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Quest Means Business
New Leadership for Ford; Turning Ford Around; Ford's Future; Ford Shares Fall; US Markets Down; Breaking News: Explosion in Nigeria Bus Station; Pro-Russian Activists Clash With Police in Eastern Ukraine; Ukraine's Future; IMF Bailout for Ukraine; Rallies for May Day Worldwide; Cuba's Economy
Aired May 01, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Weird sort of day on Wall Street. The Dow was up a bit, down a bit, and then finally ended quite a little bit lower. Much of Europe is closed. It's International Labor Day for workers. In other words -- oh, what a feeble little hit of the gavel. It is Thursday, it is the 1st of May.
Tonight, taking the wheel. Mark Fields is named chief executive of Ford.
(BEGIN VIDEO CLIP)
MARK FIELDS, INCOMING CEO, FORD: Alan, on behalf of all the men and women of Ford Motor Company, for everything you've done, thank you so much. You've been the absolute best.
(APPLAUSE)
(END VIDEO CLIP)
QUEST: That's the new guy thanking the old one. The outgoing chief exec, Alan Mulally, tells me he's fully confident in the succession plan.
Also, on this program tonight, Ukraine's economics minister says the priority is to take control of the east, and then secure growth.
I'm Richard Quest. I mean business.
Good evening. One of the greatest names in corporate America, one of the biggest CEOs, the most-respected men, Alan Mulally, the company that transformed the auto industry has named a new leader. Mulally, who drove Ford through the recession, announced he will leave his job in July.
And the man poised to take the wheel is the chief operating officer, Mark Fields. Mr. Fields helped turn Ford's North American operations around. He closed factories, he laid off thousands of workers. Today, Alan Mulally credited Fields with helping to reform Ford's culture.
(BEGIN VIDEO CLIP)
(APPLAUSE)
ALAN MULALLY, OUTGOING CEO, FORD: And Mark has been there from day one, and Mark decided that he was going to be a key part of the plan. I've never had anybody that's followed me around that wanted to know everything I thought. I have nothing left to teach or talk to Mark about. He knows everything.
FIELDS: It's just an incredible honor to build on Alan's legacy and to lead this great company and to work with the best darn team in the industry. It is the best team I have ever seen, and I feel very fortunate.
(END VIDEO CLIP)
QUEST: Now, when Alan Mulally took over, Ford was losing billions of dollars a year. And, of course, it had to face the great financial recession. Today, the company is profitable. It is most certainly one of the most astounding success stories. Maggie Lake now explains how Alan Mulally engineered the turnaround.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Three! Two! One!
(BARREL DROPPING ON TRUCK)
MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT (voice-over): A 55- gallon drum is dropped on this Ford F150 pickup, a so-called torture test to see if the truck can withstand the most extreme conditions.
MULALLY: And I get a phone call from Bill Ford. I'm going, Bill Ford? Of the Ford Motor Company?
LAKE: That was the moment, as Alan Mulally later told a group of Stanford students, his own test began.
BILL FORD, EXECUTIVE CHAIRMAN, FORD: I'd like to turn it over to our new president and CEO, Alan Mulally. Alan?
MULALLY: Thank you very much.
LAKE: Bill Ford hailed him as a turnaround guy.
FORD: This guy is a great team-builder. Sets very tough objectives, and then motivates the team to go get it.
BRYCE HOFFMAN, AUTHOR, "AMERICAN ICON: ALAN MULALLY AND THE FIGHT TO SAVE FORD MOTOR COMPANY": He has this amazing ability to transform cultures. To really diagnose what the ailments of a company's culture are.
LAKE: Bryce Hoffman has turned Mulally's success into a best-selling novel, getting rare access to the inner workings of the company.
HOFFMAN: He's not a car guy, he's not a plane guy, as much as he loves those industries. He is a guy who understands the value of leadership.
LAKE: This leadership was tested from the very outset. When Mulally took over, Ford was on very shaky financial ground.
MULALLY: I check with our finance people, and they give me the great news that we are projected to lose $17 billion.
(LAUGHTER)
MULALLY: In 2006. You can run out of money really fast --
(LAUGHTER)
MULALLY: -- at $17 billion a year.
LAKE: In the end, Ford lost more than $12 billion that year, something Mulally described as unacceptable in the end of the year report. It would get worse.
Like this thermal shock engine test, the 2008 economic crisis pushed the auto industry to its limits. Sales tumbled and fuel costs soared. Ford lost $14.6 billion.
REP. GARY ACKERMAN (D), NEW YORK: You all are not listening.
LAKE: But in the end, Ford was the only big American car company not to take a government bailout.
