and rectify and improve risk avoidance. There are some reports though suggesting they may have been warned by
regulators ahead of the IPO, but that they might have gone ahead of it because of the mounting pressure from investors.
DiDi is not the only tech company facing scrutiny from Beijing. A truck- hailing company and an online recruitment app likewise halted from adding new users. They all have something in common, they all recently went public
in the U.S. stock market and they carry a lot of user data and personal information.
So, it raises questions if geopolitics might be at play here. While not specifically naming any companies, state media reporting on Tuesday that
China will increase regulation of its overseas listed companies and improve regulation of cross border data flows and security, and crackdown on
illegal activity in the securities market.
Several tech companies in the past few months have faced investigations that in turn have led to record finds and massive overhauls.
David Culver, CNN, Shanghai.
(END VIDEOTAPE)
QUEST: Now, this crackdown in China has sent several other U.S.-listed companies into the red as you were hearing.
Baidu, JD.com, Alibaba -- they are all trading heavily down in New York at the moment. They've been burned after running afoul of Beijing before. For
instance, China launched a probe into Jack Ma's Alibaba on Christmas Eve. China's antitrust turned to data collection practice this year.
Regulators ordered dozens of apps pulled from domestic stores, including local LinkedIn rival and Chinese unicorn, MaiMai in May.
The concerns run both ways. The Biden administration reversed a Trump TikTok ban, but is working on a security review of its own.
Jamie Metzl is with me, the senior fellow of the Atlantic Council and former U.S. National Security Council staffer with the Clinton
administration.
Jamie, all right. It is being portrayed because they went public in New York, but that's too simple a way to look at it, isn't it?
It is not just because they accessed the U.S. capital markets. What is really -- in your view, what is really behind this?
JAMIE METZL, FORMER U.S. NATIONAL SECURITY COUNCIL STAFFER WITH THE CLINTON ADMINISTRATION: You're absolutely right, Richard. It is not just that they
accessed U.S. capital markets, lots of companies have done that. What we're seeing here is a reassertion or even an assertion of authority over all
major Chinese companies by the Chinese government and the Chinese Communist Party.
And the government wants to make 100 percent clear that whoever you are, whether you're Alibaba, Jack Ma; whether you're DiDi, really whoever you
are, you must be subservient to the needs of the state, and that's why it should be clear to everybody in the world that big Chinese companies are in
effect at least in part Chinese state actors and should be treated as such.
QUEST: So, this idea of being concerned about data and I imagine, of course, the more you are integrated in the West, the greater the
opportunity frankly for western governments to spy back in.
In other words, the sort of issues that the U.S. was concerned about with Huawei, I am guessing, the Chinese are concerned the U.S. is going to do
the same thing with DiDi and all these other companies.
METZL: Not just the United States. Governments around the world are trying to balance their need to have companies that are growing and competitive,
and those companies needs to collect all kinds of data that creates a new source of power.
Here in the United States, we're struggling with that. Many people think our elections were swayed by Twitter and Facebook. So, the Chinese
government is really trying to exert its dominance, including through data, and the Chinese companies really don't have any way of standing up against
the Chinese government, and if that wasn't already clear before, that's even more clearer now.
QUEST: Right, but again, to the DiDi case. They were warned. They still went ahead with a rushed road show. They IPO'd. They were asked to go --
according to what I'm reading in "The Financial Times" this morning, they were asked to link in -- to list in Hong Kong. But for logistical reasons
and licensing reasons of drivers, they couldn't do that.
I mean, is this as simple as the Chinese just trying to exert control?
[15:25:12]
METZL: Absolutely not. I mean, obviously, there is more that is happening here. But I can guarantee you that if the Chinese government had delivered
a clear message, you shouldn't IPO, you should do it in Hong Kong, DiDi would have done exactly that. Those messages maybe are clearer now,
retrospectively.
But every Chinese company knows that you have to do what the Chinese government and Communist Party tell you to do. So, there are real issues of
data. There are real issues in China and everywhere about governance, about oversight and regulation, about data privacy. But it is more complicated in
China because of this political and geopolitical overlay.
QUEST: Right. Related to that, if what you say follows through, it is also follows through that China for the greater good doesn't care if the
companies suffered. In other words, you don't want to kill the goose that is laying the golden eggs. And do I wonder if we look at Alibaba and the
sort of measures they took against Jack Ma and the company, how close they came to doing that?
