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Quest Means Business
Sepp Blatter Confirms He's Leaving FIFA; FIFA to Elect New President February 26; Coca-Cola Pushes FIFA for Independent Reforms; Dow, NASDAQ Up; Gold Hits Five-Year Low; Former Greek Finance Minister Says Greek Reforms Doomed to Fail; Greece Reopens Banks, repays Debt; Trump Refuses to Apologize for McCain Remarks; Uber, NYC Mayor Trade Attacks
Aired July 20, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:57] (NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: The Dow edges higher as trading comes to an end on Wall Street. It's Monday, July the 20th.
Tonight, a big money farce at FIFA HQ. Sepp Blatter's reform plans are hijacked in Zurich.
Open for business. Greek banks throw their doors back open.
And better off alone. The CEO of PayPal tells me about its future away from eBay.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
Good evening. Tonight, as Sepp Blatter confirms the end of his 17- year reign over FIFA, a comedian reminds him of his legacy in the eyes of critics. A press conference in Zurich meant to showcase how FIFA plans to
clean up its act was hijacked.
British comedian Simon Brodkin rushed the stage, jumped in front of Blatter, and before he could be removed by security, showered him in a
flurry of fake dollar bills. The FIFA president promptly exited the room. When he returned, he announced the reforms being instituted after the
corruption scandal that rocked global football.
(BEGIN VIDEO CLIP)
SEPP BLATTER, PRESIDENT, FIFA: My duty and mission now is to defend the institution FIFA and not to defend myself. I can defend myself. I
don't need help with that. But FIFA -- and I am happy that today the executive committee, together with the confederations, they have said yes,
president, we will help you. We take also the responsibility to go and defend FIFA.
(END VIDEO CLIP)
LAKE: Amanda Davies has more after an eventful day at FIFA headquarters in Zurich.
(BEGIN VIDEOTAPE)
AMANDA DAVIES, CNN SPORTS CORRESPONDENT: As much as FIFA tries to move forward to draw a real line in the sand, they're forever being
reminded of the corruption scandals to engulf them. The FIFA president's news conference interrupted by a British comedian throwing a wad of fake
cash at him.
But there was real progress made here at FIFA house on Monday. The first step to replacing Sepp Blatter as president with the decision of the
date for the extraordinary congress where the vote will be held.
Blatter had said he wanted time. Well, he's got it. It wasn't the December date that many were pushing for. Instead, a date of February the
26th. But fear not, Blatter insists he won't be standing again.
BLATTER: I will not be a candidate for the election in 2016. I have put my mandate at disposal, and now there will be new elections, elections
for the new president. I insisted on that. It's not only for a president, for a new president. I cannot be the new president because I'm an old
president.
DAVIES: The man in pole position for the job, it seems, is the UEFA president Michel Platini. He opted not to stand at the last election, and
arguably has the most to lose of all the people being talked about.
But it's understood that Platini has received the backing of four of the six world confederations, importantly of Asia. And his chief of press,
Pedro Pinto, confirmed that he is considering his options.
PEDRO PINTO, Head of Communications, UEFA: He has been pleased to hear a lot of words of support from some of the world's leading football
decision makers, and that has not gone unnoticed. So, he will have to make a decision regarding what his next steps are. He's not ready to make that
decision now, but he has been impressed by the fact that many people could see him as a possible successor.
DAVIES: Platini and any other potential candidates have until October the 26th to officially declare their intention to stand, and the decision
of the executive committee to agree in principle to the reform process put forward by Domenico Scala. And the establishment of an 11-person task
force means that that reform should be well underway by the time the new person takes charge.
Amanda Davies, CNN, FIFA, Zurich.
(END VIDEOTAPE)
LAKE: Pressure is mounting on FIFA to do more, a lot more, to reform. Slowly but surely, that pressure is coming --
(REFEREE WHISTLE)
LAKE: -- from major sponsors, who can hit FIFA where it hurts, in the pocket. Coca-Cola wrote a letter --
(REFEREE WHISTLE)
LAKE: -- to FIFA saying the organization needs to, quote, "build back the trust it lost." They say the best way to do that is through an
independent third-party commission that will spearhead reforms. Coke and its fell sponsors --
(REFEREE WHISTLE)
LAKE: -- Visa, Adidas, have all expressed concerns about May's bribery scandal and about the maltreatment of workers building stadiums in
Qatar. The FIFA World Cup is to be held in Qatar in 2022.
[16:05:06] McDonald's said last week --
(REFEREE WHISTLE)
LAKE: -- it is not satisfied so far with FIFA's response, saying these scandals clearly go against the company's culture and values.
Earlier, I spoke to Damian Collins, a British member of parliament, who co-founded the New FIFA Now campaign. I asked him if Sepp Blatter
should be allowed to stay on at the helm of FIFA all the way until February of next year.
(BEGIN VIDEOTAPE)
DAMIAN COLLINS, CO-FOUNDER, NEW FIFA NOW: Absolutely not. He should go now, because what we can see is he's trying to manage the process over
the next several months.
He's trying to line up someone he likes as his successor, who'll protect the old guard and also control this reform process, which he set
out today, which basically is no reform. He will make sure that there's not change at FIFA and that we have a president after him who will
similarly turn his back on the necessary changes.
LAKE: At this point, do you believe he still has that much control? And what would you like to see from this newly-formed task force?
COLLINS: Well, we need a real independent task forces that is separate from FIFA. What Sepp Blatter set out today is controlled by FIFA.
It'll be a task force comprising 11 members, 10 of whom will be football officials from around the world.
