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Quest Means Business
Blizzard Paralyzes U.S. East Coast; Former Russian Oil Tycoon Faces More Jail Time; South Africa Invited to Join Group of Emerging Economies
Aired December 27, 2010 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: Shut down. A huge blizzard paralyzes one of America's busiest travel corridors.
Guilty again. Former oil tycoon Mikhail Khodorkovsky could face more jail time. Tonight, on this program, we hear from his son.
And from BRIC to BRICS: South Africa is invited to join the group of emerging economies.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
Europe faced their winter travel chaos before the Christmas holiday, not it is America's turn. A huge snow storm along the U.S. East Coast has ruined travel plans for Americans trying to get home after the Christmas break. Now, more than 2,5000 flights have been canceled on one of the busiest travel times of the year. All three of New York's major airports have been closed to air traffic, or the area around it, at least. JFK will try to reopen in about four hours' time.
Meanwhile thousands are camped out on the airport terminal floors. No work this Monday. Some city and state officials say many people are staying at home anyway, so the blizzard's effect on the economy could be more muted.
We'll go to New York in a few minutes, but first let's go to Stamford, Connecticut, about 70 kilometers northeast of New York City. Rob Marciano is there. I asked him how bad the situation was for him.
(BEGIN VIDEOTAPE)
ROB MARCIANO, CNN METEOROLOGIST: Well, actually things have gotten a little bit better the past couple of hours. Earlier today the winds were blowing well over 60 kilometers an hour, and we had snow blowing sideways. And they had a hard time keeping up with clearing the roadways. People were actually walking in the roads more than they are walking on the sidewalks because the roads are actually a little bit more clear than the sidewalks are. And that is how people are getting out and about. There are a few private vehicles out, but a lot of buses have been doing a lot of the heavy lifting. Even earlier this morning, as buses came around this corner, they got stuck. They had to get a tow truck come out and pull out some of the buses that were getting stuck here.
A few folks just struggling here on the street to get by, and again, getting up an onto the sidewalk, you have snow that in some cases, is up to over a meter high. So, it is a tough thing.
This is city hall here, in Stamford. It is shut down. I mean, they are not shoveling his bad boy. This is not going to happen until tomorrow. City workers have been furloughed, except for those who have been assigned to try to clean up these roadways.
The other issue, Max, has been the railways. It has been snowing so hard that the main commuter rail from New Haven, Stamford and into New York City has been shut down because of switches that have been affected by the blizzard. So that railroad and the Long Island Railroad, the Long Island, which also feeds into New York City, has some issues. So it has been a travel headache to say the least there, Max.
And not only that the winds have been so strong in eastern parts of New England, that we have over 60,000 people that are without power this morning from downed trees that have taken out the power lines. So quite a blockbuster storm here for the Northeastern U.S., Max
FOSTER: And we can see what you are dealing with there, but it is not snowing right now. Will it get better?
MARCIANO: Absolutely. The snow is pretty much done. We'll see flurries throughout the afternoon, but nothing that will accumulate. The only threat is the ongoing snow that is blowing around. So we'll continue to see drifting here for the next six to 12 hours, but the storm is beginning to pull offshore and head into the Canadian Maritimes, and we'll see conditions improve dramatically. But they will stay below freezing, which means for the next two days we're not going to get a lot of help from Mother Nature as far as melting this stuff.
(END VIDEOTAPE)
FOSTER: That was Rob, there, in Connecticut.
Well, this extreme weather doesn't just affect people in the U.S. We saw across Europe, just last week, the cancellations mean passengers around the world trying to get into the U.S. are stranded, too. We spoke to a few of them stuck at London's Heathrow Airport.
(BEGIN VIDEO CLIP)
ALEX SIMONS, PASSENGER: New York to see my brother, and I've been here since half past 5 this morning. And when I tried to check in my bags I was told it was cancelled. Have another flight tomorrow at 11 a.m.
DANIELLE CAMANDUCCI, PASSENGER: The only flight we could book on was December 30th, which is in three days. And it is (INAUDIBLE) me, especially when they are not assuming care for like food or like hotels. I have no place to go. I have to stay here and sleep on the airport floor, for some odd reason they manage to find me a place for tomorrow morning. So there was available planes I just had to really push to be able to get on one. If I got lucky, I don't think a lot of other people got lucky, even though people have been here for a couple of days.
AAHMEK RICHARDS, PASSENGER: I was stuck in Paris for three days. Finally got out of Paris, flew into Heathrow. And then they told me I wouldn't be able to leave, stuck here, this would be my second day in the airport. Basically I went to the counter, and they were like, your flight has been canceled. Here is a pamphlet. The pamphlet just basically says the same thing they told me, which is your flight has been cancelled.
They should have someone here who can actually book my flight for me. Why do I have to go to the Internet? I just think that is completely unfair. They made me pay a change fee to change my ticket to get on an earlier flight, which was then canceled. They refused to refund me the money for the change fee.