METZL: And that's the whole point, that's the point I was making earlier. It is the party over everything, and there could be other significant
interests including having big national champion companies.
But the party is exerting its dominance and yes, you're exactly right, it is in this complicated context. But it is still, that is the message that
is being delivered. And so, for regulators around the world, when you're dealing with a Chinese company, you are dealing with the Chinese state.
And for business school graduates in the United States and Europe who are going to work for large for Chinese companies, you are essentially going to
work ultimately for the Chinese state, and that's the bigger issue here is that there are two very different models of capitalism that the West and
China are putting forward and there are areas of overlap and compatibility, but there are areas of non-overlap and conflict, and I think this could be
an example of that.
QUEST: Jamie, it is exactly the reason we wanted to talk to you tonight to help put that into context. I am very grateful that you did. Thank you,
sir.
METZL: Thank you, Richard.
QUEST: It is QUEST MEANS BUSINESS on a Tuesday. Bruno Le Maire, the French Finance Minister says the consensus on a global corporate tax is possible
with the Biden administration. I speak to him, next.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
QUEST: Well, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
The French finance minister, Bruno le Maire, tells us that France needs to step up its vaccination campaign and jumpstart its economic recovery.
And the CEO of Hawaiian Airways joins me. Hawaii is planning to lift restrictions for vaccinated travelers. All of that to come after we've had
the news headlines because this is CNN and here on this network, the news always comes first.
(HEADLINES)
(MUSIC PLAYING)
QUEST: The French finance minister, Bruno Le Maire, tells me he's deeply convinced all E.U. members will agree to the new global corporate tax rate
of at least 15 percent. I spoke to Mr. Le Maire after 130 countries endorsed the minimum tax on multinationals.
Notably, Ireland and Hungary and Estonia did not sign the agreement when it came before that OECD. However, Le Maire told me there's no reason for them
not to get on board, considering the benefits.
(BEGIN VIDEOTAPE)
BRUNO LE MAIRE, FRENCH MINISTER FOR THE ECONOMY AND FINANCE: I (INAUDIBLE) that all the E.U. member states will join this ambitious global and ground-
breaking agreement. We achieved an agreement at the G7 level. We have been achieving that agreement for two weeks.
We are now on the verge of having an agreement at the next G20 in Italy, in Venice, and I'm deeply convinced that, at one point, all the E.U. member
states will also join that agreement.
Because what we are building is clearly a breakthrough in the history of international taxation. We will put on the table and implement an
international taxation system, which will be more efficient, which will be fairer, which will take into account all the profits of the (INAUDIBLE)
giants (ph) and which will put to an end the race to the bottom in the taxation system.
QUEST: The political reality, Minister, if you don't get agreement from one or two E.U. members, can you still proceed?
LE MAIRE: Of course we can proceed. And I think that, when you have all the G7 member states, the G20 member states, when you have the United States,
China, 90 percent of the E.U. member states, Russia, India, the African states, joining such an important agreement, which is clearly in the
interests of all of us because we are putting to an end the race to the bottom and we are providing new taxation resources for the fight against
climate change, for public goods, I think that, under such circumstances, there is no other choice but for all of the European countries to join the
consensus and to support that agreement.
QUEST: The digital tax and its relationship to this new global corporate tax rate of 15 percent.
[15:35:00]
QUEST: Are you still ready to basically the digital tax?
And are you encouraged by the moves of other nations to adopt it?
LE MAIRE: I think that is on the digital taxation. The key point is to take into account the profits made by huge companies, which do not have physical
presence in the states but which are making profits in the European continent or in France or German, Italy and in all other countries, that's
the key point.
Then on that basis, this is pillar one objective is to get (INAUDIBLE) on pillar one ready for signature early 2022 and pillar two being implemented
no later than 2023.
QUEST: Do you -- are you more encouraged by the Biden administration's approach than the Trump administration's approach in meeting you halfway on
this?
LE MAIRE: Let's be very clear. With the Trump's administration, nothing was possible. With the Biden's administration, something important is possible.
That is the reality as it stands.
Thanks to the openness from the Biden's administration, thanks to the support of the Secretary of the Treasury, Janet Yellen, there is now a
possibility for having a consensus.
