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Quest Means Business
Bob Diamond Testifies Before Parliamentary Committee; Libor Scandal; Manchester United Goes Public; Football and Finance; Rangers Shut Out of Scottish Premier League; Currencies Steady; Merkel Visits Rome; European Markets Braced for ECB Rate Cut; France Raises Taxes; French Buyers Eye New York Real Estate
Aired July 04, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: Reprehensible. Bob Diamond slams the rate riggers while defending himself.
(BEGIN VIDEO CLIP)
BOB DIAMOND, FORMER CEO, BARCLAYS: When I read the e-mails from those traders, I got physically ill.
(END VIDEO CLIP)
QUEST: Irreversible. One of the UK's top business voices tells me greed has stained the city.
(BEGIN VIDEO CLIP)
PETER LEVENE, FORMER CHAIRMAN, LLOYD'S OF LONDON: I'm really unsure how you stuff the genie back in the bottle.
(END VIDEO CLIP)
QUEST: And monumental. Forget Mammon. It's time to believe in the God particle. What that tells us about the business world.
I'm Richard Quest. I mean business.
Good evening. "Reprehensible." "Wrong." "Abhorrent." But Bob Diamond says he still loves the bank, which has confessed to cheating the market. The former Barclays chief tells a UK lawmakers panel he felt, in his words, "physically sick, physically ill" when he found out what had been going on.
He said a number of traders, a small number, were to blame for the libor rate-fixing scandal, and Barclays has been unfairly singled out for being the first to own up to its mistakes. Diamond says it was his decision to end his 16-year relationship with Barclays, a bank which he clearly retains street -- deep feelings for.
(BEGIN VIDEO CLIP)
DIAMOND: Fundamentally, my decision to resign is my leadership and questions about my leadership have been a part of that.
And the best way I think I can help bridge Barclays from the turmoil of being the only one out and bridge them, so that this is looked at in the true context of being about an industry and about libor in addition to Barclays and prevent the damage to the reputation that's happened over the last week. The best way for me to do that was to step down, but continue to come here and answer the questions in the committee.
I love Barclays. History will judge Barclays as an incredible institution because of its people. We need to get through this period, and the best way for me to do that was to step down.
(END VIDEO CLIP)
QUEST: There was a touch of denial as Diamond talked about the bank he has just left. Jim Boulden is here to explain.
The core question, it's the old Watergate question, what did he know and when did he know it? And are we any closer to understanding that?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, he stuck to the same points he made in his testimony as some of the letters he released yesterday.
So, let's talk about that, because in the three hours of testimony today, Bob Diamond told lawmakers that he was sorry, disappointed, and angry about the scandal that has tarnished the image of the bank that he helped to create.
But he refused to take the blame, and instead pointed the finger at a handful of "reprehensible" traders. Diamond said he didn't know about the rate-fixing as it was happening and only found out about it late last month.
(BEGIN VIDEO CLIP)
DAVID RUFFLEY, MEMBER OF BRITISH PARLIAMENT: This was going on well before the 29th of October, 2008 and your telephone call with Paul Tucker, is that correct?
DIAMOND: Yes.
RUFFLEY: Yes. It has to be, because that's what they say were reported. Now, can you tell me and tell us when you discovered that this low-balling activity was going on?
DIAMOND: During the investigation.
RUFFLEY: So, you didn't know that this was going on when you spoke to Mr. Tucker on the 29th of October, 2008?
DIAMOND: No. That would have been before the investigation.
(END VIDEO CLIP)
BOULDEN: Now, Diamond was also asked about a phone call with the Bank of England Deputy Governor, Paul Tucker. Barclays has said that the former Barclays COO, Jerry del Missier, quote-unquote "misinterpreted" that call as an instruction to manipulate the rates. Now, once again, Diamond said he didn't know and that it wasn't discussed with him.
(BEGIN VIDEO CLIP)
DIAMOND: I was unaware that Jerry had the impression that the conversation that I had with Paul either by note or by conversation was an instruction.
UNIDENTIFIED MALE: Well, to get --
DIAMOND: And I was not aware that he did instruct.
(END VIDEO CLIP)
BOULDEN: Pressing home that point that he knew nothing about the rate-fixing, he said he got "physically ill" when he finally found out and read some of the e-mails from some of his traders, and he says the scandal doesn't represent the bank that he knows and loves.
(BEGIN VIDEO CLIP)
DIAMOND: When I read the e-mails from those traders, I got physically ill. It's reprehensible behavior, and if you're asking me, should those actions be dealt with? Absolutely. And immediately, when there -- when it became clear during the investigation that there was specific actions, it was dealt with at the time. We didn't wait for the end of the investigation.
(END VIDEO CLIP)
QUEST: All right. Bob Diamond making a robust defense, there. Do we know -- and I heard him questioned very hard -- harshly -- why he suddenly decided? Was he nobbled by the regulators or the Bank of England to resign?