The chair will be someone that they appoint, and they report back to the executive committee of FIFA. It's a model that Sepp Blatter's used
before, and it achieved no reform.
I think what we need is someone who is new, from outside the organization, someone respected around the world, maybe someone like a Kofi
Annan, who could come in with a task force team and really change the organization, cooperate with the FBI and the other investigations, put FIFA
on a new footing, and then have a fresh presidential election in some point in the future.
LAKE: Where is the pressure going to come for that change to happen? Do we -- do the sponsors have to be more vocal? Where is that push coming
from?
COLLINS: Well, I think the sponsors are a key part. Coca-Cola came out at the end of last week and said that they wanted to see this
independent third-party reform process. McDonald's have used some tough language as well.
So, I think we need to know from them, are you satisfied with what you saw today? Because I don't know how they can be. And therefore, what
further pressure will they apply?
The ultimate sanction the sponsors have and major soccer leagues around the world is to say, well, if FIFA won't reform, we will set up our
own organization, a new governing body for world football. I hope it doesn't come to that, but I think FIFA need to realize it's that serious.
LAKE: Some have called that the nuclear option. Do you believe that there have to be more frank and open discussions about that? And what
would that mean for football if it came to that?
COLLINS: Well, it's a series of steps. A few months ago, people wouldn't have predicted that Blatter would resign or, indeed, that a
company like Coke would come out and challenge people in the way they have done. And Sepp Blatter said today that his resignation last month was in
response to this growing pressure.
Now, I think over the summer, if this pressure continues to mount in the face of FIFA's failure to reform, and with a suspicion that they're
trying to put up a new president who will block reform, then I think those ultimate sanctions could come into force.
Football, ultimately, around the world is governed by money. That's one of the reasons FIFA's got into a huge mess. But that money comes from
the major sponsors and soccer fans in the countries around the world where football is really popular.
And it's their money which drives world football. And if those countries said, well, we'll turn our back on you if you don't change, we
will set up our own organization, they would have the commercial power to do it.
LAKE: I'm curious. What did you think of the tone of Sepp Blatter today?
COLLINS: I thought it was an extraordinary performance. I think he is in some ways in denial about just how great the crisis is. And I think
also, which I think angers people rightly, I think he's treating us all as fools.
He seems to think that he can get away with this very slow, gradual change of FIFA over the next few months with no real commitment to
meaningful reform. And he probably hopes no chance of a real reformer as the next president.
And I think he needs to really understand that he can't control events in that way anymore, and that the people who put the money into world
football and associations -- national associations around the world, have got the power to challenge him more directly to force him out this summer
and to set and train a real process of reform.
(END VIDEOTAPE)
LAKE: Coming up, after months of turmoil, Greece takes its first steps back toward normality. We'll give you the full story after this.
[16:09:24] (COMMERCIAL BREAK)
LAKE: US markets continue to build momentum as we kick off another busy earnings week. The Dow closed out this session slightly higher while
the NASDAQ pushed even further into record territory.
Today's gains were undercut by a major slide in the commodities market. Gold prices plunged by more than 4 percent in trade on Monday,
hitting a five-year low.
For more on all of today's market moves, let's speak with Anthony Chan. He's managing director and chief economist at JPMorgan Chase.
Anthony, great to have you in the studio today. What's going on with gold? Why did we see that move?
ANTHONY CHAN, MANAGING DIRECTOR AND CHIEF ECONOMIST, JPMORGAN CHASE: I think we got a couple of negative surprises. The Chinese reported their
foreign exchange reserves in gold, and that was about 20 percent lower than the market was expecting based on the estimates of the Chinese gold
commission.
And we also know that the dollar has been getting stronger, and historically, when the dollar gets stronger, it actually has a negative
impact on gold. And finally, Janet Yellen -- and even today St. Louis Fed president James Bullard continuing to sing that song that interest rates
are rising. When interest rates rise, gold pays no interest, it actually suffers.
LAKE: OK. So -- and the Chinese selling. We know they've been pumping a lot of money into their economy to support it. Should we be
worried about what's happening there? Do you think that is the situation that's under control? A lot of it -- a lot of traders have been talking to
me about it.
CHAN: Keep in mind that gold is under some downward pressure for many other reasons. The Chinese story doesn't help. And also, we're hearing
some anecdotal evidence that perhaps some of the retail investors, as they saw prices coming down, are looking for liquidity in gold and selling gold
because they can't sell the shares.
LAKE: That's right. When you have margin calls, you've got to sell what you can --
CHAN: Absolutely.
LAKE: -- not necessarily what you want to, right?
CHAN: That's right.
LAKE: We're in earnings season here. A lot of people went into it worried we were going to see a drop in earnings or a lot of headwind. We
still have to see some companies coming through. So far, the news seems pretty good. What are you expecting?
CHAN: Well, I think you hit the nail on the head. Seems pretty good relative to expectations. We know expectations are often beat or usually
beat by 3 to 4 percent, and I think this quarter will be no different..
But again, we expect that the market will start to react more positively as the market starts to anticipate next year's earnings as the
year progresses. But now, we'll probably get a 3 to 4 percent beat, but from a very, very low base.
LAKE: Easy to step over when the bar is on the ground.
CHAN: Absolutely.
LAKE: Lastly, I want to ask you about Europe. We've been so focused on that, there's been so much turmoil, and it's really be a source of
worry. Is that now fading? Should we be feeling better about Europe, or are we still in for some volatile times?
CHAN: There is no question that we should be feeling better about Europe. We know we got the bridge loan, we got the payment to the IMF, to
the ECB. Greece seems to be moving and making some progress, and the European Central Bank is probably going to step up to the plate.