And I just want to recall that the first state that supported that ideal and international taxation system has been France from the very beginning.
So we are quite happy to see the U.S. administration joining that idea and supporting this new international taxation system.
QUEST: We have a couple of moments left. I need to talk domestic financial situation in France.
As the country opens up, how much more support, what more do you think you're going to need to do within France to bolster the economy?
LE MAIRE: I think that the first key point is of course, vaccination. Vaccination is a key point and we need to insist on that matter if we want
to be successful in the economic recovery. We need to accelerate vaccination. We have almost 35 million people vaccinated, the first dose.
We need to accelerate the process because this is the prerequisite to have a solid economic recovery. The second point is to implement the recovery
plan. We are clearly on the right track since we have already put 35 billion euros on the table along with the 100 billion euros that have been
voted for, this national recovery plan.
And the third point of course is investment because I am deeply convinced that in the aftermath of the crisis, the key point which would be to
increase the level of potential growth everywhere in Europe by new investments.
(END VIDEOTAPE)
QUEST: That's Bruno Le Maire, the French finance minister talking to me this morning.
A cyber attack on one company and hundreds of other businesses were left vulnerable. We'll show you how hackers carry out ransomware attacks -- in a
moment.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:40:00]
(MUSIC PLAYING)
QUEST: The White House has announced it is to hold a meeting on Wednesday after a major ransomware attack on hundreds of U.S. companies. The software
vendor, Kaseya, was targeted by a Russia-based cyber criminal group, demanding $70 billion in bitcoin. The Biden administration has urged
companies not to pay ransoms.
The president spoke about the attack moments ago.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: I received an update from a national security team this morning. It appears to have caused minimal
damage to U.S. businesses.
But we're still gathering administration to the full extent of the attack. And I'm going to have more to say about this in the next several days.
We're getting more detailed information.
(END VIDEO CLIP)
QUEST: Clare Sebastian is with us.
He'll have more details but the situation is getting worse.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Richard. This is a really significant event. And (INAUDIBLE) cybersecurity experts are really looking
closely at it because we haven't seen this before.
Even with the surge of ransomware that we've seen over the past year, where you see what's called a supply chain attack, the likes of which we saw with
SolarWinds, where malware sort of hitches a ride on trusted software and is able to spread that way through the customers of a company, we haven't seen
that used with ransomware before.
That shows an evolution of tactics. In terms of attribution, the White House said they're not ready to do that yet but the cyber security
community does agree that Russia is probably behind this group or at least is not discouraged it.
But over the past year we've definitely seen a surge through the pandemic. This is something that we're talking about now on a weekly basis. And
(INAUDIBLE) Richard, how these tactics are evolving, in some cases, getting pretty scary.
(BEGIN VIDEOTAPE)
(BEGIN AUDIO CLIP)
UNIDENTIFIED MALE (from captions): I'd like to notify you that we've downloaded 500 gigabytes of your data from your servers.
SEBASTIAN (voice-over): The voice sounds like something out of a hostage movie, except here the hostage is data.
KAREN SPRENGER, COO, LMG SECURITY: Attackers are getting more aggressive in terms of -- they're doing their research and finding out who the key
players are at the company that they have compromised. And then they are reaching out to them.
SEBASTIAN (voice-over): Cybersecurity expert Karen Sprenger says the voicemail was left for the CEO of a client of hers, a large American
company, hit by a ransomware attack last October.
SPRENGER: They hadn't reached out to the attacker yet. And so that was just the attackers' push on them, to try and get them to contact them.
(BEGIN AUDIO CLIP)
UNIDENTIFIED MALE (from captions): If you are planning to just restore your data without paying for decryption we'll sell your company's private data
on dark net.
(END VIDEO CLIP)
SEBASTIAN: The threats worked. Sprenger says the company paid a ransom of several hundred thousand dollars and the attackers provided a decrypter
tool which successfully restored their data without it being published on the dark web.
SEBASTIAN (voice-over): In 2020, according to blockchain analytics company Chainalysis, ransomware victims are known to have paid the equivalent of at
least $400 million in ransom payments, more than four times the known 2019 level. Those numbers continue to climb as more payments come to light.
