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Quest Means Business
Volkswagen Shares Tumble After Emissions Scandal; VW Faces Huge Penalties; Pope Leaves for Final Stop on Cuba Tour; European Markets Rise After Greek Vote; Chinese President to Begin US Visit in Seattle; Western Businesses Warming Up to China; Scott Walker Drops Out of US Presidential Race; GE CEO Calls for More Business-Friendly India
Aired September 21, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The market has risen more than 100 points. It's a robust start to a new week, a gain of three quarters of a percent. And -
-
(GAVEL POUNDS)
QUEST: Now, that's what you like to see! A robust gavel on Monday, September the 21st.
What a day! Volkswagen shares go full-speed into reverse on a scandal of monumental proportions.
China's president prepares to court US tech firms as Washington's patience on cyber attacks wears thin.
And travel and food companies are taking on the migrant crisis with the power of the wallet.
I'm Richard Quest. We start a new week together, and of course, I mean business.
Good evening. The world's biggest carmaker has been pummeled by investors as Volkswagen tries to contain a disastrous emissions scandal.
The chief executive has apologized after the company was caught cheating on emissions tests for years. And now, investors are piling out the exit door
in fear that there is far worse to come.
Let me show you exactly the sort of damage that has been done over the course of the day. The shares have been battered. At one point, they were
down almost 19 percent. They have fallen at the close, off 18 percent, which is an extraordinary amount when you think about a company like
Volkswagen, mature, widely-held, deep into the market. So, it's down 18.6 percent.
The chief executive, Martin Winterkorn stopped short of admitting guilt, but he did say, "I'm personally -- personally, I'm deeply sorry that
we have broken the trust of our customers and the public.
Share price down, apologies. What has VW been up to? Essentially, the car company was cheating on the very strict emissions tests by getting
cars to give false readings. I'm going to show you how it worked.
The emissions controls would work during official tests, so when the tests were being completed, the car's internal software recognized that it
was having a test, and it would give full emissions control.
At other times, the emissions control, the switch, as it's known, was greatly reduced. Now, the car performed better, the diesel cars have more
power, more oomph, but in doing so, the nature of diesel is it's emitted 40 times the legal levels of nitrous oxide. The EPA, the Environmental
Protection Agency -- Authority says they cause asthma and respiratory problems.
Drew Kodjak is the executive director of the International Council on Clean Transportation, the group that helped to tip off the EPA. I've read
the documents and I've read the story, and as I understand it, nobody was more surprised than those who did the tests with what you found.
DREW KODJAK, EXECUTIVE DIRECTOR, INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION: That's correct. We set off to try to actually prove that
diesels can be clean in the United States. We tested three vehicles, and what we found was that while one of the vehicles turned out to be
completely clean and demonstrated that the emission standards can be met during the full use for life --
QUEST: Right.
KODJAK: -- of a vehicle, the two that we found -- the two Volkswagens that we tested, unfortunately, while they were compliant during the test
cycles, had significant excess emissions. And so, we reported those excess emissions to the government agencies --
QUEST: OK, now --
KODJAK: -- the California Resources Board and EPA?
QUEST: Now, the -- but even after knowing that, you still couldn't work out what the algorithm was in the computer system, the ECM. You had
to wait for Volkswagen pretty much to tell you what they'd been up to, didn't you?
KODJAK: We had no idea, that's exactly correct. We speculated that there could be calibration issues, that there could be load issues, any
number of issues. We had no suspicion that there was a defeat device on the vehicle.
QUEST: This defeat device, why -- to those viewers, and people like myself who are ignorant of these things, what does it -- I mean, I know it
reduces the emissions, but from the driver's point of view, what's the purpose of it? Why would you want to have it there? What does it do for
the car?
[16:04:53] KODJAK: Well, you've explained it beautifully just now, Richard, that when the vehicle was on the test cycle, it maximized low
emissions, and when the vehicle was off the test cycle, it maximized fuel economy, and that was good for the driver. It also -- diminished the
amount of --
QUEST: Right.
KODJAK: -- urea that had to be used in the emission control systems as well.
QUEST: OK, so, do you believe -- and this is, maybe, a difficult question that's -- when this was -- when this defeater device was put in,
this defeat device was put in, do you believe it was many years ago and it's one of those things everybody's just forgotten was there, or do you
think it's far more likely this has been there, they've known it's there, and they've left it there?
KODJAK: It's very difficult to speculate on what was going on in Volkswagen. We do know that the vehicles have had defeat devices on them
since 2009, so that's certainly some years. We also know that we've done - - gone down this road before, that heavy-duty manufacturers used defeat devices in the United States way back in the late 1990s.
And so, this is an issue which we've encountered before, and I think I was surprised, I think my group was surprised, when we encountered it or we
heard about it again, that Volkswagen was doing it, now with their light- duty passenger vehicles.
