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Quest Means Business
New Report on Toyota Accelerator Problems Published; China Raises Interest Rates
Aired February 08, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Mechanical not electrical. The U.S. report into Toyota's accelerator problems, it's just been published.
A big-time auction: Picasso's painting of his lover is on sale within this hour.
And a woman place is, apparently not in the boardroom. Why Deutsche Bank is at the center of the gender debate.
I'm Richard Quest. We have an hour together, and I mean business.
Good evening to you.
No fault with Toyota's electronics. It was 10 months in the making and with the help from NASA scientists the U.S. government is now giving its verdict on what made some Toyota cars speed out of control. The pictures you are now looking at are of a press conference about to begin, in the United States, in Washington. Those-that report which has come out, it took 10 months to put together. But it outlines, in great detail, the sort of reasons that might have caused some Toyota vehicles to go out of control.
And the gist of it is really this, that there is nothing fundamentally wrong with the electronics in the Toyota vehicles. This will be seen as a rousing, if you like, endorsement to some extent for Toyota.
Let me remind you of what the issue was all about, while we wait for that news conference to get underway. It was, of course, concerning the runaway cars. Now apparently, over many years, thousands of people had complained over Toyota cars, which allegedly had suddenly speeded up. There were several dozen cases where there were fatalities involved
Throughout all of this, Toyota said that there was nothing inherently wrong with the electronics and the electronic systems on the vehicles that caused them to malfunction. And more often than not they blamed driver error, break-the mats in the driver's side, and the like. It didn't really matter. By the time the time the rabbit was out of the gate, there was a massive safety recall underway; 8 million Toyota vehicles were recalled. Toyota redesigned the floor mat obstruction area. It is believed to have cost Toyota $50 million just in fines alone, let alone for any compensations, now, Toyota's full year, fiscal year, $5.98 billion. Because has been really interesting is that Toyota has made a remarkably fast recovery.
Back earlier when we were talking about this recall and all these problems we obviously thought, you know, Toyota down and out, and this was going to be one of the great crisis of brand management. But as this number shows, Toyota has managed to come back quite sharply, from that, and indeed put a lot of it to rest.
Kyung Lah is staying up extremely late tonight, in Tokyo.
Middle of the night for you, Kyung, but we need to just put into perspective, if this report says no electrical, but mechanical problems, is that vindication for Toyota?
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: It is absolutely a victory for Toyota. Because Toyota, all along has said, hey, we know that there is a problem with our cars, but it has absolutely nothing to do with the electronic throttle. What Toyota is saying, as you say, the floor mats, and a mechanical problem with the break leading to that sticky gas pedal problem. Toyota saying is what they did was they inserted a small metal part, an adjustment, so that the break would no longer stick-the gas pedal would no longer stick.
So the issue that Toyota said, is it was all mechanical. So, if at this point, NHTSA has come out and said we have done this exhaustive study, we have bombarded these vehicles with full access of an electronic coach (ph) from Toyota, to look at all this, these vehicles. Then perhaps, Toyota was not being truthful to consumers. But if they find that it was all mechanical, as Toyota has said all along, then it absolutely is a vindication.
And let's remember what is exactly at stake here. For a company that has had to recall 8 to 10 million vehicles, worldwide, where something as simple as your brake, or your gas, on the car, simply fails, then that is really turning your back on the safety of the consumers. So, it is their word at stake, and it is incredibly important. That is part of the reason why we're staying up so late in the middle of the night here. -
QUEST: OK, so hang on, hang on.
LAH: Because it is incredibly important to the world's automaker, but also to Japan's economy.
QUEST: Yes, but hang on, hang on. All right. So electronics are the future. And part of electronics within the vehicle, Toyota, if you like, get a gold star in that sense. But to the people who actually-whose cars ran amuck, is there much difference whether it was mechanical or electrical?
LAH: Absolutely not. Certainly, if the car fails in some way, something as simple as you cannot control the speed of the car, that the gas pedal sticks, well, then yes, there is a fundamental problem. And the question of quality, the brand that Toyota stands behind, that it has been known for decades to its worldwide customers. It has absolutely been damaged. By some estimates analysts say that Toyota's brand has been damaged by some $25 billion just on brand damage. That is absolutely and estimate, Richard, but you have got to look at what is the long-term damage. We talked about those earnings reports just a short time ago, Richard. Yes, the year hasn't been as bad for Toyota as many people had feared here in Japan.
QUEST: All right.
LAH: But the question will be what will happen in the year, and the year after that?
QUEST: Kyung, I need you to stay exactly where you are, middle of the night, in Tokyo. We go to New York now where it is the middle of the afternoon. And Deborah Feyerick is in New York.
Deborah, look, you heard Kyung Lah, talking there. Vindication for Toyota's position on the electronics front, but the critics of Toyota certainly will not let this one lie.
DEBORAH FEYERICK, CNN CORRESPONDENT: Oh, the critics will definitely not let this lie. As a matter of fact, there are a lot of class action lawsuits, hundreds of people who are part of them, who are convinced without a doubt that in fact it is the electronic throttle control system. And you have to think that this system that Toyota put in place in 2001, their entire fleet is based on the construction, this sort of-the gas pedal is not mechanically connected to the engine.
