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Quest Means Business

China Sends Four Rio Tinto Employees to Jail; U.S. Treasury Gets Ready to Sell Shares to Citigroup

Aired March 29, 2010 - 14:00   ET

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

ADRIAN FINIGHAN, HOST, QUEST MEANS BUSINESS: Guilty as charged, China sends four Rio Tinto employees to jail.

Profit to the taxpayer, U.S. Treasury gets ready to sell its shares in Citigroup.

And it's all about compromise. Christine Lagarde talks to CNN about striking a deal on Greece.

Hello, I'm Adrian Finighan in for Richard Quest. This is QUEST MEANS BUSINESS.

Good evening.

Four former executives of the mining giant Rio Tinto are beginning long jail sentences in China tonight. Stern Hu, an Australian, faces 10 years behind bars after being convicted of bribery and stealing commercial secrets. Three other men got sentences of up to 14 years, plus hefty fines.

Most of this case, of course, has been heard behind closed doors. But as CNN's John Vause reports now, foreign media were not allowed into the courtroom until the very end.

(BEGIN VIDEOTAPE)

JOHN VAUSE, CNN SENIOR INT'L. CORRESPONDENT (voice over): After being banned from the three-day trial, foreign and local reporters were allowed in for the verdict, an unexpected twist in this case, perhaps a last-minute attempt at openness by Chinese authorities.

But the outcome, it seems, was a foregone conclusion. China's courts almost always find criminal defendants guilty. Australian Stern Who and his three fellow Rio Tinto executives were not exception.

TOM CONNOR, AUSTRALIAN COUNSUL-GENERAL: On the charge of bribery Mr. Stern Hu was sentenced to seven years jail. On the commercial secrets matter he's been sentenced to five years in prison. The combined period of time he will have to serve in prison will be 10 years.

VAUSE: The other three received sentences ranging between seven and 14 years.

(On camera): According to his lawyer, Stern Hu took two bribes worth a total of about U.S. $1 million. The money came from two smaller steel mills looking to guarantee long-term iron ore supplies.

(Voice over): That would mean, in theory, at least, those smaller companies would not have to pay higher prices for iron ore on the open market, potentially saving millions of dollars.

(On camera): Stern Hu's lawyer says his client took the money because he was worried about being laid off from his job and he was caring for two elderly parents, both in poor health, and he wanted to help two old friends. One received U.S. $300, but Hu was detained before the other friend received any payment.

(Voice over): Hu's lawyer says confessed to receiving kickbacks shortly after his arrest and repaid the money and that early admission, the court said, meant a lenient sentence.

JOSHUA ROSENZWEIG, CHINA LEGAL EXPERT: It's a goal of the entire penal system getting a suspect to ultimately admit that what they did was wrong, whether it be in the investigation stage, at trial, or ultimately in prison.

VAUSE (on camera): The four executives who were also charged with stealing commercial secrets. The court said they had illegally obtained information from China's steal association and that meant China had overpaid for iron ore, by about U.S. $140 million.

(Voice over): This trial sparked diplomatic tension between Beijing and Canberra, and had political overtones from the very beginning. The four men, who were arrested last July, just weeks after Rio rejected a multi-billion dollar investment by one of China's biggest state-owned mining companies.

WENRAN JIANG, CHINA ANALYST: The Chinese have laid out the case, basically, saying this has nothing to do with revenge, or China is punishing one company over the other.

VAUSE: For the Australian-British mining giant Rio Tinto, business is booming in China, announcing another major deal with its biggest customer, just last week. As for the four convicted executives, Rio says, they'll be fired for violating the company's code of conduct.

John Vause, CNN, Shanghai.

(END VIDEOTAPE)

FINIGHAN: Well, Rio Tinto has fired the four executives, calling their behavior deplorable, and saying that by taking bribes they acted contrary to the company's code of conduct. It has now ordered an independent review of its own processes and controls.

Well, Rio's Chief Executive Tom Albanese said, "I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build it's important relationship with China." He said, "This is a high priority for me personally."

Well, earlier I spoke to John Meyer, who is head of resources at Fairfax, an investment bank, I asked him first, what he thought of the sentences.

(BEGIN VIDEO CLIP)

JOHN MEYER, HEAD OF RESOURCES, FAIRFAX, I.S.: It is a very tough sentence for Stern Hu, and the team there. It is at the top end of the range for bribery cases. Although, in some cases, the death sentence has been passed out in China, where officials have been caught taking bribes. But there is a mixtures of issues here. It is not just bribery and corruption, but it is also obtaining state secrets that is under question here.

FINIGHAN: All right. We'll talk more about the implications for this, for other businesses, who want to operate within China. But first of all, what about Rio Tinto, should its management be accepting any more responsibility for what actually happened here? It has fired all four of them. But does the responsibility lie with Rio Tinto?

MEYER: I think it is fair to say that Rio has a zero tolerance policy on bribery and corruption. And they withdraw from parts of the world normally, where that is a condition of doing business. That is not a condition of doing business in China, but clearly it is endemic in Chinese business practice, shall we say? And the Chinese government are trying to stamp this out. But the question is, are they stamping it out selectively, or are they-is this a widespread thing?