QUEST: I love the phrase "surprise." I'm sure there was a bit more than --
(LAUGHTER)
QUEST: -- surprise when you finally worked out what was happening. Sir, thank you for joining us. We very much appreciate you giving us the
time.
Now, the German government says it wants answers from Volkswagen and other carmakers about whether they are still deceiving customers in this
way. The German economy minister says the reputation of the entire German industry is at stake.
(BEGIN VIDEO CLIP)
SIGMAR GABRIEL, GERMAN ECONOMY MINISTER (through translator): This was a bad incident, and we worry about the fact that the justifiably
excellent reputation of the German car industry, and in particular, that of Volkswagen, suffers, as I'm sure you can imagine.
(END VIDEO CLIP)
QUEST: The falling share prices just the beginning. When all is said and done, the penalties could be amongst the harshest ever faced by an auto
company. So, just to put this into perspective, and it'll give you an idea of why this is so serious.
And remember, of course, Toyota, the previous scandals of Toyota, you've had General Motors, and now you've got this one, where you're
looking at a potential fine of up to $18 billion. That's because it's $37,000 for ever car that broke the rule, or up to $37,000.
According to Bloomberg News Agency, criminal charges, an investigation has already begun. Now, this could mean executives could face jail time,
or certainly the corporate entity could be prosecuted.
And, of course, this being the United States, serious class action lawsuits are already being explored for one very simple reason: that the
owners of vehicles who have the defeat device may now find their cars worth considerably less and be more difficult to sell.
Lauren Fix is an auto analyst known as the Car Coach. She joins me from Lancaster in New York, and it's great to see you, I've been reading
your tweets and your articles. So, let's just -- give me an overview in a sentence or three, just how serious is this?
LAUREN FIX, CAR COACH: Well, from a value perspective for people who own these two-liter TDI or turbo diesel engines only, and that's only in
the VW line and only the Audi A3, the potential for those cars to be worth less overall in resale is potential.
However, when the software repair comes in, and it is going to be a software repair, it could impact the fuel economy. If it does, it will
definitely --
QUEST: Right.
FIX: -- impact the resale value. If it does not impact the performance or the fuel economy, it's going to be a moot point. However,
there's still going to be a pretty serious fine put toward VW, and I still have some issues about what that's really going to be, because $37,000 a
car? Many of those cars don't even cost that much.
QUEST: All right. Now, within the company -- I'm going to ask you the same question I asked my last guest -- how many people do you think in
Volkswagen even knew this defeat device was there? Had it been put in decades previously, years previously, and everybody had just forgotten
about it, or do you think something more is going on?
FIX: Well, it's very difficult to speculate exactly how many people are involved. At some point, a software engineer was told by somebody,
"You need to put in this defeat device because this is going to allow us to have a cleaner tailpipe exhaust emissions."
[16:10:00] Now, just to clarify: that only means that when you're driving the car and you're on full load, that means your foot is fully to
the floor, it's between 10 and up to 40 percent worse tailpipe emissions, that's nitrous oxide, which causes --
QUEST: Right.
FIX: -- smog and potential respiratory issues. At the top, who knows? Will someone at the top be prosecuted? Highly unlikely. Let's be
honest with ourselves. Just like at GM, a few people will get fired, there'll be a lot of apologies, and in the end, there'll be a big fine and
a hand-slapping.
Unfortunately, like General Motors, they might have a delayed prosecution, but the tort lawyers, they're lining up already.
QUEST: Right. So, the compensation aspects for -- VW are huge, but give me a public policy view, if you will, Lauren. Just how -- you're a
woman who loves motorcars in every shape, form, and description. When you heard this, were you shocked, horrified, dismayed, or did you always know
there was something smelly going on?
FIX: Well, I didn't always know something smelly was going on, to be honest with you. And I was actually kind of shocked. I've always been a
big fan of the VW product. I remember the VW group overarching is Audi, SEAT, Skoda, Porsche, Lamborghini, Bentley. They own a lot of product.
And it's just this one specific lineup, but I was really surprised as someone who just test drove the VW sport wagon, and I thought it was a
great vehicle.
And I'm a juror for the North American Car and Truck of the Year, and part of it is we have to define what we're going to do with this situation.
This is a very serious situation, because it's a trust issue more than anything.
No one's going to die over this, this isn't going to impact the safety of the vehicles whatsoever. It may -- just may -- impact the resale value.
But what it does do is it impacts the trust, and that's a shame, because I've been to VW in Germany, and I have to say that they build great cars.
And I'm just shocked that they had to do this, because I've always been a big fan of diesel. I even own a diesel SUV. It's the larger
engine, so I'm not impacted by this, but still --
QUEST: Right.
FIX: -- I'm really surprised that when diesel's such a great answer to the problem that we have to cheat --
(CROSSTALK)
QUEST: I'm going to --
FIX: -- in order to meet certain emissions.
QUEST: I'm going to interrupt you because I -- if I may, we're going to take you straight to see the pictures from Cuba. Thank you, Lauren.