I had to take the tube was on strike yesterday, so I had to pay 90 pounds to go to the airport, which, you know, I mean, unfortunately it happened, but if my flight would have left I would have been happy to pay that 90 pounds, but I got to the airport, the flight was canceled. I wasn't given any option for a hotel, a cot, or anything. So it has been a pretty bad experience.
(END VIDEO CLIP)
FOSTER: An unhappy passenger, just one of the passengers stuck at Heathrow Airport, in London. The same is happening now in New York, though. Let's go to Allan Chernoff, he is at LaGuardia, in New York, just one of the airports in that region that has been closed to air traffic today.
How bad is it there, Allan?
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Well, we are actually getting an update, right now, from the general manager of LaGuardia Airport. He is speaking to the news media, as I'm speaking to you, and he has just said that they will be able to open one runway at LaGuardia Airport, 4:00 p.m. local time. So that is about two hours from now. So there is at least some hope. He said that crews had been working through the night, constantly battling winds that have been as intense as 60 miles an hour. Saying we still have a lot of work to do. And he also says that the airlines are not going to be sending many flights into LaGuardia Airport this evening, still recognizing that the conditions are quite difficult here, even though the crews have removed tons and tons of snow.
FOSTER: It is never a happy occasion for passengers, this? But I guess it minimizes the economic impact, at least, that it is happening during the holiday season?
CHERNOFF: Well, you know, yesterday, you could say that. I mean, for businesses, it is true. Although, the fact is I spoke with many people who were delayed yesterday, were trying to get to work, had meetings, business meetings to attend to today. Obviously that did not happen for virtually all of them. So, you know, I mean it is still going to have quite a hit, no doubt about that.
FOSTER: And how is the information flow there? Because when it happens here in Europe a lot of accusations against the authorities that they weren't keeping people informed. And they were turning up at the airport and having to queue. Are people stuck there? Or are they getting information before they get there?
CHERNOFF: Yes, that is an excellent question, because I've actually spoken with some people who have arrived here today not having been aware that their flights have been cancelled. And these are people who checked online, who called the airline, and didn't get the information, didn't get updated information. So clearly, there is something lacking still even in this age of digital communications a lot of people just didn't get the right information.
And in some cases, the airlines themselves were unable to make the cancellation decision until after the flight had been scheduled. In most cases the airlines did cancel and well in advance, a day in advance. The vast majority of people never had to go through the hassle of actually coming to the airport and finding out the bad news. But nonetheless, we still did have hundreds who did.
FOSTER: OK, Allan, thank you very much for joining us from LaGuardia.
The situation improves soon, at least, it seems to be opening up, there, at New York.
Alas, now China, meanwhile, surprised almost everyone by raising rates. So what might be next on Beijing's to do list? We're in New York, and Hong Kong, even for a preview of China's economy as it gears up for the year ahead.
(COMMERCIAL BREAK)
FOSTER: Now China makes a move and the world is reacting. After weeks of speculation China's central bank has stepped in again to cool the country's overheating economy. On Saturday it raised interest rates by .25 of a percentage point. The second rate increase since October. China's one-year lending rate it now at 5.81 percent. That is up from 5.56 percent. And the one year deposit rate now stands at 2.75 percent, up from 2.5 percent. China's premier Wen Jiabao says he's confident China can tame inflation. Well, earlier I spoke to Eunice Yoon. And I started by asking what Beijing's economic policymakers have at the top of their agenda for the year ahead.
(BEGIN VIDEO CLIP)
EUNICE YOON, CNN ASIA BUSINESS EDITOR: Probably the top economic theme for 2011 in China, next year, is the fact that the Chinese authorities are going to want to control inflation. They have made it very clear that they are concerned about rising prices, especially over the weekend when they decided to raise interest rates by 25 basis points. People here believe that this really shows the determination on the part of the Chinese policymakers to get ahead of inflation. What is called front loading, the tightening. A lot of people believe that the Chinese authorities are concerned about getting ahead of the inflation, getting ahead of the expectations of inflation. And a lot of that is because there has been speculation recently that the U.S. economy could actually surprise on the upside. That perhaps, based on the latest batch of economic data, the U.S. economy could do better than expected and in turn Chinese manufacturers could reap the benefits, Max.
FOSTER: And in terms of those policy initiatives what impact could that then have on growth?
YOON: Well, in terms of the growth, people here still believe that the Chinese economy is going to slow down, that those moves will have an impact. But that the slow down might be a modest one. So that China's economy will remain a bright spot in 2011, for the overall global recovery. So with that in mind the government is looking to push ahead with its five- year plan, to rebalance the economy. And, in particular, spur consumer spending. So people here believe that we are going to see higher wages, and also to see a stronger Renminbi, or currency, into next year. Anywhere between 3 to 8 percent over the next 12 months, a lot of that will help to increase purchasing power for Chinese consumers, but also it will address some of the inflation concerns, Max.