FINIGHAN: Let's leave the bribery and corruption charges aside for one moment. As far as the secrecy charges are concerned, would what happened in this particular case, if it had happened anywhere else in the world be seen as normal business practices?

MEYER: Well, we don't know what the information is yet. And Rio doesn't know either. Rio has been investigating the Chinese steel industry for many years, and I think it is an industry that is sensitive to the Chinese Communist Party, because they see it as the building blocks for their economic growth and their economic engine.

But it is possible they may have come across sensitive information as part of that. I think what is more key here is that the information they have has enabled them-has enabled Rio Tinto and other iron ore producers to massive increase the price of raw materials into China. And that is what the Chinese are upset about.

FINIGHAN: So, you don't think that these by any way trumped up charges? I mean, there was real substance to the charges?

MEYER: Well, we don't know yet. I think what the Chinese have done has taken information that they consider to be sensitive and then applied the rules to this information. So, yes, I think this could impact other companies dealing in the area.

FINIGHAN: In what way? What are the implications of this for other countries?

MEYER: Well, if you are a telecoms business selling into China and you find out that the Chinese have got strong growth ambitions in that area, and you raise your prices. Then I think you can expect to have trouble from the Chinese authorities as a direct result of that.

(END VIDEOTAPE)

FINIGHAN: John Meyer of Fairfax.

Now, coming next the race to raise billions of dollars four days after the EU agreed on a financial safety net for debt-ridden Greece. How the country is trying to fill the black hole in its budget. We'll be right back.

(COMMERCIAL BREAK)

FINIGHAN: Hello, again. Greece is just about keeping its head above water and it is struggled to remain solvent despite months of speculation, but it is close to losing the fight. The Greek government found enough appetite among lenders to raise fresh funds today. It was its first sale of bonds since the EU stitched together a safety net for Greece last week.

Let's take a look at what Greece is doing. It is selling $6.7 billion worth of seven-year bonds. The issue was over scribed $8.7 billion worth of bids were received today and its only part of the amount that Greece has got to raise by the end of May, as old loans need to be repaid. Last year the Greek budget deficit was 12.7 percent of GDP. And Greece has said that it is going to reduce that by 4 percent this year.

Now, last week there was of course that announcement of the Euro Zone aid plan, a last resort loan facility. It would involve funds both from Europe and the IMF. No specific figure for the package was given, but it is being quoted by those in the know as being worth around $36.8 billion.

The euro was the main beneficiary of the plan. Today it bounced back from 10-month lows. Right now, against, the dollar one euro is worth $1.34, and a half. Let's get more on this sale from CNN's Jim Boulden, who is with me now in the studio.

Jim, one thing puzzles me, why today? I mean, there was nothing to indicate that it was going to happen today. We knew it was going to be sometime this month.

JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Yes, they said they wanted to do this next tranche, the third tranche this year, by the end of March. So, we only have a few days left. But clearly, they weren't going to do it last week, in the middle of everything going on in Brussels. So, they waited to see that this package was put together, including the IMF, so they went to the market today.

The way the bond markets work is that the banks kind of know this is happening, the government knows it is happening. We don't know its happening. You have to wait for leaks to come out. So, this morning the leaks started coming out, throughout the day we could see that Greece was going to go to the market with an interest rate around 6 percent. Which isn't great for Greeks, but it is great for the market. And that is why it was oversold.

FINIGHAN: That was-I was going to ask you about that. It has been a steep learning curve for me today, learning all about bonds. The yields, the interest rate you are were talking about.

BOULDEN: Yes.

FINIGHAN: 6 percent, I mean that is a whopping amount. Can Greece afford to have that sort of-

BOULDEN: No.

FINIGHAN: No, all right. OK? That will be that.

(LAUGHTER)

BOULDEN: No, it can't.

However, it is lower than it was last week. It is lower than it was two months ago. It is lower than when the crisis hit, they were going to have to be charging more. But the prime minister has said very clearly we cannot sustain this. In fact, there was some numbers on the market-on the wires today, that it would cost an extra $700 million a year for Greece to sustain this. That is money they don't have. We know they don't have money already because of the budget deficit. And because it has these austerity measures going on. Can you imagine the Greek people finding out that they have to pay more this debt, instead of helping to go with the pensions, for instance.

FINIGHAN: There is a lot of interest in this sale. So, they have not surprisedly (sic) given that yield that you talked about the interest rate. This isn't going to be the last sale, though. Greece has got to raise a lot of money, very quickly.

BOULDEN: Yes, and has to have a-probably another sale in April, towards the end of March. It has to raise around $71 billion. And it wants to do that in the market. And it's like all government do. All governments do this, obviously. If it can't do it that is where we're talking about the European, Euro Zone money, and the IMF. So, as a test to the markets, it was successful. But some people are saying this isn't that successful, because anybody could sell a bond if you are going to give a yield over 6 percent. So, it depends on how you look at it.

FINIGHAN: I had a comment on Twitter today. Shivanmagnani (ph), is in Dubai, and says on Twitter, "Massive mistake by the Euro Zone in bailing out Greece. Sends out a negative message to other debt affected countries. Disgust."

