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Quest Means Business

Pfizer in the Hot Seat; Some Scientists Call Pfizer-AstaZeneca Takeover Threat to Development; Markets Up; Turkish Mine Accident; South African Mining Industry; South Africa's Economic Priorities

Aired May 13, 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: The closing Bell on Wall Street. The Dow Jones Industrials have risen once again, not much, but enough to make it a record rise. When the bell rang --

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QUEST: -- was hit, it is Tuesday, it's the 13th of May.

Tonight, a bitter pill to swallow. British politicians round on Pfizer's chief executive in London.

Also, in Turkey, a rescue operation is underway to free hundreds of miners trapped underground.

And tonight, live from South Africa, the story is all about growth after the election. We talk to the tourism minister, a crucial part of the economy.

I'm Richard Quest, live in Pretoria, where I mean business.

Good evening from the South African government capital, we are in Pretoria. And we'll have much coverage of what's happening in the South African economy during the course of the program.

We start, though, with British lawmakers in London, where else? And their attempts to make it clear to Pfizer that the proposals are not acceptable for the proposed takeover of AstraZeneca. They made it quite clear, indeed.

They join a growing chorus of officials and scientists around the world who are questioning Pfizer's commitments to jobs and research. AstraZeneca has so far rejected the American drug-maker's advances, calling the $106 billion offer too low.

The war of words began before the chief executives even got to meet the lawmakers on Wednesday. A series of statements were put out, one countering the other, getting ever more bitter.

Pfizer released a statement criticizing AstraZeneca's board, saying Pfizer believes "there is a compelling rationale for a combination." Pfizer continues to believe that "engagement by the AstraZeneca board is in the best interest of all stakeholders of both companies." That's their view.

AstraZeneca responded it was better off on its own. This was their statement: "The board believes Pfizer is making an opportunistic attempt to acquire a transformed AstraZeneca without reflecting the value of its exciting pipeline."

Jim Boulden is in London for us tonight. This is -- it's not even really fully hostile yet, and it's downright nasty. So, what did the --

(CROSSTALK)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: It is, yes.

QUEST: -- British lawmakers say?

BOULDEN: Well, it's downright nasty. What's so interesting, Richard, of course, is that we haven't even seen an official bid from Pfizer, friendly or hostile, for AstraZeneca. And so, it's extraordinary that you would see CEOs, they have been called before parliament, before you have a bid, before you have an official deal, before you even have an attempt at a merger. This is how the day transpired in parliament.

(BEGIN VIDEOTAPE)

BOULDEN (voice-over): It's rare to hear from rival CEOs about a merger deal that's not even taken place yet. But politicians here in the UK are concerned about Pfizer's desire to spend more than $100 billion to buy UK-based pharmaceutical giant AstraZeneca.

During a testy appearance before the Commons Business Committee Tuesday, Pfizer's CEO wasn't going to promise that all the jobs would be preserved.

IAN REA, CEO, PFIZER: So, I'm not sitting here saying that we can become more efficient without some reduction in jobs. We'll be efficient by some reduction in jobs. What I cannot tell you is how much or how many or where.

BOULDEN: Pfizer has made what it calls legally-binding commitments to the UK government if the deal is done, to keep 20 percent of the combined groups' total R&D workforce for the next five years. To keep substantial commercial manufacturing in the UK. And locate its European HQ and its global tax base in the UK. Ian Read would not commit to more binding promises, and there are get-out clauses.

ADRIAN BAILEY, CHAIR, UK COMMONS BUSINESS, INNOVATION, AND SKILLS COMMITTE: Mr. Read, I'm really trying to get under your skin. You've had some pretty good coaching before you came before us. What powers have you got to intervene?

BOULDEN: The chairman of the committee defended politicians getting involved.

BAILEY: Research and development involves huge sums of government money, and any company that is involved in the pharma industry benefits from enormous investments from the government in bringing their products to a commercial reality.

BOULDEN: No surprise, AstraZeneca CEO, Pascal Soriot, was praised for defending his board's multiple rejections of Pfizer's overtures. He went as far as saying a merger could be a massive time suck, especially if a merger is drawn out by American politicians and regulators annoyed by Pfizer's plan to move from higher-tax US to the UK if the merger happens.

PASCAL SORIOT, CEO, ASTRAZENECA: Any distraction, any distraction from what we are doing now would certainly run the risk of delaying our pipeline.

BOULDEN: Before the hearing, Pfizer hinted that it was willing to alter its offer if AstraZeneca entered into negotiations. AstraZeneca continues to exist the price is far too low, and that they can go it alone.

(END VIDEOTAPE)

BOULDEN: And of course, the truth here is that the parliamentarians have absolutely no way to block this deal if, in fact, the AstraZeneca board would want it to go through. But we're not at that stage yet.

But they do want to be seen to be saying to Pfizer, this American company, if you're going to come here, if you're going to take this company, we want you to make promises to keep at least a lot of the jobs here the next five years, Richard.

