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Quest Means Business
BP's Board Comes Out Fighting; Head of U.S. Air Traffic Control Unit Resigns
Aired April 14, 2011 - 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: BP's board comes out fighting as angry protestors show their fury.
Asleep on the job, the head of U.S. air traffic control unit resigns.
And after a bit of engine trouble investors in Google search for good results.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
Anger and frustration as BP faces shareholders and critics nearly a year on the Deepwater Horizon disaster in the Gulf of Mexico. It was never going to be easy. These protestors found themselves locked out of the company's annual general meeting in London. We'll have a full report on what happened in just a moment.
Inside the hall some investors were scarcely less irate. They pushed BP's bosses on the company's safety record, environmental responsibilities and financial losses. A key deal with Russia's Rosneft was due to be done today. It is not yet complete, though, it isn't dead.
Now, let's have a look at this in some more detail. Rosneft share swap, the deal is actually worth something like $16 billion, and the deadline has been extended, now, to May 16. But there is clearly a few problems. It is a vital arctic opportunity for everyone involved. The chairman of BP, Carl-Henric-Svanberg said today, that Russia is an important place for BP to be. It is a very important country, for BP.
Now, nearly one year since the crisis, that we are talking about, April the 20th, Svanberg says our response was without precedent, CEO Bob Dudley said that new safety and risk management measures need to earn back trust. They are all in place, though, he said. Svanberg said, we have to reset the company and are now doing things differently. So try to deal with all of these problems they are facing right now.
What about the future? Well, BP said the demand for energy will grow 40 percent in 20 years; 93 percent of demand will be coming from emerging markets, or the-93 percent of demand growth is from there.
Now, Bob Dudley calls it a wake up call for everyone, particularly, in the company. Now to fulfill that growing demand, BP is looking to pump oil from the Arctic, of course. And that is where Russia's Rosneft comes in. Last month investors in BP's other Russian venture, TNK-BP tried to block the deal. I asked CNN's Matthew Chance how things stand right now.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT: Well, it is not clear what is going to come out of this. But what has happened today is the deadline for the deal to be agreed between BP and the Russian state, oil monopoly Rosneft, has extended by about a month. And so that is created some wiggle room for BP to sit down again with the Russian shareholders of TNK-BP, its joint venture in Russia, and try to hammer out some kind of agreement that would either see BP buy out their 50 percent stake in TNK-BP, or bring them into the deal in some way that they were happy with, but obviously it is going to be very difficult. So far the attempts to negotiate a settlement to this have not been successful. And so it has put the deal somewhat in jeopardy, Max.
FOSTER: Uh, is another partner likely to come in, say an American oil firm, to replace BP. Is that the best option for the Russian, do you think?
CHANCE: I think it is a possibility. But I think it not the most likely scenario. I think still, investors I have spoken to, people who have been focusing on this, think that the most likely outcome on this is that some kind of deal will be reached. Remember, this isn't just about a financial, you know, agreement between a Russian oil company and BP. This issue is of a fundamental strategic importance to Russia. It wants to make sure that in the future it remains the world's biggest energy supplier, the world's biggest oil producer. To do that it needs to exploit those oil and gas resources underneath the arctic. It has identified BP as the best company to do that with. And so I think it is probably very unlikely that a few Russian shareholders and, you know, an agreement and a few court rulings are going to get in the way of the Kremlin if that is what is they want to do.
FOSTER: And these key figures that have such a large stake in the business. Do you think that they are just holding out for the highest price or do they want something more strategic here, do you think?
CHANCE: Well, I think it is a bit of both. They have said repeatedly, the Russian investor half of TNK-BP; they have said repeatedly that the business is not up for sale. But obviously it has been reported that they have been in negotiations with BP to find a price that they would agree on to buy them out. They have been talking about $25 billion, valuing the company at $50 billion. That has not been acceptable to the Russian shareholders. They want a valuation of somewhere in the region of $70 billion, which means they would have to get $35 billion for BP.
But it is not just the price that is the problem. The other problem is that these Russian billionaire oligarchs are also demanding that that money is paid in terms of share, in both Rosneft and BP. And both of those companies have decided, it seems, that they don't want these Russian billionaires to be significant shareholders in their companies. And so at the moment that is a non-starter. But, you know, now that no agreement has been reached, now that there are several more weeks of negotiations ahead of us, that kind of deal could very well be back on the table again.
(END VIDEOTAPE)
FOSTER: Well, back to London and to protests outside that meeting of BP shareholders. Residents of the Gulf of Mexico are still suffering the effects of last year's spill. As Jim reports, some people came a long way to let BP know.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT (voice over): Just days before the first anniversary of this, the BP Gulf of Mexico disaster, Louisiana fisherman Mike Roberts and shrimper Terry Kuhns joined other Gulf residents to come all the way to London in an attempt to get into BP's annual general meeting.
UNIDENTIFIED MALE: We are officially being denied access. And that comes from whose authority?
UNIDENTIFIED MALE: Under the authority of BP.
BOULDEN: The group was not successful as they aren't shareholders.
TRACY KUHNS, LOUISIANA BAYOUKEEPER: And it is sad. It really is. I mean, this is what got BP in trouble. Not listening to the people.
BOULDEN: Roberts says he's entitled to more than just the one small payment he has received from the $20 billion fund paid by BP and run by Kenneth Feinberg.
MIKE ROBERTS, LOUISIANA FISHERMAN: The Feinberg process is a farce. It is not-it doesn't work for everybody. There is no rhyme or reason to it.