Let's show the pictures of Cuba where the pope is setting off for the final stop on his tour. He is about to fly from Holguin to Santiago in
Cuba, and His Holiness, of course -- we'll just watch until he gets on the aircraft.
Now, he's had a three -- four-day visit to Cuba. The massive rally, the mass that was held in Havana. The off-the-cuff comments that the pope
has made at various points, perhaps not so much pointed digs at the Castro dynasty. The informal and friendly meeting that he had with Fidel Castro.
And now -- he leaves for his final stop on the Cuba tour before, of course, visiting the United States.
In the United States, it is an address, the first by a pope to the joint session of Congress. It's the United Nations, to address the General
Assembly, and it'll be to Philadelphia for one of the largest rallies and masses or religious services that this country will have seen.
The pope is now onboard his Alitalia A-330, and we will continue to monitor the progress as His Holiness continues.
The fallout from the VW scandal -- let's keep things clear and precise -- is so great that shares in other European carmakers have also fallen.
This is sort of -- if the rising tide lifts all boats, well, when the tide goes out, everyone goes down.
Renault is off 3, Peugeot is down 2.5, Daimler, 1.5, and BMW -- which incidentally, one of the test cars they used with the VW was a BMW, the BMW
was fine, it was the VW, of course, that was knocked down 1.5.
European markets, they were higher overall. Volkswagen weighed on the DAX, so it's not surprising where the DAX got clobbered. Shares in Athens
were off slightly after Syriza managed to win reelection in Greece.
QUEST MEANS BUSINESS. Xi Jinping is visiting the United States, so China very much on the agenda as the Chinese president comes with an
entourage of vast proportions for business of monumental size.
(RINGS BELL)
[16:15:03] (COMMERCIAL BREAK)
QUEST: It's a crucial week for relations between the United States and China. A number of world leaders are preparing to visit the US, of
course. It's also the United Nations. Few are more anticipated in Washington than the Chinese president, Xi Jinping.
President Xi will first stop over in Seattle. When he's there, he'll be meeting with executives from top US tech firms.
Now, that's going to be fascinating meetings, because they're eager to gain access to China's one billion consumers, but at the same time, Western
businesses are also very concerned at what they see as cyber security issues from China. And it's this dichotomy, on the one hand, as well as
warming up to China despite Beijing's heavy-handed approach to regulation and censorship.
So, this is how many major companies are actually adapting and responding to the visit of President Xi. Start off with Rupert Murdoch.
Now, Rupert Murdoch has been introducing himself to a Chinese audience. He's launched a Weibo account, and Weibo is the Chinese equivalent of
Twitter.
Murdoch quickly hit 45,000 followers. He's posted that he's met President Xi, talked about opening up China to foreign media.
"Leaving great Beijing airport, remind you of abandoned, third-rate US infrastructure hopeless planning and wrong priorities." "Wonderful Chinese
food in Beijing, now back to boring diet in New York." "Leaving for New York to be with my two beautiful Chinese daughters."
Amongst the others, of course, Warner Brothers, owned by CNN's parent company, Time Warner, Warner itself has been busy and has inked a deal --
designed to make Chinese language movies.
It's going to partner with Chinese Media Capital, and the chairman of Warner Brothers says he hopes that the partnership "will enhance the
cultural exchange between China and the rest of the world," so says the CMC chairman.
If that wasn't enough -- you've got Murdoch, you've got Warner Brothers, you've also got politicians. George Osborne, the British finance
minister, Chancellor of the Exchequer, he has been to Beijing and says Britain and China are on the verge of a golden decade of cooperation.
And to do that, he's announced plans to build the West's first Chinese-designed nuclear plant and then, crucially, he is going to
guarantee -- give a government guarantee on the financing of it.
Let's put all this together and talk to Ian Bremmer, who joins me. Good evening, sir.
IAN BREMMER, PRESIDENT AND FOUNDER, EURASIA GROUP: Richard.
QUEST: How are you?
BREMMER: Very well.
QUEST: You're the president and the founder of the Eurasia Group, but you know that.
BREMMER: I do.
QUEST: So. Xi comes here, to the United States --
BREMMER: Yes.
QUEST: -- and there are these -- everybody's trying to get their nose into the trough of business on it.
BREMMER: It's true. And yet, the industrial espionage against the United States and its companies, the cyber attacks against the US are only
growing. The US is talking about sanctions against China, and American firms are saying, actually, we want to do as much as possible with the
Chinese individually.
That -- the fact -- in China, you can't do that. In China, the companies are aligned with the government. The United States, not true.
It actually means China has an easier time with strategy.
[16:20:02] QUEST: Right. China has an easier time with strategy, but then what does this -- what's the strategy for the West, particularly
if you've got people like George Osborne going there to get a nuclear reactor and to guarantee the financing of it?
BREMMER: What West? There's no West. There's the United States and there's Britain and there's Britain and there's Germany, and everybody's
sort of trying to cut their own deal. It's every Western country for itself, and the United States government.