(END VIDEO CLIP)
FOSTER: Well, in the U.S. the Dow has ticked lower in today's trade, on that rate decision from China, probably. Let's go to Alison Kosik, who couldn't actually make it to the stock exchange today. So she is trying to stay warm in New York, in our CNN studios in New York.
You were well enough to make it that far, at least, anyway, Alison.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Yes, you know, I gave it the good ol' college try, trying to get to the stock exchange. It didn't quite work in all the snow.
You know, we have 90 minutes left in the trading session. Stocks are off their lowest numbers of the day, but still the Dow is trading to the downside. The other two indices are modestly higher. But the good news is even with the recent losses, we are still on track to end the year, with 10 to 15 percent gains for the major averages. Today's action isn't expected to spoil and of that.
And as you mentioned, Max, the market is taking a hit because of that surprise interest rate hike in China over the weekend. Investors, of course, are concerned that a slowdown in China's economy could wind up taking a toll on a global rebound. And without much else going on, the reaction to that is more pronounced than it may be on a normal day, especially, because of the light trading.
We also don't have many economic reports, any economic reports out today. So investors really don't have much direction. On top of that, yes, we have the big snow storm that you mentioned, Max.
FOSTER: Yes, and that is linked to the light trading you are talking about, right?
KOSIK: It really is, I mean usually the day after a big holiday weekend, it was the Christmas holiday on Saturday. Usually after a big weekend, it is going to be quite. But the snowstorm is really making it even quieter. In fact, this could down as one of the lightest trading days of the year.
As I said, I couldn't even get close to the New York Stock Exchange. Taking the subway this morning I had to turn back here to the bureau. So that is why we are also seeing that thinned out crowd down at the New York Stock Exchange where we have our producer, who valiantly made it there to keep track of the markets today. But the market is open for a full day of business. The last time that we had a shortened session was back in1996, and even before that, back in 1969 when the market had to close up for a full day because of the snow. So we are not seeing that today. We are still seeing some business being done, even though, it is very light, Max.
FOSTER: A very different picture here in London, Alison, because I struggled to get to work because of all the shoppers. It was absolutely crazy out there. But you are not going to have that there in New York. And that is going to affect the retail picture, isn't it, slightly?
KOSIK: It really could. Because, you know, if you think about it, the day after Christmas is really-and we're talking about even yesterday, it is just a huge day for these retailers. It is one six big shopping days of the year. So sure, I mean, retailers are going to feel the pinch with that. But the reality is, you know, they had the week off. This is-we are sort of in the middle of a holiday week, because New Year's is coming up at the end of the week. Schools are out. A lot of people are off from work. They still are going to have a lot of time to make up for that shopping experience.
And a lot of these retailers understand what is going on. There is a huge swath of the Northeast that is really just shut down. So what these retailers will wind up doing is really extending these Christmas sales, for another few extra days, so they can try to reap the rewards. Because it is a very big shopping week for them, Max.
FOSTER: OK, Alison, thank you very much. I hope you get home OK.
KOSIK: You got it.
FOSTER: In the snow.
KOSIK: Thank you.
FOSTER: Shoppers have got the option of going online of course. And we have a great tongue-in-cheek blog, posted at Amazon.com, for you. They say their newest Kindle surpassed the latest Harry Potter book as the best- selling product in Amazon history. But they refuse to say how many kindle units they have actually sold. But our team has done some digging for you. So log on to Facebook.com/cnnquest, to see our estimates on that.
We are off to sunnier climes in the next part of QUEST MEANS BUSINESS. Our "Future Cities" series takes us to Abu Dhabi. We'll be looking at the thrills and spills of building a new cultural capital, in just a moment.
(COMMERCIAL BREAK)
FOSTER: For our "Future Cities" segment we are visiting the places around the world building innovative and sustainable urban designs. And today, that takes us to Abu Dhabi. The emirate is giving itself 20 years to massively upgrade its infrastructure. And as Richard finds out it is starting to step up its game.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (voice over): You can't accuse this city of not planning for the future.
(On camera): Abu Dhabi is the capital of the United Arab Emirates. And having spent years in the shadows, now wants to take what it believes is its rightful place in the world. There is no pretense anymore, they will spend whatever it takes to make it.
(voice over): Abu Dhabi of 2030 is the project of the Urban Planning Council. It wants measured, controlled growth, projects that connect with each other. There are 1.4 million people living in the emirate now and that population is growing.
MICHAEL WHITE, ABU DHABI URBAN PLANNING COUNCIL: In the last three years there has been tremendous growth and tremendous pressure on the region and the emirate of Abu Dhabi. In fact, in 2007, just prior to the creation of the Urban Planning Council, and Plan 2030, there were proposals for communities of hundreds of thousands of people, without any consideration on the impacts on the rest of the region, whether it was transport, infrastructure, community facilities, what have you.