SPRENGER: And the criminals using it don't even need to have any technical experience. They can go on the dark web and they can purchase or lease
access to software that allows them to release ransomware on a company's network.
SEBASTIAN (voice-over): Then, if the victim decides to pay, some attackers will negotiate.
In this email chain from late May, Sprenger says she's negotiating on behalf of another client, a small healthcare provider on the U.S. East
Coast. The attackers' opening demand: one bitcoin, then worth about $36,000.
Sprenger, who uses a different email and pseudonym for each negotiation, tells the attacker her client has insurance but it will only cover a small
portion of the ransom, a detail, she says, a hacker who had infiltrated a company's network, might already know.
[15:45:00]
SPRENGER: We're starting to see, too, where the attackers go through the data and look for cyber insurance policies to see what the deductible is
and to understand how much coverage they have.
SEBASTIAN (voice-over): They eventually settled on a little less than half the original demand.
SEBASTIAN: The currency of choice for ransomware attackers is, experts say, overwhelmingly bitcoin because of its perceived anonymity and widespread
usage. And so to help victims navigate this process, cybersecurity experts say a common feature of the ransomware experience includes some kind of --
call it -- customer support.
UNIDENTIFIED MALE: They all set up some kind of communication and then step by step tell them you know, how to access an exchange, how to set up a
wallet. You know, the kind of cryptocurrency that they want the payment to be made with in. In fact they even help troubleshoot.
SEBASTIAN (voice-over): And yet because bitcoin transactions are stored on a public block chain, they are traceable.
UNIDENTIFIED FEMALE: The old adage, "Follow the money," still applies.
SEBASTIAN (voice-over): The Colonial Pipeline case showed how law enforcement was able to track and seize cryptocurrency worth $2.3 million.
In a similar success story in January, the Department of Justice seized almost $0.5 million worth of cryptocurrency from ransom payments associated
with Net Talker, another prolific ransomware strain.
They did that with the help of block chain forensics tools from Chainalysis.
JESSE SPIRO, CHAINALYSIS: It provides unprecedented insights into the supply chain for these groups.
SPIRO: You know, what they are doing with the crypto currency, how they are moving it, (INAUDIBLE) affiliates and additional connectivity, how they are
laundering the money.
SEBASTIAN (voice-over): The FBI says private sector partnerships are one of its biggest tools against the cyber threat. For companies, it is about
stepping up their cyber defenses to avoid being next.
(BEGIN AUDIO CLIP)
UNIDENTIFIED MALE (from captions): If we leak that data your business will be as good as gone.
(END AUDIO CLIP)
(END VIDEOTAPE)
SEBASTIAN: So Richard, what you see are these extortion techniques really developing in the cyberspace. Now in the case of Kaseya, we don't know
whether they've paid a ransom. It's understood in the cybersecurity community that the hackers have demanded a ransom of $70 million for a
universal decryption key which could be distributed to all the customers and downstream customers.
We don't know if they've paid that yet. But what we do know, even when people do pay, mitigation can take a long time. It can be very costly. And
then of course you have reputational damage to deal with as well.
QUEST: Absolutely fascinating. Clare Sebastian, superb report. Thank you.
Business is rebounding this summer in Hawaii. Now the state is trying to make travel even easier. The chief executive of Hawaiian Airlines is with
me next.
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[15:50:00]
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QUEST: Now that's the place to be. Waikoloa, in Hawaii, where it's nearly 10:00 in the morning on Hawaii's big island. That's a live cam picture for
you. And Hawaii could soon be thronged with tourists once again. The island is set to lift all restrictions for vaccinated travelers. They only need to
present their vaccine card and they're uploaded to the Safe Travels website.
Hawaii's tourism industry has been ravaged by the pandemic. It was down by 74 percent in 2020, seeing only 2.7 million visitors all of last year.
Compare that to 2019 and the state hit an all time record with nearly 11 million tourists.
Business is back again. Discuss this now with the CEO of Hawaiian Airlines, Peter Ingram who joins me now.
The gorgeous views that we're seeing there, Peter, looking at your business, 55 percent North America. That's nearly back to normal. Still
down on intra-neighbor island travel but recovering. International travel, still nonexistent.
Is that a fair upsum?