QUEST: Right. OK.
FEYERICK: It is all done by electronic sensors.
QUEST: But this report, it has gotten NASA, it has got-
FEYERICK: Yes. So basically--
QUEST: the DOT, Uncle Tom Cobbley, (ph) and all, Blue Ribbon Commission, I mean, this puts an end to that debate!
FEYERICK: Well, it does put an end to the debate, but a lot of people, just from witness accounts, for example, from descriptions of how people were trying to control the car, that seemed to be surging wildly, without any ability to stop the vehicle.
We went down to ground zero where this California Highway Patrol officer and his family, they all died a dramatic 911 call where they say they cannot turn off the car. And this was a seasoned officer, his friends say if anybody knew how to control a runaway vehicle, it would have been this particular officer. So there is still a lot of doubt.
So, yes, they have now said, all our studies, we have bombarded it with electro magnetic radiation, that means there was no interference from a tower, from something else like that. And we believe-we are confident that Toyota's explanation, that it was an oversized floor mat, or that it was a sticky accelerator pedal. They say we believe that is what caused this. Not some default, not some flaw in the electronic control. And that is what NASA was looking at. And they had unprecedented access to all of Toyota's computer code on this. So, it is a big deal.
QUEST: Coming back to you, finally, to wrap up our discussion. They will be pleased. How will it played out in the press in Tokyo today or tomorrow?
LAH: It will play out that Akio Toyoda was saying exactly what he pledged in the beginning, to be very truthful to consumers. The questions is, as Deborah points out, are those consumers listening. We really just don't know. If you think about major impacts to companies that have happened over the years, people remember the scandal. Do they remember the vindication? And that is really going to be the question here. How important is this report going to be? How loud will it be heard among all those future Toyota customers?
QUEST: Right.
LAH: The hope certainly, among the company here, is that they are hoping they will be listening very, very carefully.
QUEST: Kyung Lah in Tokyo for us tonight. Many thanks indeed.
And while we've been talking, of course, back in Washington, we'll just have quick look, I'm not sure that that actual press conference has even kicked off yet. We'll keep an eye on it, in the hour ahead as indeed- no, as you can see the podium is still empty.
But another event that we are keeping an eye on is right here, up the street from where I am, in London. This a picture from Sotheby's, the auction house, where it is a web picture. It is coming. When we come back we will update you on how the very large pictures are going for some very sizable sums. QUEST MEANS BUSINESS.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: Returning to a press conference that is now taking place in Washington. We are hearing what U.S. investigators think caused cars to accelerate out of control, in some cases with fatal results. We are expecting to hear more on, of course, that in just a moment.
The other story, the other story, that we are following for you at this hour, is the Sotheby's auction, that is taking place. There are currently-this is fascinating. We're going to follow this throughout the course of the program. They are on Lot 5 at the moment; which is a Paul Signac painting. They are up to 2 million pounds, so they are half way on that one.
The most expensive painting so far tonight, that has been sold, Lyonel Feininger's picture sold for 2.8 million pounds. And that doesn't-now, they've just gone on to Lot 6. Lot 8 is the big one that we are looking forward to watching, as we move on.
Now, the big talking point, on the floor of the exchanges, of course, has been China, which has been raising interest rates again; this time by a quarter of 1 percent, to try to reduce inflation. It is a recurring theme for emerging economies. Indonesia, for example, which raised rates last Friday. Brazil which raised rates by half a percentage point last month. Then there is Sweden, all these countries, of course, have been raising rates, which has raised rates four times.
Even developed economies, like Australia, are getting in on the act. They were one of the earliest ones, Australia, over here, raised rates. Cambria, unexpectedly raise rates November. So you get an idea of economies that are growing very fast, like Brazil, China, Indonesia, and Australia. And those countries that are relatively secure within their economy, such as Sweden.
Rising prices could derail the Chinese success story. CNN's Asia Business Editor Eunice Yoon explains why this is such a big decision for China's economy.
(BEGIN VIDEOTAPE)
EUNICE YOON, CNN ASIA BUSINESS EDITOR: China's interest rate hike was widely expected, and the 25 basis points hike is meant to control inflation. And it is part of a broader government campaign to try to keep prices manageable for the people here.
Consumer prices have been on the rise, especially when it comes to food. And you could feel it in the stores.
TAO WANG, CHINA ECONOMIST, UBS: For the average consumer, people will feel that inflation is worse, because you go buy food everyday. And food inflation is higher than 10 percent.
YOON: The authorities want to prevent any discontent over rising food prices so most economists believe that this latest interest rate hike is a way for the government to telecast to its people that it is on top of the inflation problem. Eunice Yoon, CNN, Beijing.
(END VIDEOTAPE)
QUEST: Straight away to Sotheby's. Lot 8 is not under auction. It is "La Lecture" by Pablo Picasso. And the auction is starting. They are expecting-this is going to be the big one tonight.