QUEST: All right. Jim, talk me through the time scale now. What happens?

BOULDEN: Well, tomorrow, the same two CEOs appear again in front of parliament for science -- the scientific subcommittee. So, they're going to through another set of grilling. But May 26th is deadline because of the way the takeover rules here exist.

You must see something from Pfizer and from AstraZeneca by that time. By that time, you either have to see Pfizer go hostile -- in other words, talk directly to the shareholders of AstraZeneca, go around the board and say, please, take this deal, make your board do it.

Or, you have to see them pull out and disable, try another time. But it has to happen, one way or the other, by May 26th, Richard.

QUEST: Jim Boulden, who is in London on the Pfizer-AstraZeneca story tonight. Now, Pfizer insists that has made strong commitments in terms of its R&D and the production and the safety and security of jobs. Some of the UK's top scientists have doubts and say the deal is a direct threat to development in the UK.

Dr. David Brown has worked at Pfizer and Zeneca. He's one of the inventors of the little blue pill, Viagra. He's named on the patent as the co-inventor. Dr. Brown joins me now, again, from London. In a nutshell, do you fear if this deal goes ahead, Dr. Brown, that AstraZeneca loses out?

DAVID BROWN, SCIENTIST, PFIZER AND ASTRAZENECA: I think actually both companies lose out. I think the deal is bad for both of them. If you look at what's happened as a result of the previous takeovers by Pfizer, there's been massive destruction. Destruction of jobs, destruction of global R&D, and destruction of shareholder value. This really isn't good for both companies.

QUEST: And yet, Pfizer maintains that this will not only protect those jobs, but it actually would increase, through much greater efficiencies and greater R&D spent, and therefore, would improve the possibilities of science. Why are they wrong?

BROWN: Well, just look at Pfizer's record at managing its own R&D. The last major drug discovered at Pfizer was Viagra. And that was invented in 1989. So, in the last quarter century, Pfizer has mismanaged its own R&D and failed to produce any major drugs. Why is it going to better when they have an even bigger organization to manage?

QUEST: It's very difficult to stop this takeover if the shareholders of AstraZeneca decide they want it to go forward, although that's controversial at the moment. Government don't have, really, the power, as we understand it. So, who is your call towards tonight? Is it to government, or is it to shareholders?

BROWN: Well, I'd -- place words to both. First of all, I personally would not want to see the UK become like France, where politicians interfere in business the whole time. So, I think we're on a bit of a slippery slope the way this is going at the moment.

What I would say to the AstraZeneca shareholders is to read the takeover code that was developed over the past couple of decades, but updated as a result of the takeover of Cadbury's by Kraft. It isn't just the price that they're asked to look at. They're asked to ask the Pfizer management --

QUEST: Right.

BROWN: -- to prove to them that the takeover will be increasing shareholder value in the mid to longterm, not just making money for the people who want to make money in the short term.

QUEST: Right. And finally, Dr. Brown, you make a very valid point. If we just take the way the French government at the moment is starting to interfere with Alstom and the possibility of GE versus Siemens, you're right to warn that this is a very dangerous and slippery slope upon which the Pfizer board is going to take the British government.

BROWN: Yes, absolutely. There's more at stake here for the UK. The UK is a very business-friendly environment. We've done very well in the last couple of decades in building, for instance, high-tech clusters around London, Cambridge, Oxford. And we've done that because of the very business-friendly environment. That is more important to retain than just concern about one particular takeover.

QUEST: Dr. Brown, thank you for joining us and giving us a very interesting and different perspective on this story tonight, Dr. Brown joining us, one of the co-inventors of Viagra joining us from London tonight.

To the markets and mergers and acquisitions very much on the minds of markets on both sides of the Atlantic. Smaller gains in New York -- maybe they needed some Viagra. But smaller gains in New York. The market still rising -- there's a joke in there somewhere -- to the point where it did close at a record. It's Wall Street's third consecutive record.

The S&P also climbed above the 1900 mark for the first time. The NASDAQ, that bounded between small gains and small losses.

When we come back after the break, we're going to take a look at the mining industry here in South Africa. A 16-week strike in the platinum mine, but why is this so disconcerting? After all, it's an important part of the economy, but is it still vital to South Africa's economic future? QUEST MEANS BUSINESS, we're live in South Africa.

(COMMERCIAL BREAK)

QUEST: Welcome back, QUEST MEANS BUSINESS in Pretoria. Before we look at the mining --

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QUEST: -- in South Africa, we need to bring to your attention, five people are thought to have died and several hundred are still missing or at least believed trapped in a mine in Turkey. Hundreds are feared to be trapped. Ivan Watson is in Istanbul for us tonight. Ivan, what is the latest situation? What do we know?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Richard, it appears like a major problem stemming from an electrical fire, according to Turkish government officials. Our sister network, CNN Turk, is reporting - - it's citing statistics coming -- sad statistics coming from the national emergency agency here that up to 17 miners had been killed as a result of this and 11 wounded.