PETER INGRAM, CEO, HAWAIIAN AIRLINES: That's a pretty good summary of where we are. In the month of June, we actually flew more traffic on our North
America flights than we did in 2019 before the pandemic. So that part is recovered. Neighbor island is coming along and, as you say, international
is still very, very depressed.
QUEST: Are you making money?
Well, let's -- in terms of profit, et cetera, are you operationally making (INAUDIBLE)?
INGRAM: We are at a point now where our cash flow is basically around break even, which is a lot better than we were last year. To make income
statement profits, we really need that international part of our business to start to come back.
QUEST: If we now look at the lifting of restrictions from the rest of the say domestic U.S., the 48, 49. And the problem here is, you're already
full. Your business is back.
Can you shift some of that equipment?
I presume you already are.
But can you shift more capacity to grow the domestic business?
INGRAM: Well, I think the biggest impact because we have seen such a strong recovery with testing machine, the biggest impact with the changes this
week that will allow people vaccinated anywhere in the U.S. to travel to Hawaii without restrictions is going to be making the experience easier for
our guests.
And I think it is going to help us, maybe not as much in terms of stimulating demand during the peak summer period but as we get into the
off-peak period, that's going to make it more convenient for people. So we're pleased to see the move into this next phase of reopening.
QUEST: If we look at the international -- and I looked at the route, now because of where you're located, it is really grim news to an extent. New
Zealand, Australia, AsPac, all the countries in Asia Pacific, southeast Asia, that are still north Asia, that are still heavily affected by COVID-
19, where, arguably the next wave is arriving, you can't reasonably expect much improvement. I would say, what?
Before mid next year if not later.
INGRAM: Well, I think we'll see some improvement before then as vaccines get more broadly disseminated in Japan and Korea. I think those are -- have
the prospect of seeing some recovery by the end of this year, maybe not back to 100 percent yet but seeing some recovery. And then Australia, New
Zealand, I think may take a little bit longer.
But it really for us is all about the vaccines and vaccine distribution in other parts of the world and other parts of our network, catching up to the
success we've had getting vaccines distributed in the United States.
QUEST: Hawaii has done a very good job of its tourism vaccine testing regime, introducing the rules at the right moment early, tweaking them when
necessary to encouraging travel and, indeed, keeping the numbers low.
What do you now need them to do?
What is the next stage that you would see in this symbiotic relationship that you have with the government there?
[15:30:00]
INGRAM: Well, I think we're seeing the next important one, with allowing vaccinated travelers to come in. The next thing we really need is not from
the U.S. government. It is from foreign governments to -- and foreign jurisdictions to really get vaccines more distributed.
And that's the most important thing that can happen for us at this point. We don't have restrictions on inbound travelers per se from those areas.
But they've got to be vaccinated before those markets really open up.
QUEST: Peter, we'll talk more as the summer goes on. Wonderful pictures that we're seeing from Hawaii, which, of course, is so magnificent. Thank
you for taking time. We will check in with you as the year moves on to see how things are progressing. Thank you, sir.
INGRAM: Thanks, Richard.
QUEST: Let me show you how the market is going. It is down on Wall Street. It is a hot summer's day and the market is fairly cool but not as cool as
it was. Anyway, that's the numbers. I'll have a "Profitable Moment" after the break. QUEST MEANS BUSINESS.
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QUEST: Tonight's "Profitable Moment:" we had two moments, two doses, if you will, of reality on the program tonight. The first is COVID.
And the reality is that we will be living with this virus for the foreseeable future and, therefore, the sort of decision of governments like
Boris Johnson, to open up, accept higher numbers but lower hospitalizations and deaths because of vaccines, is a statement of the obvious and a
statement of reality.
The governments in Europe and the U.S. are essentially doing the same thing. And the other dose of reality, China doing business in China. And
Didi, as Jamie Metzl says, if you do business with a company like Didi or Alibaba or jt2.com (ph) then you are essentially doing business with the
Chinese government.
And nobody should be fooled about it. Or they should not be shocked or surprised when China does exactly the same sort of restrictions and
attempts to keep the companies within the walled garden to make sure that data doesn't get out and security remains, well, secure.
Two doses of reality in today's economic world that makes investing all the more difficult but, perhaps, just a little bit of fun, too.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable. The
closing bell on Wall Street is ringing. The Dow is down.
END