MUBARAK HAMAD AL MUHAIRI, MANAGING DIRECTOR, TDIC: We knew from the beginning that we had one chance to turn this into a milestone destination, into a world class destination, into a successful story. And we spent a lot on the planning.
QUEST (on camera): Imagine you are a developer in Abu Dhabi. This city and state is less than 50 years old. So effectively it is still a blank canvas. When some areas get a bit crowded you just move over and start filling in the gaps.
WHITE: We need a plan to guide this growth, otherwise there is going to be development happening haphazardly throughout the region.
QUEST: The vast oil and gas wealth from the Arabian Gulf has given the Emiratis and experts who live here and enviable way of life. But hydrocarbons won't last forever. So Abu Dhabi has embarked on a policy of ferocious economic change, which now means this place is a case study in urban development.
(Voice over): If everything happens as planned, Abu Dhabi will begin to wean itself off the oil and gas for which it is so famous. Instead develop more industries for renewables. So Plan 2030 is an aspirational blue print for that future. Building regulations are being reformed. Construction must be green and sustainable, says the plan, and energy efficient.
Then there is the new cultural district on Saadiyat Island, which will house three major international museums, including a Guggenheim and Louvre.
It is not just bricks and mortar, which are the focus of Plan 2030. The whole of Abu Dhabi outlook is getting a make over.
MOHAMED AL MUBARAK, CHIEF COMMERCIAL OFFICER, FERRARI WORLD: We are diversifying everything in Abu Dhabi. We are not just focusing on oil and gas anymore. It is on technology, it is on aerospace. It is on many different fields, education, infrastructure. So we are going to bringing, thousands and thousands, millions of people to the city, and one aspect you want to improve on is quality of life. So that is entertainment, that is education, that is healthcare.
QUEST (voice over): And it is also places like this, Ferrari World. The newest tourist destination in Abu Dhabi.
ANDY KEELING, PARK MANAGER, FERRARI WORLD: It is the largest indoor theme park in the world. And it is the only Ferrari World that there is, there is only Ferrari World Abu Dhabi.
QUEST: Ferrari World is part of this wider idea to diversify the economy and increase the potential, in this case, of tourism. It's greatest asset is this. The Formula Roster (ph), at 150 miles an hour, it is the world's fastest roller coaster.
KEELING: The track itself is approximately 2.2 kilometers long. The ride lasts for 92 seconds. It is the world's fastest roller coaster.
QUEST: There is the question, who are these changes for? As 80 percent of the people who live here are foreigners, who have been lured in by big business. Plan 2030 caters to an expected swell in population, but that swell might not happen. The Urban Planning Council already predicts that a target of 3 million people living here by 2030, doubling the current size seems unlikely.
WHITE: The major failings of most planning efforts in the world is they don't allow the government to adapt to changing economic circumstances, or environmental circumstances.
MUHAIRI: There is a clear map for Abu Dhabi. And we are not saying we are-this 2030 plan is static. This 2030 plan is reviewed every two to three years and we are adapt and we change. But at least we have a clear map. We know for example, travel and tourism is important to the government. It is on the agenda, and that brings, you know, more confidence to the private sector when they go an invest in this.
QUEST (On camera): When you look around this city, new buildings are springing up-everywhere.
(Voice over): The problem for most cities is not which changes to make, but rather how to pay for them. Here, they have all the money they need. So the challenge for Abu Dhabi is how to spend it wisely. After all, you only get one chance build a true future city. Richard Quest, CNN, Abu Dhabi.
(END VIDEOTAPE)
FOSTER: Now his supporters call it a Kremlin conspiracy. His defense lawyer says it is a charade of justice, but Mikhail Khodorkovsky has been found guilty of corruption and faces the possibility of many more years in prison. We will be speaking to his elder son in just a moment.
(COMMERCIAL BREAK)
FOSTER: Welcome back. I'm Max Foster. QUEST MEANS BUSINESS continues in just a moment, but first the headlines for you.
It's a frustrating time for travelers on the US east coast. A winter storm has left behind piles of snow and icy roads from New England to North Carolina. All three major airports servicing New York have been shut down since Sunday. Authorities say they expect flights to resume at JFK International about three and a half hours from now.
Nine men accused of planning terror attacks in Britain and -- had the London Stock Exchange and the US embassy in London on their list of targets. A prosecutor revealed those details on Monday in court. The suspects were arrested last week in England and Wales. Three other men who were held in the sweep have been released.
Ivory Coast opposition leader Alassane Ouattara, whom many believe won that nation's presidential election, called for a general strike on Monday, but it appears many workers and businesses have ignored it. The idea was to pressure President Laurent Gbagbo to concede the election. Meanwhile, France is considering accepting the opposition's candidate for ambassador.
At least nine people have been killed in back-to-back suicide bombings in Iraq's Anbar province. The attacks targeted a compound in the heart of Ramadi that houses government offices and the local police headquarters. It comes just days after Prime Minister Nouri al-Maliki vowed to tackle the country's enormous security challenges.