The Turkish government has rushed dozens of ambulances to this province, Manisa province, to the area known as Soma. This is a privately- owned coal mine where, according to Turkish media agency reports, the fire broke out at a depth of more than a kilometer underground, and that potentially hundreds of coal miners are currently trapped there.

We've seen images of hundreds if not thousands of residents, very concerned relatives and family members, gathered around the hospital there in what is sure to be a very worrying and anxious vigil.

We've seen images of some of the miners coming out looking quite healthy with soot on their faces to applause, being rushed to waiting ambulances at night in that area. And of course, Turkish government officials saying that the key priority is to pump clean air, pure air, down into the shaft where the fire broke out. As you know, oxygen would, of course, burn off in the event of a fire.

Sadly, this is not an isolated incident of deaths in a coal mine, disaster in Turkey in 2010, at least 30 coal miners killed in the region of Zonguldak in a coal mine fire. The previous year, another 19 people killed.

So, this is a hazardous industry in Turkey, and people are watching very closely to see -- to make sure that the rest of these miners come out safely in the aftermath of what is already a very deadly fire in this coal mine. Richard?

FIONNUALA SWEENEY, ANCHOR: Well, actually, Ivan, this is Fionnuala Sweeney in Atlanta, so forgive yourself if your screen, you think, is playing tricks on you. Richard is temporarily unavailable to us because of satellite issues. We're going to go straight back to him.

But a question for you, if I may. How big a part does the mining industry play in Turkey, and specifically in relation to this particular incident, how much experience do the Turkish authorities have when it comes to situations like this?

WATSON: Well, as I mentioned, this isn't the first time that there has been a deadly incident. Again, in 2010, 30 miners killed in a coal mine fire. In 2009, 19 killed by a methane blast. And there were certainly, according to some statistics I've seen from between 1994 to 2003, more than 140 coal miners killed in the coal mining industry.

So, this is not a rare incident in Turkey. But what is particularly worrying here are the large numbers of workers that were believed to be down at the depths of the mine when the fire broke out. According to some media reports, a shift change may have been underway, in which case there could have been many hundreds more people down there.

The Turkish government saying it's rushing an ambulance helicopter to the scene. About a hundreds rescue workers as well.

And there's also bee some chatter about efforts that were being made within the last couple of months by one of the opposition parties to do some kind of a safety survey of this particular region of these coal mines in this area. As far as we know, that this was a privately-owned mine in the town of Soma.

So, there's going to be a big question about, of course, safety records, and this is going to bring up again the safety record of coal mines. If you look, within the last five, six years, we're talking about dozens of coal miners killed in different Turkish coal mines.

So, there are going to be a lot of questions about safety, particularly if we can confirm these latest somewhat tragic statistics being cited by our sister network, CNN Turk, that up to 17 coal miners have been cited as dead, according to the national security agency -- national disaster agency here.

So, this is quite serious, and there's a very worrying and anxious vigil taking place in that town of Soma right now, people very desperate to know and make sure that their loved ones come out safely in the wake of this deadly coal mine fire. Fionnuala?

SWEENEY: All right, Ivan we leave it there. Thank you very much for the update. We're going to stay there with the mining situation. In South Africa, it's three miners have died in violence related to the longest- running strike in history. The two who died weren't taking part in the stoppage, which has crippled platinum production in South Africa.

The country's mines produced nearly 5 percent less in March than in the year before. That's according to new figures from the government. Platinum saw a 44 percent decline year-on-year.

Well, platinum miners have now been on strike for 16 weeks, and as we've seen, those who refuse to stop working face the threat of deadly violence. The strikers are demanding higher pay. They say they're not getting the benefits of the country's natural resources.

Well, the president of South Africa's Chamber of Mines says the labor relations environment is creating major challenges for the industry. He spoke earlier to Richard Quest.

(BEGIN VIDEOTAPE)

MIKE TEKE, PRESIDENT, CHAMBER OF MINES OF SOUTH AFRICA: We are facing challenges, that is a new union called AMCU. I call it new because they started last year organizing in the platinum industry. In fact, before 2013, in 2012, we had the Marikana crisis or tragedy, which is something I don't want to see again. And yes, we are facing challenges.

QUEST: But at the same time, those challenges, relation to the importance of mining to South Africa.

TEKE: The mining industry is still important to South Africa. It's the fly wind of our economy, yes.

QUEST: Well, you say that but --

TEKE: It has --

QUEST: -- it's 8 percent, which is roughly the same as tourism. Manufacturing --

TEKE: Well, directly 8.2 percent. Indirectly, 16 percent.

QUEST: Manufacturing --

TEKE: Tourism is 9 percent.

QUEST: Manufacturing is still, obviously, of crucial importance. Services is growing in importance.

TEKE: Yes.

QUEST: And mining is, frankly, a pain in the neck.