BOULDEN: He was asked that question directly. They said, did the chairman get a phone call from anyone from the government to force you out? And he said you'd need to ask the chairman. And the chairman, who will stay on a bit longer, will eventually testify as well. But he wouldn't say directly.
QUEST: There was the fear and the thought that Bob Diamond was going to blow up the bridge --
BOULDEN: Yes.
QUEST: -- or whatever that --
BOULDEN: Name names.
QUEST: Name names, blow up the bridge --
BOULDEN: Yes.
QUEST: -- take everybody down, sink the ship.
BOULDEN: Yes.
QUEST: He did none of that.
BOULDEN: None of that at all.
QUEST: None of it.
BOULDEN: No. No. And what he said was, he said constantly, "I didn't know, I didn't know, I didn't know" when asked if there was any government pressure to lower these rates. He said he did not interpret that letter -- that phone call to do that. He said it was done -- by other people lower down the chain.
QUEST: One thing is clear, Jim -- many thanks, indeed -- one thing is clear, that the attention turns necessarily from Bob Diamond to the Bank of England, and the deputy governor of the Bank of England has agreed and asked to tell his side of the story in the libor affair.
He is Paul Tucker, the man named in that crucial Barclays memo which, as one lawmaker put it, read like a nod and a wink, as they say, to rig the rate. He's asked to give evidence to lawmakers as soon as possible.
The memo, written during the market meltdown, essential to the question of whether the Bank of England sanctioned the manipulation of inter-bank rates.
Joining me now to discuss this is Dan Conaghan. He's had a 15-year career in finance and the author of "The Bank: Inside the Bank of England." The one thing -- do you believe -- come on, I'm afraid you and I are just going to have to take the gloves off and go bare knuckle on this. Do you believe that Paul Tucker was giving a nod and a wink in that conversation to Barclays?
DAN CONAGHAN, AUTHOR, "THE BANK: INSIDE THE BANK OF ENGLAND": It certainly seems like it, doesn't it? It seems like a gentle nudge in the right direction, because what the bank and Paul Tucker always hate is a disorderly market.
And in 2008 in particular, that's exactly what they had in libor, and what they want is it to be realigned and recalibrated, and I think that that sort of fed itself down the system in Barclays and, unfortunately, fell foul of the lawmakers, as you say.
QUEST: If -- and none of this has to do, of course, with the traders that were fixing libor. That was a separate incident earlier -- a few years earlier. But if he did give that, would you expect him -- what do you expect him to say to the committee when he gives evidence? Because he's going to obviously say, "I never intended that."
CONAGHAN: I think he's going to -- I'll bet it's going to be a tough session. And I think the big question is not just what he did say to Bob Diamond and to Bob Diamond's colleague, Jerry del Missier, but also to the 16 -- 15, 16 other banks.
Was there a pattern here of the Bank of England's top brass in the markets division giving sort of guidance to the banks setting their libor, submitting their libor rates?
QUEST: This is just another case -- and I've read your book about the Bank of England, and you are fairly caustic -- I think I'm being charitable and polite when I say that -- in the way you believe the Bank of England held the crisis. So, I'm guessing that you're not surprised by this.
CONAGHAN: This is another example of the tripartite failing, the tripartite being the bank, the treasury, the FSA. No one was looking after libor. The British Bankers Association, the ultimate toothless watchdog if ever there was one, it was supposedly in control. The bank not wanting to touch it because it's something to do with regulation, and therefore, it just fell between the sword.
But there was a crucial committee at the Bank of England called the Money Markets Liaison Group, all about libor, which met regularly at the bank, and the bank knew exactly the problems about the libor rate being fixed.
QUEST: So, you're saying, did they -- would you say that they knew when the traders were asking for it to be fixed?
CONAGHAN: Well, they certainly knew in 2008. I've seen minutes which describe the British Bankers Association telling the committee at the Bank of England, we're aware of a discrepancy and irregularities in libor. "We do not think it's compromised the whole system," that's a direct quote, "but we're keeping an eye on it."
QUEST: And do you believe that that liaison committee will also have been well aware of the spike that took place in the Barclays in libor just ahead of the -- the investment?
CONAGHAN: Not just that committee. The bank's dealing room, which resembles nothing so much as a major dealing floor in a major investment bank, sees everything.
QUEST: Fingers on the pulse.
CONAGHAN: They see the trades, and sometimes when they see traders misbehaving, they call them in, they wrap them over the knuckles and they say, "We see your trades. Don't do that again." It happened in the gilts market, it probably happened way back when in the gold -- when Gordon Brown sold the gold reserves and so on.
QUEST: One thing -- the big difference that's happened now, isn't it? In the old days -- nod, nod, wink, wink, don't worry old chap. But with troublesome people like you, and with people like me and a whole raft of inquiries and online, it's all changed.