BOULDEN: Well, the level that Spain and Portugal has to pay for its debts isn't anywhere near as high. So, it hasn't actually-they haven't actually said that they are in that much trouble. They haven't shown the market-the markets haven't attacked their bonds.

So, obviously, a lot of people were very worried about this. Because they didn't want Greece off lightly. That is what has worried a lot of German taxpayers. But everybody we could argue for years about last week. But it is a done deal.

FINIGHAN: All right. Jim, many thanks, indeed.

Let's more about this bailout plan. EU leaders were, at first, reluctant of course to seek outside help, to solve Greece's problems. CNN's John Defterios spoke with the French Finance Minister Christine Lagarde at a business gathering at Lake Como in Italy at the weekend. He asked her whether she thought too much politicking went on before that deal was reached.

(BEGIN VIDEO CLIP)

CHRISTINE LAGARDE, FINANCE MINISTER, FRANCE: Well, the good news is that there was a solution found yesterday and it involves a mixture of all euro members and all members of the union actually pooling their strength, closing ranks, and determined to actually help Greece. And the involvement of the IMF, which is number one, a bank which has European funds, in significant amounts. And also the expertise of similar situations. All in all, it is a combination of strength, common determination, and financial expertise that lies with the IMF, which will be extremely helpful in the process.

JOHN DEFTERIOS, CNN ANCHOR, MARKETPLACE MIDDLE EAST: In this process, when we got here, President Sarkozy wasn't one that was a big supporter of bringing the IMF in, thought it should be a European solution, but it was Angela Merkel's demands of balancing out this rescue package and then having a veto at the end of the day. Are we bending too much to German demands for austerity, and this EMU, the way Frankfurt sees it?

LAGARDE: European construction and European solutions are always about compromises. If you look at the landscape there was also initially a very strong reluctance to provide any funding, to put any European solution together, at some stage.

So, there has been movement in the direction of each other, in that compromise. What's really at the end of the day ultimately matters is there is a solution. There is an agreement, there is a mechanism in place and that is what matters.

DEFTERIOS: The debate over the final communique whether it is economic government or governance of the European Council, many saw this as an effort to strangle domestic policy and take a way the freedom of some of the states. How do you define the difference, in your view?

LAGARDE: The good news is that both worlds have the same Latin origin, gubernari (ph). So, I hope that we can find enough common view around the table.

DEFTERIOS: You know it is not playing well in London, as you can imagine?

LAGARDE: What, Latin origin?

DEFTERIOS: No, no, the government versus governance.

LAGARDE: So, it is always, at the end of the day, a matter of what are the driving rules. Who has the license? And who is driving the bus? But ultimately we need it all.

DEFTERIOS: It was better coordination, really, at the end of the day, that we're looking at? So you can spot the problems early?

LAGARDE: Better coordination, better surveillance, necessary convergence, and that will keep us all together.

DEFTERIOS: You had mentioned that 2010 is a year of subtly. What does-if you look at the year, and what happened in 2009, what does 2010 as a year of subtly actually mean in terms of policy?

LAGARDE: Well, look at 2009. 2009 was a year of brutal measures. We were all encouraged to put massive public finance into the economy just to get it started again, and to bounce back from where it was. And we invested massive amounts of taxpayers money into the economy. It had to be fast, brutal, focused and reversible.

When I said that 2010 is a year of subtly, we are going to have a to encourage the fragile growth that has now surfaced. But we need not to stop it. Not to restrain it. And as a result we are going to have to withdraw some of the measures that were put in place in 2009, gradually over time, subtly, gently, so that we don't provoke a complete stop, yet again, of the economic forces. That is what I call subtly in economic terms.

(END VIDEOTAPE)

FINIGHAN: Christine Lagarde speaking with CNN's John Defterios. Well, as Finance Minister Lagarde holds talks in Italy, here boss, Nicholas Sarkozy, is in New York. It is the beginning of a busy round of diplomacy for the French president. And we'll have a live report when we come back on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

FINIGHAN: Ericsson, the world's biggest mobile phone maker-well, of hardware, anyway, has said that its won two major contracts. The Swedish group said the China Mobile and China Unicom have signed deals worth a combined $1.8 billion. Ericsson says that they will drastically boost the capacity of China Mobile's phone network and provide China Unicom with a faster 3G network.

Meanwhile, another Chinese company is in focus today. Shares of Geely Automotive rose on Monday, a day after the start of its big European adventure. Geely's parent company said on Sunday that it was buying the Swedish carmaker Volvo from Ford for $1.8 billion. Let's hear from CNN's Emily Chang in Beijing, who has more on the significance of that deal.

(BEGIN VIDEOTAPE)

EMILY CHANG, CNN INT'L. CORRESPONDENT (on camera): After a two-year courtship Ford has signed a deal to sell Volvo to Chinese carmaker Geely for a price tag of $1.8 billion. It is less than a third of what Ford bought Volvo for a decade ago. But it is the largest acquisition of a foreign carmaker by a Chinese company yet, and a luxury brand at that.