UNIDENTIFIED MALE: Showing here behind me. And we start the bidding at 9 million pounds for this, 9 million pound, at 9 million, 9 million-10 million, 10 million, 10,500,000, 11 million, I have 11 million pounds now. At 11 million pounds, 12 million pounds, 12 million pounds now, with Platineau (ph), do you want to bid again? 12 million pounds, do you want to bid? 12.5 million, I have, at 12.5 million, against your, at 12.5 million. 12.5 million? 13 million.
QUEST: Just to remind you that the estimate is between 12 million pounds and 18 million pounds. So the are at 13.5 million at the moment. They are just at the low end of the estimate for this very famous picture by Picasso, of his mistress. One of a series that he did. Now this is believed to be one of the most important of that series, "La Lecture".
UNIDENTIFIED MALE: Yes, 14,500,000. 14,500,000? 15 million, 15 million pounds.
QUEST: 15 million, and don't forget, of course, there is still a buyer's premium to be paid on this. 15 million, about $23 million.
UNIDENTIFIED MALE: You're sure? You want to ask everybody else? 15 million. 15.5, 15 million, 5. 15,500,000? Say 16? 16 million pounds now, 16 million pounds, 16,500,000. New place, 16.5, it is against you both. And it is 16,500,000.
QUEST: So the painting is at 16 million.
UNIDENTIFIED MALE: 16,500,000, it is 17 million pounds, now. 17 million pounds. 17,500,000, 17 million, 5.
QUEST: They are now at the top end of the range, we're going to leave the Sotheby's auction.
UNIDENTIFIED MALE: 18 million pounds.
QUEST: 18 million, so they are now above the estimate. 18 million pounds, that is $27 million, give or take, between you and me.
UNIDENTIFIED MALE: 18,500,000.
QUEST: I think it might be about to be sold. But we are going to return to the Toyota press conference taking place in Washington, where-as you can see it is an extremely busy hour-the U.S. investigators are now saying what they believe caused the Toyotas to accelerate out of control. Have a listen.
(BEGIN LIVE FEED, IN PROGRESS)
RAY LAHOOD, U.S. TRANSPORTATION SECRETARY: Safety organization was right all along. As we stated last year, there are only two real-world causes of high speed, unintended acceleration in Toyotas. First, some Toyota floor mats entrapped driver's gas pedal while their vehicles were in motion. Second, so-called sticky pedals made some Toyota acceleration too slow to release.
As a consequence, Toyota has issued recalls and paid for repairs on nearly 8 million cars or trucks. And NHTSA has level record-breaking civil penalties on the company because it failed to respond to these critical safety concerns in a sufficient-sufficiently timely manner.
Our conclusion that Toyota's problems were mechanical-our conclusion is this: Toyota's problems were mechanical not electrical. And that comes after one of the most exhaustive, thorough and intensive research efforts ever taken. NHTSA's best and brightest engineers, our nation's leading electronics specialists, men and women who work with the space program, rigorously examined nine vehicles, in which consumers reported unintended acceleration.
They poured over more than 280,000 lines of software codes looking for potential flaws that could initiate an unintended acceleration incident. They bombarded vehicles with electromagnetic radiation to see whether it could make electronic systems cause the car-
(END LIVE FEED, IN PROGRESS)
QUEST: That is the Transportation Secretary of the United States. The press conference is going to go on for a very long period of time. But we have heard the gist. Mechanical, not electrical, the acceleration issues were because of sticky pedals and driver side floor mats.
Kyung Lah is in Tokyo still, assuming you are still there and still awake. It is, what? We're coming up on half past 2:00, I think, in the morning, for you. Maybe even later. They will be-I mean, there is the vindication, isn't it? They have paid the fines, but they have got off on the really big issue.
LAH: Absolutely. Yes, this is music to Toyota's ears. Because this is exactly what Toyota has been saying throughout all of this. That it is mechanical. That all those suspicions that it might be something to do with the electronics, with the throttle control. That that was suspicions raised by lawyers and by speculators in the media. That it was simply what Toyota said, all along. The question, though, will be what is the lingering effect of all this. Are those consumers, those consumers who had to have their vehicles hauled into dealerships and have these repairs done, have the recall take place in multiple countries.
The question will be, will those consumers forgive Toyota? Will they look at the deal on the showroom and continue to buy the car that was supposed to be bulletproof when it came to quality? So, the lingering effect of this is still yet to be seen. But as far as today, as far as this report-had it gone the other way, Richard, it would have been extraordinarily damaging to Toyota's reputation, yet again. So, what Toyota has to do now is just try to keep its cars on the road. Keep them safe and avoid any more recalls.
And we should point out, Richard, just last month, 1.7 Toyota vehicles were recalled for a different factor. So, certainly this company has got to make sure that they simply avoid those problems.
QUEST: Kyung Lah, many thanks, indeed. I don't know, since you were broadcasting, I suspect you where with me, you were not the bidder who came up with the best part of 22.5 million pounds, a mere $30, $34, $35 million for the Picasso. Kyung Lah is in Tokyo. If she did, if she was the purchaser of that, she has kept very quiet about her hidden millions.