HOFFMAN: He proposed this to his team, and the reaction was like, are you crazy? Uncle Sam has his checkbook open and he just wants to know how many zeroes to write. But he said, look at this, people. If we do this, if we save ourselves ourselves, think of the payback.
LAKE: Mulally knew there was no room for complacency.
MULALLY: Few companies have restructured more aggressively. We have taken out excess capacity, closing 17 plants and reducing our workforce.
LAKE: And he got his payback. Ford's share price has come back strong since the recession, and the company notched 19 straight quarterly profits.
LAKE (on camera): For all that success, does that make it so much harder for Ford to transition now?
HOFFMAN: Well, I've always said that the biggest test, the ultimate test of Mulally's leadership is this transition. Because I believe he has created a system that can continue to guarantee success at Ford.
LAKE: That system will face challenges. So, just like the cars and trucks Ford builds, the next person to lead the company must be built to last.
Maggie Lake, CNN, New York.
(END VIDEOTAPE)
QUEST: And there you actually have the triumvirate, the past CEO of Bill Ford, the current of Alan Mulally, and the future of Mark Fields. But how far will Fields follow Mulally's strategy? One, of instance, the famous strategy to use the management culture of post-it notes.
At various meetings, green, yellow, or red would be used. Now, red would be used on a post-it note on a board if there was an issue that had to be dealt with. For example, currently, quality. Five of the ten least- reliable cars are Fords, according to consumer reports.
Then, he's got an issue of the yellow cards. Let's take Europe, where there's a nascent recovery, needs watching, not too much.
But what Mark Fields will have, big front and center, is management strength. The green post-it note. Management is good at Ford, and that is one of the legacies of Alan Mulally, as he explained earlier.
(BEGIN VIDEOTAPE)
MULALLY: I remember when Bill Ford called and I first met him here in Ann Arbor, and within a couple of hours, Bill is so neat, and he shared everything about where the company was and what the challenges were.
Within a couple of hours, we really came together on the priorities of a strategy for an exciting, profitably-growing Ford. But also a management system that would allow us to deal with a very rapidly-changing world and do it very decisively and change the culture.
And the third thing, Richard, that we're really celebrating today is that we wanted to put in place a very, very robust leadership development and succession plan. And so, clearly, we've pulled a team together, and you know the story and you've covered it well. Everybody was on the team worldwide, the businesses, the skill teams like engineering worldwide. And we started to transform Ford.
QUEST: Did you ever for a moment consider taking government money?
MULALLY: Richard, we did not. And that was one of the most important decisions that we made. But in addition to that, as you well remember and reported, we decided to actually testify on behalf of our competitors that were bankrupt.
And we did that, which is very strange in itself, but we did that because of the importance of the industry to the US economy, but also the US economy and the world economy. And we knew that if they went into free fall that we could have taken the United States into a depression.
So, even though they're our competitors, we absolutely believed it was the right thing to do, even though we didn't need the money, because we were well along on our plan to transform Ford.
QUEST: As you look at the world now, Alan, what are you most concerned about? Which part of the world is giving you that little bit of indigestion?
MULALLY: Well, the US is very strong, the economy is growing slowly, but it's growing. South America has some real issues with the currency devaluations that we're working our way through.
Europe, Richard, we're very pleased that we're starting to see a gradual recovery, maybe about a 1 percent GDP growth this year. Our operations in Europe are doing really well. We're bringing in all the One Ford plans, we're picking up market share based on the strength of our products.
Russia is a real watch item for us. We have great operations in Russia, but clearly that economy is slowing down due to all the factors that we all understand.
Asia-Pacific, Richard, is continuing to be a fantastic market. They love the Ford brand. We're putting in production to support all of the customers in China. They love the Ford vehicles, and we're the fastest- growing brand there.
And so, it's different all around the world, but our One Ford plan, where we're serving all the markets around the world with this complete family of best-in-class vehicles, is really serving the customers and Ford worldwide.
QUEST: I'm sure you've been asked this more times than is honest or decent, so what do you do now? Do you get that book that you're reading and you head off the to Florida beach --
(LAUGHTER)
QUEST: -- to sort of pop your feet upon a deck chair?
MULALLY: Well, Richard, I'm kind of looking forward to seeing you again at the air shows and at the auto shows.
(LAUGHTER)
MULALLY: That would be really fun. But clearly -- clearly the most important thing that I've been focused on is this orderly transition at Ford. So, it's fun to think about the future. I think the retirement word sounds good, too, but I love serving and I look forward to seeing what is next.
But my laser focus right now is to complete this orderly transition at Ford, which is -- very rarely has this been done, not only at Ford, but in other businesses. So, that's my highest priority, and I'm really excited about the next couple months.