CONAGHAN: Well, we've got a rash of inquiries. And one inquiry that hasn't happened, of course, is the bank's own inquiry into its own behavior during the financial crisis.
QUEST: It's not going to happen.
CONAGHAN: Well, I think that should happen before a --
QUEST: Does this kill -- I use that phrase advisedly -- does this kill Paul Tucker's chance of succeeding Mervyn King?
CONAGHAN: It depends on whether a pattern emerges of Paul Tucker and his colleagues nudging, if we can use that word, banks other than Barclays Capital. And if that is the case, I would say Paul Tucker's star is waning rapidly.
QUEST: You'll come back and talk more about it.
CONAGHAN: Thank you.
QUEST: Good to see you. Many thanks, indeed.
Now, later in the program, an industrialist who worked in government who then became the chairman of Lloyd's of London Insurance. Lord Peter Levene gives us his views and tells us why he thinks it's going to be very difficult to put the money genie back into the bottle in the city of London in regulation. After the break --
(RINGS BELL)
QUEST: -- it's your chance to buy a piece of Manchester United. Don't expect the money to go to the new players. We will explain who gets the dosh after the break.
(COMMERCIAL BREAK)
QUEST: Manchester United are going public. One of the world's most popular football teams is hoping to score a major cash injection, but where the money's going and the reasons why? Well, if the -- tactics go according to plan, then it could start paying off the club's massive debts.
But don't rush off. Let me show you exactly why Man United's IPO is not all it might seem. The idea is to raise 100 million. But what's interesting is it will be raised on the New York Stock Exchange, not as originally planned, on the Singaporean exchange. We'll discuss that in just a moment to explain why New York and not Singapore.
And interestingly, the money is not going towards playing -- paying for new players. It's an entirely defensive move. The proceeds are going to pay off some of the $663 million in debt that the company has.
We can see that from the exchange -- the form F1, the register of what was going to be released in the United States for the New York Stock Exchange, and they're not going to pay any dividends either.
So, what does all this mean for the fans? Well, the fans and the finances -- there's about 660-odd million fans, there's no shortage of them. But here's the cleverness. It's a bit of a Murdochian move, News Corp ala.
There's Class A shares, for the ordinary investors. You get one vote. And there's Class B shares. They, not surprisingly, go to the Glazers, and they get ten votes. And the Class B's will outweigh the Class A's. So, the Glazers pay off the debt, they keep control and Manchester United, to explain.
Now, if you take a look and see exactly where this company will be based, the Cayman Islands. So, here's an interesting thing. From Old Trafford, where they play the football, to the Cayman Islands, where they've registered the company, 7,500 kilometers. Which is a long way, even for Rooney, to kick a ball.
So, Manchester United was originally planning to float in Singapore. Roger Blitz of the "Financial Times," said that would have been a better option. I asked him why this IPO at the moment was so difficult.
(BEGIN VIDEOTAPE)
ROGER BLITZ, SPORTS AND LEISURE CORRESPONDENT, "FINANCIAL TIMES": The debt that they bought the club with back in 2005 remains the thing they're saddled with. They haven't been able to pay this down in sufficient chunks and sufficiently during their process, during their ownership, and they have been paying huge amounts on interest to service this debt.
It's a reflection of how tight the deal was back in 2005, that they didn't really have huge amounts of resources to work with.
QUEST: So, you take a club like Manchester United, largest fanbase in the world, exceptionally well-known, and -- to the uninitiated, to myself, it's a runaway success to launch it on the stock market. Why is it being so difficult?
BLITZ: Well, the market is difficult for floatation anyway, and there is strong evidence to suggest that they've been trying to push this floatation where some advisors have said this is not the right idea. They tried to do it in Singapore. They haven't been able to do that. And that would have been a better place to do it.
They can't get it right because actually the -- running sporting institutions is still a difficult game. It's still hard to make profit out of it. These owners have actually done extremely well driving the commercial side of the business.
QUEST: Right.
BLITZ: But that isn't necessarily sufficient, to say that we have the way forward for the next ten years. There's all sorts of uncertainties and unpredictabilities.
Such as, for example, the amount of money that's being thrown into Premier League football through the new television deal, which is going to see rivals to Manchester United, such as Manchester City, such as Chelsea, throwing much more money and resources into buying players. This is patently been a problem for Manchester United in recent seasons.
QUEST: So, is United -- and this is what the fans will care about -- at one level, the fans don't really care about the share structure of the company, frankly, providing some of the money from the floatation is going to be invested back into the club, and that means into the players.
BLITZ: Well, football fans like to be in step with their owners. They like to speak to their owners, discuss these things with them. And actually, there's an interesting line in the prospectus saying that the club's owners secrecy has actually not helped the brand itself. So, this issue about where the club is going and what fans want out of it is very, very important.