That picture, "La Lecture", which was being sold. We've got a picture of it, that we can show you. That is the picture that we've been talking about, at Sotheby's. It was by Picasso, it was Lot 8. It was actually sold for 22.5 million pounds, that is what? About $35 million or so, maybe a bit more. But, plus 10 percent buyer's commission, you are looking at the best part of $40 million for that particular picture. We'll be back with more in just a moment.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: I promised you it was going to be a busy hour, and that is exactly what it is. Other news that happened in New York today: Four people affiliated with a hedge fund are now facing U.S. federal charges of insider trading. The prosecutors made the announcement a few hours ago in New York. It is all part of an investigation into alleged improper information sharing across Wall Street. CNN's Maggie Lake is in New York.
Maggie, does this tie in with any existing investigations, and why do we care particularly about this particular case?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, you know, in the wake of the financial crisis, Richard, everyone said we're going to do better. We're going to crack down. And this is part of that effort, really getting serious with enforcement. This is part of an ongoing investigation. We have been talking about this expert network and consultants. The focus had been on the people in that area. Now it has shifted to employees of hedge funds that were profiting from that information.
As you said, four men arrested, former hedge fund employees. Two have actually plead guilty. Authorities say they used these networks to gain access to employees, company employees, that then provided them with inside information.
The attorney leading the charge, you see there, Preet Bharara says, this was aimed at regaining the public trust.
(BEGIN VIDEO CLIP)
PREET BHARARA, U.S. ATTORNEY: The complaint unsealed today is a sad chronicle, not only of criminal conduct, but also its brazen cover up. It is precisely the type of pervasive and pernicious activity that causes average people to think that they would be better off pulling their money out of Wall Street and stuffing it in a mattress. As alleged the scheme touched half a dozen hedge funds, affected at least that many publicly traded companies, and yielded millions of dollars in illicit profits.
(END VIDEO CLIP)
LAKE: Now, Richard, this isn't any sort of gray area we are talking about. Preet, in the presser said this is hardcore, stock after stock, inside trading, and interestingly, this is a cooperative effort between the SEC, the DOJ, the FBI, and the FBI said it ain't over. The investigation continues, and there will be more arrests.
QUEST: More arrests, more prosecutions, and you'll be there to cover it. Maggie Lake, who is in New York for us tonight, with that part of the story.
Now, in 30 minutes from now, 33 minutes, if you want to pedantic. We'll have a view from Jordan on developments in Egypt and the Middle East as a whole. Queen Noor, the widow of King Hussein, will be talking to our own Piers Morgan.
(BEGIN VIDEO CLIP)
QUEEN NOOR OF JORDAN: I think what is happening in Egypt, Tunisia, today, and perhaps elsewhere, can-these can be models for peaceful transition, to more open, more accountable, governance. And toward societies that offer more opportunities, social, economic, and political, for a cross-section of their people.
(END VIDEO CLIP)
QUEST: Her Majesty Queen Noor will be talking to Piers Morgan, on "PIERS MORGAN TONIGHT", which of course, follows, QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, of course, the news always comes first. Which is why into remind you of the situation in Egypt.
In Cairo tonight, the Google executive who was detained for 10 days before being released on Monday is becoming a louder voice in the crisis.
(VIDEO CLIP)
QUEST: Today, Wael Ghonim rallied the largest crowd in Cairo's Tahrir Square. He led them in a chant of, "This country is our country!" After a few days of smaller protests, he seems to be at least partly responsible for this re-energized crowd.
An intensive 10 month investigation into possible causes of sudden acceleration in Toyota cars has found no fault with the company's electronic throttle controls. In a press conference, the Department -- the U.S. Transportation Department has released its report a short time ago, despite recalling nearly eight million cars for sticky pedals and other problems. Toyota has always insisted the cars are safe. Toyota is currently facing hundreds of lawsuits over alleged unintended speeding ups.
Chechen rebel leader, Doku Umarov, is claiming responsibility for a deadly attack on Moscow's airport that left 36 people dead. In a video message posted on a Web site linked to Chechen rebels, Umarov warned that there are more attacks in the works. The Russian authorities have not publicly identified the suicide bomber they say set off the blast last month.
We return to Cairo now, where Fred Pleitgen, our correspondent, is in Cairo for us this -- this evening.
We will be hearing -- Fred, are you with me?
FREDERIK PLEITGEN, CNN CORRESPONDENT: I certainly am, Richard.
Can you hear me?
QUEST: I can hear you loud and clear, Fred.
And the thing I need to know from you is this -- Fred, I've heard that the protests and the marches and what's happening in the square, some of the largest groups that we've seen since this began.
What's brought them out tonight?
PLEITGEN: Well, Richard, you're absolutely right, it is one of the largest showings that we've seen, really, since these protests begin. And I think it's a mix of things that brought people out. First of all, there were messages on Facebook and Twitter, again, urging people to come here to Tahrir Square and to show their support.
And then, of course, there was the situation with this Google executive, Wael Ghonim, who was released by Egyptian security forces yesterday after having been detained for 11 to 12 days, in which he says he was blindfolded t6 entire time.
Now, he joined the protesters on Tahrir Square today and gave them support. And certainly, that seems to have galvanized and mesmerized this crowd, as many, many people showed up here, especially since last night. He gave a very, very emotional (AUDIO GAP) where he praised the protesters here, where he said that this was not the time for failure for Egypt. He broke down crying several times in that interview.