(END VIDEOTAPE)
QUEST: And that's exactly the point about this transition, how to actually effect it to make it smooth and orderly from one CEO to the next. Companies rarely manage to get that right.
Ford's sales were down 1 percent in April, and the shares, they fell around 1, 1.5 percent. Still up more than 3 percent so far for the year, but I think that is classically buy on the rumor, sell on the news.
And to the US markets and how they traded. The markets were down 22 points for the Dow. It was off its lows of the day, not a particularly impressive day for the market. The jobless claims rose to nine-week highs. We will get a full jobs report on Friday.
When we come back, we'll turn our attention to Ukraine. Violent clashes broke out in the eastern part of the country. We'll talk to the Ukrainian economy minister about the $17 billion bailout package the IMF has just agreed, in a moment.
(COMMERCIAL BREAK)
QUEST: We're getting some breaking news that I need to bring to your immediate attention. In Nigeria, witnesses are reporting there has been an explosion at a bus station in Abuja. There's no immediate confirmation regarding casualties.
It's the latest in a number of security incidents in Nigeria, and it follows the kidnapping of more than 200 schoolgirls where, of course, they're still waiting to see exactly what the outcome will be. We'll have more details on what's happening in the Nigerian capital in a moment.
Ukraine's government has announced it's lost control of two regions in the east of the country. Protests turned violent in Donetsk earlier, 26 people were wounded when pro-Russian activists clashed with police.
Armed protesters have seized more government buildings in the city of Luhansk like, for example, this regional administration center. Our senior international correspondent Nick Paton Walsh has this report from Slaviansk.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Any doubts about what comes next in Donetsk region can be put aside in this quiet courtyard. In here, an old Communist Party headquarters, Sabina Zhivatovskaya is reading for a referendum on independence on May the 11th.
What question voters will be asked isn't clear, but her allegiances are as she hands out the protesters' ribbon. Soviet revolutionary Lenin would probably have approved. He's overseen here eight times.
"Without a past, there is no future," she says. "Lenin suggested a lot of good things. The Soviet Union had great power, and now we're separate, we see that Ukraine has regressed."
You might think checking the 140,000 names on a voter list in ten days is an impossible task, but she says there won't be a problem. A question about whether Russian troops are needed here to hold the vote safely is interrupted by Igor at the back.
"We've always been robbed, and they've taken from us," he says. "We simply want to be a federation and let the people decide whether it should be part of Ukraine or Russia."
Some support change here to shake them out of poverty. Distance from Kiev, who they feel have given them little.
WALSH (on camera): According to Ukraine authorities, this is supposed to be a city under siege for days. While look, the May bank holiday, no signs of tensions. The referendum, it seems, happening, and the unrest, it's a done deal.
WALSH (voice-over): Still, preparations here for the very worst. At checkpoints we, for the third day running, saw better-armed men, similar to those who appeared in Crimea without insignia before it was annexed.
And strangely, pro-Russian militants, who have run free for days, were pulling back here, dismantling a checkpoint that has twice been attacked by the army, saying they fear another advance.
This sign says the field where the day before Ukrainian military armor advanced, is laden with mines. Like the hatred sown here, difficult to undo.
Nick Paton Walsh, CNN, Slaviansk.
(END VIDEOTAPE)
QUEST: While all this is going on and preparations for the referendum continue, the IMF has approved a $17 billion bailout package for Ukraine on Wednesday. I spoke to Ukraine's economy and trade minister, who says the first task of the government after getting the money and the loan must be to regain control of the eastern part of the country.
(BEGIN VIDEOTAPE)
PAVLO SHEREMETA, UKRAINIAN ECONOMY AND TRADE MINISTER: Our number one priority is to take control over all of the country. As we know, there are issues in the east and the southeast of the country. There is the escalation of the situation.
So, the first thing that we need to do, we need to deescalate the situation and take control of the whole of the territory of the country, that's number one. Number two is the economic issue. We need to jump-start the engines of the economy so that it starts growing.
QUEST: Is the east and south of the country, as the president suggested, is that already lost? Is it out of control? Is it a lost cause?
SHEREMETA: No, no, not at all. Not at all. It's -- there are temporary issues. We believe we are heading into the elections. On May 25th, we'll be having a free, fair, and democratic election. So, what we understand is going on is a little bit of campaigning going a little bit too far.
Not in terms of the candidates, but there are the issues there, the hot, burning issues. And there are the political quarters and groups that are trying to instigate some of the issues.
QUEST: Right, but --
SHEREMETA: We hope and we believe that the situation will stabilize before or after -- immediately after the elections.
QUEST: So, when the president says it's beyond control, it's gone too far, what does he mean?