Remember, the Chinese announced the Asian Infrastructure Investment Bank. We said we weren't going to join it because it wouldn't have Western
standards. We told our allies, don't join it, and the Brits and the Germans and the French and everyone else lined up --
QUEST: Except?
BREMMER: Except Japan and the United States. They all signed up. Doesn't help us any. So, there's no West. Our allies aren't engaging with
us. Our companies aren't engaging with us. Puts the US government in a very challenging position to really respond to what we see as encroachments
on US national security.
QUEST: Right, but, well, if that's right, then surely the US companies may be selling -- classic marks, they may be selling the rope
that's going to hang them.
BREMMER: Indeed. But the average American CEO lasts less than five years. The average American shareholder's interested in the next quarterly
returns. The Chinese government's very aware of that.
I mean, you look at a company like Apple, they're making tremendous money in China right now, it's the most explosive market --
(CROSSTALK)
QUEST: And yet, they announced, of course, that they've discovered -- you joke about that, but they've announced that they've discovered malware
in some of their iPhone software that's coming from China. Shocking.
BREMMER: Because, of course, over the long term, the Chinese government wants to ensure that they're the ones that are actually
filtering a Chinese internet, they're the ones that are seeing what Chinese consumers are going to buy.
QUEST: Right. But do you believe that this cyber security issues is taken up at the highest level in this summit, or is it glossed over?
BREMMER: No, no, no. It's going to be taken up, and I actually think there will be an announcement, there'll be a deal. I think that you'll see
the Americans and the Chinese, both of whom want to show we have good relations, and they'll say, you know what? We're not going to engage in
integrity attacks against each other's critical infrastructure.
It's going to sound like Obama and Xi will both say, look, we're taking it seriously, we're really engaging. And the reality is, it's not
going to stop the Chinese for one second in terms of continuing to grab intellectual property in industrial espionage against American firms.
American firms will continue to say we want to be in the Chinese market, we can tolerate this until we can't. So, we are kicking the can
down the road. It's going to be a larger problem, as we'll see.
QUEST: Thank you, sir.
BREMMER: My pleasure, Richard.
QUEST: Very busy day.
BREMMER: Good to see you.
QUEST: Very busy day. Thank you. And we need some breaking news to tell, thank you.
(RINGS BELL)
QUEST: Some news just into CNN: Scott Walker, the governor of the US state of Wisconsin, has decided to drop out of the race for the Republican
nomination to be president. Now, we're expecting a press conference from Walker in about 90 minutes from now.
He'll confirm he is no longer running for the Republican nomination, or he'll probably put it -- I think they put it more in terms of they're
suspending their campaign. It's all to do with where the money goes.
Anyway, Scott Walker is out of the race, and we will -- or he will be out of the race, we -- I'm getting ahead of myself, there. But I'll buy
you a cup of coffee if that -- if the announcement's anything different than that.
When we come back, the chief executive of General Electric is calling on the Indian prime minister to make it easier to do business in his
country. We'll be talking about that after the break. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:25:04] QUEST: One of the biggest names in US businesses in India, General Electric's chief exec, Jeffrey Immelt, is calling for
reforms to make it easier to do business in the country. The prime minister of India, Narendra Modi, is promising to bring more jobs to the
country, specifically and especially in manufacturing.
The hunger for jobs is evident. When an Indian state government recently advertised for 368 key service and night guards -- 368 people they
wanted -- 2.3 million people applied for the jobs. The way in which the Indian economy has been under reforms lately, of course, has been one of
the crucial issues of the new government.
I spoke to Eswar Prasad, a senior fellow of Brookings Institution, who told me Mr. Modi hasn't yet delivered on the campaign promise of more.
(BEGIN VIDEOTAPE)
ESWAR PRASAD, SENIOR FELLOW, BROOKINGS INSTITUTION: The big problem is that although this government -- the Modi government entered with a very
large political mandate, and there was the sense that there would be big reforms in the air, very little has been accomplished so far.
And that, I think, is a real concern for India, that this wonderful window of opportunity because of good domestic and external circumstances
is not being --
QUEST: Right.
PRASAD: -- used wisely to push forward with reforms.
QUEST: Right. But even if those reforms are on the table, the slowdown in emerging markets, which we are seeing as a result of China, as
a result of oil, as a result of commodities, how much of that is crimping India's ability to move forward faster?
PRASAD: Here's the lucky thing for India. At one level, it's not been a great thing for India that it's not that well-integrated into global
trade and finance. India's alliance and net exports to power growth is not that large. So at a time when the global economy is weak, when the ability
to absorb exports from India is very weak, it doesn't matter that much to India.
Likewise, although there has been a fair bit of capital flowing in, and right now, flowing out of some emerging markets that look vulnerable,
among the emerging markets, India still looks relatively safe because the rupee has been stable. India has a large store of foreign exchange
reserves.