But it really seems as though, Richard, this movement has a lot of strength.
And if you look at Tahrir Square right now, Richard, you can see that while the crowds are sort of starting to go home -- it's 9:30 p.m. right now -- it still is substantially a lot more people than we saw at this same time of night yesterday -- Richard.
QUEST: All right, we thank you, Fred Pleitgen, who's in Cairo tonight with that update.
You're watching CNN, QUEST MEANS BUSINESS.
And Facebook is updating its location and getting a brand new pad. It's expected, Facebook, to announce in a few hours, that it's moving to a new office complex in California. It apparently outgrew its current headquarters in Palo Alto. Of course, Silicon Valley has had a renewed energy and impetus, whether it be the iPad or social media. Silicon Valley is very much back in vogue.
Dan Simon joins us from the place where Facebook is set to call home - - and, Dan, what do we make of this decision, because we've concentrated so much on Facebook and its -- its money raising abilities, but now it's really down to business.
DAN SIMON, CNN CORRESPONDENT: Well, it's really symbolic, isn't it, Richard?
I mean, obviously they've now joined the elite here in Silicon Valley, one of the most elite companies in the United States, quite frankly. And what Facebook just announced -- and they -- they made this announcement just a little while ago -- they're taking over nearly 80 acres of property here in Menlo Park, California, in the heart of Silicon Valley. They're adding about 1,000 workers over the next 12 months. And, really, when you talk to people who follow the technology industry, they're saying this is a broader trend. You just heard Google announce last week they're adding 6,000 more workers to its workforce.
I had a chance to talk with Michael Copeland. He's a senior writer at "Fortune" magazine. And he says, really, you know, when you take a look at -- at the way things are structured right now, you're seeing employment -- the numbers increase in -- in three sectors. You're seeing it in social networking in the case of Facebook and Twitter. Obviously, those two companies leading the pack there.
You're seeing it in mobile -- all of the Smartphone devices that you're seeing coming online and all the -- the apps associate with the Smartphones. Obviously, opportunities for growth there.
And you're also seeing it, Richard, in what the -- what they call cloud computing. Any time you stream data over the Internet, that's the cloud. If you've streamed a -- a movie, for example, from -- from Netflix.
This is what Michael Copeland had to say about the prospects for more workers here in Silicon Valley.
(BEGIN VIDEO CLIP)
MICHAEL COPELAND, SENIOR WRITER, "FORTUNE": I think it is on fire if you're in the right part of the industry. So, clearly, social networking like Facebook, Google, the Internet cloud, mobile, those things are all going like gangbusters. I mean if you're a mobile app developer in Silicon Valley, you can, you know, pretty much write your own ticket.
(END VIDEO CLIP)
SIMON: So in 2010, you saw a net gain of a little more than 8,000 workers here in Silicon Valley. Those numbers obviously expected to increase next year, as well.
But -- but back to Facebook for a second, obviously, you can't really sort of understate the impact of acquiring about 80 acres of property, nine buildings. Obviously, that's going to create a -- a whole infrastructure, bringing in, you know, mechanics and -- and construction workers to get this thing going.
And, obviously, you're seeing, again, Richard, this broader trend in those three sectors of -- of social -- social networking, of mobile and cloud computing...
QUEST: All right, Dan...
SIMON: -- things really looking up here in Silicon Valley.
QUEST: Dan Simon joining us from Silicon Valley tonight.
Now, that is one place in the world where they really wouldn't have too much difficulty in purchasing some of the pictures that we're now going to show you from the Sotheby's auction. In fact, many of the pictures -- many of the big prices paid at auction have been coming -- have been paid by Internet gazillionaires. That Sotheby's auction is still going on at the moment.
And Jim Boulden is here -- how much would that -- how -- how...
JIM BOULDEN, CNN CORRESPONDENT: Who needs the original when you can just have it here on an LCD screen, right?
Well...
QUEST: Is that upside down?
It's going all around.
BOULDEN: No, it's not. Yes, it did finally go for 22.5 million pounds, something around $36 million. And we have a little bit of that. You can see, here's from Sotheby's at the time that it was sold, just a few moments ago.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: are you finished?
UNIDENTIFIED MALE: At 22,500,000 pounds then.
Anybody else?
At 22,500,000 pounds. I'm going to sell it. Last chance. Fair warning. And selling. Sold. Congratulations.
Thank you very much.
(END VIDEO CLIP)
BOULDEN: So that one -- that auction, actually, Richard, went a bit longer than the other ones. We saw a couple of them go pretty quickly. But it got very slow and very intense when it got around the 18 million pound mark...
QUEST: Which, of course, the -- the upper limits of the...
BOULDEN: Exactly. Yes.
QUEST: Have you added on the buyer's premium...
BOULDEN: Well...
QUEST: -- because you -- imagine you've got to pay a premium, which I was just looking online at Sotheby's...
BOULDEN: Yes.
QUEST: -- over half a million. It's 12 percent.
BOULDEN: Yes. Some of them are 12.5, some of them are 15 percent, a little bird in the audience texted me about five minutes ago and said they were listening to a very high placed source in the audience, who thinks that probably an extra $4 million, on top of the $36 million.