SHEREMETA: Well, first of all, we have an acting president. We are going to elect a new president on May 25th, the first round. And what the acting president means most probably is that the escalations is going a little bit too far than we want this to be. We would like to have full control of the full territory of Ukraine. By the way, Crimea included.
QUEST: The money that has been given, or is being lent by the IMF, tell me what you're going to do with it.
SHEREMETA: Well, first of all, what we need to do is we have some debts to pay, the outstanding, and this is May and June. So, part -- the immediate part of this money will go into this.
A large portion will go into the currency reserves that were actually almost depleted when we came to power in the end of February. So, we need to back up the currency reserve as well so that we can stabilize the currency and achieve the macro-economic stabilization.
QUEST: Will paying Gazprom be one of the first bills that you pay?
SHEREMETA: Well, we are having discussions still with Gazprom. I'm happy to say that tomorrow there will be a high-profile meeting in Warsaw, both with Gazprom and Naftogaz representatives, but also with government representatives. European Union representatives will be there, too. So this issue is under discussion constantly, and tomorrow, too.
(END VIDEOTAPE)
QUEST: That's the economy minister from Ukraine talking to me earlier. The IMF managing director Christine Lagarde spoke to Christiane Amanpour. Ms. Lagarde says the $17 billion package for Ukraine is not, of course, without risks.
(BEGIN VIDEOTAPE)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: It's a program which has been under negotiations for the last few weeks with the Ukrainian authorities, and it's obviously not without risk. But it's a necessity to respond to a member's request. And we have tried everything we could to mitigate the implementation risks.
Just to give you an example, prior to agreeing, we asked the Ukrainian authorities to take a few of the hard measures which had been under discussions for the last few years and which they were reluctant to take.
Such as, for instance, letting the exchange rate fluctuate. Such as, for instance, revisiting the procurement law in order to establish a bit of governance in the way they deal with companies.
Second, it's a program that sequences over two years the disbursement. So it's not as if we were disbursing $17 billion tomorrow.
CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL CORRESPONDENT: Right. And can they survive?
(CROSSTALK)
LAGARDE: We're going to do that over time.
AMANPOUR: Can they survive on your disbursement?
LAGARDE: It will not be enough, let's face it. But as usual, the IMF has to intervene in times of crisis, and when we do so, we take all the precautions we can, and then we try to catalyze additional support. And we have received assurance that various countries, other organizations, such as the World Bank, such as the European Reconstruction Bank, will also provide support and funding to the country.
All in all, we believe that another $15 billion will be coming out of those other international institutions and other countries. And that together with our $17 billion package should be OK to sustain the country in the next two years and help it through the bold economic reforms that they have to take.
(END VIDEOTAPE)
QUEST: That -- you can watch the full interview with Christiane, the full interview with the IMF managing director Christine Lagarde. It's on "Amanpour." It starts in about 30 minutes here on CNN.
From half a million-man marches to violent riots. Today was May Day. It was always going to be noisy.
(BEGIN VIDEO CLIP)
(TRUMPETS AND PERCUSSION MUSIC)
(END VIDEO CLIP)
QUEST: We'll take you around the world to look at this year's celebrations of the working man and woman.
(COMMERCIAL BREAK)
QUEST: The sacred day for workers and unions across the world is, of course, May the 1st, and protests in Seoul have been fueled by anger at the ferry disaster where hundreds of school children perished. Five thousands workers gathered outside a railway station this afternoon and marched to City Hall, where they paid their respects at a makeshift memorial.
In Russia, a May Day parade was held in Red Square for the first time since the collapse of the Soviet Union. In a patriotic demonstration, thousands of Russians marched past the Kremlin, in part to celebrate the recent annexation of Crimea.
In Istanbul, security forces blocked the entrance to Turkey's Taksim Square. Protesters threw stones and bottles at the police, who returned fire with plastic pellets, teargas, and water cannons.
Cuba's president Raul Castro led some 600,000 May Day paraders through Revolution Square in Havana. The government bused in workers to the capital for the celebration, in the words of Castro, "to make the Cuban land shake."
Now, Raul Castro has begun implementing gradual economic changes since taking over as president in 2006. For a glimpse of the future of the socialist economy in Cuba, CNN's Karl Penhaul sent us this dispatch from Havana.
(BEGIN VIDEOTAPE)
KARL PENHAUL, CNN INTERNATIONAL CORRESPONDENT (voice-over): Old Havana's buildings, little changed, and some little maintained, since Fidel Castro's revolution. But look closer -- a sign of new economic times. Down the street, mechanic Ernesto Ramirez is asking about $18,000 for his two- bedroom apartment. That, he insists, doesn't make him a capitalist.