TEKE: It is an important industry. It's not a pain in the neck. We're facing challenges. We employ around 500,000 employees. And most of the industries you've mentioned depend, some of them, work with mining -- with the mining industry.

QUEST: So, fundamentally, what has gone wrong with mining in South Africa that you have Marikana, you have industrial disruption, you have unions at each other's throats. You have poor labor relations with management. What's gone wrong?

TEKE: Number one, we have faced the challenge of a game that has changed. As I said, the labor relations environment has changed. We traditionally have had a union called the National Union of Mineworkers. The United Association of South African Solidarity, those were the three unions to dominate in the mining industry.

AMCU's introduction in 2012 and 2013 has been coming to the industry, specifically into the platinum industry, and in some areas of the gold mining industry. And that has created a challenge, because the way they do things, things have changed.

QUEST: In what way? Was it -- they've upset the apple cart?

TEKE: Essentially, the negotiations we've seen historically, when we negotiated with the other union, there was a clear understand that the interest of the workers, the interest of the industry must be taken cognizant of.

Right now, we're sitting in a situation where we've never seen a strike of 16 weeks with -- with AMCU. And the challenge we're sitting with is the way they negotiate. Ideally, you would have liked them to say the employees should go back to their work places, negotiations continue.

QUEST: There is a feeling, though, is there not, that the workers have not benefited to the extent -- they may have benefited, but to the extent that, perhaps, they could or should have from the gains of the industry?

TEKE: The industry has grown substantially. Over a period of time, when the industry was doing well, employees benefited. We pay salaries, we pay living out allowances, we've built houses. Yes, we've got a history. We've got a history of fatality where employees were dying. In 1992, we used to have fatalities of over 500 employees dying. Last -- 2013, we recorded below 100.

We are seeing improvements. We've faced the history of hostile, illegal mining. We've seen the issue of migrants labor. We understand that, and we're dealing with that effectually.

QUEST: But not sufficiently fast enough for some in the industry.

TEKE: The speed can be improved on. Yes, we face challenges when it comes to that. And the employees themselves acknowledge that, that we have come from a difficult time, and the industry will improve.

QUEST: How far does the industry here need to realize that there are other countries where there are mines that mine similar products, and that if, eventually, it doesn't work here, they'll move elsewhere?

TEKE: We have recognized the issue of investor confidence. We have recognized the challenge of uncertainty that are created by these issues. We're dealing directly with the issue of investors.

You're heard that we've had elections last week, successful elections. And we believe that one of the key drivers or action plans that we mustn't back up on is to restore that investor confidence.

(END VIDEOTAPE)

SWEENEY: The president of South Africa's Chamber of Mines, there, speaking to none other than Richard Quest. We've been working on the gremlins. Richard should be right back with more on QUEST MEANS BUSINESS after this, live from South Africa.

(COMMERCIAL BREAK)

QUEST: Welcome back to Pretoria. As you've seen over the last day and today, the issues facing the South African economy are really rather complex and do not make for easy solutions. Goldman Sachs believes South Africa needs to invest more in its people, perhaps more than its -- and also strengthen its institutions.

It studied the effects of 20 years of democracy, and these are some of the conclusions. Since 1994, the economy itself has quadrupled in size. High inflation has been cut in half. Up to 2007, a golden period of robust growth and falling inflation existed.

Now, we've seen the rise of a black middle class, which has more than doubled in size. But don't be fooled, though: 85 percent of black South Africans would still be defined as poor.

The biggest challenges remain. The issues of high unemployment, wealth inequality and the state of the mining sector, as well as much- needed improvements to schools and infrastructure. Colin Coleman joins me now. Good to see you, sir.

COLIN COLEMAN, HEAD OF SUB-SAHARAN AFRICA, GOLDMAN SACHS: Very nice to be here.

(CROSSTALK)

QUEST: -- at Goldman Sachs. Let's talk about this in detail. What is it you believe needs to be the priority for the government?

COLEMAN: Lifting growth to 5 percent at least in the future, which means fixing the education, fixing the health sector, fixing the labor stability, in order to get the productivity and growth that will feed 5 percent of the next 20 years.

QUEST: Right. Now, that 5 percent that we're talking about at the moment. Bearing in mind growth is at the moment -- what? -- 2, just under 3. Barely 2 percent last year. It's not going to be easy to execute that.

COLEMAN: No. And the new administration that's just been elected under president Zuma is going to have to get the generals and the foot soldiers in place, which will, in fact, implement this plan. It's not that we don't have the right policies. It's that we've been lackadaisical in implementing these plans properly.

QUEST: But that's the difficult part, the implementation. Anybody can come up with a policy that people can sign onto.

COLEMAN: Correct. So, it's really critical that the infrastructure programs, the economic growth programs, the mining sector -- which is really important to exports, very important to trade, very important to the current account deficit in South Africa is adrift.

QUEST: So, why have they failed? Well, maybe "failed" is putting it too strongly. Why has implementation not been successful?