The deal shows just how far China's car market has come. It is now the largest car market in the world, with several companies making major efforts to go global. Geely is a small but ambitious company that unlike many Chinese car companies is completely, privately owned and less vulnerable to government interference. The chairman calls himself the Henry Ford of China and calls Volvo a tiger that needs to be liberated, referencing safety and quality that the brand is famous for.

He promised that Volvo's main factory and headquarters would remain in Sweden, but that a factory would open here in China, as well. But growing Volvo will be a major challenge for Geely in China. Volvo sales have been slumping around the world. And its main market is in the U.S. and Europe. Industry analysts say average Chinese customers spent about $17,000 on a car. It remains to be see if they will be willing to pay more for expensive luxury cars on the road ahead. Emily Chang, CNN, Beijing.

FINIGHAN: Now, his poll ratings are on the decline, at home his party just suffered big losses in local elections, but French President Nicholas Sarkozy is hoping to put all that behind him with a visit to the U.S. Mr. Sarkozy is currently in New York. He'll meet with President Obama in Washington on Tuesday. CNN's Richard Roth joins us now, live, from New York with the latest on the visit.

And, Richard, Mr. Sarkozy began his trip with a pretty harsh critique of global finance?

RICHARD ROTH, CNN UNITED NATIONS CORRESPONDENT: Yes, we heard just moments ago in that interview with John Defterios France's finance minister saying the year ahead in growth will be a year of subtly. The French president was none too subtle at Columbia University, in New York City today. Appearing at a world affairs program, the French leader was rather forceful, strident, on the need, he says, for a complete reform of the world financial system.

President Sarkozy accused speculators, bankers, and corporations of almost wrecking the world financial system.

(BEGIN VIDEO CLIP)

NICHOLAS SARKOZY, PRESIDENT OF FRANCE (through translator): What are we going to talk about together? One thing, principally, primarily-how can-together-how together can we ensure what occurred 18 months ago should never reoccur. That is our only responsibility. Eighteen months ago, when it happened, we were almost swept a way by this tidal wave. Everything was virtually knocked down. And when I see that today the self same people are prepared to start all over again committing the same mistakes, I do not want to be an accomplice to aid and abet that. Do you get me there? Is that clear? I don't want it. And I will not do it.

(END VIDEO CLIP)

ROTH: All right. Now, when President Sarkozy said we, what are we going to talk about? He was referring to his planned meeting with President Obama in Washington, tomorrow. The U.S. and France are working together in many areas, but when it comes to regulation of the financial system there are differences. President Sarkozy, in other comments, said that a few 100 irresponsible hotheads did mad things in the stock market, with derivatives, with other people's money. And he says, in order to save and preserve the good things about capitalism, he says there needs to be major changes-Ann-Adrian.

FINIGHAN: Yes, that will do-no, I am Adrian, Richard. I'll forgive you, don't worry.

There was talk here at the weekend of the special relationship between the U.K. and the U.S. coming to an end, or some would even say, if you listen, that the relationship is over. One wonders with comments like that what the relationship is like between the U.S. and France. I mean, the president has go to do a certain amount of lobbying on behalf of one European company when he meets President Obama, tomorrow, hasn't he, EADS?

ROTH: Yes, I don't think any one at that Columbia appearance that the U.S. France relationship was over. The French president was laudatory about the-about America being the major power on the stage. But it has to use its powers wisely. But one of the aspects, yes, of his visit will be lobbying for EADS, regarding a tanker refueling-major billion-dollar contract. This was a contract that the U.S. reopened after Northrop and EADS had won the bid, and now Boeing won it. And France, Germany and Britain are non too happy with this. So, Sarkozy of France is looking for a reopening of that bidding contract.

France also believes that all financial transactions should be taxed. The U.S. disagrees on that. They also have to talk about Afghanistan. France has the fourth largest troop deployment in Afghanistan. The president of the United States was just there. The U.S. would like France to contribute more. So there is a lot to talk about.

FINIGHAN: Certainly is. It is our age, Richard. Senior moments, I think they call them. And I can never remember people's names, either.

ROTH: Thanks, Bill.

FINIGHAN: Richard, many thanks. Great to talk to you.

Yeah, cheers, Ricky.

Right, this is QUEST MEANS BUSINESS on CNN. Stay with us. We'll be back with the latest from Moscow, in just a few moments.

(COMMERCIAL BREAK)

FINIGHAN: Welcome back. Live from London, this is QUEST MEANS BUSINESS from CNN. I'm Adrian Finighan. Let's get you right up to date with what's making news around the world right now. Fionnuala Sweeney joins us live from the London newsroom.

FIONNUALA SWEENEY, CNN CORRESPONDENT: Thanks, Adrian. Russian authorities believe a terrorist group from the North Caucuses Region is behind today's twin suicide attacks in Moscow. Thirty-eight people were killed when two female bombers struck during this morning's rush hour, in two underground metro stations. Dozens were wounded in the blast. No one claimed responsibility for the strike, but a shadowy group called the Causes Emirate has repeatedly threatened to attack Moscow.