Now, they are known as the BRIC powerhouse bloc of trading partners composed of Brazil, Russia, India, and China. The numbers they generate are big, 40 percent of the world's population and half of all global growth. And now, southern Africa's biggest economic player has been invited to join.
South Africa may have major problems with unemployment and the recession, but it's also a key emerging economy. Earlier, I talked to the chief economist at Pan African Investments and Research in Johannesburg via Skype, and I started by asking Iraj Abedian whether he thinks this is good news for South Africa.
(BEGIN VIDEOTAPE)
IRAJ ABEDIAN, CEO, PAN-AFRICAN INVESTMENT AND RESEARCH SERVICES: Definitely good news. It's news that's been in the making ever since the summit in Denmark, Copenhagen, where South Africa played an essential role in bringing some form of conclusion to that summit.
And, of course, even prior to that, over the past eight years, South Africa has been actively promoting what is generally known as South-South trade and international and political alliances.
FOSTER: South Africa's economy is nothing compared with China, India, for example. But do you think South Africa would be invited to join BRIC, because it represents the African economy, as it were.
ABEDIAN: Look, that's one of the reasons. But at the same time, despite the fact that the South African economy, in terms of the size of GDP, is not in the same league as China, India, Russia, and Brazil, in terms of economic governance, in terms of the history and the depths of institutional economic governance, South Africa is way ahead of all of them.
FOSTER: And to what --
ABEDIAN: And in that sense, brings a lot of value to the alliance in BRIC.
FOSTER: And what is being formed here with you, say, because BRIC is a term that was just cooked up by a British economist, wasn't it? And since then, we've had these formal summits beginning and South Africa applying to become a member. What is BRIC? How does it represent the world?
ABEDIAN: Look, it's increasingly forming a growing proportion of GDP of the globe. But also, it's representing regional rising or emerging economic powers. China and India in Asia, Russia in Europe, Brazil in the Americas, and South Africa is the only and the largest economy in Africa. In that sense, it's more than just political alliance, it represents the emerging economies of the next decade or so.
FOSTER: And the South African economy is struggling. Unemployment, economic growth is a bit of a problem, certainly compared with the BRIC countries. Do you think, somehow, that will be helped by becoming a member of what will be BRICS?
ABEDIAN: South African economy serves or shares a lot of attributes with that of Brazil and Russia in terms of high unemployment, high inequality of income. In terms of its growth, there is no doubt that its membership of the club of BRIC, so to speak, will accelerate its trade relationships and will also increase level of investments by countries such as India and China.
(END VIDEOTAPE)
FOSTER: Well, Hillary Clinton has voiced her concerns about the guilty verdict in the trail of Mikhail Khodorkovsky. Up next, we'll ask the former oil tycoon's son what this decision means for Russia's future.
(COMMERCIAL BREAK)
FOSTER: Now, he was once Russia's richest citizen. Now, Mikhail Khodorkovsky faces yet more prison time as a court finds him guilty of stealing billions of dollars in oil.
Let's just remind you how we got to this point. His business group bought the oil company Yukos at auction in 1995 for around $300 million and turned it into Russia's biggest oil producer.
It was 2003 when things turned sour, or started to turn sour. He was arrested and convicted of tax evasion and fraud, and was sentenced to eight years in a remote Siberian prison. Meanwhile, Yukos went bankrupt in 2006 over a $27.5 billion tax bill when these new corruption charges were leveled at Khodorkovsky and his business partner last year.
This caps a spectacular fall from grace for the former Yukos boss, but US Secretary of State Hillary Clinton says the verdict raises questions about the rule of law in Russia. As Matthew Chance reports, the controversy surrounding this case will echo around the country for years to come.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Outside the courthouse, his supporters chanted "Freedom," clasping pictures of Russia's former richest man and his co-accused.
Most Russians may not be watching Mikhail Khodorkovsky's trial, but few in this country doubt its national significance.
CHANCE (on camera): This case, what does it say about the situation in Russia, the state of Russia at the moment?
UNIDENTIFIED FEMALE: It's very important for me how this trial will finish because according to it I'll know which country me and my children will live in. So we believe that maybe our people can influence this power. But when these cosmonauts come, it seems that it's impossible to influence --
CHANCE: You mean the riot police?
UNIDENTIFIED FEMALE: Yes.
(CROWD CHANTING IN RUSSIAN)
CHANCE (voice-over): And with helmets covering their heads like cosmonauts, the riot police moved in, detaining protesters even as the verdict was passed down.
CHANCE (on camera): Within the last few minutes, Mikhail Khodorkovsky inside has been found guilty of money laundering and embezzlement charges, and the police outside are arresting people who are supporters of Mikhail Khodorkovsky.
(CROWD SCREAMING)
CHANCE: Do you think that Mikhail Khodorkovsky received a fair trial?
SERGEY, DEMONSTRATOR: No, definitely not.