"Regardless of whether we can sell a house or a car now, that doesn't mean the Cuban system is disappearing. Socialism will continue," he says.
Two and a half years ago, President Raul Castro approved reforms allowing Cubans to buy and sell their homes for the first time in half a century. Now, thanks to another new law, real estate brokers, like this one, are legal.
"House prices grew at first, and for about a year, they've been stable, or even dropped a little. But as Cuba opens up to foreign capital, then logically, prices will increase," he says.
La Isla Realtors says it has 500 houses and apartments available. "Some people like to move straight in and have nothing to do, but others like to buy something to remodel. That, of course, affects the price," she says.
For example, this two-bedroom fixer-upper near the sea front is going for about $35,000. A des res in this art deco building would cost about twice that.
On the edge of Old Havana, real estate agent Cantillo shows me a three- bedroom home built in the 1940s. He says some buyers are keen to avoid property expropriated after 1959. "They look for original deeds where children or grandchildren are still alive. That avoids the fear that a third party could come and register a claim," he explains.
With state salaries running at round $20 a month or less, and so far no bank mortgages available, ordinary Cubans have to sell their own home before buying another.
"Our property is our little treasure chest. We can sell one place and then look at buying somewhere else, and that helps energize the economy of the country," she says.
Change often comes slowly here, but homeowners and realtors seem convinced the emerging property market can drive economic reform without destroying Cuba's revolution.
Karl Penhaul, CNN, Havana.
(END VIDEOTAPE)
QUEST: When we come back in just a moment, the first report on the disappearance of Flight 370 shows a four-hour gap when the plane left radar to when the search began. We'll take a look at how the time ticked away.
(RINGS BELL)
(COMMERCIAL BREAK)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN and on this network the news always comes first. In Nigeria witnesses reporting an explosion at a bus station in Abuja. There's no immediate confirmation regarding casualties. It's the latest in a number of security incidents in Nigeria and it follows the kidnapping of more than 200 schoolgirls.
Ukraine's acting president has ordered a return to compulsory military service - excuse me -- for young men in an effort to counter growing rebellions in eastern cities. Pro-Russian militants seized a prosecutor's office in Donetsk today. They're preparing riot police armed with tear gas and stun grenades.
At least 33 people have been killed and dozens more injured in a military air strike in the Syrian city of Aleppo, this according to the U.K.-based Syrian Observatory for Human Rights. The attack comes a day after Syrian forces dropped a barrel bomb on a school in the same city that killed at least 25 children.
Yemeni soldiers - ten Yemeni soldiers - and more than a dozen suspected al Qaeda militants were killed today as the government cracked down on local insurgence. Yemen's security forces also reported having killed Abu Muslim al-Uzbeki, one of the suspected leaders of al Qaeda in the country.
The Ford Motor Company's named a new chief exec. The COO, Mark Fields, takes over in July. The current chief exec, Alan Mulally is credited with turning Ford around after the financial crisis without taking a government bailout. He told me he's focused on making his exodus smooth as possible.
(BEGIN VIDEOCLIP)
ALAN MULALLY, CEO, FORD: The most important thing that I've been focused on is this orderly transition at Ford. So, it's fun to think about the future. I think the retirement word sounds good too, but I love serving and I look forward to seeing what is next.
(END VIDEOCLIP)
QUEST: The Malaysian government today released the first preliminary report on the disappearance of 370. The report was actually sent to ICAO up in Montreal as required by the Montreal Convention and the various rules and regulations of the Annex 13). And today, not only did we get a five- page report which was fairly basic in details, we've got the seating list, we've got a maps, we got the cargo manifest and we also got - crucially - the timeline of communications between the various air traffic control centers after the plane and after the incident took place. So, join me at the Super Screens as we go through what can only be described as a rather extraordinary four-hour period after the plane went missing.
We are going to go through this. I'm going to give you - there's actually 24 points. Don't worry, we're not going through all 24. Instead, we're going to go through hour-by-hour and give you a taste of what was happening during those various hours. So, the first hour, at 1:18, the plane disappears from radar. Now throughout that next 60 minutes - throughout the next hour - there are numerous investigations. But the most important, at 1:38, Ho Chi Minh basically says to Kuala Lumpur, `Hang on, this plane hasn't arrived. We were expecting it. It's fallen off the radar, we don't know where it is, but we were expecting this plane.' In the second hour, two hour later, Kuala Lumpur asks if Malaysia 370 was actually supposed to go through Cambodia because there's some report from Malaysian Airlines that the plane was actually over Cambodia. But Phnom Pinh incidentally says, `No, it's not there.' And as the hours go on, it becomes clear that it's clearly not in Cambodia. Hour three, and Malaysia Airlines tracker now says quite clearly their information about Cambodia, about a normal state of affairs is not reliable. And throughout all this period, throughout the next couple of hours, as the clock ticked `round, KL is asking Ho Chi Minh, Ho Chi Minh is asking KL, both are asking Malaysian Airlines `Where is the plane?'