They of course are slightly opening the banks now, not a big move, because in fact what they've done is allowing people to basically take out
of the bank what they would've taken out over a seven-day period in one day.
So, we're not done, and capital controls remain. But we're moving in the right direction. We're talking about not necessarily haircuts on the
debt, but some sort of adjustment so that the burden of the debt is a lot less. And you're hearing that from many circles in Europe, and that's a
positive.
LAKE: All right. A lot of long-term questions, but at least the short term seems like it's calming down a little bit.
CHAN: Absolutely.
LAKE: Anthony, always great to catch up with you. Thank you so much --
CHAN: Same here.
LAKE: -- for coming in.
Now, after a rocky few months, as Anthony just mentioned, Greece is taking its first steps back towards some sense of normal. Banks reopened
for the first time in three weeks. However, citizens are still struggling to access their money, as strict capital controls remain in place.
Athens also received a $7.8 billion bridge loan from Europe and immediately spent most of it repaying its debts, of course. $2.2 billion
went straight to the IMF, that repayment was three weeks overdue. And another $3.5 billion plus interest went towards servicing bond maturities
and loan interest payment to the ECB, although that repayment was right on time.
As part of its new debt deal, Athens is pushing ahead with a raft of economic reforms, but the country's former finance minister says they are
already destined for failure.
[16:15:02] Earlier, Yanis Varoufakis spoke exclusively to CNN's Christiane Amanpour. She asked him whether people had overestimated the
Greek government.
(BEGIN VIDEOTAPE)
YANIS VAROUFAKIS, FORMER GREEK FINANCE MINISTER: It's not true we did not have a Plan B. We had a Plan B. We in the Ministry of Finance
developed it under the aegis of the prime minister, who ordered us to do this, even before we came into the Ministry of Finance.
Of course, you realize that these plans, Plan Bs, are always by definition highly imperfect, because they have to be kept within a very
small circle of people, otherwise if they leak, a self-fulfilling prophecy emerges.
The problem was that once our banks were shut, the government decided not to affect -- not to put into effect this Plan B. And the Plan B
wouldn't -- make no mistake, this was not a plan for getting Greece out of the euro, but it was a plan for creating euro-denominated liquidity in
order to give us more degrees of freedom and more bargaining power once our banks were shut down.
The fact of the matter is that that Plan B was not energized. I didn't get the green light to effect it, to push the button, if you want.
And if you want, one of the main reasons why I resigned was precisely that.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Can I ask you a final question? Because just as we think a bailout is coming to
rescue Greece, people are still talking about a Grexit, including -- and perhaps especially -- the Germans.
Now, both Merkel and her finance minister are -- that word is still in the atmosphere. Do you think that will happen, and will that be best for
Greece?
VAROUFAKIS: Well, no fragmentation of the eurozone, no Grexit, can ever be good for Europe. And if it can't be good for Europe, it can't be
for Greece. There's no doubt that Dr. Schaeuble has his sights set on a Grexit, it's part of his strategy, I've written articles about this. He's
told me so, I've discussed it with him. I'm not so sure about Chancellor Merkel.
But the main point, remember, is that Europe has brought itself to a great deal of disrepute. Think about it, Christiane. We have a Greek
government which is coming to the Greek parliament and is saying to the parliamentarians, to its own parliamentarians, here is a plan, here is an
agreement. We don't believe in it, but we will try to implement it to stay in power.
And at the same time, Dr. Schaeuble and Mrs. Merkel go to the Bundestag, the federal parliament in Berlin, and they say here is a deal
for Greece. We don't believe in it, we don't think it's going to work. What has Europe done to itself?
(END VIDEOTAPE)
LAKE: That's a question a lot of people are asking. Italy was one of the few nations which supported a compromise with Greece during recent debt
negotiations. My next guest is Italy's deputy minister of economic development, Carlo Calenda. He joins me here in the studio. Lovely to
have you with us this evening.
CARLO CALENDA, ITALIAN DEPUTY MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much.
LAKE: Thank you so much.
CALENDA: Thank you.
LAKE: Varoufakis always very passionate, once again sort of putting forth that view. Let me ask you. He said people are wondering what Europe
has done to itself. You are here going around saying to people come invest in Italy. Look at Italy and its economic potential.
How do you make that argument when people looking at the crisis just happened, say Europe is dysfunctional at best? Some say doomed as a
currency union.
CALENDA: Well, crises are all over the world. Russia, Middle East, we have a lot of countries with currency problems, devaluation.
Now, I think that Europe still remains a very safe option. And within Europe, there are countries that have very good fundamentals, very strong
in export, able, capable to hook with international demand. So, I think there is a lot of good business that you can make in Europe and in Italy in
particular.
LAKE: And I know that you are promoting Italy as an export -- or maybe one that people under appreciate, but you have a currency that's
highly valued for your economy, and you have a lot of reforms that you have not been able to push through. Isn't that hurting the export sector?
CALENDA: Well, the export sector is performing very well. This year, we up 4.5 percent, and the average for the past three years has been 2
percent. Germany is 2.3. So, we are close to Germany.
Now, the problem is that you still have to push for the reform. We made a couple of very important reforms. One was on the liberal, which was
long-time due and passed by the companies especially. And then fiscal reform. And we have just announced a very significant plan for tax cuts
for the next three years.
So, I think we are moving in the right direction, as far as the government is concerned. But please do not forget that the industry has
always been there, and the performance of the X sport of the Italian companies has always been fantastic.