CHANCE: Why?
SERGY: Well, according to all -- I'm not, according to lawyers, according to the whole process, he would judge him almost the same like trials here or what he was in prison for all those years.
CHANCE: So, the charges didn't make a lot of sense?
SERGY: No.
CHANCE (voice-over): Khodorkovsky has already been in jail for seven years, charged and then convicted of fraud and tax evasion. A human rights group said the original case against him was politically motivated. Khodorkovsky had made allegations of corruption against the Kremlin and funded opposition parties.
CHANCE (on camera): Well, the protesters, you can hear them, they're shouting "Pozor," which means "shame," as the police come and they arrest these individual protesters here. Remember, this trial was never about just the fate of two men, Mikhail Khodorkovsky and Platon Lebedev. It was much more for people around here about the rule of law in Russia.
CHANCE (voice-over): International observers have been following this trial closely, as well, with the European Union demanding Russia respect its human rights commitment. But few will have been surprised by this guilty verdict and what it says about justice in Russia. Matthew Chance, CNN, Moscow.
(END VIDEOTAPE)
FOSTER: Khodorkovsky could stay in prison until 2017. Joining us now, live, from New York is Mikhail Khodorkovsky's eldest son, Pavel, who's also the co-founder of the energy group Enertiv. Thank you very much, indeed.
We heard Matthew, there, talking about how people in Russia weren't surprised by this verdict. Were you surprised?
PAVEL KHODORKOVSKY, SON OF MIKHAIL KHODORKOVSKY: I wasn't surprised, but I was certainly shocked. Even though we were expecting a guilty verdict, I was still hoping that a good outcome would still be possible.
FOSTER: And have you had any contact with your father or managed to get any response from him?
KHODORKOVSKY: I've sent him a note yesterday night, before we knew that the guilty verdict was being announced, wishing him luck and telling him that my daughter, his first granddaughter, just started walking on Christmas. So, I'm hoping that cheered him up a little bit and face -- in the face of this horrifying news.
FOSTER: What was he expecting from the verdict?
KHODORKOVSKY: I believe he was expecting a guilty verdict. Nevertheless, even after spending seven years in jail, it's still a big shock. My father is very realistic and he's sad, already, that he will probably spend some other years in jail. But he is ready for that sacrifice, because he is fighting for an ideal, and he is fighting for something more than his own and Platon Lebedev's freedom.
FOSTER: Is this what some Russians call "telephone justice?"
KHODORKOVSKY: Absolutely. Before today's news, I had hoped that Medvedev's -- President Medvedev's rhetoric about judicial system reform would actually bear some fruit. However, today, I realize that the judge is completely subservient and is a slave to the political will of Mr. Putin and other bureaucrats in the Kremlin.
FOSTER: What evidence, though, have you, first of all, that the judge wasn't doing his job properly?
KHODORKOVSKY: I don't have direct evidence, but the day after my dad's verdict was supposed to be announced on the 16th of December, Prime Minister Putin in his direct line telephone conference with the Russian people answering the question about my father stated that he should sit in jail. And a statement like this coming from a government official is not acceptable, because it's an influence on the court. While the judge was still deliberating the verdict.
FOSTER: Yes, but that doesn't mean the judge will react to that, does it? If it's an independent justice system.
KHODORKOVSKY: I believe so, but at the same time, everyone realizes that the only legal outcome in this trial would be an acquittal. Because the prosecution throughout the course of the trial failed to present evidence that supports their charges.
FOSTER: Are you concerned that your side, as it were, had many of their motions turned down by the judge, whereas the other side had all of theirs upheld?
KHODORKOVSKY: Of course. That's one of the things that demonstrate that the judge is much more eager to support the prosecutor's side than be fair to both sides in court.
FOSTER: OK, so what happens next? Will there be an appeal?
KHODORKOVSKY: Of course there will be an appeal. What I'm hoping for right now is the shortest sentence possible, because I'm really hoping to see my dad as soon as possible a free man. I was hoping that it was going to be next year.
I don't want to make any predictions about the sentencing, but I believe we will learn the actual number of years that the judge is going to hand down as a verdict in a couple of days.
FOSTER: But what's the point in appealing if you don't believe in the justice system?
KHODORKOVSKY: The point is that we should go through all of the legal resources available to the legal defense team in Russia, and then, appeal to the European court. We have to do this, because that's -- even though the system is subservient and it's probably influenced a lot by the politicians, but we still have to go through all of the motions so that there is no chance that my dad and his defense is accused of not following the correct procedures.
FOSTER: What if your father accepted a guilty verdict, which may allow the president to issue a pardon? Would your father consider that?
KHODORKOVSKY: My dad would never acquit -- would never admit guilt on this case because he is innocent and he has spent so much time in jail that this is just not possible for him. He is incarcerated right now because of his ideals and because he is fighting for something more than his and Platon Lebedev's freedom.