BOULDEN: The fund, to date, has paid out around $3.5 billion. And it says more than half the claims submitted have now been processed. But the fund says 19,000 claims need more paperwork. It has already rejected 3,000 claims. Tracy Kuhns wants BP to pay for not just lost business, but also for lost food on the dinner table.
We save a lot of what we catch, that is what we eat. We bring it home, we feed our families with that. And we can't fish.
BOULDEN: BP said Thursday it remains committed to paying all the legitimate claims and will fulfill its responsibilities along the Gulf.
BOB DUDLEY, CEO, BP: And over 99 percent of the Gulf is now open for fishing. And government testing has consistently found Gulf seafood safe to eat.
BOULDEN: The BP board did receive sympathy from some shareholders. But also heard some big institutional shareholders were unhappy about BP's risk management systems before the spill. BP CEO Bob Dudley read out the names of the 11 men killed in the Gulf last April.
DUDLEY: Gordon Jones is one of those, from MS Swako (ph). Jason Anderson, Aaron Dale Burkene, Donald Clark, Steven Curtis.
BOULDEN: At the AGM the BP board did receive sympathy from some shareholders. But also heard how some are unhappy about BP's risk management systems before the spill.
And inside, and outside, BP also faced a small number of protestors calling for the company to stop deepwater drilling.
(On camera): Inside the meeting CEO Bob Dudley told shareholders, in fact, the company will double investment into exploration and focus on countries like Azerbaijan, Angola, Egypt, and, yes, the Gulf of Mexico. And Dudley says the company will focus on deepwater drilling. Jim Boulden, CNN, London.
(END VIDEOTAPE)
FOSTER: Well, elsewhere, Glencore, the world's biggest commodities trader has revealed a new boardroom line up, and plans for a multibillion dollar IPO. Seventy-one year old Antarctic adventurer and former Hutchinson Whampoa CEO Simon Murray has been appointed non-executive chairman of the board. Former BP boss Tony Hayward will join as a senior independent director. They will help launch the company's public listing in Hong Kong and in London. It is expected to raise as much as, wait for it, $11 billion and become a component of the FTSE 100.
Glencore's IPO announcement comes in the same week that Goldman Sachs says commodity investments are too risky. It has dropped its recommendation to buy crude, cotton, copper and platinum. It says political unrest and natural disaster could hit demand. Oil prices are looking slightly lower. This Thursday, in fact, Brent crude is currently trading a touch under $122 a barrel. Down around half a dollar on Wednesday's close. It has been a volatile 12 months for oil, with prices ranging from $70 to $126.
John Stephenson is a commodities expert and author of "The Little Book of Commodity Investing". He joins me now, live from CNN New York.
Thank you so much joining us.
First of all, Glencore, they are making a bit of a bet here as well, aren't they? If they are right, of if Goldman Sachs is right, we are at some sort of peak on commodities. This is just the time for an IPO for a commodities trader?
JOHN STEPHENSON, AUTHOR, "THE LITTLE BOOK OF COMMODITY TRADING": Well, I think that is right. I think they have done a good job, just like Goldman did a good job with their IPO, in terms of timing it at the height of the dot.com, you know, rally. And I think for Glencore, the timing is excellent. But I do believe that at least as far as Goldman's most recent call, it was a bit of a trading call. I think it is widely viewed in the industry that we might see a pull back in the price of commodities in the short-run, but overall, it is going longer. Goldman, after all has a $200 oil handle out another year or so. So, I think they are pretty bullish on commodities overall.
FOSTER: It is interesting because they are suggesting that because prices have risen so much, actually that is taking some of the demand away. Is that something you agree with?
STEPHENSON: Well, that-there is a bit of an argument, I mean, up until this point, particularly in many commodities, we were focused on the supply side. And in the oil complex, for example, we were focus on supply disruptions, lately focusing on Libya. But now there is some evidence coming out, that Americans, for example have been driving less and the effect of $3.75 per gallon gas, has kept some cars in the garage. But I think the reality is it is still a supply driven story and I think the fundamentals, longer term are very, very positive for commodities, including all the ones that Glencore trades and Glencore produces.
FOSTER: Haven't heard much today about the huge demand from China and India, for example, but that is an ongoing trend. But I guess Goldman Sachs are looking in the more medium term, rather than the long term, right?
STEPHENSON: Yes, well, I think basically what they are saying is, look, you have had a great run in copper. You have had a great run in cotton. You have had a great run in oil. Take some bets off the table. And come back, revisit this in a month or two time. And they'll go higher from there. And I think that is probably a fair call as a trading call. But longer term, you know, if you look out five to 10 years, I think this is still one sector investors want to focus on, because you have this huge demand coming from Asia, and supply is really struggling. We just heard in the, you know, before, about BP focusing on the Gulf and offshore drilling, and deep offshore. The reason is that is where the growth is going to come from. There is no other alternative and that is the supply story for very- for virtually all commodities across the board. Supply is very constrained and demand is voracious.
FOSTER: Just looking at the market dynamic. We are talking about this because it was Goldman Sachs saying it. It is still a very big player in this market, isn't it? Could that perhaps be enough to take a lot of the heat out of the market, because people will simply follow Goldman Sachs' trades?