So, it doesn't look that vulnerable, so it's continued to receive some amount of capital. So, the external circumstances are not as big a problem
for India as for many other emerging market economies.
QUEST: Let's listen to Jeffrey Immelt, who's been visiting and hear his -- what he has to say on this question of jobs, production, and
manufacturing.
(BEGIN VIDEO CLIP)
JEFFREY IMMELT, CEO, GENERAL ELECTRIC: We see great opportunities for a market this size. We like -- we want it to be easier to do business
with. We believe that Prime Minister Modi's vision is the right vision, and what we expect is just execution. Better execution, more execution,
faster execution.
(END VIDEO CLIP)
QUEST: Better, more, and faster. I mean, every -- back to our first question, everybody's saying the same thing. So, in a nutshell, what is
the biggest problem to that better, further, faster execution besides the natural sclerotic nature of India's bureaucracy and economy?
PRASAD: India has enormous potential, but unless the Modi government can get the manufacturing sector going well, it's going to be very
difficult to generate good, high-quality jobs --
QUEST: Right.
PRASAD: -- and it's going to be difficult to generate that potential. So, there is an area of reforms, especially infrastructure, dealing with
power --
(CROSSTALK)
QUEST: Right. Let me jump in here, right.
PRASAD: -- all of that has to be tackled.
QUEST: Right, right. But -- I understand that, but what in a nutshell is the problem with implementing those reforms?
PRASAD: The problem is that every one of these reforms has a large political bloc that opposes the reforms. Because the system as it works,
it works well for some people, but not for the country as a whole. And somebody needs to expend a lot of political capital to get beyond that
opposition.
And this is where there was a great deal of hope that Mr. Modi, given how well he had executed in Gujarat both in terms of overcoming opposition
and actually pushing through reforms, there was a sense of optimism that he would be able to do it at the national level as well.
Unfortunately, that's not happened. Despite having a strong mandate, he didn't seem very willing to use political capital early on, and now the
opposition has sort of redoubled and gained strength, and it's become very difficult even to move forward on reforms like the value added tax reform
or land acquisition reforms that Mr. Modi had put a little bit of political capital behind.
(END VIDEOTAPE)
QUEST: The issues of India, China, and the emerging markets.
[16:29:52] The big brands are trying to make a big difference in the refugee crisis. TripAdvisor is matching your donations, and I'll be
talking to the chief executive about the principles behind this as to what they hope to achieve, besides obviously the immediacy of relief of anguish.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:30:00] QUEST: -- behind this - what they hope to achieve besides obviously the immediacy of relief of anguish. "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Hello I'm Richard. There's more "Quest Means Business" in just a moment when the top travel and fast food companies are tacking
Europe's migrant crisis. Can they do more in many ways than governments have managed to achieve?
And hacked at the source, Apple takes down dozens of apps from its app store. Before that, this is CNN and on this network the news always comes
first.
Scott Walker, the governor of the U.S. state of Wisconsin's expected to drop out of the race to be the Republican Party nominee for president.
We're expecting a press conference with him in around 90 minutes from now where he's expected to confirm he will no longer be running for the
Republican nomination.
Alexis Tsipras has been sworn in as Greece's prime minister for the second time. The leftist Syriza Party won the snap election at the
weekend.
Mr. Tsipras called the election after reaching a new bailout deal with Europe and he will oversee the implementation of the tough economic reforms
the deal requires.
Speaking today, he called on European leaders to do more to confront the migrant crisis.
(BEGIN VIDEOCLIP)
ALEXIS TSIPRAS, GREEK PRIME MINISTER VIA INTERPRETER: I think Europe now has the opportunity to realize the great responsibility that it has
towards a European problem that cannot burden only the countries of this region.
(END VIDEOCLIP)
QUEST: Pope Francis celebrated his second mass in Cuba today, this one in the provincial homeland of Fidel and Raul Castro. He addressed the
faithful in Holguin, making a point to thank those who've spread the Catholic Church's message in Cuba.
On Tuesday he'll travel to the United States where he'll address the U.S. Congress as well as the United Nations General Assembly.
The U.N.'s nuclear watchdog says it has inspected Iran's Parchin military site for the first time. Several Western nations believe Tehran's
been carrying out nuclear research there.
The announcement came after the Iranian President Hassan Rouhani met the head of the agency the IAEA.
Sad news to bring you this evening -- fresh tragedy in the migrant crisis as at least 15 14 refugees have drowned and dozens more are now
feared dead after their boat collided with a cargo vessel off Turkey and another sank off Greece.
[16:35:11] A monitoring group says this year alone more than 2,800 people have died or been lost at sea as they tried to make the dangerous
crossing to Europe.
European leaders are due to meet this week. And whilst the leaders are perhaps negotiating, talking and trying to sort out something to do,
business has been taking the lead campaigning of refugee relief.
The founder of the American yogurt company Chobani is donating half his wealth to the current crisis. He's also hiring refugees to help them
change their lives and their future.