Russia's prime minister didn't mince his words as he reacted to the attacks. Vladimir Putin said whoever is responsible, "will be destroyed." Mr. Putin added that new legislation may be necessary to combat terrorism. President Dmitry Medvedev also suggested that more must be done to keep Russia safe.

(BEGIN VIDEO CLIP)

DMITRY MEDVEDEV, RUSSIAN PRESIDENT (through translator): Prevention of such terrorist acts is a complex endeavor. We need to do more. Look at the problem around the whole country, not just in the transportation system or in a single town. It is obvious whatever has been done so far is not enough.

(END VIDEO CLIP)

SWEENEY: The political party of Myanmar democracy advocate, Aung Sang Suu Kyi, says it won't take part in this year's regional national elections. Representatives of the National League for Democracy announced today they will not register their party under the new election law. And that is the same rule that disqualifies Suu Kyi from taking part in national elections.

A new development today in the controversy surrounding the death last year of Michael Jackson. An attorney representing Jackson's father, Joe, says medical records show the pop star's heart beat briefly in hospital, where he'd been taken by an ambulance. But the lawyer says Jackson was "long gone" by then. Joe Jackson is planning to file a wrongful death suit against his son's personal physician, Dr. Conrad Murray. And those are the headlines -- Adrian, back to you in the studio.

FINIGHAN: Fionnuala, many thanks. Now, the U.S. Government's Wall Street bailouts have left it holding some big stakes in some of the country's biggest financial groups. But it doesn't want to keep them for any longer than it absolutely has to.

CNN's Stephanie Elam joins us now live from New York with the latest on that and the new of another possible tidy profit for the taxpayer -- hey, Stephanie.

STEPHANIE ELAM, CNN CORRESPONDENT: That is a very nice way to put it, Adrian. That's exactly what we're talking about. At this point, the Treasury is not going to give us any information on exactly when the timing of the Citi Share sale could happen. But they did say it would be quote in a, "orderly and measured fashion." And it will probably take place at some point this year.

Now, the U.S. Government owns about 7.7 billion shares of the bank. And that's about a 27 percent stake. So the big question here, at least, is what does this mean for the American taxpayer? It should mean quite a nice return. If sold at today's opening price, which was $4.38 a share, the government would make about $34 billion. And that would equal a $9 billion profit. Quite tidy.

Now, Citi Shares have gained more than 25 percent so far this year. And because the worst of the crisis appears to be over, we could see a sale sooner rather than later. The company already reached one major milestone late last year after paying back the $45 billion in money that it got under that TARP plan, the Troubled Asset Relief Program that we've talked about ad nauseum here -- Adrian.

FINIGHAN: Stephanie, something else we've talked about ad nauseum is that the rally on the stock market that we've seen over the past few months, I mean if we took stocks as -- as the only indicator of economic activity for just a moment, you'd -- you could be forgiven for thinking that the economy is set to bow ahead -- ahead over the next few months.

Can this rally really sust -- I have a feeling you're going to say how long is a piece of string in answer to this question -- but can this rally really sustain?

ELAM: Yes, I know. I -- I keep joking about my need for a crystal ball and also classes on how to use one. But you're right, it's one of those things where, as long as things continue the way they've been, where we haven't had a major catalyst, this tortoise rally could keep crawling along.

Now, even if you take a look at something like the horrific subway explosions in Moscow, something like that could rattle the markets. That didn't happen today. Investor seem to see -- be feeling increasingly more upbeat about the economy and its progress. And that's probably because we've been getting this steady stream of positive readings over the last few weeks.

Again, though, we do have a biggie coming up on Friday and we'll get that closely watched monthly jobs report for March. Analysts are expecting that U.S. Employers probably added about 190,000 jobs during the month. That would be huge. And if it turns out to be the case, we could see a pretty dramatic reaction to this.

I should caution, though, it won't be a reaction on Friday, because the markets will be closed for Good Friday. So any pent up reaction will have to wait and play itself out on Monday. So we'll have to see.

But if it is that much stronger -- you know, some people say because of all the snowstorms we had in February, Adrian, that it suppressed any growth in the economy. And so if this moves through it in March, then it could be much strong and that could give people more hope to keep on trading stocks. And, you know, who knows, maybe we'll see 11000 -- Dow 11000 this week.

FINIGHAN: That would be amazing. Let's keep our fingers crossed. Stephanie, many thanks, indeed.

ELAM: Sure.

FINIGHAN: Now, in a moment, the man who's making a play for Africa's mobile phone market by sponsoring the World Cup. We'll be right back.

(COMMERCIAL BREAK)

FINIGHAN: There are now just 73 days left until the World Cup opens in South Africa. Last week, I was hearing all about the new airport rail service that's due to open, the Gautrain, featuring gold trains. Now, businesses are hoping to cash in on all the attention generated by the tournament, businesses like MTN, for instance, the South Africa-based telecoms group.

CNN's Robyn Curnow sat down with the company's CEO recently and asked him about the changes that the mobile market in Africa have been through of late.