STEPHENSON: Well, people absolutely follow Goldman Sachs' trades, and advice. And I think they are certainly a big player in it, but I think, you know, we have to look a little behind where it is coming from. And I think they have a vested interest in having you move your money from one sector to another sector. And I think also the fact remains that they are not part of the syndicate that is leading the IPO for Glencore. And I think that is, you know, in part, maybe has something to do with this. But I think, in general, Glencore is going to do very well with their IPO and commodities, in general are going to march higher from here.
FOSTER: Good stuff, thank you very much. John Stephenson, thank you for joining us, from New York. Appreciate it.
Let's have a look at the European markets now. It was all about economics, really, here. They have been on a bit of a roller coaster ride this week, of course, after rebounding from a sell off yesterday the big three are back in the red today. The worst performing index was in Athens, though, with the crisis of confidence triggering a slide of more than 2.5 percent. The cost of borrowing money grew-the cost of borrowing money grew for Greece as bond yields soared, while the cost of credit default swaps or insuring Greek bonds against default, also increased to a record high. Those are both signs that investors have little confidence in Greece's ability to pay back its debts, as things stand. Part of the reason for that are comments by Germany's finance minister Wolfgang Schaeuble. An interview-in an interview with the newspaper "Develt" (ph), he implied that Greece may have to restructure its debt if an analysis in June finds that its levels of debt are unsustainable.
Now, Google is preparing to report rising earnings later today. That is another story, in New York. With anti-trust suits and Facebook snapping at its heels, we'll look at how long its golden touch can last.
(COMMERCIAL BREAK)
FOSTER: Well, in just a few hours' time, Google will release its first quarter earnings. It marks the end of an era for Google, many are saying. New CEO Guy Paige will be steering the company in coming quarters. He took over from Eric Schmidt last month who had been at the helm for 10 years. CNN's Maggie Lake joins us now from New York.
Maggie, what is most interesting about this, today, for you?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Well, Max, if we take a look, I think we might have a stock chart, there with you on set. But, you know, Google, we are used to them having great profits. But the stock has been going down ever since CEO Eric Schmidt announced that he was going to step aside as CEO. It is sort of an interesting dynamic. It seems to be falling out of favor with investors. So, today I talked to a veteran journalist, Steven Levy, who has a new book out about Google called, "In The Plex". And I asked him, when Schmidt stepped aside he famously Tweeted, "Day to day adult supervision no longer needed." But did he think that Larry Paige was really ready to run this company?
(BEGIN VIDEO CLIP)
STEVEN LEVY, AUTHOR, "IN THE PLEX": The test really is, whether he is going to not only do the strategic, product oriented stuff, that we know he's going to do. We know he is a smart guy, we know he has a great vision of the future. But whether he is also going to take on the other side of the CEO. You know, Google's public perception is as much a product and is important a product for Google, as it goes forward and negotiates regulatory problems, privacy criticisms, and things like that. So, Larry has to step up, not only in terms of coming up with great products and great vision, and taking on Facebook. But he has to be able to make people feel OK about Google and not be scared of it.
LAKE: There is a sense from some, that Google has peaked. What did you see from your time inside?
LEVY: The thing about Google is, I actually think they have a shot at taking on this innovator dilemma. Where a company dominates in one area and then the next power line comes a long and they are really challenged to be as innovative in the next round. And I think the thing that is going for them is that Larry, in particular, looks far head and he is making a big bet on artificial intelligence, and pushing Google's mission to the farthest definition that you could, which is of course gathering, making accessible all the world's information there.
It is no means assured. And in the short-term they have a big challenge in the social space with Facebook, but I think they have a shot.
(END VIDEO CLIP)
LAKE: You know it is interesting, Max, I asked about this issue of privacy, of you know, privacy of-anti-trust people now looking at Google now that they are so big. I said, do they realize that they have this target on them? That people are looking at them closely? And he said, intellectually they do, but in their bones, in their hearts, they still sort of think of themselves as the little guy, as the underdog. And that people understand they want to do good. That their intentions are good and therefore they are going to get a little slack then. Really interesting insight. This guy has spent a lot of time with them, they are not a company or people that are easy to get access to. So, really interesting stuff. I'm going to blog about it tomorrow and it will be interesting to see how investors react, if Larry gets on that investor, leads the call, and how they react to his leadership. It is going to be crucial for Google.
FOSTER: OK, stay there for a minute Maggie, because I'm going to bring in that chart that you were referring to. Because shares of Google, which has beat Wall Street profit targets. So, for the past seven of the past eight consecutive quarters they are actually down more than 8 percent and that is since the company announced in January that Paige would be come CEO.
Let's have a look at the charts. Here you go. And we'll show you point at which that announcement came. It is actually right, here. So, there was an initial dip down. Then it came back up, then it went back down again.
Maggie, it is all about confidence, isn't it? Because Google, for many people, is still a unique company. So it is hard to value.
LAKE: It is about confidence and how he will lead the company. And, Max, it is also about where they are going to go from here. A lot of people have been concerned about the fact that Google has really made a misstep and has fallen behind in the area of social. You hear people say, Google doesn't do social. Facebook has got a lot of users, a lot of information, and information is power. So that is a short-term challenge for them. Are they going to be able to get over that? Are they going to be able to regain some of that growth momentum that we had.
One of our colleagues at CNNMoney had a very nice line in an article he did. He said it is no longer a growth company, but it is not a value company. It is kind of in no-man's land for investors. So, Google has to kind of win people over and get them to believe in their vision of the future and that they can achieve growth.