QUEST: But if this is just a fundraising exercise to pay off some of the family, to write down the debt, and doesn't do a jot for the team, then it's not going to go down well.
BLITZ: No, it's not going to go down well. The hope for the fans -- for some of the fans is that actually paying down the debt does make the club more in a position to invest in players, in bigger transfer wages. That is one way of looking at it.
The other way, of course, is to look at whether the Glazers are really in it for the long term or may be looking to position the club for an eventual sale at some point. Always been the big question over the ownership.
(END VIDEOTAPE)
QUEST: Roger Blitz of the "Financial Times." Another debt-ridden football club is facing even more serious questions. Rangers have nowhere to play next year after being refused permission to play in the Scottish Premier League.
In the words of the overwhelming majority of teams in the SPL rejected the team's application to play. Rangers have had to reform as a new company after a tax dispute forced the club into liquidation. Together with their Glasgow rivals, Celtic, the team has dominated Scottish football since the league began.
A Currency Conundrum for you, not from the border. Which of these countries' bank notes does not feature the Southern Cross constellation? Australia, Japan, Brazil? Which doesn't have the constellation? Answer later in the program.
These are the rates for today. Take a look at the numbers, and you can see the pound at 1.56, the euro is steady. In fact, all of the currencies because, perhaps, even though London traded, New York is out for July the 4th. Those are the rates --
(RINGS BELL)
QUEST: -- this is the break.
(COMMERCIAL BREAK)
QUEST: The German chancellor Angela Merkel and the Italian prime minister Mario Monti have put on a show of unity. It took place in Rome. It was a joint press conference. Mrs. Merkel said they were determined to face together the difficulties of the eurozone.
Her Italian counterpart said his country had been working on important reforms to the pension system and spending review package, which will be ready by the end of the week.
It was an important show of support for each other, since it's widely believed that Mario Monti bounced Mrs. Merkel into making concessions at last week's euro summit in Brussels.
Most European markets closed the session lower. If you join me in the library, you'll see what I mean. Well, if you look at the big four in Europe, London, Paris, and Frankfurt, they were down, not hugely.
You've got to remember, it was a fairly quiet session, New York not been trading with July the 4th Independence, and everybody is expecting to see what the ECB does when they're widely thought to cut rates at the meeting.
In fact, the latest reports, a vast majority of economists who monitor these things do expect a small cut in rate by the ECB tomorrow. If they don't, they will disappoint the market, and you could probably see a target and a tumble there.
Spanish bond yields are headed higher ahead of an auction on Thursday, 6.41 percent. It's some way off the 7 percent. But remember, there's a long way to go for Spain before it does get any form of the aid that's been suggested or that's been requested by the Rajoy government.
And France's new socialist government, well, we knew it was coming, and so it has arrived. Francois Hollande has announced $9 billion-worth of tax rises. It affects the richest households and businesses. He promised it in the election, and now he's living up to it.
The deficit-busting budget is also designed to sweeten the bond market, and even though France has lost its Triple A to at least protect those rates that still exist.
The French budget reverses measures pushed through by the former president, Nicolas Sarkozy. It's raising fears the French will simply leave France rather than pay higher taxes. Our very own Felicia Taylor in New York has met one French buyer who has set his heart on living in the Big Apple.
(BEGIN VIDEOTAPE)
(WOMAN SPEAKING FRENCH)
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT (voice-over): For top real estate agents in New York these days, it doesn't hurt to speak un petit peu de Francais.
(WOMAN SPEAKING FRENCH)
TAYLOR: Pamela Johananoff is showing this newly-renovated apartment on Manhattan's west side to Xavier Guery, a French-born derivatives broker who lives in New York. Guery says, when it comes to investing in property, New York wins hands down over the eurozone.
XAVIER GUERY, FRENCH-BORN DERIVATIVES BROKER: It makes the perfect buying apartment here at the moment.
TAYLOR: Guery is not the only Frenchman setting his sights on a swanky Manhattan pied-a-terre. Barnes International USA director Christophe Bourreau says the number of French citizens interested in buying in New York for investment purposes is rising fast.
CHRISTOPHE BOURREAU, USA DIRECTOR, BARNES INTERNATIONAL: We have been contacted over the past month by people that never came to New York, but they read articles here and there that the market is strong.
TAYLOR: Chalk some of that up to the election of France's new socialist president, Francois Hollande, who once said --
FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): I don't like the rich. I don't like the rich, I admit that.
TAYLOR: Hollande has pledged to hike tax rates on those making more than a million euros a year to 75 percent. Other taxes on the rich could rise, as well. And with socialists now in complete control of the French legislature, those goals are within reach, to the dismay of many.
GUERY: You have to give up 75 percent of whatever you make above 1 million, where's the point of working harder?