COLEMAN: I think we have --

QUEST: Or "fail" is a good word.

COLEMAN: South Africa has fantastic amount of capital, depth of capital, markets, we have fantastic people. We need to put the people to work. And this is a second opportunity for this ANC government under President Zuma to make this implementation program work better by putting the right people in place.

QUEST: You're a hard-nosed banker.

COLEMAN: Perhaps.

QUEST: Tell me why people should believe that this time, this administration, incoming, will get it right?

COLEMAN: Well, the ANC has a very good monetary and fiscal track record. What they need to do now is put the micro policies in place and implement. They did it around the World Cup, for example. Fantastic infrastructure was built. We need to carry on that forward, so that we get more port programs, more power programs, implemented on time, on budget.

QUEST: And one thought: Nigeria claims to be number one now, after the rebalancing of the accounts. You don't buy it, do you?

COLEMAN: Well, let's just bear in mind that Nigeria has 170,000 million people, 2 million barrels of oil a day. Many things that are different. It's not as sophisticated an economy as South Africa. South Africa is twice the GDP per capita as Nigeria. But don't underestimate Nigeria. It's on the rise.

QUEST: Good to see you, sir.

COLEMAN: Thanks very much.

QUEST: Many thanks, indeed, for joining us tonight. Now, when we come back after a moment, we've already talked about the mining sector. You had an overview of the economy as seen from the banking sector.

But what about tourism? It makes up to 7 to 8 percent of the economy, and it is a growing and important part of south Africa's growth. We'll be back after the break. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" from Pretoria in just a moment. This is CNN, and on this network the news always comes first. We start off tonight -- five people are dead after an explosion in a mine in western Turkey. It's left up to 400 people trapped under ground. A major rescue operation is underway. Turkey's energy minister said the incident involved an explosion in a transformer. In Ukraine the government says six soldiers were killed. It's what is being called a terrorist attack in the volatile east. The defense ministry posted a statement on its website saying it happened in the Slavyansk region during a unit movement from a military base.

The U.N. Arab League's special envoy is to resign at the end of the month. U.N. Secretary General Ban Ki-moon accepted Lakdar Brahimi's resignation today when what he described as deep regret. He said Brahimi had faced almost impossible odds in trying to bring peace to Syria. The governor of Borno State says 54 of the girls in a video released by Boko Haram militants have been identified by name. The governor also says all the girls came from the Chibok School where 276 girls were kidnapped last month.

By any definition South Africa is one of the most beautiful countries on earth. And as it showed during the World Cup, it can put on major events and handle superb, complicated, expensive infrastructure projects. But now the question is what next for South African tourism? How to grow the cake even more. The tourism minister Martinez Van Shouldwick joins me now. Minister, good to see you, sir. Thank you so much for coming on.

MARTINEZ VAN SHOULDWICK, SOUTH AFRICAN MINISTER FOR TOURISM: Good to see you, Richard.

QUEST: You're -- first of all, do you expect to still be tourism minister by the end of the month?

VAN SHOULDWICK (LAUGHTER): Never a question to ask any politician or it's the president's prerogative no matter which country.

QUEST: Would you like to remain in the job?

VAN SHOULDWICK: Well, it's a fantastic job. Tourism is our new goal. Since 1994 growth in tourism, GDP 200 percent, compared to 74 percent for the rest of economy. So it's really going well with tourism.

QUEST: What's your priorities now? Because all the old problems are still there. The question of airlift, the question of visas, the question of intra-African travel. So where are your priorities for growing the industry?

VAN SHOULDWICK: Making sure that the private sector and government works together . We've done that. Making sure that we diversify in terms of our markets. Our traditional markets will continue to be important. Europe, the U.S., but the new markets are great for us -- Africa and Asia, China and India. But also to diversify in terms of products. Eco-tourism products very important. Our culture and heritage products, business convention, tourism --

QUEST: Right, but --

VAN SHOULDWICK: -- they are very important.

QUEST: -- now you and I have talked about the shift in product before, because we always think, you know, I mean, 'Leo the Lion.' People come here for 'Leo the lion.' But you're now basically saying that is only one element. So are you sort of saying 'Leo, back down, (inaudible)?

VAN SHOULDWICK: It will continue to be important but people want to experience more. They want to experience people, their culture, the way that they do things. And in South Africa we --

QUEST: Go ahead.

VAN SHOULDWICK: -- we have warm people. People want that connection. So of course people would like to see the big five, the game parks, but they want more. They want to taste the food and they want to see how people live and how they do things.

QUEST: So, as you now look forward to your priorities, because you're juggling many balls here. The intra-African is so important, the new markets of China, India and the like. But the traditional markets which are slow in the European Union -- I wonder whether you've got too many different messages going on at once.