So probably the person who got this is paying around $40 million. So it's nowhere near the Picasso record of $106 million last year, but still very nice.
The interesting thing is that here at Sotheby's and tomorrow night at -- at Christie's...
QUEST: Right.
BOULDEN: -- a lot of these Impressionist arts are going to go on sale. And it's going to really set the tone for 2011. Christie's had a record year last year. But we're not sure whether or not -- and we saw -- I saw three, so far, go unsold, including other Picassos...
QUEST: Right.
BOULDEN: -- in this sale alone.
QUEST: All right, a quick -- a final question.
BOULDEN: Yes?
QUEST: And it's Amelia's birthday.
That one, that one or that one?
BOULDEN: I don't like that kind of stuff. That's nice.
QUEST: Oh, you're so...
BOULDEN: I like landscapes.
QUEST: You're -- landscapes...
BOULDEN: I do.
QUEST: The Monet.
BOULDEN: It looks very nice.
QUEST: You're so traditional.
BOULDEN: I know.
QUEST: All right.
A problem is a chance for you to do your best. We'll look at some of the chief execs who are putting Duke Ellington's words to work for their businesses. It's part of tonight's edition of The Boss.
Good evening to you.
(COMMERCIAL BREAK)
QUEST: It really is very simple -- take three chief execs, three multi-million dollar companies, three continents and throw in a camera crew and, of course, you have our series, The Boss.
Tonight on this program, we are going to feature Richard Braddock, who you will be aware in New York, and has some sizeable problems in getting his product to market; and Sarah Curran, who is making some fundamental changes to her company, My-Wardrobe.com.
(BEGIN VIDEOTAPE)
UNIDENTIFIED CORRESPONDENT (voice-over): Previously on The Boss, Richard Braddock gave executives a crash course on how he makes money off the Internet.
RICHARD BRADDOCK, CEO, FRESHDIRECT: What I write down in the speech is -- is my precious thinking.
UNIDENTIFIED CORRESPONDENT: And in London, Sarah Curran shared her vision for My-Wardrobe with her executive board.
SARAH CURRAN, FOUNDER AND CEO, MY-WARDROBE.COM: So you need to sell business, sell the story, get them as excited.
What are your views seeing the logos?
UNIDENTIFIED FEMALE: See, I like the way...
UNIDENTIFIED CORRESPONDENT: It's February and it's a crucial time for Sarah Curran, as she meets her creative and art directors.
CURRAN: We need to decide which logo style we're going to aim for.
UNIDENTIFIED CORRESPONDENT: In just a few weeks, they'll be relaunching My-Wardrobe.com and presenting it to the world.
CURRAN: The all in one is already a no -- a no-go.
What do you think?
UNIDENTIFIED CORRESPONDENT: For Sarah, this is about taking it up a notch, charting a new direction for My-Wardrobe.
CURRAN: It kind of gets lost there though, doesn't it, mostly, because your eyes are automatically here.
Innovation, for us, is so important. And the frustration that we've had previously is that we had amazing ideas, but it's joined a cue of a road map. And so there have been frustrations in really being able to sort of be a leader in innovation with them online with the resources that we've had.
UNIDENTIFIED CORRESPONDENT: As part of the relaunch, Sarah is introducing a new logo. It's a risky move.
UNIDENTIFIED FEMALE: What I hope is...
CURRAN: I mean it looks as if it will work for women, but for men's so her point was is that too girly?
UNIDENTIFIED CORRESPONDENT: The logo may appeal to women, but Sarah knows it could also put off her male customers.
CURRAN: It is going to be a problem on the men's. I think it's way - - that's too feminine.
UNIDENTIFIED CORRESPONDENT: In the end, it's Sarah's decision. She's the chief executive.
CURRAN: Sure, I do love the hand written, but it's not going to work with men. That's the problem. And I do think it is -- a lot of it is driven by guts.
UNIDENTIFIED CORRESPONDENT: Instinct clearly matters. But Sarah knows she also has to listen to her intellect.
CURRAN: Well, it's not about necessarily a studio polished environment and heavily over styled red carpet sort of styling. It is, actually, you know, the everyday luxury piece for everyday women and everyday men.
UNIDENTIFIED CORRESPONDENT: There are only a few weeks until the big launch and already the tension is rising.
CURRAN: I don't think we've got it yet. I don't think we've got it.
UNIDENTIFIED CORRESPONDENT: For Sarah, there's only one thing to do - - pile the pressure on herself and her team.
It's bitterly cold and New York City is suffering from one of its worst winters in years. Relentless snowstorms, freezing roads and several feet of snow have made delivering goods almost impossible for FreshDirect. For its chairman, Richard Braddock, these are trying times.
BRADDOCK: Hi there, Frank.
How are you?
UNIDENTIFIED CORRESPONDENT: They're a test of his leadership.
BRADDOCK: We've had an unbelievable, you know, snow-related weather, which is hard for us to deal with, obviously. And we've been closed a couple of days, effectively.
UNIDENTIFIED CORRESPONDENT: Today, he wants all hands on deck. He'll need them if FreshDirect is to deliver the goods to customers on time.