TAYLOR: Christophe Bourreau says the socialist sweep is a wakeup call for French citizens looking to invest outside of France.
BOURREAU: The truth is, they really were interested about it. The election of Hollande maybe made them think maybe to go hard with it and make it real.
TAYLOR (on camera): For those who are moving to New York and snapping up property in this so-called French invasion, they're going to feel right at home. They'll find many outdoor cafes, like this one, be able to read their "Paris-Match," and sip a cappuccino.
You can come to this local boulangerie and buy a croissant, a baguette, or a quiche.
Or maybe pop into Laduree for one of their well-known French macarons, just like you would in Paris.
TAYLOR (voice-over): As for apartments --
PAMELA JOHANANOFF, BARNES INTERNATIONAL: And it's been beautifully decorated.
TAYLOR: The French do like luxury.
JOHANANOFF: The price range for my clients right now, it's between $1 million and $5 million.
TAYLOR: Among the units Barnes International is showing off, this one at the venerable Carlyle Hotel.
JOHANANOFF: It was renovated very, very recently. You see there are beautiful sycamore doors.
TAYLOR: And Barnes believes it'll see a more than 30 percent spike in the number of New York apartments it sells to the French this year.
GUERY: Magnifique, eh?
TAYLOR: The views are magnifique, indeed, for those wealthy enough to swap the Siene for Central Park.
Felicia Taylor, CNN, New York.
(END VIDEOTAPE)
QUEST: Coming up next, the culture of greed must go. We hear the verdict on London from one of the elder statesmen of the British industrial and financial world in a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
As we've been telling you in this hour, the former CEO of Barclays says the behavior of trade is involved in the rate fixing scandal was, in his words, "appalling and wrong," dealt with immediately. Bob Diamond resigned on Tuesday and says he only learned that the details of what took place last month.
Turkey says it's located the bodies of the two pilots killed when Syria shot down a Turkish jet last month. Turkey claims Syria attacked the jet over international waters. Syria denies this. The Syrian president told the Turkish newspaper he regrets the incident. He also said Turkey has interfered in the Syrian conflict and has blood on its hands.
An attempt to evict a man from this apartment building in southern Germany turned violent and left five people dead. Police say the man took hostages at gunpoint and special forces stormed in when the building caught fire. Inside, they found only the victims, including the gunman. The authorities say he took his own life after shooting the hostages.
A massive collision of subatomic particles may have revealed one of the long-sought mysteries of science. Physicists in Europe have announced they may have found the illusive Higgs boson, a particle believed to play a key role in the creation of mass, which makes up the known universe.
And three of the four men's semifinal slots are now set at Wimbledon. The main draw will pit Novak Djokovic against Roger Federer. In women's play, Serena Williams advanced after defeating the defending women's champion.
(MUSIC PLAYING)
QUEST: One thing is certain at Barclays, it's set for a change of course, whoever takes over from Bob Diamond. They will have the task of restoring faith in the British bank and perhaps becoming a litmus test for change throughout the industry. The chairman who resigned earlier this week will lead the search, and he says the bank is prepared to cast a net wide.
(BEGIN VIDEO CLIP)
MARCUS AGIUS, OUTGOING CHAIRMAN, BARCLAYS: I don't think we should limit the -- or narrow the search, one way or the other, of the sort of banker we're looking for. I think we should have a wide search and I think we should identify the right person, which is an important bank. It's an important British bank.
And the person who is going to be the next chief executive shall be someone of outstanding quality and outstanding integrity. And that's what I'm going to lead the search to find.
(END VIDEO CLIP)
QUEST: So there are several contenders for Bob Diamond's corner office suite, as you can see, this is the -- this is the entire -- well, I suppose the tower over in Canary Wharf. And we're telling you these names to put them in the frame so that you are -- you become familiar in the days and weeks ahead as we talk about them.
For instance, there's Antony Jenkins, who's the chief exec of Barclays existing retail banking. So he knows Barclays; he's not connected to the investment banking. That's a plus, but also that could be a big minus bearing in mind the huge size of investment banking. So Mr. Jenkins has many pluses but also some minuses.
There's also Rich Ricci, the chief executive of the investment side. There you've got exactly the opposite. He knows the investment world, but of course, he's closely associated with Diamond and very quickly it will become did he know what was going on, and if he didn't, why didn't he?
Other names, Naguib Kheraj, the former finance director, could be in the frame. We've got outside of the bank -- this is a name to watch -- many people are saying Bill Winters, one of the greatest names in banking, based in London, former number two at JPMorgan Chase, he left JPMorgan when he didn't get the top job. This is a man who has had deep insight into what's been happening in the financial world, and he's very much in the frame at the moment.
We also have Colm Kelleher. He's -- no picture of Colm Kelleher, but he's the co-president at Morgan Stanley. And we have Richard Meddings, the group finance director at Standard Chartered. They are some of the names that you might well see when it comes to looking at who will run Barclays Bank.