However, I can tell you that, according to the Russian legal system, a presidential pardon does not require an admission of guilt.
FOSTER: OK, Pavel Khodorkovsky --
KHODORKOVSKY: President Medvedev is free to pardon my father if he needs to.
FOSTER: OK, thank you very much for joining us, Pavel Khodorkovsky, appreciate your time on the program today.
Now, getting the message. Three business leaders on three continents show us how they communicate with their biggest asset, which is their employees. Be here for the next part of our special series, "The Boss."
(COMMERCIAL BREAK)
FOSTER: Now, "Create a mindset that let's your employees feel confident about success." The words of a chief executive who has transformed a troubled company into a success story, despite tough times.
Over the past few weeks, we've -- these three leaders have been giving us an insider's view of life at the top of a company. And, as we approach the new year and the season of fresh starts, we're keen to know how they handle their hopes and their fears.
(BEGIN VIDEOTAPE)
TEXT: The Boss.
ANNOUNCER: Last week, on "The Boss." Fresh Direct CEO Richard Braddock told us what it took to turn the company around.
RICHARD BRADDOCK, CEO, FRESH DIRECT: We were pretty close to being out of business.
ANNOUNCER: Sarah Curran of my-wardrobe.com reveals her own insecurity.
SARAH CURRAN, CEO, MY-WARDROBE.COM: More than anyone, I'm probably the most critical person about the brand, the site, the products, and the new styles.
ANNOUNCER: And Michael Wu, the chairman of Hong Kong Maxim's Group set out his big plan to enter China.
MICHAEL WU, CHAIRMAN, HONG KONG MAXIM'S GROUP: Change is actually quite difficult to implement in a company of our size.
TEXT: The Boss.
ANNOUNCER: It's morning in Hong Kong, and Michael Wu is meeting the managers who run his various brands. This is the only time during the week when they call get together.
WU: This Tuesday morning is a time when nobody goes on business trips, nobody has their own internal meetings, and it's just an hour and a half with me.
ANNOUNCER: The time gives executives the chance to air their concerns.
UNIDENTIFIED MALE (through translator): My way of doing it is with a centralized purchasing and food department.
ANNOUNCER: For Michael, it's an opportunity to listen to his employees and set his policy.
WU: Communication, I think, is very important. Our company has 14,000 people, and it's very easy for our message to get lost.
WU (in Chinese, through translator): Mainland China someday.
ANNOUNCER: At the top of today's agenda, China. Hong Kong Maxim's Group entered the mainland market five years ago with their bakeries. Now, they're ready to expand. For Michael, tackling this major market will require a smart strategy that starts in this board room.
WU (in Chinese, through translator): I want to explain this. Why do we need this? Because in three or four years, we need to be here. This is our goal.
ANNOUNCER: This is Michael's biggest challenge, his biggest gamble. Is this where The Boss really earns his stripes?
WU: Change is quite easy for us. It's in our blood. We try new things every year, we do new things every day. And we have a whole organization just geared towards change.
ANNOUNCER: In central London, a queue is forming outside Somerset House. It's London Fashion Week, and these followers of fashion are waiting to see the latest creations.
For Sarah and my-wardrobe, London Fashion Week is one of the busiest weeks on her calendar.
CURRAN: My hours are pretty much 24-7. There is no switch-off. That probably means I have no work/life balance. But, for me, it feels quite natural.
ANNOUNCER: The London, New York, and Paris fashion shows are Sarah's greatest challenge. This is when her judgment comes into play.
CURRAN: Sometimes, I'll wake up in the morning and I'll think, "Oh, my God, which season am I buying? Where am I?" But, yes. You've really got to keep ahead, and that's why, again, trends are very, very important.
ANNOUNCER: Today, she's on the lookout for those key fashion pieces that will make or break her collection next season.
CURRAN: It's really important, before you go to any of the Fashion Weeks, that you understand brands that you're going to bring on board, and also the budget you're going to attribute to that brand. Because what you don't want to do is get to the end of the buying season or get to the end of your open to buy, which is your buying budget for that season, and actually not having any buying budget left.
ANNOUNCER: Sarah will have more buying budget this time around. Her buying power for the Spring/Summer 2011 collection is being doubled. As The Boss, Sarah knows she needs to be strategic here.
CURRAN: It's very, very planned. And sometimes you can -- you want to get carried away and bring on all these brands but, actually, you've got to sort of keep looking back at how much you spent, what is your buying budget left?
ANNOUCNER: Equally important during Fashion Week, the opportunity to network. An opportunity for Sarah to build her brand. For some, like Sarah Jessica Parker, the attention comes naturally. Not so for The Boss.
CURRAN: My natural sort of comfort zone is not in front of the camera. As the business grows, there's sort of a certain amount of -- I won't say "pressure," that would be kind of wrong. But there's a lot of sort of demand for me just to be more present.
ANNOUNCER: Perhaps for Sarah, leaving the comfort zone is the ultimate penalty of being The Boss.