BRADDOCK: The way we run the business, we start everyday, no matter where anyone is, with a -- a review of where we are and what we're doing about it. And so we were all intimately involved with Adrian, our transportation guy, efforts to basically cope with these -- these incredible challenges.
UNIDENTIFIED CORRESPONDENT: For Richard, much of the company's success this winter is down to the people working in this room. This is the heart of FreshDirect's operations. It's from here they track every FreshDirect truck on the road, steering them around traffic and away from unplowed streets to get the food delivered on time.
UNIDENTIFIED MALE: And 61 are delivered. Copy.
BRADDOCK: It's a relatively sophisticated system, but there's nothing off the shelf about it. It's -- it's built to our needs, to satisfy our customers more than we were able to do before.
UNIDENTIFIED MALE: So far, we've delivered 1,900 orders. We're running at 99 percent on time.
UNIDENTIFIED CORRESPONDENT: There is a silver lining in this miserable weather -- Richard has discovered that out of crisis and adversity, he can make money from the snow.
BRADDOCK: We went above and beyond and we -- we really stunned some people with how much of our product we did get delivered. Customers used to leave us if they couldn't order with us for a day. Now, they stay with us and order a couple of days out. So we're -- we're getting great trends.
UNIDENTIFIED CORRESPONDENT: Next week on The Boss, only a couple of weeks to the My-Wardrobe.com relaunch and Sarah Curran is at the venue applying some final touches.
And a world away, in Hong Kong, Michael Wu and his team work around the clock. It's the Chinese new year.
(END VIDEO TAPE)
QUEST: The Boss, which, of course, is only seen here on CNN.
And next week, I'll tell you how perhaps you can join and become one of our bosses that we are following.
Fire warnings have been lifted on Western Australia. There's still some risk.
And Guillermo Arduino is at the CNN World Weather Center -- Guillermo, as I was watching these reports, I mean, you know, flood, fire and storms...
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes.
QUEST: It's almost biblical.
ARDUINO: It is. And it is the influence of La Nina, as well. So we are under the same umbrella constantly. And we'll have this until March.
Now, I have to report, as you said at the beginning of this segment, that things are looking better for Perth because it continues to be dry, but at least -- for now, we see better conditions. The -- the warnings have been lifted. A very small risk of other fires, but at least we don't have the significant winds and the weather that is conducive for this.
Why?
Because the winds are going to continue to weaken right now. They will continue to weaken. The high pressure moves away. And even though this low stays in here, these two systems are far enough so as not to generate intense winds.
The best piece of news that it can deliver, things are better in Perth.
Now, let's move to Europe. Some areas are much better, too. I think that it's going to remain extremely windy in Germany, in the north, in Denmark. Look at Copenhagen. Britain, much better. I was checking out the last time, seven kilometers per hour winds. Here they are in Heathrow. Seven in Paris. But look, as we move to Copenhagen here, this is wind -- wind country. We have a lot of wind farms here in Schleswig-Holstein, I mean in Denmark. So the winds are welcome, in this case.
In general, it's very stable. I don't see significant precipitation anywhere. Some rain showers in Britain. This is the pattern overall. So you see we are going to get a new system in the north, as usual, but the high pressure is going to provide nice weather conditions into Italy. And the cold air remains all the way into the east. Look at France, looking fine. Look at Northern Spain.
Now, that is bringing this thaw that we are expecting. Look at where the average low should be, Richard. I'm happy to report that Friday is going to be OK. It's not going to be cold in London. The same for Brussels. It should be freezing point. We're talking about eight degrees on Friday. So there is a slight warm up. Paris, the same thing -- tomorrow and Thursday the best days for people walking around Paris, I promise you that. Then, some more clouds -- Richard.
QUEST: On this weekend, I'm filming in Rome. So before the week is out...
ARDUINO: Beautiful.
QUEST: What, the city or the weather?
ARDUINO: No, Rome.
QUEST: No, Rome is more about -- yes, quite. Get some new tires (INAUDIBLE).
ARDUINO: OK.
QUEST: Yes, I'll get some new ties...
ARDUINO: OK.
QUEST: -- for myself.
Well, look, you've got me into deep water here.
ARDUINO: Yes (INAUDIBLE).
QUEST: Guillermo, many thanks, indeed.
ARDUINO: Thank you.
QUEST: Yes. A pleasure. Any time.
Don't call us.
When we come back in a moment, after what's been an extremely busy show, a gentleman of the old school -- that's what Deutsche Bank is saying in defense of its chief's controversial comments about women in the boardroom. We're going to talk gender inequality in business in a moment.
(COMMERCIAL BREAK)
QUEST: Several prominent women in German business are angry -- that might be putting it mildly. They're actually furious, spitting feathers over comments from Deutsche Bank's chief exec, Josef Ackermann. The head of Germany's biggest bank told a press conference -- you've probably seen this story -- "Women on our board would make it prettier and more colorful."
Well, that sparked anger from some prominent women.
A Deutsche Bank spokesman defended his comments, saying he's a gentleman of the old school, which, of course, might be regarded by you as pouring petrol on the flames.
Ackermann's comments come as the debate rages over whether we should impose quotas to get more women through the boardroom door.