Again, Steven Levy has some interesting thoughts on that when it came to artificial intelligence. We will be talking more about that over the next 24 hours, but they have a lot to prove to investors, Max.
FOSTER: Maggie, thank you very much indeed.
Now, another tech stock to watch is HP. It's share fell today along with many of its rivals on news that PC shipments are declining. CEO Leo Apotheker still has plenty of plans to keep up with the competition, though. He spoke to CNNMoney's senior editor Adam Lashinsky.
(BEGIN VIDEOTAPE)
ADAM LASHINSKY, CNNMONEY.COM: Talk a little bit about your competition with Cisco. With Cisco retrenching, as we speak, they are getting out of the flip video business. They seem to have-they seem to be acknowledging that maybe they made a mistake getting into the consumer business in the first place. You compete with Cisco on their making servers. You bought 3COMM so you are making networking devices. What is the state of that competition?
LEO APOTHEKER, CEO, HEWLETT-PACKARD: Well, we were in the networking business before that. And we bought three companies to strengthen our offer. And the networking business and HP is a very, very strong business. It is growing double digits every quarter. We are doing, very, very well. We are getting market share every quarter, significantly. And we are probably one of the reasons why Cisco is retrenching. So that competition is going strong. I think we have-we are in a much better position than, unfortunately, for Cisco, they are in. We don't see them that much in the server business. They see us much more in the networking side of the house. And given the innovation that we are putting into this, I think they will see us even more.
LASHINKSY: Conventional wisdom, certainly among investors, would that your predecessor Mark Hurd, was able to do very well with earnings at Hewlett-Packard, by cutting costs, which had the knock on affect of hurting morale, at the company-at least, again, that is the conventional wisdom. Can you have it both ways? Does it take money to improve moral. And does that hurt the expense side of the company?
APOTHEKER: Success is the best recipe for moral. And therefore we are focusing on being successful first. For that, you need to make some investments in order to be relevant. That doesn't mean that you don't want to be very cost conscious. That means that you want to be very efficient. Means you want to be very effective. But you can't just cut yourself to- you just can't cut a business to salvation, it doesn't work. There comes a moment where you have to create some value. We are about creating value some value in the most efficient way possible.
By the way, there are still a lot of inefficiencies that we can deal with inside HP.
LASHINSKY: What is an example of that?
APOTHEKER: When it comes to quality, for example. We have to be better in quality. When it comes to innovation we need to bring innovation much faster to market. That is all efficiency that we can drive. And we are driving that. And there are programs in place to address these in a very, very straightforward manner. So I'm very much committed to that. People respond very well to that, to these ideas. They rise to the challenge. We have great people in HP, globally. And I believe that you will see HP coming out of its corner, swinging.
(END VIDEOTAPE)
FOSTER: Now, the head of the U.S. air traffic control agency has resigned after several planes had to land without the help of an air traffic controller. Scary stuff. It is even more scary when you consider that they were actually asleep, that story, after the break.
(COMMERCIAL BREAK)
FOSTER: Well, there is a new job opening high up at the U.S. Federal Aviation Administration. Hank Grabowski, head of the FAA's Air Traffic Organization, has stepped down. If follows the sixth incident this year of controllers sleeping on the job. From Washington, Samantha Hayes has more.
(BEGIN VIDEOTAPE)
SAMANTHA HAYES, CNN CORRESPONDENT (voice over): Inside the control tower at the Reno-Tahoe Airport early Wednesday morning, seven calls came in from a pilot trying to land a Life Flight plane with a sick patient onboard. But no answer, according to a government source.
UNIDENTIFIED MALE: They are not answering the phone line either.
UNIDENTIFIED MALE: We're going to need to land.
UNIDENTIFIED MALE: Landing will be at your own risk.
HAYES: The FAA says the controller was asleep and out of communication for about 16 minutes.
RAY LAHOOD, U.S. TRANSPORTATION SECRETARY: This is ridiculous. It is outrageous. It is the kind of behavior that we will not stand for at the Department of Transportation. The controller has been suspended. We are conducting a investigation.
HAYES: The FAA also said the official in charge of operating the air traffic control system has resigned, after this, the latest case of a controller sleeping on the job. Airport officials say the controller fell asleep during what is usually a low traffic time of day.
KRYS BART, CEO, RENO-TAHOE AIRPORT AUTHORITY : We have very light traffic at 2:00 a.m. We are a 24/7 operation and open to any aircraft that want to land or take off at any hour of the day or night. However, during the night we typically have very little traffic.
HAYES: The FAA says the controller is suspended as the agency investigates. And meanwhile, the government is assigning an additional controller to 27 airports where currently only one person is staffed during the midnight shift.
Senate Majority Leader Harry Reid, who is from Nevada, raised the issue on Capitol Hill, Wednesday.
SEN. HARRY REID, (D-NV): This shouldn't happen in Nevada. It shouldn't happen anywhere in our country. It shouldn't happen in any airplane. And it certainly shouldn't happen in an air ambulance.
HAYES: Samantha Hayes, CNN, Washington.
(END VIDEOTAPE)
FOSTER: Now a different view on the U.S. debt debate is just 30 minutes away. Billionaire businessman Donald Trump is on PIERS MORGAN TONIGHT, giving his view on President Obama's economic plans, and latest political polls, much more. Piers will also be joined by Oscar winner Whoopi Goldberg. That is at 8:00 p.m. in London, 9:00 in Berlin, only here on CNN.