LAKE: Thank you very much for coming in today.
[16:20:01] CALENDA: Thank you.
LAKE: Appreciate your time.
CALENDA: Thank you. Thank you.
LAKE: Donald Trump isn't backing down. He's tripling down on controversial comments about John McCain's wartime heroism, and some say it
is the beginning of the end for The Donald.
(COMMERCIAL BREAK)
LAKE: Donald Trump says he won't apologize for controversial comments in which he questioned the heroism of Senator and former prisoner of war
John McCain. In an op-ed, Mr. Trump dug in further, accusing the senator of making America less safe and abandoning US veterans.
Joining me now is Brianna Keilar. She's CNN's senior political correspondent. Brianna, a lot of people know that Donald Trump is
outspoken, but even his -- some of his fans heard this and were scratching their heads saying, what is he doing?
BRIANNA KEILAR, CNN SENIOR POLITICAL CORRESPONDENT: Or even booing, as we heard at this event. But Maggie, it's interesting, because the
Republican establishment does not like Donald Trump. They would be very happy with him going away, and they have long said that a moment like this
is inevitable.
They believe -- and I would certainly say they are hoping -- that this is the beginning of the end for Donald Trump's presidential aspirations.
(BEGIN VIDEOTAPE)
KEILAR (voice-over): Donald Trump touching off a political firestorm this weekend by insulting former Republican presidential nominee John
McCain.
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: I supported him. He lost. He let us down. But he lost. I never liked him as much after that,
because I don't like losers. But Frank -- Frank, let me get to it.
FRANK LUNTZ, POLITICAL CONSULTANT: He's a war hero.
TRUMP: He hit me --
LUNTZ: He's a war hero.
TRUMP: He's a war hero --
LUNTZ: Five and a half years as a POW --
TRUMP: He's a war hero because he was captured. I like people that weren't captured, OK? I hate to tell you.
(LAUGHTER)
LUNTZ: Do you agree with that?
TRUMP: He's a war hero because he was captured? OK? You can have -- and I believe, perhaps he's a war hero, but right now, he said some very
bad things about a lot of people.
KEILAR: Almost immediately, Trump's remarks drew scrutiny.
TRUMP: I like the people that don't get captured, and I respect the people that do get captured.
KEILAR: McCain, a navy pilot during the Vietnam War, was shot down, held prisoner, and beaten for more than five years in Hanoi, even refusing
early release. Still, Trump has not backed down, claiming his comments were misconstrued by the media in a "USA Today" op-ed, trying on "The Today
Show" to turn his criticism of McCain to issues, like the VA scandal.
TRUMP: I'm not a fan of John McCain, he's done a terrible job for the vets.
KEILAR: McCain himself took the high road this morning.
MIKA BRZEZINSKI, MSNBC, "MORNING JOE": Does Donald Trump owe you an apology?
SEN. JOHN MCCAIN (R), ARIZONA: No, I don't think so. But I think he may owe an apology to families of those who have sacrificed in conflict and
those who have undergone the prison experience in serving their country.
KEILAR: But Trump's Republican opponents swiftly denounced the comments. Jeb Bush.
JEB BUSH, REPUBLICAN PRESIDENTIAL CANDIDATE: This is a legitimate hero that has served his country in lots of ways, and Mr. Trump knows that.
He should just apologize. I think that would probably move it on to the next thing. Next week, there'll be another one of these things.
KEILAR: Macro Rubio.
MARCO RUBIO, REPUBLICAN PRESIDENTIAL CANDIDATE: This is not just an insult to John McCain, who clearly is a war hero and a great man, but it's
an insult to all POWs.
KEILAR: And one of the two Republican vets in the race, Rick Perry.
UNIDENTIFIED MALE: If Donald Trump does not apologize to John McCain, do you feel that that disqualifies him as a legitimate presidential
candidate.
RICK PERRY, REPUBLICAN PRESIDENTIAL CANDIDATE: And as the commander- in-chief of this country? In one word, yes.
[16:25:01] KEILAR: Ted Cruz, who stands to benefit if Trump gets out of the race, would not take a position.
TED CRUZ, REPUBLICAN PRESIDENTIAL CANDIDATE: I recognize that folks in the press love to see Republican-on-Republican violence, and so you want
me to say something bad about Donald Trump or bad about John McCain or bad about anyone else. I'm not going to do it.
(END VIDEOTAPE)
KEILAR: These comments don't seem to have immediately hurt Donald Trump's standing in the polls in the key early contest state of Iowa. A
Monmouth University poll has him currently standing at second at 13 percent of this very crowded Republican field.
But at the same time, Maggie, you have to consider that those are poll results that came out right after this happened, so you could see that this
is a controversy that continues to simmer. We could see his poll numbers affected, or maybe they won't be. You never know. Donald Trump is very
much a political wild card.
LAKE: He certainly is. Brianna, how do the Republicans square the fact that although they wall want him out, he's doing so well in the polls?
KEILAR: They say that this is about name recognition, that this is someone who is very good at chasing ratings as a successful reality
television host. And he says things that are provocative, and then they get picked up by the media, and them Republicans respond to them. And it's
sort of this endless cycle that you can see.
But there's that, and then there's also this thought that his sort of very straight-talking style might be tapping into something that people
like, a lot of voters do like someone who is genuine. But at the same time, you can see in those comments that he made, Maggie, about John
McCain, how someone with this kind of style can also cross the line.
LAKE: That's right. And if straight talk was in vogue, you would have thought Chris Christie would have been doing better off the back of
that as the foil, another straight talker, and that doesn't seem to be happening. Fascinating stuff, Brianna. Thank you so much.