In many ways, it is the call of business that's now providing most relief as Cristina Alesci explains.
(BEGIN VIDEOCLIP)
CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Mustafa Abdelkarim is putting labels on yogurt containers. Three years ago, he was running for
his life -- his village in Sudan was burning.
MUSTAFA ABDELKARIM, REFUGEE, VIA INTERPRETER: They kill my father and two of my siblings.
ALESCI: He's one of 600 refugees working for Hamdi Ulukaya.
ULUKAYA: So my background is the reason that I knew about the refugees and I knew how important it is to be accepted within new
community. It's only possible if you get a job.
ALESCI: Ulukaya started Greek yogurt company Chobani in 2007. A year later he began hiring refugees to work at his Upstate New York plants.
Why did you feel a connection to refugees? Because you didn't have that kind of story.
ULUKAYA: I left Turkey because I was Kurdish and I was very serious about Kurdish rights. A lot of Kurds in Turkey flee the country, villages
were bombed.
ALESCI: Persecution, oppression, fear - these are the common themes in the stories that many of his workers tell. But these refugees are the
ones that hit the lottery.
The U.N. resettles less than 1 percent of those seeking refuge. The odds are against the millions currently fleeing violence and death in the
Middle East.
ULUKAYA: I couldn't believe it. I didn't know. I should have known. Even though I was hiring refugees for four or five years, I didn't know how
bad this is.
ALESCI: Ulukaya says the system for processing and resettling refugees is in dire need of change and that undertaking will require
corporate America to step up.
ALESCI: You're asking business leaders -
ULUKAYA: I do.
ALESCI: -- to contribute.
ULUKAYA: Yes.
ALESCI: Why should they?
ULUKAYA: Because we are effective.
ALESCI: The way that you said it suggests that government is not effective?
ULUKAYA: No. I mean, it's broken, right? It's broken, the U.N. is broken, government is broken. This issue shouldn't have come to this
point. It could have been stopped a long time ago.
ALESCI: Big names from Google to Goldman Sachs have already pledged support. The U.N. high commissioner for Refugees has raised $17 million in
donations, but Ulukaya says business leaders can do more than just write checks.
ULUKAYA: Let's face it, the way that we're dealing with the refugee crisis today is the same way that we did in 1940s and `50s. Nothing is the
same. Imagine, the refugees has a cell phone, they have a Facebook, has a group and they're telling them which roads to follow so they - the way that
they're dealing with this is different than the conditions are in the ground.
ALESCI: And while he's promised to eventually give away about half of his $1.4 billion fortune to support the cause, right now he's donated $2
million for immediate relief. He hopes that will make it easier for people like Abdelkarim to start a new life.
ABDELKARIM: But in this short time of working here I was able to buy my own house and I'm happy and also helping my kids.
ALESCI: There's enough wealth, there's enough knowledge, there's enough mobility, there's enough technology, there's enough willingness -
there's enough of everything. We just have to ask faster.
(END VIDEOCLIP)
QUEST: Cristina Alesci there. Now millions displaced means millions of hungry mouths to feed and the World Food Program has been forced to
scale back its assistance.
Now it's getting help from the biggest name in fast food. McDonald's has donated funds for the World Food Program to make a 30-second commercial
to raise money for displaced families. Take a look.
(BEGIN VIDEOCLIP)
ANNOUNCER: Today is the International Day of Peace. Yet war rages around the world, resulting in more refugees than any time since World War
II. People not so different from you and me, except more than half of them are children.
They are innocent, they are hungry. And you can help. Please give today at wfpusa.org/peace.
(END VIDEOCLIP)
QUEST: McDonald's there of course joining the call. Whether it be McDonald's or the Chobani founder urging all business to do more.
And if you want to help make a difference, head to our Impact Your World page where you'll find information, charities and lists of resources
so you too can get involved. It's cnn.com/impact. "Quest Means Business"
(COMMERCIAL BREAK)
[16:42:22] QUEST: The fashion circus has moved on from New York to London where Fashion Week is now in full swing with big names, big shows
and big money. A hundred and fifty million dollars in orders are expected to be placed during London Fashion Week.
Overall, it'll mean $40 billion from U.K.'s fashion industry going directly into the U.K. economy and that's a sizeable increase - up some $8
billion from just six years ago.
Now there are nearly $800,000 jobs that are supported by such an industry as fashion. One of America's most enduring brands is trying
something new.
Coach hit the catwalk at New York Fashion Week with its first full women's ready-to-wear show, a piece of the brand's turnaround strategy as
the chief executive Victor Luis told Maggie Lake.
(BEGIN VIDEOCLIP)
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: As it celebrates its 75ht anniversary, American fashion company Coach is
attempting to redefine itself yet again.
A family-run leather goods company founded in the 1940s, Coach grew into global accessory giant by making luxury accessible to the mass market.
But in recent years, overexpansion and frequent discounting has weighed on results.