(COMMERCIAL BREAK)
FOSTER: Welcome back.
I'm Max Foster.
You're watching QUEST MEANS BUSINESS.
Let's check the headlines this hour.
Libyan state TV says civilians were killed in NATO air strikes on Tripoli earlier on Thursday. Sources showing a defiant Moammar Gadhafi in public for the first time in days. The latest strikes come as NATO's secretary-general asks for more precision fighter jets to avoid civilian deaths.
Tunisian authorities want to try former President Zine Abidine Ben Ali on 18 different charges, including manslaughter and drug trafficking. The justice minister says he's looking at ways to legally extradite Ben Ali from Saudi Arabia. That's where he fled in January after an uprising that inspired others in the Arab world.
Russia says the U.N. should have remained neutral in the crisis in Ivory Coast. News agencies quote President Dmitry Medvedev saying the body should mediate between the parties. The U.N. said it was protecting civilians when it attacked positions held by soldiers loyal to former President Lauren Gbagbo.
Angry protests here in London at BP's first annual general meeting since the massive Gulf oil spill. Around 100 people came out to show their anger at the company and one was ejected from the conference hall. BP head, Bob Dudley, said the firm is working hard to earn trust back.
The world's top emerging economies have laid out their plans to chip away at the dollar's status as the world's global reserve currency. In a joint statement after the BRICS summit in China, Brazil, Russia, India, China and newcomer, South Africa, said the international monetary system needs an overhaul. The five countries have now agreed to work toward using their own local currencies when lending money to each other.
And they've also pledged more action on inflation and rising commodity prices in particular. The BRICS nations also criticized the use of force by countries intervening in Libya and the rest of the Arab world.
It was a solid display of unity by the five countries at their first summit.
As Eunice Yoon reports, the BRICS nations are hoping to earn themselves as much -- a much greater role in the way the world is run.
(BEGIN VIDEOTAPE)
EUNICE YOON, CNN CORRESPONDENT (voice-over): On the small Chinese island of Hainan, a summit of five big developing nations -- the leaders of Brazil, Russia, India, China and South Africa met to coordinate policy, paving the way to one day become a voice for the developing world.
DILMA ROUSSEFF, BRAZILIAN PRESIDENT (through translator): This is a group that wishes to see a solidarity-based international order, solidarity taken to mean the ability to promote prosperity.
YOON: Together, they're known as the BRICS -- emerging nations banning together to act as a counterweight to the wealthier West. At this year's summit, BRICS leaders talked economic issues, calling for greater say at international institutions like the World Bank and a need to calm volatile commodity prices -- a potential threat to their growth.
(on camera): Until now, the summit has been focused on the global economy. But now there's been a shift where these countries want to have more influence in political affairs.
DMITRY MEDVEDEV, RUSSIAN PRESIDENT (through translator): Our economic potential, our political opportunities and prospects of development as a group of countries are, in this sense, unique and they break new horizons.
YOON: South Africa joined the talks for the first time as the newest member, harshly criticizing the use of force in Libya, despite voting in favor of a no-fly zone at the UN. Other BRIC nations abstained.
JACOB ZUMA, SOUTH AFRICAN PRESIDENT: We underscored our support for multilateralism and the United Nations system, but are also agreed on the need for the reform of the United Nations, including the U.N. Security Council.
YOON: While the leaders here were unified in their opposition to military force in Libya, experts say these nations are so different, that it's difficult to get them to come out with clear, unified positions on many matters. For example, countries like Brazil have been highly critical of China, saying Beijing keeps the value of its currency artificially low.
But the yuan was left out of discussions here.
(on camera): Well, how do you feel about the Chinese currency?
Isn't it harmful to Brazil?
LUCIANO COUTINHO, PRESIDENT, BRAZILIAN NATIONAL DEVELOPMENT BANK: No, I don't think Brazil has to take care of himself and not count on others to solve its own problems.
YOON: Instead, the leaders criticized the current monetary system, which is dominated by the U.S. dollar. These leaders will meet again in India next year for more discussions and another chance to move their agendas forward.
ANAND SHARMA, INDIAN COMMERCE MINISTER: This platform, as such, can make a significant and defining contribution to the global architecture as the world is seeing a major shift.
YOON: Driven by the rise in wealth of the developing world.
Eunice Yoon, CNN, Sanya, China.
(END VIDEO TAPE)
FOSTER: While South Africa was formally welcomed into the BRICS fold in that leaders' joint statement, not everyone is convinced by the newest addition to the club there.
Robyn Curnow explains what South Africa will offer the BRICS.
(BEGIN VIDEOTAPE)
ROBYN CURNOW, CNN CORRESPONDENT (voice-over): South Africa's Durbin Harbor is one of the busiest and biggest in Africa. It's a gateway to the rest of the continent, a point that South Africa's diplomats emphasized as they negotiated entry this year into the BRIC club of emerging economies.
With one billion people, an emerging middle class and the third fastest growing region in the world, Africa is a market that can't be ignored, say the South Africans.
MAITE NKOANA-MASHABANE, SOUTH AFRICAN INTERNATIONAL RELATIONS MINISTER: South Africa runs the biggest and the most diverse economy on the South -- on the African soil.
CURNOW: She says South Africa has lots to offer.
NKOANA-MASHABANE: South Africa has mineral resources that are exploitable now, because of our (INAUDIBLE) infrastructure, worth $2.6 trillion. So we're not coming bare-handed.