KEILAR: It is. Thanks, Maggie.
LAKE: Just getting going. Now, New York's mayor said today he doesn't know if the city can break off its contracts with Trump, but it
certainly won't be giving him any new business.
Bill De Blasio's feud with Trump is a small spat compared to his all- out war with the transport company Uber. That's right. The mayor today rejected Uber's invitation to a live stream debate.
Now, if you haven't been following this, at issue, a proposal to cap the number of cars Uber can put on the road. In a series of ads and op-
eds, Uber has accused the mayor of taking money and marching orders from the taxi industry.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: While taxis often refuse people in minority neighborhoods, Uber's there, taking more people to and from communities
outside Manhattan than anyone. But Mayor De Blasio is pushing the agenda of his big taxi donors to limit Uber cars and drivers and vital service for
thousands of New Yorkers.
(END VIDEO CLIP)
LAKE: The mayor hit back at Uber in his own op-ed, writing, "No company's multibillion-dollar political war chest gives it a blank check to
skirt vital protections and oversight for New Yorkers."
Julie Samuels calls the city's proposal to cap the number of Ubers a threat to innovation. Julie is the executive director of Engine, a non-
profit that advocates for start-ups, and she joins me now from Chicago. Julie, thanks so much for being with us. So, you don't agree with the
mayor's position. Why?
JULIE SAMUELS, EXECUTIVE DIRECTOR, ENGINE: That's right. We don't agree with the mayor's position, but it's really important to state from
the outset that the reason we don't agree has nothing to do with Uber.
The reason we don't agree is the way this legislation is written is that it would freeze all development from all companies who are trying to
come into the city over the next year and enter the ride-sharing market.
LAKE: So --
SAMUELS: And in fact, it's worse than that. It disproportion -- the smaller you are, the more you would be harmed.
LAKE: Right, and so --
SAMUELS: So, we're worried about the effect on those other companies.
LAKE: But the mayor and others have pointed out, there isn't any type of industry where you can come in and grow at any pace and not have some
sort of restrictions or some protections, and they're talking about worker protection, ride protection. Just getting the legislation to catch up with
this industry that's moving so quickly. Do they not have a point?
SAMUELS: Well, listen. We don't think that you shouldn't be able to regulate the industry of for-hire vehicles in New York. That's not our
point at all. We think that there are plenty of good reasons why you might want to regulate that industry. Insurance is the perfect example, right?
What we're actually talking about is putting a freeze on companies coming into the marketplace at all, and that's essentially what this
legislation would do. And we think that's incredibly dangerous for a couple of reasons.
One, it's really bad for New York City in particular, because if you've got some young -- or you don't need to be young -- if you've got
some people who want to launch a new ride-sharing company in New York and they can't, they're going to go somewhere else.
And there are a lot of interesting companies out there that could help with things like congestion and pollution and traffic. Just what Mayor De
Blasio and others are concerned about. To be clear, we're concerned about those things, too. We don't think this is the right way to get at them.
LAKE: Julie, if they do vote in favor of the mayor's proposal, is this going to hurt New York's reputation?
SAMUELS: I think so. I mean, do I think this one piece of legislation alone is going to halt start-up activity in the whole city of
Manhattan? Probably not. But I do think it's going to have a negative impact.
[16:30:01] This is out there -- there's tons of news about this, obviously. We're here talking about it right now. And people all over the
country, all over the world think of New York as this hub of innovation. But if there are -- these really kind of popular, well-known efforts to
stymie innovation in New York City, it can't help anyone.
LAKE: That's right. And the city spent a lot of time building up that idea of Silicon Alley. Julie Samuels for us, the director of Engine.
Thank you so much for sharing your views.
SAMUELS: Thank you.
LAKE: Now, after the break, the US and Cuba open a new chapter in their history, but with trade sanctions still in place, can they overcome
the economic obstacles which divide their countries.
(COMMERCIAL BREAK)
[16:00:00] JULIE SAMUELS, EXECUTIVE DIRECTOR OF ENGINE: -- this is out there, there's just tons of news about this, obviously we're here
talking about it right now.
And people all over the country, all over the world think of New York as this hub of innovation, but if there are - there are these really kind
of popular well-known efforts to stymie innovation in New York City, it can't help anyone.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL FILLING IN FOR RICHARD QUEST ON "QUEST MEANS BUSINESS" SHOW: That's right.
The city spent a lot of time building up that idea of Silicon Alley.
Julie Samuels for us, director of Engine. Thank you so much for sharing your view.
SAMUELS: Thank you.
LAKE: Now after the break, the U.S. and Cuba open a new chapter in their history book. With trade sanctions still in place, can they overcome
the economic obstacles which divide their countries?
(COMMERCIAL BREAK)
LAKE: Hello, I'm Maggie Lake. There's more "Quest Means Business" in a moment when the CEO of PayPal tells me how independence from eBay will
change his company for the better. And after one year of sanctions from the West, we'll show you how ordinary Russians have adapted the way they
live.
Before that, these are the top news headlines we are following for you this hour. A suicide blast which killed 31 people. More than 100 were
hurt in an explosion at a rally in the town of Suruc. A group had gathered there to call for aid for the Syrian town of Kobani which is a few miles
away.
The U.N. Security Council has voted unanimously to endorse the recent nuclear deal with Iran and to begin to remove sanctions on Tehran. The
United States Defense Secretary Ash Carter traveled to Israel in order to address Israeli concerns with the deal. He said the U.S. relationship with
Israel should not be affected.