But if you join me in the gentleman's club of the library, you'll see. Here's a snapshot. If we take the Fortune 500 chief execs, only 3 percent of Fortune 500 are women. Now, Germany's DAX stock index, 30 of the thir - - three of the 30 have all been on the supervisory board. So only three of those companies have women on their management board -- I beg your pardon. That's amongst the DAX.
And if you highlight a global company -- take, for example, Goldman Sachs -- well, Goldman Sachs has just one woman on its board of directors, Lois Juliber. And I will refer, of course, to my own parent company, Time Warner, which has two women on the board of directors.
So let -- let's talk more about this.
I'm joined by heather Jackson, who founded the Two percent Club after discovering only 2 percent of FTSE companies in Britain are led by women.
She led the -- she launched the club so that high level women could find one another and share their knowledge.
What did you make of Ackermann's comments?
HEATHER JACKSON, FOUNDER, TWO PERCENT CLUB: Well, what I'd like to believe from Mr. Ackermann, that what he meant to say was that women would bring a more colorful and constructive debate into the boardroom, because what they don't want to do is trivialize this now, because what we have got at the moment is a serious business issue of the indirect (INAUDIBLE). Of women on boards.
QUEST: Why is that the case?
Is it just that -- is it just that women are still working their way up to senior management, director of management, in large numbers, so in the fullness of time, they'll make it to the board?
JACKSON: I think, in the fullness of time, we -- we can't actually understand whether that's going to last happen. What we need to do is make sure that the women that are coming through are completely, fully aware of the skills and the capabilities to take to that position.
QUEST: But why do you think there are more women on boards of directors and executive boards?
Because you said to me beforehand, we were -- we were chatting beforehand -- you don't believe it's sexism.
JACKSON: Absolutely not. I believe there's two elements in this. One, I think we've got to actually put a call out to women now and have them realize that never before has it been more important for women to go to the top and take their skills forward to be fielded, valued and -- and appreciated, because they can make a difference.
And, two, we need companies now to actually -- it's not about -- it's purely about meritocracy. I don't have any doubt that we need skilled women at the top but we need companies now to start explaining to those women why they need to come to the top and what a difference they're going to make.
QUEST: But, you know, I'm assuming that you're not involved -- in favor of political correctness.
JACKSON: Absolutely not. I like my men and I like -- I like, you know (INAUDIBLE).
QUEST: Right. And I'm assuming if -- if a male colleague says, "Oh, you look lovely today," you're not going to suddenly start attacking them with a -- with a -- with a pencil sharpener.
JACKSON: The day they don't will be the day I get worried.
QUEST: Right.
JACKSON: So...
QUEST: So, what's the big problem, do you think?
Why do you think that we -- that we have this disconnect in the workplace?
JACKSON: I think it's gone for too long on the fact that, you know, culture has been a large part of this. And no matter what companies do, I mean in -- in the great (INAUDIBLE) now we've got Taylor Davis (ph) bringing out his report, which will come on to the pressure. Companies have to answer to it. But, actually, we've got to change the view of women, as well. This isn't just a problem that lies with companies. It's a whole cultural thing.
QUEST: What, women think that they can't do it and particularly in that middle a -- middle -- not middle-aged, middle -- middle part of their career. They sort of drop out.
JACKSON: They actually drop out, but actually it's about confidence and self-belief and the recognition of the skills that a woman has got. And a woman has to remind herself she's worked darned hard to get those skills and actually take them as far as you can. And it's about choice.
QUEST: All right. Many thanks, indeed.
JACKSON: All right, thank you very much.
QUEST: we're going to leave it there...
JACKSON: Thank you.
QUEST: -- because I need to tell you that there is a Texas refinery - - an explosion at a gas refinery in Mont Belview in Texas that is on fire - - well, you can -- you can see these -- look at these pictures coming to us from KPRC. The Mont Belview Police Department confirmed there was an explosion at 11:45 Central European time. That was about three hours ago.
Its Enterprise Products on -- according to its Web site, Enterprise owns a state-of-the-art gasoline additive production facility. It might have been state-of-the-art once, but as you can see now, it is absolutely roaring on fire. It makes motor gasoline octane enhancement products. We don't know injuries. I can't tell you any more information than that. When I can, I will.
We'll have a Profitable Moment right after this break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment.
Now, back to that story of Ackermann and his comment.
I don't think we think he's sexist or meant any harm when he said he looked forward to women making the board prettier and more colorful.
Al-Askar (ph) said exactly that. It wasn't best practice, by any means.
No, the real disgrace is not his comments. The real disgrace is the fact that women are less than 2 percent of top directorate jobs. In Germany's case, the women on supervisory boards are often from unions or workers' councils. They're there to make up the numbers.
Very few companies come to this issue with totally clean hands. Even CNN's parent company, Time Warner, we only have two women out of 13 on the board of directors, according to the Web site. From reading your Tweets today, most of you don't want tokenism -- women for women's sake on the board.
But you do believe something is wrong. So forget prettier or more colorful, how about you and I can all agree best person for the job?
And that's QUEST MEANS BUSINESS tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable
"PIERS MORGAN TONIGHT" is just ahead.
But first, I'll have the headlines for you.
END