But as we put this into context as to what happens with the bank, and as we move forward into all of this, the core question is whether or not there needs to be radical change in the city of London. I spoke earlier today to Lord Peter Levene.
In 50 years, his career has spanned business, government and banking. He's been in industry, where he made tanks and most recently, he was the chairman of the insurance Lloyd's of London. This is the man we turn to tonight to ask what is wrong with banking in London? Lord Levene told me that culture of money must change.
(BEGIN VIDEO CLIP)
PETER LEVENE, FORMER CHAIRMAN, LLOYD'S OF LONDON: Well, I wouldn't say that there's a great element in that. I think what happens is -- and this used to irk me when I was in the industry, that it would take us years and years to build up a business. And we would hope you would come in and analyze it. You know, they were known at that time -- I haven't seen the phrase recently -- as teenage scribblers.
And teenage scribblers would come and say (inaudible) what you're doing or what you're not doing; you're very good, you're (inaudible). Didn't have a clue about it. But they could -- they could move this information around, either rightly or wrongly, to make money, whereas if you were actually producing a physical product, it was much more difficult. It would take you years to get this right.
So I think -- so but just to answer your question, the difference is that you could build up making a lot of money much more quickly on a rationale which, I think, was flawed.
QUEST: The scale of risk and reward came out of all kilter to anything else.
LEVENE: Yes. Yes, definitely. And you know, people have been working their whole lives, as you know, with their income up. And they -- not a menial job, but doing a reasonable job, would come up to retirement, would actually find it quite hard to make ends meet.
And yet somebody could go off to one of these newly constituted institutions in the city, making an enormous amount of money. You have people retiring in their late 40s or early 50, with more money than they ever knew what to do with.
QUEST: So what needs to happen? We've got this parliamentary inquiry, which is going to look at the immediate impact of the crisis du jour. But what you're talking about is deeper, it's philosophical, it's about a change of culture. How do we affect that?
LEVENE: That is very difficult. You know, the parliamentary inquiry which is going on is looking at this specific issue, (inaudible) slightly more broader issues. But that's not going to change the culture. And I'm not sure -- I'm really unsure how you stuff the genie back in the bottle.
I look at it from a different point of view, and this is not a political point, because it wouldn't be my politics, anyway, but I just completed six years as a director of one of the largest Chinese banks, it's the second biggest bank in the world. The remuneration there for a bank which is colossal is extremely, extremely modest. And yet they get things done.
Now I'm not -- believe me, I'm not advocating we should all follow the Communist system. But you do have people who are much more dedicated to their job, because that's what they were brought up to believe.
QUEST: Do you believe that the damage that has been done to the city as a result of this latest -- it is reparable in one sense, but that it is long lasting and will have a stain?
LEVENE: None of the above. I think that the damage that has been done to the industry generally -- and, you know, we focus on the city here, because we're here. It's not very different in the States. It's not very different in France or in Germany.
It is different in the Far East, Richard, although again, its starting to get paid a lot of money there. I think there is considerable damage. But you shouldn't overexaggerate how much effect it's having in the rest of the world.
I think that it can be reparable if people start looking at it and acting more sensibly and, you know, a lot of these scandals, if you think about what happened, as I said, with Enron WorldCom, that was a scandal to end all scandals. And everybody's forgotten about it by now. They've got a new one to look at.
Will it be much better in 10 years' time? Because I'm an optimist, I think it is. Will it be much better in a year's time? No, I don't. I think it's going to take quite some time to get there.
(END VIDEO CLIP)
QUEST: Lord Peter Levene with some wider thoughts on the crisis. The genie, it's going to be very difficult to put the genie back in the bottle.
When we return, now, look at this. What am I trying to do? Well, why am I trying to do it? Some thoughts on having a snooze in an airport, in a moment.
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QUEST: Now the "Business Traveller," if you like going around the world, you will be well aware that getting enough rest while on the road is a singular major challenge, particularly if you happen to be in an airport, either because it's a long layover or a delay or technical problem.
Whatever it is, when it comes to being stuck in the airport, tonight, we have two solutions for you. And especially if you enjoy a bit of do-it- yourself.
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QUEST: Spread out the mini motel (inaudible).
(Inaudible) the tent fabric, climb into the tent entrance.
It is now time to get help.
Thank you.
(Inaudible) yet.
Oh, that's good. It's exhausting.
The verdict? Actually, it is quite a cute little idea, although I'm not sure I'd ever use it in an airport. But I like it.
UNIDENTIFIED FEMALE: Good morning.
QUEST: Ooh.
UNIDENTIFIED FEMALE: Here's your coffee.
QUEST: Aha!
UNIDENTIFIED FEMALE: Enjoy.
QUEST: Budapest service, thank you.