(BEGIN VIDEOTAPE)

PHUTHUMA NHLEKO, CEO, MTN GROUP: When I came in, you know, eight years ago, penetration of mobile telephony was still very low in a lot of African countries. And, of course, you -- you've got to realize that those countries have a very, very limited fixed line there to work. So mobile telephony effectively became the primary way to communicate and therefore, you know, the kind of growth we've seen over the last eight years. It's been a good experience.

ROBYN CURNOW, CNN CORRESPONDENT: So it's good business for you, obviously.

NHLEKO: It was good business. It was hard business. We've enjoyed, you know -- you know, providing that service, because you feel you're really changing people's lives. And -- and there's still significant growth to go. So we're not saying it's over yet.

CURNOW: So it's not saturated? The market in Africa is not sort of tapped out?

NHLEKO: Not really. South Africa is an exception. South Africa has a penetration of over 100 percent. But, of course, you know, they started very early, as early as 1994. And we also had a very good fixed line network. But on average, most countries are around 40 or 50 percent penetration. So it's not over yet.

CURNOW: You're the biggest cell phone operator in Africa.

NHLEKO: Yes.

CURNOW: But you -- you're looking wider than Africa and you're very focused on the Middle East, as well. Give me some sense of what it's like. Is it different doing business in the Middle East compared to Africa?

NHLEKO: Well, every -- every -- every country is different, let alone regionally. Cultures are different. Nigeria is just different from South Africa. And South Africa is different from Syria and so on. So we have rolled out in -- in the Middle East, as well. As I said, we've got, you know, five countries where we've got a presence.

CURNOW: Yes.

NHLEKO: We've got a presence in -- in Iran. We've got a presence in Syria, in Yemen, in -- in Afghanistan.

CURNOW: With Iran and the protests last year, did the Iranian government ask you to monitor phone calls or to turn off the network -- in effect, trying to dampen down the protests, that were largely seen on -- on -- on mobile phones?

NHLEKO: No, not really. I think we comply with whatever the -- the license regulations are. And, you know, like any other operator in any country, you know, we'll comply with whatever the license conditions are.

CURNOW: What were the license regulations? I mean did -- did you -- were you asked to monitor, perhaps intercept, information, that sort of thing?

NHLEKO: We -- we were not asked to do that. Suffice to say that every country has got, you know, interception requirements for security, as much as South Africa has and, you know, essentially every country. But I think those are done, obviously, in compliance with the laws of the country.

CURNOW: But with Iran specifically, do you feel, particularly with South Africa's history and the emphasis on freedom of speech and access to information, do you feel uncomfortable having to work within the parameters of the Iranian regulations?

NHLEKO: At the end of the day, we provide a telecommunications service, right, to many, many different countries. As I said, we are in over 21 countries. And every single country has got its own issues or challenges, whichever way you -- you may choose to interpret them. And I think our role is really to, as service provider, not to make committee -- political commenture on any particular country. And that's really how we see our role.

CURNOW: Let's talk about the World Cup.

NHLEKO: Right.

CURNOW: You're a sponsor. Would you write that check again?

NHLEKO: Well, we would certainly seriously consider don't that. And why I'm saying we'd consider doing that is that we can give you a far more definitive answer at the end of the games. But so far, we would most probably write it again. We think that...

CURNOW: How much did you spend?

NHLEKO: We haven't made that number public.

CURNOW: But it's millions and millions, isn't it?

NHLEKO: It is millions...

CURNOW: -- of dollars.

NHLEKO: It is millions of dollars. But we really believe that, you know, being a tier two sponsor of the World Cup is great. It gives us good profile. It will be very mobile-friendly, so there's a lot of content that we'll be able to share with our subscribers and so on.

CURNOW: Is it a big revenue earner over the World Cup, as well?

NHLEKO: Well, it's not a massive revenue earner, but it's -- it's revenue that we would rather have than not have. So, yes, there is, hopefully, a lot of roaming traffic. And, of course, I think it's a good opportunity to say that all those that are coming to South Africa, if they want to pay roaming charges, we can always, you know, arrange a prepaid card for them in good time. And -- and I'm sure our marketing people are doing that. So all I all, I think we were fairly happy with our involvement.

(END VIDEO TAPE)

FINIGHAN: CNN's Robyn Curnow there with the CEO of MTN. Right, let's get some weather. It's all -- approaching a quarter to nine here in Central Europe, a quarter to three over there in Atlanta, just after lunch. Just be thankful this is television and not smellivision, because I'm on the other side of the Atlantic - Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Oh.

(LAUGHTER)

FINIGHAN: -- from Guillermo and I don't know what you had for lunch, but my God, what is...

ARDUINO: Caribbean. I had a Caribbean -- a couple of...

FINIGHAN: With onions...

ARDUINO: -- Caribbean food...

FINIGHAN: -- in it.

ARDUINO: -- let's put it this way. Yes, some. It had onions.

FINIGHAN: Yes.

ARDUINO: How did you know? I told Hala a minute ago, you know, stay far away from me. Get out some gum.

FINIGHAN: Ah, you -- you should -- when you have a microphone on, you don't know who's listening.