As you move forward, the search teams at 5:30 are finally activated. Four hours has passed since that first call. The report recommends all commercial aircraft are now tracked in real time. To Peter Goelz, the former managing director of the NTSB. He joins me now from Washington. We talked about this several times, Peter. I mean, I'm being - I say an hour, an hour and a half just for the usual left knowing what the right hand is doing. Am I wrong in saying four hours seems excessive?
PETER GOELZ, CNN AVIATION ANALYST: Inexcusable. But you're right, you know there is, as you know, in aviation there's a reluctance on, you know, pilots' part, air traffic controllers' part, to ever declare an emergency. They are loathe to do that right out of the gate. But in this case, after 18 minutes of the plane not showing up on the radar screen, the alerts should've gone out, certainly within the hour or an hour and a half as you mentioned. Four hours - inexcusable.
QUEST: There's a point at which - 40 minute after 2:18 - we have this bizarre bit. Cambodia has confirmed it's not there and was never meant to be, Ho Chi Minh says radar contact was lost and radio contact never established, and everybody says we don't know where the plane is. I don't know what more you have to do in that situation before you start sort of saying `crisis.'
GOELZ: Well, I tell you what has to be done and what wasn't done is somebody at the air traffic control center has to call up the general and wake him up and say, `We've got a crisis.' And apparently they're loathe to do that.
QUEST: Now, let's talk about the other information we did get. You have probably written more preliminary reports or at least you've had to supervise the writing of them. The prelim is a fairly boring document. It's the documents that go `round it that are interesting. S
GOELZ: That's right, and, you know, this document should've been published two weeks after the accident. It is dry, it is factual. There is no analysis in it by design. But the way in which an investigation gains any credibility with the family members, with the public at large, is by issuing periodic reports like this from the start that give basic factual information that is built on in subsequent reports. That we've waited seven weeks, eight weeks is simply unacceptable.
QUEST: Finally, we are moving into the most difficult area, because now this search goes - continues to go - right the way down with a much wider search area than we were before off the coast of Australia. Do you think, Peter, we've all just got to prepare ourselves for this long, hard slog?
GOELZ: I do, Richard, and I've been saying this from the beginning. I mean I've overseen some open-ocean searches. Even' when we've know where the aircraft generally was, they are very difficult, they take a long time and in this case, you know, the suppositions that we're working on - if they're off just a little bit - are going to end up - end up moving the aircraft enough so that's it's going to take a very long time to find it.
QUEST: But they will, do you think?
GOELZ: They're not going to stop. Commercial aviation cannot tolerate a vacuum like this.
QUEST: Right.
GOELZ: They cannot allow a mystery.
QUEST: Peter, good to talk to you, sir. Thank you for putting it into perspective. I appreciate it tonight. Thank you.
GOELZ: Thank you.
QUEST: When we come back, there's more "Quest Means Business." Good evening.
(COMMERCIAL BREAK)
QUEST: Sport stars and billionaires are lining up to buy the Los Angeles Clippers. The National Basketball Association, the NBA, is trying to force the current owner, John Sterling, to sell - you will be well familiar. It follows those racist comments which were caught on tape and leaked. There were plenty of high-profile names who may be about to bid for the Clippers. Let's talk about some of those names.
The basketball legend, Magic Johnson, whose name actually came up in the inflammatory comments, he already owns part of the L.A. Dodgers baseball team. He was previously part of the Lakers, which was another NBA franchise in Los Angeles, so he has already said he might be interested. Then you've got David Geffen who made a failed attempt to take a controlling stake in the Clippers four years ago. He'll obviously be highly interested. Worth a fortune entertainment mogul - he's going to want to get in there when it happens. The Oracle chief exec Larry Ellison is a potential buyer. Ellison has tried and failed to buy the Golden State Warriors, the NBA team based in Oakland, California.
And - just throw another name into the pot - Oprah Winfrey says she might be an interested partner - part owner - with Geffin and Ellison in a bid. You can see the deal making about to come together. Finally, the boxing champion and entrepreneurs Floyd Mayweather, Jr. and Oscar da la Hoya say they might make up a team to purchase. Mayweather is a courtside regular at Los Angeles sporting events. I think I'm going to get a tenner (ph) - tin out - go `round the studio. Maybe you'd like to contribute and we could have the "Quest Means Business Consortium" going for the Clippers. We could call it the QMB Clippers. Maybe not.