There are other ways of getting a bit of sleep in an airport as Diana Magnay now reports.
Well, you forgot me toast.
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DIANA MAGNAY, CNN CORRESPONDENT (voice-over): We've all been there, a desperate bid for a big of shuteye in transit. And even with the most luxurious of travel pillows, it's never that comfortable, which is why the idea for napcabs was born, a bolt hole of privacy at your gate, for now only at Munich Airport.
NICOLA FRIEDRICH, NAPCABS GMBH: There are some ideas and projects worldwide. I think those cabins are usually not located right at the gate. So that's a big advantage for us that we can be right where the passenger needs them.
MAGNAY (voice-over): A quick credit card transaction and I'm in. There are a range of settings to make your stay more comfortable, mood lighting, classical music and Internet included in the price. So whilst my fellow passengers rough it outside, I check out the bed.
MAGNAY: Darkness. Off. Yes. Perfect. Mmm. Aah! It's very comfortable.
MAGNAY (voice-over): As soon as you check out, the cleaning staff are alerted and in 15 minutes the cabin's ready for reuse. There's some interest while we're there, they're more from the curious than those ready to commit.
UNIDENTIFIED FEMALE: Oh, yes. They look like those funny little hotels in Japan, where you just rent a coffin.
UNIDENTIFIED MALE: Very chilly.
MAGNAY: It's 15 euros an hour, minimum 30 euros.
(CROSSTALK)
UNIDENTIFIED MALE: That would be too expensive for me.
MAGNAY: Really?
UNIDENTIFIED MALE: Yes.
MAGNAY: Ten euros at night. Would you consider that?
UNIDENTIFIED MALE: Yes, I would consider that.
MAGNAY (voice-over): Lighting's clearly a problem, (inaudible) space at gates is prime real estate. These cabins don't bring in the kind of rents for an airport that a high-value shop might. So it's difficult for napcabs to secure the space and keep prices low for the customer.
But in just over three years, 31/2 thousand passengers have checked in and out of napcabs Munich facilities, grounds to make the company believe it's a concept that must catch on -- Diana Magnay, CNN, Munich.
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QUEST: We'll have more "Business Traveller" and tips and (inaudible) next week.
After the break, a historic scientific breakthrough. The progress in the sources for the Higgs boson, why it matters and let's put it into the context of man versus the "God particle." (Inaudible) all about money (inaudible) QUEST MEANS BUSINESS.
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QUEST (voice-over): The answer to our "Currency Conundrum," which of these countries' banknotes does not feature the Southern Cross? The answer is B, in Japan. The Australian $5 note features the constellation. So does the new series of the Brazilian banknotes. I didn't know Brazil had it. I thought it was Japan. I mean, I thought Brazil was the answer. But anyway, there you have the answer.
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QUEST: The financial world focuses in on one man at one bank, embroiled in one particular scandal. The science world is engaged in something altogether more profound. It's the Higgs boson, the particle that explains how mass itself came into being.
And today's scientists at the Large Hadron Collider say they've found something which resembles it. It was the culminating of moment of billions of dollars and decades of research.
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ROLF HEUER, DIRECTOR GENERAL, CERN: As a layman, I would now say I think we have it.
Do you agree?
UNIDENTIFIED MALE: Yes.
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QUEST: Mark Vernon is an author with a unique perspective on the so- called "God particle." He's a former priest with a physics degree.
Mark, when you -- I mean, with that perspective, when you hear that they've found something like this, do you leap with joy? Or do you say, oh, no?
MARK VERNON, AUTHOR AND JOURNALIST: It's very fascinating, and there's a very romantic story about it, you know, Peter Higgs had this idea of something approaching 50 years ago, this huge quest, billions of dollars, all the creative energy that represents, too. And now something that looks like it has been discovered.
But at the same time, will it make a difference to you or I? In a practical way, not now, and really not for the foreseeable future, if ever at all. But it does sort of fire our imagination, and I guess that's what appeals to you.
QUEST: That's what appeals to me, but we need to put it into the context. We're so -- in the great scheme of things, what I'm talking about tonight, LIBOR fixing, is arguably minuscule compared to what you and I are talking about now.
VERNON: What if we were a few seconds off the Big Bang that LIBOR fixing would be, but we are where we are. And you know, in terms of jobs and really practical elements of people's lives, it is -- it's a fun story, but it's not going to make much difference.
QUEST: Mark, you and I have (inaudible) cut it short, because proving the point that we go from one extreme to the other, we'll have you back again to talk about this. Many thanks indeed, Mark.
I need to turn back to the issue of Bob Diamond. The former chief Barclays CEO appeared before a panel in U.K. lawmakers today defending it. Andrew Tyrie chairs the treasury select committee that grilled Mr. Diamond, and he is with me now.
Mr. Tyrie, were you content with the answers that you got today from Bob Diamond?