ARDUINO: Technology -- oh, yes. Are you sure? Really? You were listening or are you making it up?

FINIGHAN: I heard you. I heard you.

ARDUINO: Oh, good.

FINIGHAN: No, I heard you.

ARDUINO: Excellent. You see, all across the Atlantic, that's amazing. The weather is bad in Europe, as bad as -- as bad as in parts of the United States. What we have here is a low that is coming into the Bay of Biscay here. It's going to bring another round of rain showers into France. And I would say let's focus on who is not going to get bad weather. And I think that Crete, probably Cyprus is coming out of a storm. Parts of Italy and the southern parts of Spain.

Elsewhere, we are getting storms, like in the north of France, some rain, a lot of it in parts of Britain, especially in the Midlands, and snow. You heard it well -- snow. And a lot of to it. Look at Scotland. So how much snow within two days? Well, it can be all the way up to 25 or 50 centimeters, or even 60 in some parts. Northern Ireland, the same thing.

Did you think that winter was over?

Think again.

And also, along with this, we get the delays at the airports. All these cities that we point out this -- on this graphic, also, it's all courtesy of this low pressure center, quite deep, that is coming from the Atlantic Ocean. It's loaded with winds and humidity, so it's going to bring precipitation in the area. The Alpine Region is going to see the winds and also some snow. So in some parts, it's going to be a combination of both.

In Vienna, we expect some winds. The delays appear not to be that significant in that part of the world. But as we go a little bit farther south, the winds continue, the rain continues, as well and we have clouds in Madrid and Berlin, with rain showers, especially the bad weather that's in the north there. Look at the north -- the Black Sea, parts of Turkey here, clearing in Greece, but parts of Turkey here and into Armenia.

And as we move into Asia, also, we see some bad weather. Temperature- wise, if you don't take into account the winds, we're looking fine, especially 20 in Vienna, even though it's going to be breezy; 10 in London, the high for Tuesday, and five in Glasgow only. And remember, we have the snow in that part of Great Britain. All right, we're going to see these storms that are actually affect the Carolinas and Georgia and parts of Florida are actually moving away. So we see an improvement over there, no doubt about that.

Now, the northwestern parts of the States and in Canada, we see some bad weather there, as well, that is going to move into the Four Corners here. So no end in sight for those conditions. The Northeast is where we have some lingering storms and some bad weather that -- it's going to be very rainy, indeed, in this area, because this system is going to pick up a lot of moisture in the Atlantic Ocean and it's going to dump it in the Northeast, the New England states and parts of Canada. That translates into storms and delays at airports. So that's why there are alerts posted all over, especially into the Northeast.

The Mid-Atlantic still dealing with the lingering effects of the same storm. And I would add Florida, as well, here, Miami at the very tip of Florida, though the warnings and the -- the watches have been lifted. So, significant changes right now. It's improving a lot. Now, back to London -- Adrian.

FINIGHAN: All right, Guillermo, many thanks. If you're watching where it's not raining right now, you don't know how lucky you are. It's been a miserable Monday here, Guillermo.

ARDUINO: Absolutely. I know it. Sorry.

FINIGHAN: Thanks. See you later.

ARDUINO: Yes.

FINIGHAN: Now, when we return, is it time for a recovery? If you want to know if the economy is running to schedule, we'll meet a man who knows a thing or two about time keeping. That's in, ooh, about a minute.

(COMMERCIAL BREAK)

FINIGHAN: And it's been a long, painful recession for companies that deal directly with consumers, especially if what they sell falls into the discretionary category. Well, watch maker Tag Heuer knows exactly how that feels. But now the Swiss company says that growth is returning, even in the hard hit United States. CEO Jean-Christophe Babin talked with

CNN's Monita Rajpal at the Baselworld Watch and Jewelry Show in Switzerland.

(BEGIN VIDEOTAPE)

JEAN-CHRISTOPHE BABIN, CEO, TAG HEUER: Tag Heuer has a chance to have a kind of Swiss sort of business model, where one third is American, one third is Europe-the Middle East and the other third is Asia. So to that extent, we are quite balanced.

MONITA RAJPAL, CNN CORRESPONDENT: Has it always been that way, though?

BABIN: Well, no. We -- we used to be, let's say, with a stronger percentage of our business in the Americas, weaker in Europe and over the last year, one of our strategical targets has been to better balance between those three major ports of luxury. So I would say that in terms of bands, we are pretty well off for now. Whether the recovery comes now, it has different speeds.

So worldwide, Asia is leading the recovery, clearly, since eight months. Europe has never gone really down, except maybe Spain, which is (INAUDIBLE) real estate. And now the good news is that America is -- is coming back.

RAJPAL: The fact that Asia, though, is really buying aggressively now and you're seeing that in your -- in your books, is -- does that change the way you -- you strategize your business at this point?

BABIN: Well, I mean Asia was -- even before the crisis, I mean growing much faster than at the rates of the world, just because you have more emerging, wealthy customers than anywhere else in the world. So since shares already committed by Tag Heuer have invested more and more in Asia, not only in marketing, but also building boutiques to present a brand like Tag Heuer out of 100 boutiques whirlwind, 80 are in Asia, which shows, I mean, how much Asia...