VAN SHOULDWICK: No. And that is why we are outperforming all our competitors. They decided to ditch the traditional markets and move whole scale to the new emerging markets. The value from the traditional markets will continue to be very important. Per capita spending from those markets, much higher than from the emerging market. But China and India like everybody important (ph) but Africa is absolutely an underestimated market. The middle class on the African continent bigger than the Indian middle class. They're right on our doorstep.

QUEST: One of the things I've been always most impressed when I come to Suoth Africa, there's always seemed to be an important and a realization of the significance of tourism. You know, a senior minister like yourself is put in position. Do you think President Zuma will continue giving it that importance? Bearing in mind mining and all the other issues that we've heard about --

VAN SHOULDWICK: Yes.

QUEST: -- tourism can often get left behind.

VAN SHOULDWICK: I do because when he became president, he made it a stand-alone department for the first time ever. He decided that it should be one of the six pillars of our new national growth plan. So the answer is, yes, very important part of our economy. We employ already more people in tourism compared to mining. So for us it's the way to go.

QUEST: One more go at the -- I'm going to have one more go at this. (LAUGHTER). Will you still be minister at the end of the month?

VAN SHOULDWICK: And I'll have one more go at the answer -- the answer is the president's choice. That should be the case in every democracy and it's the most important prerogative that any president should have in his or her hands.

QUEST: Which is one of the things that most of us don't have to live with after an election -- how to give politicians one big thumbs up. You know, after an election you really don't know if you've got a job -- before or after.

(LAUGHTER)

QUEST: Good to see you, minister. Thank you very much indeed. When we come back, we're going to discuss the right to be forgotten on the Internet. And now Google's getting involved to say basically, 'You don't want to know? We won't tell you who you are.' After the break.

(COMMERCIAL BREAK)

QUEST: Now here's an interesting question or an interesting point. The European Court of Justice says that now you have the right to be ignored -- well, maybe forgotten on the Internet. What am I talking about? Under the ruling, search engines can now be compelled to take down things that contain irrelevant personal information. The decision was in response to a complaint from a Spanish man who objected to a Google linking an article about the repossession of his home. So, you are forgotten but not gone. Samuel Burke joins us now from New York. Samuel, in a nutshell, what does this mean? Can you insist that somebody can find out about you?

SAMUEL BURKE, BUSINESS CORRESPONDENT: Well, it depends where you are, Richard. Me in the United States right now, no. You in South Africa at this very moment, no. But if you and I were both back in London, now we can finally have a say over our digital footprints. So for the longest time, Google had says these results right here. You type in Samuel Burke into a search engine, they said we can be responsible for this, these are just links other websites. Now this court has said, no, that's not a good enough excuse. It doesn't matter where your servers are. But think what's even more interesting, Richard is that lawyers are saying that this could go far beyond just Google. It could be other search engines and even to other online publishers. So, the images that show up here for me on Google -- maybe I want Google to take these down, but maybe even an online publisher who published an article about me might have to take down this image as well. So, lawyers saying this is landmark ruling.

QUEST: It may be a landmark ruling but it's a nightmare. Look, I've got no great love lost for the search engines, but it -- could we end up with a situation where the rule is one thing in Europe but you've got to take some things down over there, and something's down over there. It could all end up as a very messy mess.

BURKE: Exactly, Richard. You could have a two-tier Internet where you see one group of results like this one. These videos could pop up inside the European Union but back here in New York, you would have a totally different set of search results. That's not just messy for online search results, that would be incredibly difficult for these companies. Imagine if Google has one algorithm in Europe and a different and a different algorithm for everywhere else in the world.

Actually I want to read you what Google said about this. In this statement, they're realizing it's going to be a very difficult situation. In their statement, Richard, they said this. They said, "This is a disappointing ruling for search engines and online publishers in general. We now need to take time to analyze the implications. And I think they're going to need a lot of time to see just how many places they're going to have to change all these search results. It's really fascinating.

QUEST: All right, Samuel, pull the strands together for me now because the whole question of privacy online -- what can be seen in what jurisdictions, which governments are going to pull down in which websites?

BURKE: Well right now --

QUEST: The patchwork quilt -- well I'm finished.

BURKE: Yes.

QUEST: Easy. The patchwork quilt of rules and regulations is slowly becoming unworkable.

BURKE: That's what Google will argue. How can they cater to one continent and completely -- cater to a continent in a completely different way. Even more interesting, some lawyers are telling me today that each country might implement this in a different way inside the European Union. But most interesting to me, lawyers say that this is the top court in the E.U., Google cannot appeal this decision so now it's up to the countries. So we could --

QUEST: Right.

BURKE: So we could be very quickly moving to this two-tier Internet, Richard.

QUEST: A two-tier Internet, that's fine, Samuel as long as you're in the slow lane. Samuel Burke joining me from New York and don't touch the bell. All right, the weather forecast here in South Africa. It is a clear sky, the moon is very easy to see tonight, glorious hot sunny days, cool winter nights. Jenny Harrison's at the World Weather Center. Is that good enough, Ms. Harrison?