To turn things around, CEO Victor Luis put the emphasis back on quality and hired a new creative director Stuart Vevers.
VICTOR LUIS, CEO, COACH: With the collection that Stuart has just shown, what we're doing is really defining luxury and quality for a
youthful, modern customer.
And what we see, Maggie, is that consumers are not just looking for exclusivity, they're looking for what Coach offers and its approachability
and really do so in a very cool, modern way which reflects the New York aesthetic that we so well represent globally.
LAKE: All right, I'm going push on approachability because I was just in a store and the price tags do look high. You know, Shearling coats for
over $2,000. Is that accessible for all of Coach's customers?
LUIS: We have a broad range of price points, so in addition to the Shearling coat at over $1,000, you have a wonderful wallet in the $200 to
$300 range.
You have of course a saddlebag which Stuart has just launched which is in the $300 price range as well which has been our core handbag price point
for quite some time.
LAKE: So there is still a little (CROSS TALK).
LUIS: Absolutely. Absolutely.
LAKE: There is a lot of concerns that when we talk to economists that the world economy is slowing down, or at least that it keeps hitting these
patches. What do you see on the international front?
[16:45:03] LUIS: We're incredibly excited about the opportunities that we have as a brand globally, whether it be in Asia, where of course
China remains by far the largest opportunity for the category and for us.
Or whether it be in Europe where we're very much in the early stages of development of our brand and where consumers are just starting to
discover American fashion and what we represent in that part of the world.
LAKE: And what should we expect in Europe? You're right - it's been the sort of - the area - where you seem to have the least exposure. It's
also home to some of those really storied luxury brands.
What's Coach going to bring that's different there? How are you going to penetrate?
LUIS: Europe is quite unique in that you have the traditional luxury brands very well represented there. The local consumer, however, is just
discovering what it means to also find approachable American luxury brands.
And we're very lucky to have a positioning now under Stuart's vision and creative leadership that really understands that consumer well and
offers them at a great approachability, great American fashion.
And that represents the New York fashion that they haven't necessarily seen today. And it's resonating really well.
(END VIDEOCLIP)
QUEST: "Quest Means Business," back in a moment.
(COMMERCIAL BREAK)
QUEST: "Quest Means Business." Returning now to the migrant crisis that's dividing Europe. Businesses are in many ways now taking the lead in
helping to alleviate some of the pain and misery.
TripAdvisor's calling the response to its matched giving campaign incredible. It's raised $750,000 in just two days to help the refugees.
Overall, the travel website says its total donation to organizations helping the crisis is more than $1 million. The TripAdvisor president and
chief executive Stephen Kaufer joins me live from West Newton, Massachusetts. Sir, it is good to have you, sir. Thank you and the superb
work that you're doing in this regard.
What prompted you to lead forward on this? Because there are many campaigns and there are many causes. At what point did you decide this is
something you had to do?
STEPHEN KAUFER, PRESIDENT AND CHIEF EXECUTIVE, TRIPADVISOR: Well we're watching this news unfold and it is clearly one of the worst
humanitarian crises since World War II.
Oh my goodness, how could we - how could anyone as citizens of the world just sit back and watch. So, as you say, we had to do something and
we made our contribution and we had that idea to use our traveler membership.
All the people that love TripAdvisor and ask them for help - spread the word. And of course as you - as you mentioned, that match and that
call for action was incredibly successful over $1.2 million now.
QUEST: There is one thing that has become abundantly clear in this crisis is that there's no easy solutions here, is there? Where we -
whether it's Hungary closing the borders with Austria, Croatia or Serbia or Germany refusing.
There are no easy solutions. So I wonder when you as a CEO look at this, what do you think?
KAUFER: I look and say there is no problem that can't be solved by the cooperation of all of the leading countries, leading philanthropists,
leading activists in this world.
TripAdvisor is one tiny, tiny maybe little piece to this puzzle in terms of helping raise awareness and helping raise real dollars.
[16:50:06] If leaders step forward as various have, there's an answer to this crisis. It may not be easy, but we can handle the number of
refugees.
QUEST: See, now that (inaudible) is this question - the ability to handle the number of refugees. And I'm putting to one side completely the
whole issue of how we ever got here in the first place with the wars in Afghanistan, Syria, Iraq, instability in other parts of the world that's
promulgated this crisis.
KAUFER: Right. So we're not looking backwards, we're looking forwards and we're saying this is a population that clearly needs help over
whatever borders they're crossing.
And you do have some tremendous government leaders and you have tremendous companies that have also pitched in to help in this situation.
More is clearly needed, there's no simple answers but through the cooperation, through the help of as many folks as we can get, we're
optimistic. Or I'm optimistic -
QUEST: Right.
KAUFER: -- that something like this solvable.
QUEST: In a nutshell then, sir, what do you believe is the next step forward?
KAUFER: I would look to governments all around the globe to help in this situation. You can take a look at our own country, the United States
here, and we're accepting more but we are such a wealthy country, there's so much more that we could be doing in terms of taking our fair shares of
the refugees in this situation.