CURNOW: But even taking into consideration its gold, diamonds, platinum and other mineral riches, many believe South Africa just doesn't belong in the elite club of powerful emerging economies -- muscle flexing countries that should account for 3 to 5 percent of global GDP, says the man who coined the phrase, "BRIC."
JIM O'NEILL, GOLDMAN SACHS: South Africa doesn't even come close to - - to certainly not the BRICS. The South African economy, what, $350 billion, is -- is .5 a percent of global GDP.
CURNOW: So then why has this small economy at the southern tip of Africa leap-frogged over better BRIC candidates like Mexico or Turkey or Indonesia?
(on camera): South Africa and its new BRIC partners argue that it's a political choice, not an economic one. The diplomats lobbied hard for membership, arguing that a new global political order is emerging with power shifting away from the West. They say that Brazil, Russia, India and China need South Africa's stature as a strong democracy in Africa if they're to create a new bargaining bloc for the developing world.
(voice-over): Even though the harbors and highways, rail links and airports provide a strategic link to the economic spoils in the rest of the continent, it's South Africa's moral weight on the world stage, after a successful transition to democracy, that seems to have sealed their entry into the elite club of global powerhouses.
Robyn Curnow, CNN, Johannesburg, South Africa.
(END VIDEO TAPE)
FOSTER: Well, coming up, a soap opera with an unhappy ending -- a laundry detergent cartel gets smashed by price-fixing watchdogs. We'll tell you who wasn't whiter than white, after the break.
(COMMERCIAL BREAK)
FOSTER: Two of the world's biggest consumer giants have been hit with combined fines of nearly half a billion dollars after a price-fixing case that gives new meaning to the phrase money laundering. European regulators found that Procter & Gamble, which makes washing powders like Dash and Unilever, which is behind brands like Purcell (ph), fixed laundry detergent prices around Europe for years. Procter & Gamble have been fined more than $300 million. Univer -- Unilever has to pay around half that amount.
I spoke to the European competition commissioner, Joaquin Alumnia.
And I asked -- I started by asking him how the cartel was uncovered.
(BEGIN VIDEOTAPE)
JOAQUIN ALMUNIA, EUROPEAN COMMISSIONER FOR COMPETITION: We discovered it when one of the companies involved, company Hankel, came to the commission with the information about the existence of the cartel and the very useful information to figure out how do these cartel was working during the more than three years.
FOSTER: How was it working?
How were prices being fixed?
What sort of agreements were being reached?
ALMUNIA: So they use an opportunity that is the result trade association was launching an environmental problem to reduce the size and the -- the components of the packages of the washing powder. And they can say well, this is a good opportunity to distribute our market shares, not to compete among themselves and to maintain, to keep the prices even if the size of the packages were reduced.
FOSTER: So they were agreeing not to compete in certain geographic areas?
ALMUNIA: Yes, in eight member states of the European Union.
FOSTER: And how was this agreed?
Was it agreed amongst executives in hotels? how was it agreed?
ALMUNIA: Well, I don't know about the details. But their representatives of the three companies that are very important ones, Henkel, Procter & Gamble and Unilever. They managed to agree the distribution of the market shares and their agreement to maintain prices and even, during the duration of the cartel, at one moment, they decided to increase prices at the same time.
FOSTER: They obviously agreed to this fine because it was lower than it would be if you continued the investigation.
Why did you bail out of the investigation earlier?
Why not go all the way and give them a proper fine that would really punish them?
ALMUNIA: So, we -- we had notice of the existence of the cartel and of the activities of the cartel thanks to one of the companies, to Henkel. The others also cooperated, given the evidences that were in our offices. And at one moment, because there was no possibility to deny the evidence and they accepted the existence of these illegal activities, they accepted a settlement and this had allowed us to adopt a decision less than three years after we started our activities, our inspections, that this is a shorter duration than in other cartel investigations that takes longer.
And because of the settlement, because of their acceptance of the existence of a cartel, of an illegal activity and because of their cooperation, the -- the settlement implies that the fines are reduced in 10 percent.
FOSTER: It doesn't really reflect how much they gained from it, though, does it?
ALMUNIA: Well, we don't calculate how they gain. What we intend with our fines in the cases of cartels or of anti-trust infringement in general is to deter. So we try to convince the companies that they will not be involved anymore in these kind of activities.
And, in fact, I have the satisfaction to say that these companies, after the existence of the cartel and the -- our investigations, they have tightened their internal rules so as to avoid, in the future, the repetition of these kind of activities.
FOSTER: And what does this mean to the viewers, then?
Does this mean that washing powder will become cheaper in Europe?
ALMUNIA: Well, it means at least that even if the size of the package have been reduced, the prices will not be maintained, that we will pay in proportion of what we want to buy.
(END VIDEO TAPE)
FOSTER: Well, there you are. A fascinating story.
Meanwhile, a massive sandstorm encompassing over 300,000 square kilometers of the Arabian Peninsula is racing across the Middle East. It's scary stuff.
Meteorologist Pedram Javaheri is at the CNN International Weather Center following that story -- Pedram.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes, Max.
Sandstorms, you know, typically, you head your way from March into April and also the latter portion of the year. We have these winter storms that cruise right on through and pick up a lot of sand and have caused a lot of problems out there across portions of the Middle East.
And I just want to show you what it looks like from space, going from Bartard (ph) south toward Kuwait. And you can see this area that we talked about. Over 300,000 square kilometers of coverage of just a massive dome of sand here moving its way toward Kuwait. And then you break it down and you calculate it, that's equal to roughly the size of Germany.