(BEGIN VIDEOCLIP)
ASH CARTER, U.S. DEFENSE SECRETARY: There's no disagreement about the threats Israel sees every day - from Iran's destabilizing activities, from
terrorists like Hezbollah, Hamas and ISIL. That's what I came here to work on with Minister Ya'alon - the problems faced by both our nations and our
overall strategy in this region.
Make no mistake, this deal limits Iran but it places no limits on the United States, the Department of Defense or the U.S.-Israeli relationship.
We're moving full speed ahead.
(END VIDEOCLIP)
LAKE: FIFA president Sepp Blatter was showered with fake money after a British comedian interrupted a press conference in Zurich.
Football's governing body was announcing new plans to overhaul its transparency after several top executives were arrested on corruption
charges.
Blatter said that new measures would protect FIFA's reputation.
(BEGIN VIDEOCLIP)
SEPP BLATTER, FIFA PRESIDENT: My duty and mission now is to defend the institution FIFA and not to defend myself. I can defend myself - I
don't need help with that. But FIFA - and I am happy that today the executive committee together with the Confederations, they have said, `Yes,
president, we will help you. We take also the responsibility to go and defend FIFA.'
(END VIDEOCLIP)
[16:35:24] LAKE: American Zach Johnson has won golf's Open Championship, capping off a dramatic and historic day at St. Andrews in
Scotland. Johnson beat out Australian Marc Leishman and South African Louis Oosthuizen in a rain- and wind-filled three-way playoff. The three
players had finished atop the leaderboard at 15 under par.
It was a pivotal moment in Cuban-American relations.
(BEGIN VIDEOCLIP)
(PEOPLE SHOUTING)
(END VIDEOCLIP)
LAKE: As the flag went up, down came the diplomatic divisions which have separated the two nations for decades. Cuba officially reopened its
embassy in the United States, restoring relations for the first time in 54 years. Speaking earlier, U.S. Secretary of State John Kerry said his
government would work hard to improve its relationship with Cuba.
(BEGIN VIDEOCLIP)
JOHN KERRY, U.S. SECRETARY OF STATE, SPEAKING IN SPANISH AND VIA INTERPRETER: I can assure all of you including the Cuban people that the
United States will do its part.
(END VIDEOCLIP)
LAKE: The cooling of tensions could also have far-reaching consequences for Cuba's economy. The country's been subject to a U.S.
trade embargo since the 1960s. Patrick Oppmann is live for us in Havana.
First, let's go to Elise Labott in Washington. And, Elise, a lot of ceremony today, but there are still people in the U.S. and still members of
Congress that are unhappy with this.
ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: That's right, Maggie, and that's why, you know, the total embargo on Cuba won't be lifted any
time soon.
Secretary Kerry spoke today very passionately about the need for Americans and Cubans to be traveling back and forth for the free flow of
information for commerce, for the relationship to continue to deepen.
But there are many in the U.S. Congress who, as long as the Castro regime is in power, they're not ready to move forward with relations with
Cuba, to restore diplomatic (AUDIO GAP) or to lift that embargo.
But certainly today a very emotional moment for Cuban Foreign Minister Bruno Rodriguez as he lifted the flag over the U.S. Embassy. The Cuban
National Anthem playing to a crowd of 500 Cubans and Americans. Obviously a lot more work to be done, but an important first step today.
LAKE: And, Patrick, what's the feeling in Havana where you are? I know a lot of people very much looking forward to an opening of those
economies.
PATRICK OPPMANN, CNN CORRESPONDENT: Absolutely. And there was a lot of excitement even though there wasn't a flag raising here in Havana,
they'll have to wait `til August when Secretary of State John Kerry will be the first secretary of state from the United States to come to Cuba since
the Cuban Revolution, raise the flag as the Cubans did in Washington, D.C., put up an embassy sign.
But of course today was the first day there was a U.S. embassy in Havana since 1961. And just the history of it then brought out a lot of
people, including a lot of Cubans supporting the American Flag - something that was all but prohibited just a few years ago.
So there was something of a carnival atmosphere. People just looking for any kind of sign of change - and there were some small changes. There
was less security around the embassy, that's one of the changes. U.S. diplomats had complained over the years that the Cuban guards around the
embassy were keeping people away, were writing down Cuban's names and identification numbers who were trying to come into the U.S. Embassy.
So that's one of the concessions that's been made. But more and more you hear Cubans say that even if the U.S. embargo were to be lifted, it's
not going to fix all the deep problems this country economy has, and more and Cubans are saying it's up to Cuba now to turn their economy around and
that's really going to take a lot of work and years of work. But they do feel that today was an important step in the right direction.
LAKE: And, Elise, an important step, and as you and Patrick both laid out, there's still a lot of work to be done before we get to full, normal
relations. But this has moved a lot more quickly than some had thought. I mean, even though there are still some protests, what are we looking at in
terms of timetable?
LABOTT: Well, I mean, the restoration of ties is ongoing and now there are, you know, with these restoration of ties today you're going to
have a lot more regular contact between U.S. and Cuban officials. You know there's a lot of cooperation and a lot of talks behind the scenes that most
of our viewers don't even know about.
There's talk on law enforcement, there's talk on counter-narcotics, terrorism. I think those ties will continue to deepen and broaden, but I
think that in order for real normalization of relations which is more about not necessarily formal diplomatic ties but relationships with two
countries.
[16:40:09] There are a lot of things that yet to be discussed. The U.S. has a lot of problems with the Cuban situation on human rights, the
Cubans want to see a lifting of that embargo and the Americans have their own things. There's reparation of American property and fugitives that are
in Cuba that the U.S. wants to address.