ANDREW TYRIE MP, CHAIRMAN, U.K. TREASURY SELECT COMMITTEE: Well, Bob Diamond was at pains to point out that the culture of Barclays had been changed, that they had suffered hugely by coming out and settling first, that other banks were up to a much greater degree of mischief and so on.
But there were some things that just cumulatively looked somewhat implausible. We heard about a bank that had been -- where traders had been behaving extremely badly over a long period. We heard about the reputation --
QUEST: OK.
Listen, I don't mean to interrupt you, but the -- I suppose the core question comes down to whether or not you felt, for example, on the issue of why he left, why he resigned, was he ennobled (ph) by the regulators to feel you've got a satisfactory answer to that?
TYRIE: No. He said there that he didn't know what, if anything, had been said by the regulators to his chairman. I found that unlikely, but I have his comment that it is so. We'll be seeing the chairman next week.
QUEST: Are you content with the answers that you got in the way it's proceeding on the question of the Bank of England's role? What are you going to ask for, I mean, Paul Tucker's responsibilities in this?
TYRIE: Well, I don't think he added anything at all to that. He said that, as I understand it, you probably have the transcript in front of you, but he appeared to say that it was officials or it might have been ministers.
I don't know whether Paul Tucker will have anything to add to that. But certainly it doesn't seem to me that he took that issue any further forward. And I don't think, in the context of the inquiry we held today, it's crucial, either.
QUEST: So as you move your inquiry forward, and your sort of hearings, what is the core thing now that you really want to get to?
TYRIE: Well, with respect to Barclays, what I feel many members will have concluded from watching that, and probably many others who've followed this story closely, is that there was something deeply wrong with the culture in Barclays and that that may have something to do -- had something to do with the leadership, that they had these rogue traders, that they had -- that they lowered the LIBOR rate in order to protect the reputation of the company, and that his own chief operating officer carried on, falsifying returns quite happily in the knowledge that he'd thought received an email from his boss telling him to do so, even though Bob Diamond said that he -- that that email was misrepresented.
QUEST: So, finally, because the core question also becomes which other banks were involved. Do you have any intention to call or to ask to see the chief execs or executives from other banks?
TYRIE: Well, we're -- that is something that we should consider when we've seen what, if anything, regulators publish as fruit of the investigations they're now conducting into those banks. So that's something that's a bridge we'll cross when we come to it.
QUEST: Andrew Tyrie, many thanks indeed; apologies it has to be brief, but I appreciate your time for joining us --
TYRIE: Thank you.
QUEST: -- this evening. Thank you very much indeed.
So there we have the man that's leading the investigation, or at least the questioning before Parliament today.
When we come back in a moment, some "Profitable Moments," remember the New York markets are closed today. There is no trading. It is the Independence Day holiday. It's July the Fourth. QUEST MEANS BUSINESS.
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QUEST: Tonight's "Profitable Moment," we have spent so much time talking about LIBOR, minute changes of interest rates, Bob Diamond, physically ill, didn't discuss, didn't know. The issues of today's banking scandal du jour. But in the great scheme of things, does it matter?
Well, the financial world is one where the little details do count. If share prices move 1 percent, if earnings dip by 1 percent, it's enough to send investors and journalists alike into a frenzy.
Sometimes we devote too much time and energy to movements. But in the grand scheme of things are actually relatively insignificant. It's worth remembering. There are some things which represent things more important, more profound.
For example, just today, we've learned from the scientists in Switzerland, who think they may have found the Higgs boson, the Large Hadron Collider that cost $10 billion to build. It's buried deep under the Alps. And even before that, the scientists in the U.S. spent and tried out 500 trillion particle collisions in the search for an elusive particle.
Forget banks for the moment. Let's concentrate on the big picture. The chances of them being wrong, the discoveries around one in a million, because that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
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QUEST: A report in to CNN, AFP is reporting the final findings of an investigation into the Air France 447 crash that blames the pilot response to the failed speed sensors. Report's due to be officially published on Thursday. It's expected to say that the malfunctioning speed sensors were not a catastrophic failure in and of themselves. Two hundred twenty-eight people were killed in the crash. It happened in 2009.
The former chief executive of Barclays Banks says the behavior of traders was reprehensible and wrong. Bob Diamond, who resigned on Tuesday, said Barclays had been unfairly singled out for the first to own up to its mistakes.
Turkey says it's located the bodies of the two pilots killed when Syria shot down a Turkish jet last month. Turkey claims Syria attacked the jet over international waters. Syria denies this. The Syrian president told the Turkish newspaper that he regrets the incident. He also says Turkey has interfered in the Syrian conflict and has blood on its hands.
And an attempt to evict a man from this apartment building turned violent in Germany, leaving five people dead.
Those are the news headlines. You are up to date. Now, from New York, "AMANPOUR."
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