BRADDOCK: Well, I think this is going to be a great real launch, and I think --
ANNOUNCER: In New York, Richard is meeting with his creative team. The issue, the online revamp of the Four-Minute Meal, one of the company's most important products.
BRADDOCK: Why doesn't someone hold up a before and after package. Whether we enhance the taste appeal or the product dramatically, and --
ANNOUNCER: The Four-Minute Meal is about to cross the Hudson River. New Jersey is its next market.
BRADDOCK: We're headed to, probably, two expansion markets. In the short-term, we're out raising money for that to demonstrate to people we can do this not just in New York.
UNIDENTIFIED MALE: So, you'll notice that editorial content at the top is now abbreviated.
ANNOUNCER: On the shelves and online, Richard knows the new market requires a fresh push. For that, he's counting on his team to make the message digestible to new customers.
UNIDENTIFIED MALE: I did a storyboard for my storyboard, so --
ANNOUNCER: A new online video of the product is in the works by one of his team members.
UNIDENTIFIED MALE: It's a 60-second video. I'll just walk you through the script. "But no wait and no waiter. Four-Minute Meals made fresh daily exclusively at Fresh Direct."
BRADDOCK: Definitely get you a super-duper promotion, so -- yes, it's good.
ANNOUNCER: for Richard, getting the team to think about expansion is his top priority.
BRADDOCK: When you ask your people to think every day about how to make the business better, you create a mindset that says, in fact, I can make it better. And then you, through the process of them seeing that the things they try actually work on a short-term basis, you create a lot of confidence.
(END VIDEOTAPE)
FOSTER: Well, "The Boss" series continues. Right now, though, we're going to find out what the weather's like, because people are traveling via New York will be very concerned about things. Jill Brown is monitoring things for us from the Weather Center. Hi, Jill.
JILL BROWN, AMS METEOROLOGIST: Hi, Max. I just couldn't help but thinking about this, people who, it's so stressful this time of year to be with your family for a few days. And then, to get a few more days out of it because of the weather might not be the best thing.
Big, big travel week and, of course, we continue to get the snow here. Also reporting snow and 45-kilometer-per-hour winds, so still kind of getting clocked here. But looks like Christmas blizzard 2010 is winding down for the US and will still be moving in across Nova Scotia and New Brunswick with some of those very strong winds and very heavy snow over the next several hours to come.
Take a look at some of the snow totals that we've had reported. Up to two feet, 73 -- more than 73 centimeters of snow. That is a lot of snow in about 24 hours time. And, in some spots, perhaps even a little bit more.
This is a classic nor'easter. You get that low coming up the coast, it brings in the cold air and, of course, plenty of moisture from the Atlantic. That combination produces the heavy precipitation and up to 70 centimeters of snow. But you get those strong winds as well, and that reduces visibility.
And, of course, keep in mind, every time you start clearing the road, not only is it falling, but more snow is blowing back over it. So, that's why we've had that tremendous problems at the airports and on the roads.
Even as that low moves out, the fairly strong winds will continue, perhaps for another 24 hours. Actually, all the way down to the southeast, still very blustery today, even though that storm is long gone from the southeast. So, we'll continue to watch it in the northeastern US and into Canada.
All right. To Europe we go, where we still have a little bit of snow, but now it's changing over to rain. This is going to be a warm front, actually, that comes through. A cold front, but with warmer -- warm enough air that will keep it mainly rain. So, I think we'll say good-bye to the big snows that we've had.
And we've been talking so much about below-average temperatures, it's nice to see London back on track. And looks like Wednesday, Thursday, should be dry, although Tuesday, still some rain showers.
Bigger picture, takes us south here into France. You can see, again, maybe a little bit of a mixture, but most of the snow, now, is going to be in the eastern part of the continent, with this low heading north. And we could be seeing more than ten centimeters or so of snow in places like Moscow.
So, winter lives on here. Max, back to you.
FOSTER: Absolutely. Jill, thank you so much. After the break, we'll check the US and Asian markets. Your watching QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
FOSTER: Time for a check of Wall Street. It's been a very chilly day. In fact, most traders haven't been able to get to work, as we understand it. Let's see how the doing is -- the Dow is doing right now. On that very thin very trade, it's down 0.1 percent.
So, extremely quiet. It's the blizzards, really, in New York, which has stopped people from getting into work largely. Cisco Systems one of the better performers, though, up more than two percent on a quiet day.
In Asia, most of the major markets finished lower, despite gains earlier in the session. Shanghai's main index was the biggest loser as investors reacted to Saturday's interest rate increase. China's Central Bank raised borrowing costs by a quarter of one percent in an effort to ease inflation. It came as something of a surprise. Most analysts weren't expecting it to happen until early next year.
Markets in Hong Kong and Australia closed for public holidays.
That is QUEST MEANS BUSINESS, thank you for watching. I'm Max Foster in London. "World One" starts right now.
END