So I think, you know, this is going to go forward. But, again, today really a kind of ceremonial opening. A lot of work left to be done,
Maggie.
LAKE: Absolutely. Thanks very much. Elise Labott and Patrick Oppmann for us. Now as relations between the U.S. and Cuba begin to warm,
another diplomatic relationship remains decidedly frigid. It has now been a year since sanctions against Russia were put in place by Europe and the
West.
CNN's Kellie Morgan takes a look at their impact on Moscow.
(BEGIN VIDEOCLIP)
KELLIE MORGAN, CNN PRODUCER: Apples, once sourced from Spain, now from Chile. The fish is from the Mediterranean but is imported from Turkey
rather than Greece. And these delis no longer sell German sausage, it's all locally produced. It's the changing face of Russian supermarkets since
President Vladimir Putin banned fresh food imports from the West in response to the introduction of sanctions on his country 12 months ago.
At the moment you can still find some really popular French brands of cheese on the shelves but only if they're labeled lactose free which was
permitted up until recently. Once the stocks of these ones run out, the only variety you'll be able to buy is this particular brand here which is
from Argentina.
It's Russian cheesemakers though who are largely filling the void and reaping the benefits. Among them, Andre Ekasolo (ph) who owns Koza Nostra,
a small organic dairy and cheese farm that had been losing money.
ANDRE EKASOLO (ph), RUSSIAN DAIRY FARMER, INTERPRETED BY MORGAN: "Of course countersanctions affected us in the best possible way," he tells me.
"We felt the growth of demand for our products."
MORGAN: As a result, Koza Nostra is expanding but not as much as Ekasolo (ph) would like. For that, he needs a loan which is where Western
sanctions on access to finance are biting.
EKASOLO, INTERPRETED BY MORGAN: "The business reached a point when it required serious investment," he says. "That means a loan from the bank.
Unfortunately, the current interest rate in Russia makes it impossible."
MORGAN: Economists say that the lack of investment is the key barrier to realizing Putin's ambition for local producers which have long been
underdeveloped and under resourced.
YAROSLAV LISSOVOLIK, CHIEF ECONOMIST, DEUTSCHE BANK: Weakening the ruble and achieving some modicum of important substitution is the easy
thing. But the returns to that are very limited. The bottlenecks to growth are structural, they need probably several years of significant
investment in order to deal with these roadblocks to growth.
MORGAN: With that kind of reform, Ekasolo (ph) believes his business can continue to satisfy Russian taste buds even if countersanctions are
eventually lifted. Kellie Morgan, CNN Moscow.
(END VIDEOCLIP)
LAKE: Starvation, abuse and forced labor at the hands of what is today one of Japan's biggest companies. Now, 70 years after World War II,
Mitsubishi is trying to make it right.
(COMMERCIAL BREAK)
[16:45:33] LAKE: One of Japan's oldest and largest corporations is taking responsibility for an atrocity it committed during the Second World
War. Mitsubishi has made a formal apology for using captured American soldiers as slave laborers. Will Ripley met one of them 70 years on. He
sent this report from Tokyo.
(BEGIN VIDEOCLIP)
(MALE SCREAMING)
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Japan's brutal treatment of World War II prisoners is the subject of Hollywood movies and
history books. James Murphy lived through the horror described as slavery.
JAMES MURPHY, FORMER P.O.W.: It was a poor slaver camp. We either worked or you died.
RIPLEY: The 94-year-old American became a prisoner of war in 1942. He spent his early 20s in Japanese labor camps, enduring near starvation,
regular abuse watching fellow prisoners die. Murphy worked in a mine owned by Mitsubishi Mining Company, known today as Mitsubishi Materials.
On Sunday in Los Angeles, it became the first Japanese corporation to publicly apologize for war time atrocities.
MURPHY: The elation and happiness that we finally after 70 years got a direct apology from the Japanese who mistreated us during World War II.
RIPLEY: Mitsubishi's apology comes as Japan prepares to mark seven decades since the end of World War II. It comes at a time when government
leaders here in Tokyo are trying to move past the nation's war crimes.
(SOUNDS OF PROTESTERS)
RIPLEY: Ignoring protests and plunging approval ratings, Prime Minister Shinzo Abe is pushing controversial legislation through the
Japanese Parliament, expanding the role of the nation's military for the first time since World War II.
Mitsubishi is not offering financial compensation for P.O.W.s like Murphy. The Tokyo-based company has faced lawsuits seeking payouts to
former prisoners, including British, Chinese, Koreans and Filipinos.
MURPHY: We can go on now even though we had certainly living in a past but we don't want to forget the past.
RIPLEY: The apology comes far too late for all but a handful of survivors, now in their late 80s and 90s. Murphy says he forgave his
captors long ago but spent 70 years waiting for this moment, waiting to hear two simple words - `we're sorry.' Will Ripley, CNN Tokyo.
(END VIDEOCLIP)
LAKE: Ashley Madison is a dating site that's geared towards people who want to cheat on their spouses. So the last thing users want to see is
their details flashed all over the web.
(COMMERCIAL BREAK)
(CROWD COUNTING DOWN, APPLAUDING)
LAKE: And with that PayPal was on its own again. The payments company completed its split from eBay by listing on the NASDAQ. Shares
ended 5 percent higher on Monday. PayPal is listed under the same ticker symbol it used 13 years ago, before eBay bought the company.