This area of sand is beginning to move in. Now, of course, we've got millions of grains of sand that are moving in at 50, 60, 70 kilometers per hour. That's going to cause some respiratory issues for the folks out there. Some schools, we know, have been closed across portions of Iran and also some travel difficulties out there.
But the sand right now on track to work its way toward portions of the UAE. So from Abu Dhabi toward Dubai, you're going to see plenty of strong wind gusts and also a lot of sand working its way toward that region.
And some video to share with you coming out of areas of Kuwait. This is what it looked like. An iReporter sent us this phenomenal video. It shows you how dangerous it is to be out on the roads because within a moment's notice, you can have visibility go from one or two kilometers to right there to zero, where you can't see anything in front of you.
And I've actually driven through a sandstorm and it's among the serious things you can do, because right just like that, you lose everything you have as far as visibility is concerned and it becomes very dangerous. And, again, this is going to shift south and into Southern Iran over the next 24 hours. And, again, switching back the graphics, I'll show you what's going on.
Here you go. The winds, the current winds around portions of Abu Dhabi at about 20 or so kilometers per hour. Notice the green numbers. That's visibilities right there, reduced around areas of Doha there in Qatar. But work your way south toward Abu Dhabi and also Dubai, visibility is right now at about 10 or so kilometers. That's going to reduced. So if you have travel plans out there, you've got to keep that in mind. We're certainly going to see some travel difficulties in and out of the UAE.
And take a look at the what's happening over in Europe. We do have high pressure trying to extend out, so across portions of the UK there around Ireland, we're going to see partly cloudy skies. The storm systems have all moved to the south here, so your weekend plans look pretty nice across the northern fringes and the northwest corner there of Europe.
But again, the storms are going to shift to the south and bring some showers toward that region and eventually a little bit of a warming trend as we get back up close to seasonal temperatures for this time of year, which is about 13 or 14 degrees, say, for areas around London. And that's going to be the pattern, Max, after a few clouds roll by in the next couple of days and keep you partly cloudy out there.
So not too bad across Europe.
FOSTER: OK, Pedram.
Good news.
Thank you very much, indeed.
Now, we spend years racking them up and hours on the phone trying to get the best deals. For frequent fliers, air miles are the world's most important currency.
But would you take a completely needless flight just to get more?
As Poppy Harlow finds out, there are some travelers who take air miles very seriously.
(BEGIN VIDEOTAPE)
POPPY HARLOW, CNN BUSINESS CORRESPONDENT: How many miles have you flown in your life?
RANDY PETERSEN, FOUNDER, FLYERTALK: I raise my hand -- 17 million.
HARLOW: What?
PETERSEN: Yes, 17 million.
HARLOW: Didn't George Clooney fly like a million in "Up in the Air".
PETERSEN: He ain't got -- he ain't got nothing on me.
HARLOW (voice-over): Imagine flying for fun. It sounds crazy to most, given the delays, cancellations and security hassles. But to some, like Randy Petersen, it's well worth it to rack up the miles on so-called mileage runs.
RICK SEANEY, CEO, FARECOMPARE.COM: A mileage run is really just a mechanism to do one of two things -- earn the most miles for the cheapest amount of money and then you take those miles and redeem them for something really valuable later on.
UNIDENTIFIED MALE: You want to go from Point A to Point B, but you want to go in as much -- a roundabout fashion as you possibly can, leave in the morning, hop all around, pick up 10,000 or 15,000 miles.
UNIDENTIFIED MALE: All right, National to Atlanta, Atlanta to Seattle, Seattle to Detroit, Detroit to Houston, Houston to Atlanta, Atlanta to Seattle, Seattle to Detroit, Detroit to Nashville, and then I drive home from Nashville.
HARLOW: On FlyerTalk.com, people post and search for the cheapest mileage runs with the most miles.
BARBARA KESSLER, FREQUENT FLIER: We are flier talkers.
HARLOW: Barbara Kessler is a self-employed attorney who flies, well, just for the sake of flying and racks up hundreds of thousands of miles a year. KESSLER: Some people like to go shopping all day. I will go to California for lunch and meet friends. I went to Disneyland and met friends and spent the day at Disneyland.
HARLOW: One day?
KESSLER: Yes.
HARLOW (voice-over): Kessler even flies from New York City to Hawaii more than she goes to Midtown Manhattan, just 20 blocks from her apartment. The key, experts say, is paying less than two cents per mile and redeeming them for much more.
UNIDENTIFIED FEMALE: Did you want anything else?
UNIDENTIFIED MALE: Well...
UNIDENTIFIED FEMALE: Water?
UNIDENTIFIED MALE: White wine.
HARLOW: But with hefty mileage bonuses from credit card offers, the currency of sorts is being devalued and award tickets can be harder to come by. But the perks are still there.
SEANEY: If you like to travel, you know, and get upgraded, if you want to be the first person to board the plane so you can actually have some bin space, so that's where miles come in.
HARLOW (on camera): Do you have to be rich to be a flier talker?
KESSLER: Not at all. I have seen places that I could not afford. I -- I've stayed for weeks in Paris for less than seven euros.
PETERSEN: I've been to the Great Wall of China. I've been to the ballet in Moscow. I've been to -- on safari in South Africa. And I've eaten shrimp on the barbie in Australia all because of miles.
HARLOW: Not bad if you don't mind the long journey getting there.