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: That was marvelous, Richard. Very good, yes. And the good news is of course it's going to continue like that. For the next few days, you've got some very, very nice weather there. As you say, temperatures by day in the mid 20's, dipping down into single figures in the overnight hours. Not all of Europe is seeing such nice weather it has to be said. Still pretty warm across the southwest. We've seen quite a bit of rain ahead across central Europe. And now, once again, we've got another system really impacting the southeast. Some very heavy amounts of rain. This is what it looked like in France and Paris. In fact, just a couple of days ago as that rain came through, the good news is it has since cleared. But as I say, it is now heading towards the southeast and it's going to be lingering in this region for the next few days. Already, in just 48 hours, 73 millimeters, 67 millimeters -- you can see Croatia, Austria, so, you get the general idea.

It's a very, very slow moving this system under some heavy rain imbedded within it. So there's that system and it really does get rather cut off. We've got high pressure across into western areas of Russia. So, it's just going to sit here for the next couple of days. Quite a bit cooler too in the wake of this system and then we've got high pressure building nicely out across much of Western Europe.

So, this is how it looked in Moscow this day, very nice indeed. You can see this is one of the main parks in Moscow itself, although we all were wondering what those mounds were on the grass. Could it be grass, is it a big mole? We're not too sure. So if you've got any ideas, do let us know.

Meanwhile, that system as I say in the southeast is heading towards these areas, and really it's very widespread. The rain pretty far-reaching as you can see. Still a little bit of a snow to the top of the Alps. Not a huge amount, but then it will of course continue to accumulate in the southeast. Some areas, look at this -- could be picking up another 150 millimeters on top of what they've already had. So this is for the next 48 hours. That's a lot of rain to come down. The temperature's still high in the southwest. Madrid, cooler than it was, 25 this Tuesday, 36 in Cordoba, about the same there in Seville as well, and it'll continue to stay warm. And in fact, warming up again in Madrid for the next few days. But temperatures certainly in Seville in the low to mid-30s, so we've got that warm air in the southwest, much cooler across northern areas, very cool indeed across areas of Norway. And so a widely unsettled picture as you can see, and there's that snow across the mountaintops that tipper- (ph) most part western Europe the best place to be. Although, Richard, I have to say, I think you've got it pretty nice down there in South Africa.

QUEST: I have to say, Jenny, this, I mean, it's not the hot time of year to be in South Africa but the weather is stunning when you get these clear blue skies with beautiful sun. Jenny Harrison at the World Weather Center. Behind us is the High Court -- well it has to be of course it's Robyn Curnow --

ROBYN CURNOW, ANCHOR AND INTERNATIONAL CORRESPONDENT FOR CNN, BASED IN JOHANNESBURG, SOUTH AFRICA: Hello.

QUEST: -- our South Africa correspondent.

CURNOW: Forgive (ph) me. Good.

(CROSS TALK)

QUEST: This is the High Court --

CURNOW: Yes.

QUEST: -- where the Pistorius trial is taking place at the moment. This trial could completely shift tomorrow. Tell me why, tell me how.

CURNOW: Well it's amazing, isn't it? We just thought we were getting to the end of it and I'm not just talking about journalists, but also the defense thought they were going to wrap up their defense case perhaps next week, give closing arguments, the week after that, we're going to see and hear from the judge in terms of a judgment. That could all be out of the window because what we saw was literally the State hijacking the defense's defense, and suggesting to them -- suggesting to the court -- that they -- she -- the court should be dealing with an insanity defense.

QUEST: They're trying to basically suggest or at least the State -- the prosecution -- is trying to suggest that Oscar Pistorius should be sent off for a psycho -- for a psychiatric evaluation. Now if that happens, does that twist the entire case?

CURNOW: Well, first of all there's a delay because to have a psychological evaluation in this country, maximum 30 days. So he has to then be institutionalized in a mental institution and a panel of experts will assess him. So really, that's a delay. And then depends on what they -- what they assess him as.

QUEST: Were you surprised? You've covered this closer than anyone. Were you surprised that this case in the last 24 hours suddenly took this turn?

CURNOW: I was surprised and I don't think I was the only one because this literally has shifted the whole landscape of this case. And it -- it's not just about us worrying about how long this is going to be, there's legal precedence here that has never gone before -- State basically saying to the court , 'Think about an insanity defense here. Listen, let's push this. Let's try to explain and explore a whole area that hasn't been dealt with before.'

QUEST: M'Lady's giving her judgment tomorrow morning at 9:30. Where will you be at 9:30 tomorrow morning?

CURNOW: Oh, I wonder. Lot earlier than 9:30, I want to get a good seat.

QUEST: You get a good seat.

CURNOW: Absolutely.

QUEST: Get a good seat and when you've got a good seat, look about (ph) here.

CURNOW: I will.