RAJPAL: That's a lot.

BABIN: It's huge, but it was not built last year, because there was a crisis. It -- it's a phenomenon which we started, I mean, 10 years ago. So what's going on right now is more and more Asian countries tend to get marketing investment which often can be at least as, if not more, than traditional European countries or even the United States.

RAJPAL: In -- in -- in addition to marketing investment, what about investment in research and development, technology from that region? Is there any -- any -- any -- are there any plans to do that?

BABIN: Well, you know, we have to manage, I mean, the products of the global brand on the local basis. You know, technology, most of the R&D we do, it's kind of (INAUDIBLE) R&D we do in Switzerland. But since several years, this has never been a particular job of Tag Heuer. We use a network worldwide with universities, with research institutes, with aerospace companies. And they have no passports, they have no boundaries.

So, I mean if a great idea comes from, I mean, the aerospace industry in the U.S. We will take it. If it's a great idea, I mean, from the car industry in Japan, we'll borrow it. So, you know, Tag Heuer is a company very open to the outside world. We're obviously a Swiss-led company and a Swiss company, but we borrow a lot of ideas here and there.

(END VIDEO TAPE)

FINIGHAN: Monita Rajpal with Jean-Christophe Babin, the CEO of Tag Heuer. Let's just take a quick look at what's happening on the stock market in New York right now. Stephanie was telling us earlier on about that rally. As you can see, the Dow you nearly 45 points.

Boeing leading the way right now, after the aircraft manufacturer announced that it passed -- had passed a crucial phase in its testing of its new 787 Dreamliner.

Apple shares are also up, with the iPad going on sale on Saturday.

In Europe, stock markets tiptoed higher this session. In London today, shares in Vodafone were a popular buy. Traders were chasing rumors that Vodafone might be able -- might be able to extract a dividend from Verizon Wireless, the company that it owns jointly with Verizon Communications.

Strength in the mining sector also helped to lift the FTSE 100 into the black.

Tech shares doing particularly well today. In Frankfurt, Infineon and Siemens leading the gains.

In Paris today, energy companies and steel makers rose, joined by the telecom equipment company, Alcatel-Lucent.

And in Zurich, financial stocks, including Credit Suisse, led the SMI, which ended marginally higher on Monday. A nice rosy picture on what has been, as I said, a dismal day, certainly here in London today. It's been raining all day.

Now, take a look at the shares in Desire Petroleum. They almost halved in value in London today, from 100 pence to 50 and -- or 49.5 pence -- no, 50.5 pence for the -- at the close. Desire one of the companies which is drilling for oil off the Falkland Islands in the Southern Atlantic. And early results from one of its wells have turned out to be, well, a huge disappointment. Desire says that oil may be present, but only in thin intervals and that reservoir quality is poor. It's going to carry on drilling, but if things don't improve, then the well known, as -- could be plugged and the well known -- the well, rather, known as Liz, could be plugged and abandoned.

Now, Monday is day three of the strike by British Airways' cabin crew, but the strike's impact seems to be, well, a bit up in the air, really. If you ask the airline's CEO, he says that things are going swimmingly. That was -- the airline was able to get three out of four planes to their destination on Sunday.

(BEGIN VIDEO CLIP)

WILLIE WALSH, BRITISH AIRWAYS CEO: I'm pleased with the way it's going. I'm clearly disappointing for customers who have had disrupted travel plans. But I -- I'm really pleased that we've been able to do so much and we're determined to keep this going. So at this point, I would say we're -- we're very much in control of the situation.

(END VIDEO CLIP)

FINIGHAN: Well, that's what Willie Walsh has to say. But the union is painting a different picture, claiming that on Sunday, half of British Airways' flights were canceled. As for the passengers, well, we got some differing opinions.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'm frustrated. You know, I read a lot about the strike and why they're striking. And with the economy the way it is, I'm not sure I understand why they couldn't figure out a way to come to some agreement so this (INAUDIBLE) happen. I cannot see anybody gaining anything out of this -- the company, the employees, the travelers.

UNIDENTIFIED FEMALE: And what's nice is at least they're trying, because it's very calm and...

UNIDENTIFIED FEMALE: And we thought we might have to cross a picket line.

UNIDENTIFIED FEMALE: -- (INAUDIBLE) today. But (CROSSTALK)

UNIDENTIFIED FEMALE: -- egg throwing, flour bombs or something. But we (INAUDIBLE).

UNIDENTIFIED FEMALE:

UNIDENTIFIED FEMALE: So well done, Willie Walsh, we say.

(END VIDEO CLIP)

FINIGHAN: Well, this is the union's second strike in a month over pay and working conditions. Just before we go, let me remind you about our very own QUEST MEANS BUSINESS Facebook page. You can get all sorts of views and gossip on there.

And Richard is back tomorrow. Richardquest is his Twitter address, if you want to get in touch with him.

That is it for QUEST MEANS BUSINESS for this Monday.

In London, I'm Adrian Finighan. Coming up next, "WORLD REPORT" with an update on the Moscow attacks.

END