Germany's a shining example. We've looked to the rest of Europe, to the rest of the world to step up and help and if everyone does, then it
becomes solvable.
QUEST: Sir, it's an honor to have you on the program tonight. Thank you, Stephen, for joining us and talking about it. We'll talk more. Thank
you, sir.
Now -
KAUFER: Thank you.
QUEST: -- Apple has removed some of its most popular apps in China. Let me explain why. Well apparently the app store suffered a malware
attack. More than a dozen apps were taken down including the messenger WeChat. Joining me Jose Pagliery to talk about this. What has been going
on?
JOSE PAGLIERY, CNN MONEY: So -
QUEST: The app store has been hacked.
PAGLIERY: So, this is the news we always go, right? If there's ever - if you're ever going to download an app, do it from Apple's app store.
Everything is safe there.
Except here we have an episode that shows that sometimes they're not.
QUEST: Right. So are these the apps in the app store -
PAGLIERY: Yes.
QUEST: -- that are corrupted or is it the -
PAGLIERY: These are app -
QUEST: -- app store itself.
PAGLIERY: No, it's apps in the app store that are supposed to be trusted. When you have an iPhone, OK, and you're going to download an app,
you're told by Apple that the only place for you to do it is in their app store because those apps are OK, they're verified, they're checked, they're
safe.
QUEST: But there's so many we knew that's not true.
PAGLIERY: Well, this is a great example that it's not true because here we have 39 different apps made in China. These were mostly for
Chinese users and they were all infected and here's why - because the developers of these apps were impatient.
Instead of waiting to download the official software to build an Apple app, they instead went around and downloaded it elsewhere.
QUEST: Right. So, but what was on these apps?
PAGLIERY: So, these apps were infected and they could access your iCloud password, they could send software into your phone. I mean, if you
downloaded these apps, you're sort of out of luck.
QUEST: Right. But I always get sort of concerned when I hear these stories. I mean, is there any evidence that as a result of these apps
being downloaded, nefarious activity took place.
PAGLIERY: No, but only because it's hard to connect the dots. I mean, all we know is a bunch of apps that people got on their iPhones, OK,
were infected.
And so we're talking about tens, maybe hundreds of millions of people who had an entryway into their phone. Someone could get into their phone
somehow.
QUEST: And we'll never - let's be honest about this. We will never find out who infected these apps.
PAGLIERY: Well, we might find out who infected them but we won't find out what they did with them. All right, this is - the lesson here is that
even the app store, Apple's app store, which is supposed to be the trusted safe place, isn't.
QUEST: So nowhere is trusted and safe.
PAGLIERY: Safer, it's more trusted but you're still in a dangerous zone.
QUEST: OK, so we've got the Chinese President Xi Jinping coming to the United States. I expect there's not going to be too many - we were
talking to earlier - you remember - there's not going to be too many unsavory conversations, but you think there should be?
PAGLIERY: If there's one, it should be the corporate espionage that China engages in when China - their hackers - government hackers - break
into American companies, steal secrets, hand them to China's corporations and then produce them in China instead.
So that's the conversation that we need to be having because the U.S. spies on China, China spies on the U.S. and that's OK, that's traditional
spycraft. But the new aspect of this is the corporate espionage part.
QUEST: And when we then - I think you and I've both got - well your phone's probably more expensive and better than my -
(CROSS TALK)
QUEST: -- but - so you were surprised by this finding? That the app, the app store -
PAGLIERY: It's -
[16:55:08] QUEST: I mean, do you feel like a virgin who has had his eyes - you know - the shades removed from your eyes?
PAGLIERY: No, look to me, I cover cybersecurity and it's only a matter of time before someone breaks something. I mean, everything is
going to get hacked into, everything's going to be broken.
QUEST: Hang on to that cheerful note. Jose, thank you very much. Everything's going to be hacked into, everything's going to be broken.
That is a very cheerful thought to say "Profitable Moment" after the break. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Of the stories that we've brought to you tonight, perhaps there is nothing more remarkable and more
extraordinary than the allegations that are now swirling around Volkswagen. Just think about what they did.
Volkswagen puts a `defeat device' and software into their cars - into the Jetta and other diesel cars - that was designed so when they were being
tested, they gave the right results and when they weren't being tested, they gave a load of noxious fumes out the back.
And apparently they knew that was the case. The company's now said sorry and then the share prices dropped 20 percent.
I've heard many examples of corporate misfeasance. But this has to be way up there. Somewhere in Volkswagen there is somebody who knew what this
thing did, how it did it and what the effects was going to be.
And the job of Volkswagen - if it wants to regain trust - is to basically open the doors and say who that person is, what the company's
done and how they'll make sure it never happens again. Because as the guest on our program said tonight, this is not about damages or
compensation, it's about trust.
And that's "Quest Means Business" tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's
profitable.
We'll do it again tomorrow.
END