QUEST: Good to see you of course. Now when we come back, we're talking with the tourism minister about 'Leo the Lion.' Well, forget about Leo the Lion, what about 'Ronnie the Rhino?' and how to stop poaching. Now they're going to strum up with some very interesting new and different ways to prevent poaching. They're using drones. We'll hear about it after the break. "Quest Means Business."

(COMMERCIAL BREAK)

QUEST: Welcome back to South Africa. Rangers in this country could soon have a new and very powerful weapon in the battle against rhino poachers. They are now starting to experiment using unmanned aerial vehicles, often better known as drones. Last year in South Africa, poachers killed more than a 1,000 rhinos -- that was a distressing record number. Illegal trade is fueled by soaring demand in Asia where many believe rhino horn can cure diseases. As these disturbing pictures show, many of the rhinos killed in South Africa are smuggled through neighboring Mozambique en route to Asia. The two countries have reached an anti- poaching agreement last month. Wouter van Hoven is director of the Centre for Wildlife Management at the University of Pretoria. Come and join me, sir. Come and join me -- come on in. Tell me what -- let me just see -- what have you got here and how does this help you in the battle against poaching?

WOUTER VAN HOVEN, DIRECTOR OF THE CENTRE FOR WILDLIFE MANAGEMENT, UNIVERSITY OF PRETORIA: Well this is a model of a CSIR in South African, and there's now research to improve the present machines that are being used. There are some of these UAVs in Kruger Park already. But this is a model and there's an all competition -- an international competition -- to improve and better these things for longer flight, better payload, better cameras and that's what basically is happening now and there's a competition in September --

QUEST: Right.

VAN HOVEN: -- competing --

(CROSS TALK)

QUEST: So what do you do? I mean, how do you use the -- obviously you put it in the air, that much I can work out -- but once it -- do you wait until you know poachers are present? Or do you actually just keep them on constant patrol.

VAN HOVEN: Now that's an important thing. At this point, when they know there's poachers, these machines then go out. And the focus in the future should be to be proactive and to find poachers before they actually get to killing rhinos.

QUEST: Right. Well, let us take this to one side and maybe you can just take the drone out for the moment while you and I -- come closer -- while you and I continue to talk. The issue of poaching with rhino is serious and seemingly getting worse.

VAN HOVEN: Yes. That's right. As you said, we've had more than a 1,000 killed in last year alone, and by the present figures, it seems that we're going to go even beyond and more in this year.

QUEST: So, to use a drone in this way, or an unmanned vehicle, what's your biggest problem or challenge in this regard?

VAN HOVEN: Well as far as Kruger Park is concerned, it's a huge park and there's at any given time about 300 poachers all over the place. So, that's a very difficult situation out there. And because of the improvement and more soldiers and rangers, we see that there's more poachers going out to the private ranches.

QUEST: With the drone, do you wait until they've crossed over, do you just do patrols? Because you could really be looking for -- pardon the phrase -- the proverbial needle in the haystack.

VAN HOVEN: That's right.

QUEST: So how do you tighten it up?

VAN HOVEN: It's difficult in Kruger Park and that's why there's constant research to improve the present situation. It is a tool -- it's one of a number of different tools to use against these poachers.

QUEST: But these drones have to be able to distinguish the -- obviously the animal and the poacher, and they have to go backwards and forwards and they have to be controlled. Where are you getting the money for this?

VAN HOVEN: Well, there's an organization Wildlife Protection Solutions, it's an NGO in the United States. They are supporting in this whole program, and we're also having a shift of emphasis. We believe that smaller reserves in parts of Africa where there's real poverty -- that should be the answer -- where we can have animals and rhinos and that the people can protect them. You know, people didn't do much good for wildlife and I think it's time that wildlife do good for people. And if people can protect wildlife and get a benefit from them like harvesting the horns, I think then we'll have a solution to food security in certain communities. And I've been out there in some of these places in the Congo and in Malawi where there's real poverty. And I think this might just be a two-way solution.

QUEST: What a splendid story. Thank you for bringing it to us this evening. Thank you for bringing the model of the drone in. I much appreciate it.

VAN HOVEN: I just wanted to say one thing -- I'm now Emeritus Professor with the University of Pretoria, I'm not there anymore.

QUEST: Well, well great that he's made that clear. Many thanks indeed. Now, when we come back, we'll have a "Profitable Moment." This is "Quest Means Business." Good evening people of (ph) Pretoria.

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment" from South Africa. There is no question when it comes to tourism, this country has done the most outstanding job of creating an industry. But it didn't happen by accident. It happened because the government put a priority on tourism and it brought the most qualified people it could find into some key roles. Many other countries in Africa would do well to learn from the experience of Southern Africa and South Africa. If you want high-paying tourists to come here, if you want to develop an industry in the way they've done it in this country, then you have to make sure the right people, the most experienced people who know what they're doing. As for the rhino industry, well what more can one say? This is another example of again making sure the right people are in the right place to stop this despicable poaching. Indeed. And that is "Quest Means Business" for tonight. I'm Richard Quest in Pretoria, South Africa. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.

END