The league owner's Michael McCann joins me now from Saint Anselm College in Manchester, New Hampshire. You're going to join us, you'll put some money in the pot I hope to also join our bid. Sir, let's start - how are they going to force Sterling to sell? Which of the clauses in the constitution are they going to use?
MICHAEL MCCANN, LEGAL ANALYST: Sure, Richard, so the key clause really - there're a couple of key clauses, one of which is article 13. Article 13 talks about owners deciding - three quarters of them deciding - to essentially oust one of their owners. And 13's an interesting provision because most of 13 - there are 10 portions of it - nine of the 10 portions really talk about specific conduct that has nothing to do with what Donald Sterling did.
QUEST: Right.
MCCANN: It's about financial impropriety, betting, things aren't related. But then there's this catch-all provision -- the first part of section 13 which talks about any type of conduct that's intentional, willful that violates the NBA's rules. And that clause is very nebulous and it will be one that could end up leading to litigation.
QUEST: OK. Litigation because Sterling will say `I didn't break the rules or if there is a rule that I broke, it wasn't such egregious to take the extraordinary stage - step - of expropriating my ownership - basically that's what it's going to be, isn't it?
MCCANN: That's exactly right, Richard. The idea that his wrongful conduct simply doesn't warrant this type of extraordinary -
QUEST: OK.
MCCANN: -- measure --
QUEST: He has a -
MCCANN: -- that if he were to be thrown out of the NBA for making racist comments in a private conversation, a conversation that may've been recorded illegally and then shared with the media potentially illegally - that if that's the - if that's the bar for losing your team, then many other owner could have made similar missteps to warrant that type of extraordinary measure. Now, we could say it's not just about the private conversation, it's the contents of what he said and then it became an international crisis for the NBA. But he's going to argue that that wrongful conduct simply doesn't match up with anything within the League's rules - to throw him out.
QUEST: I'm not defending his comments in any shape, form or description but I am saying to you, sir. He has an argument there, doesn't he? He really does have quite an argument because at the end of the day, he owns it. All right he joined the club, he agreed to the rules of that club, but he owns it and surely there has to be an extraordinarily high bar before you force somebody to sell an asset.
MCCANN: One would think. I think your instinct is right, Richard. Your analysis is spot-on. It's very difficult to imagine losing a team because of personal comments made in your house that you didn't intend to leave your house. It's really a striking outcome for him, and, again, obviously what he said was reprehensible, it was outrageous, it's intolerable but it was made in private. And this isn't like Marge Schott who was an owner of the Cincinnati Reds back in the 1990s who made a series of racist comments -
QUEST: Right.
MCCANN: -- about African-Americans. She was sympathetic to Adolf Hitler. Those comments were made publically. These were made privately. If this can trigger losing your team, I think some owners may be wondering what else could lead to that outcome.
QUEST: Michael, good to see you. Thank you, sir, for putting that in perspective. We'll talk more about it once we know the decision and the results. The weather forecast now demands attention. Jenny Harrison is at the World Weather Center.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, Richard, need to talk of course about the storms affecting - or that have been affecting - the United States. Now, one of the things you asked me a couple of days ago is, you know, how is - how are - we right now in terms of the number of tornados compared to the average? Well so far, believe it or not, it's been a very slow season. This shows you on this graph - that red line there would be a real peak here and happy knows (ph), but so far we've been well below the average and that's at the end of April. Two hundred and fourteen is the total. Now, on average by this time in the year, there should've been about 299/300 tornados. But certainly May is the month when we expect to see many, many more as you can see here - this is the averages of the last 20 seasons.
So we do expect to see a severe increase, but certainly in the last few hours, the last 24, it's really been about the amount of rain that's been coming down - some record-breaking rain totals here. We've got 450 millimeters in Pensacola, 481 in Foley in Alabama and in particular - just have a look at these pictures because this is from Pensacola. So this particular house is a before and now I'm going to show you an after the flood waters came through. It came down in a very short space of time and this is what it looks like now. In fact, a colleague out there, Chad Myers has been reporting from here this - throughout most of the day - and this is what it looks like. See the burst water main, you can see pipes that are obviously revealed. That is completely the road that was washed away. Here's another roadway that, again, was just so severely damaged by the rain - just look at it. There's a huge operation now in place for many parts of the south, but they've got to get things back up and running.