[16:50:01] And PayPal is already worth more than its former parent - $46.6 billion compared to eBay's $35 billion. Now PayPal was a pioneer in
the field of digital payments. It's now facing growing competition from Apple, Google and Amazon among others.
I spoke to PayPal's CEO earlier today. He told me splitting from eBay gives PayPal one crucial advantage - independence.
(BEGIN VIDEOCLIP)
DAN SCHULMAN, CEO, PAYPAL: Being an independent company allows us to be a truly independent, neutral third party for customers. And so there
are no conflicts of interest whatsoever being a part of eBay, we can partner with any merchant in the world right now as an independent neutral
third party. So that's a big advantage for us.
LAKE: This landscape is getting a lot more competitive obviously with Apple Pay. Do you have the mobile strategy to compete with them and anyone
else who comes in the field?
SCHULMAN: Well it is a very competitive marketplace, but that's because it's a dynamic and growing marketplace. We compete in a $25
trillion addressable market. And we have several advantages as we compete in that, but probably the biggest advantage we have is we're truly a
neutral third party.
Our platform that we've worked on re-architecting over the last several years is both operating system and point of sale technology
agnostic so we can work with any merchant, any operating system whether that be IOS, Android or Windows and provide a seamless consistent
experience for consumers and for merchants.
And last year, we did over 1 billion mobile payments transactions. So we're probably amongst if not the leader in the world in processing mobile
payments.
LAKE: Dan, there's been such hope with watches now, wearables, whether it's on our phone that we were finally at the point where we were
going to all, you know, transfer to this digital wallet. It was all going to be at our fingertips. Consumers have - it seems a little sticky that
transition. Consumers haven't given up their traditional wallet yet. What do you see happening in that space? What's holding it back?
SCHULMAN: In-store if you're just talking about a form factor change - in other words, instead of, you know, swiping your credit card, you're
tapping your phone, that's a difficult proposition for consumers. But if it's a true value proposition change, then I believe that consumers will
start to use their mobile phones and payments not only online and in an app but in-store because real value can be given.
For instance, you can order ahead, you can skip the line, you can get rewards. All of that are what merchants today are trying to write
applications that allow them to have a more intimate relationship with their consumer. And what we as PayPal want to do is power that merchant
application that's truly a value proposition change, not a form factor change. And when that happens, I think you'll see rapid adoption of in-
store mobile payments.
(END VIDEOCLIP)
LAKE: Names, addresses, credit card logs and sexual fantasies for millions of people. That's just some of the data hackers say they stole
from Ashley Madison, a dating sight that helps married people cheat on their spouses. The hackers are now threatening to release the information
unless Ashley Madison's owners take the site offline.
Samuel Burke is following this story. There's got to be a lot of nervous people out there, Samuel. Why are the hackers targeting this site?
Is it morally motivated?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Everybody is nervous except for maybe divorce court lawyers.
LAKE: (LAUGHTER).
BURKE: Because Lord knows a lot of people are going to be taking their spouses to court if they find their information on this website.
The hackers are actually trying to take some type of moral high ground though it's not that high if you ask me. They say they don't like some of
the business practices of this website. The website offers to delete all of your information for $19.
The hackers say they don't actually delete it and this is their way of trying to prove that. The website Ashley Madison still maintains they do
delete the information and all this stuff you just listed - personal, financial. You know, financial information may be the least of people's
worries because you can change your credit card number but you can't change your fetishes and your affairs.
So they're working to fix this. The website says in fact they already have fixed it. They've apologized and acknowledged it, but they said in a
statement the following, quote, "We are working with law enforcement agencies which are investigating this criminal act. Any and all parties
responsible for this act of cyberterrorism" - they called it, Maggie - "will be held responsible."
LAKE: I mean, you've got to think if you're a customer of this, I don't care what assurances they're giving you, you're probably petrified
and rethinking whether you ought to be doing this at all. This isn't the first time we've seen this, isn't it? I mean, what are people doing in
terms of precautions.?
[16:55:06] BURKE: Maggie, I always say if you can publish it online, it can be hacked online. If a website builds a wall, the hackers can build
a ladder and try and get over it.
And it isn't just this website. It's actually part of a group of websites. Also Cougar Life - women looking for younger men, Establishment
which bills itself as a website that connects young beautiful women with successful men, also hacked.
And you and I we've reported both on websites like Adultfriendfinder.com which was hacked a few months ago. Lots of people's
information out there for everybody to see. If you put it online, it can be published online.
LAKE: There is no such thing as discreet when it comes to these things.
BURKE: Especially extramarital affairs.
LAKE: All right, this is going to be one to watch I'm sure. Samuel, thank you so much. Now, it was a dramatic end to a rare five-day long open
championship at St. Andrews. We'll tell you who won and who is in the business world loss after the break.
(COMMERCIAL BREAK)
LAKE: Only one other time in the 144-year history of the Open Championship has a victor hoisted the Claret Jug on a Monday. This Monday
at historic St. Andrews in Scotland it was Zach Johnson, a 39-year-old from Iowa in the United States.
Fighting back tears on the 18th green, he said it was humbling and surreal. Johnson won in a three-way playoff that won't soon be forgotten
in the golf history.
Now it turned out to be a disappointing day for Jordan Spieth which means it was a disappointing day for his sponsor Under Armour. Under
Armour's share price dipped noticeably when the young phenom missed a shot on the 18th hole that placed him out of contention.
The stock would recover to close 2 percent higher, but it wasn't the pop that Under Armour executives might have been hoping for.
And that is "Quest Means Business." I'm Maggie Lake. Thank you so much for watching. Stay with CNN.
END