In New York, Poppy Harlow reporting.
(END VIDEO TAPE)
FOSTER: Now, we're royal wedding fashion hunting next. And it's not just about the dresses, you know. Prince William needs a uniform that's fit for a king. I'll show you how much that costs from no less than his tailor in just a minute.
(COMMERCIAL BREAK)
FOSTER: There is plenty of speculation over Kate Middleton's dress ahead of the royal wedding, but what about William?
We know he's gone for a uniform, but we don't know which one, while I did find out, though, from his tailor is that dressing to impress on the big day doesn't come cheap.
(BEGIN VIDEOTAPE)
FOSTER (voice-over): Savile Row -- for centuries, home to Britain's finest tailors. At Number One sits Gieves & Hawkes, where, for the right price, you can be dressed to fit into any social setting. Special guests are invited upstairs, where Prince William and other royals have their fittings.
(on camera): Well, you can expect to see a few uniforms at the wedding because that's traditional for members of the military. But you'll also notice a uniform of sorts for other male guests.
Andrew, pleased to meet you.
ANDREW GOLDBERT, GIEVES & HAWKES: Hello.
FOSTER: General manager of tailoring here.
And this is what we call a morning dress, isn't it?
This is what most guests will be wearing?
GOLDBERT: That's correct. This is -- for formal wedding occasions, this is what you would wear.
FOSTER: OK. So take us through it.
GOLDBERT: Well, here you have the morning coat and also the trousers. The morning coat would be originally worn as a -- a riding coat...
FOSTER: Yes.
GOLDBERT: -- for gentlemen riding their horses...
FOSTER: In the morning.
GOLDBERT: -- in the morning.
FOSTER: OK.
GOLDBERT: And -- and moving on, we have the trousers, pleated, striped. The stripe has cashmere in them for comfort, but, also, you would wear them with braces to make sure the trousers are well supported.
And the way to go for yourself, we would suggest a double-breasted, although you could wear a single-breasted.
FOSTER: If someone is feeling particularly daring, it -- could they turn up in a regular suit?
Could they turn up with something quite (INAUDIBLE)?
GOLDBERT: The groom usually sets the tone of the wedding. So he is wearing a morning dress suit as such.
FOSTER: Or a military uniform?
GOLDBERT: Or a uniform. That is what you would wear.
FOSTER: And it would be a bit of a faux pas, I guess, if they went in something different?
GOLDBERT: It would be. Yes.
FOSTER: Embarrassing?
GOLDBERT: It would be embarrassing, I think, yes.
FOSTER: OK, then Andrew, let's put it to the test. And as if by magic, I'm ready for the wedding.
Andrew, what does this look say to you?
It certainly feels really -- really proper, I have to say.
GOLDBERT: It says your dressed for the occasion. It's a solemn occasion so the idea is that you should look and feel different than any other normal day.
FOSTER: And in terms of costs, what are we talking here?
GOLDBERT: If we were making this for you on the spot, we'd be looking at right about $8,000.
FOSTER: It can quickly go up from there, though, can't it?
GOLDBERT: It certainly can. But we leave that to the client to choose.
FOSTER: Fifty thousand dollars?
Sixty thousand?
GOLDBERT: It certainly can, yes.
FOSTER: Andrew, thank you very much.
GOLDBERT: A pleasure.
(END VIDEO TAPE)
FOSTER: And more than that, I heard.
The only thing I'm missing at this point is the wedding invite, but I'm sure it's going to come. You know, I'm just elated by it -- a cancellation guest, maybe.
Anyway, after the break, we'll have a look at the markets for you.
(COMMERCIAL BREAK)
FOSTER: Now, let's have a look at the markets.
The markets in Asia finished mostly lower this session. Tokyo's Nikkei was the only index to post gains. Resource and property stocks dragged Hong Kong's main benchmark lower.
Mining stocks were some of the losers there in Sydney.
Reminding you of the day's numbers across Europe, after a rebound session on Wednesday, it was another down day, really, for the major indices here. Paris, the worst off, with a loss of almost 1 percent. A lack of confidence in Greece's ability to avoid defaulting on its debt has hurt banking stocks in particular.
We'll bring you these European markets in a moment.
As we said earlier, the bond markets are piling on the pressure after comments by Germany's finance minister.
Barring some decent gains tomorrow, all three of the indices look like they'll actually end the week with losses.
As for across the Atlantic, let's check in one last time on the Dow. It's recovered from early losses. The Dow fell more than 100 points at one stage, down slightly now, but hardly moved. Financial stocks have been weighing the markets down. Shares in banks and technology companies also falling today.
We'll keep an eye out for Google's earnings reports. That's what everyone was talking about today. Those due out after the closing bell. That's in around an hour's time. But we'll bring it to you on CNN.
Now, there is a lot of activity over in Washington, meanwhile, on Capitol Hill right now, but it seems as if the buildup to the excitement wasn't quite enough to keep one Democratic leader awake. The vice president of the United States couldn't keep his eyes open during President Obama's speech on Wednesday night. He appeared to be dozing during parts of the president's remarks.
Maybe he was just concentrating. Maybe we're being unfair.
The president said Biden will head up deficit reduction negotiations with both parties beginning in early May.
Definitely a bit sleepy, I would say.
That's QUEST MEANS BUSINESS.
I'm Max Foster in London.
"PIERS MORGAN" just ahead.
First, though, John will join us with a check of the headlines.
END