But the rain of course has not stopped there. It continued to work its way up into the northeast in the last few hours. Some very heavy amounts of rain here as well. In terms of some amounts - some totals - 134 millimeters to LaGuardia in New York, New York 133 millimeters, and so not surprisingly plenty of flood warnings. Not even watches, but flood warnings are still in place. The rain is of course continuing to move out of the picture. But we've had quite a lot of delays at the major airports today. Newark right now is a ground storm, it wasn't as bad even just an hour ago. New York LaGuardia we've got one hour and a half nearly there and also in Boston 56 minutes. So, this is the rain clearing away, pushing up into eastern Canada, but all the while becoming a lot lighter. Much cooler in the wake of this weather system. However, out across the West, no rain which where we need it because of the drought and also some really record-breaking heat. Look at these temperatures for Wednesday - 33 in Los Angeles, 32 in San Francisco, against an average of 18 degrees. So, again this Thursday we expect to see perhaps some records broken. LA could be 33, Portland 30 and Seattle 28 against those records which are just at a degree or so lower. Again, the concern now is fires. There's a couple that are burning right now. Only 10 percent contained. All these areas very, very strong winds, very low humidity and that is why the warnings are in place.
Meanwhile in Europe, a bit of a cool down as we head into the weekend. Still unsettled in the south - I'll have those details for you certainly by tomorrow. Richard.
QUEST: Jenny, thank you very much indeed and some weekend weather and some weekend thoughts tomorrow. We'll look forward to that. We'll be back. This is "Quest Means Business." Good evening.
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QUEST: More now on that explosion at the bus station on the outskirts of the Nigerian city of Abuja. Vladimir Duthiers is in Lagos and joins us now. What more could you tell us? Do we have any word on casualties?
VLADIMIR DUTHIERS, CNN CORRESPONDENT: Richard, I just got off the phone with a spokesman for Nigeria's National Emergency Management Agency and he says that he believes at least eight people have been killed in what he's describing as an explosion probably from an explosive device. He's not sure exactly what kind of a device, but it happened at about 8 p.m. local time here in - here in Nigeria, that's in the capital Abuja. He says that casualties are still coming in. They've cordoned off the area, they're directing people away from the scene of the explosion and trying to keep people calm. He said also something really interesting, that this explosion happened not more than 100 meters away from the scene of the explosion that took place on April 14th. That explosion killed at least 71 people, injured over 120 -
QUEST: Right.
DUTHIERS: -- people in a bus station which appears to be in pretty much the same location where this explosion has gone off, Richard.
QUEST: Eight killed is the preliminary number that you are saying so far, which gives an idea now this is an extremely serious - obviously any sort of bomb is serious - but one that kills eight it goes way up the scale. The World Economic Forum is due to hold its Africa forum, if I'm not mistaken, either next week or just into next week. There are already security concerns as a result of the previous explosion. This makes things a great deal worse, Vlad.
DUTHIERS: That's right, Richard. I mean, this couldn't be happening at a worse time for the image of Nigeria and its government. This country has been under a serious security threat since 2009 when the infamous terrorist group Boko Haram really started to launch their campaign of terror across the country. Now, for many years the attacks that Boko Haram carried out were pretty much in the northeastern part of the country. In fact, three states in the northeast are still under a state of emergency. But in recent years, they've started to expand that campaign of terror and we've had an attack on the U.N. in Abuja - that was in 2011 - killed at least 20 people there and this, as I said, --
QUEST: Right.
DUTHIERS: -- recently just two weeks ago, an attack that killed 71 people and that this is another attack just a few days away from what is supposed to be a very big event. Now, as you know, Nigeria has rebased (ph) its economy. They are now considered the largest economy in Africa. If this is coming at the eve of this event, it will probably put a lot of people off to it.
QUEST: Vlad, many thanks. Vladimir Duthiers is going to be following the events from Lagos and will of course get back to us when there is more to report. And I'll just recap to you as Vlad's reporting, eight people are preliminarily - from earlier reports - believed to have died in an explosion at a bus station in Abuja. There's no confirmation on that number. It's the latest in a number of security incidents in the country which in fact is due to host the World Economic Forum in Africa at the end of next week. This is CNN. Because the news never stops, neither do we.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." If all that Malaysia had produced and released for us was this five-page report, well I'd rightly be standing here tonight suggesting that it's scant at best and we needed more details. But they didn't. They gave us a whole load of backing documents - maps, the seat list, the cargo manifest and this crucial list of conversations that took place between various air traffic controllers. It can't have been easy to put out this list because, frankly, it is a rather sorry account of a four-hour delay with communications between Kuala Lumpur, Ho Chi Minh, Malaysia Airlines, Phnom Pinh, Singapore - anybody but not the military. And what it reveals is that for those four hours, the plane was flying in the opposite direction and seemingly, seemingly there is no sense of panic. Right or wrong. As a simple airline passenger, I can say with authority I'd rather like to know that if my plane was missing for four hours, somebody might think we better go and have a look. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
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