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Quest Means Business
Trump Hails U.S. Market Rally; Murdoch Aims to Take Over Sky; South Korea Votes to Impeach President; Trumps Cabinet: Millionaires and Military Minds; U.S. Anti-Doping Agency Warns of Athletics Boycott; Samsung Tries to Power Down Note 7. Aired 4-5p ET
Aired December 09, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: Bells are now rings on Wall Street. The Dow is at a record, the NASDAQ at a record, the S&P at a record, the
market is 20,000 and the Dow not that far away. You keep pushing the bell -- that's it. And you do the gavel --
It's all too much. Just look at these numbers before actually show you date, the Dow up 142 points, 19,757 all the way up right throughout the
day, and it is Friday. It is December the 9th. Tonight, Donald Trump toasts the might of the markets and the Trump rally sees no sign of
slowing.
Reach for the sky, Rupert Murdoch tries again for a cable company take over. And the least two phone update of all times. Samsung tries to power
down one of their own phones once and for all. I'm Richard Quest. It may be Friday, but of course I still mean business.
Good evening, exactly a month since Donald Trump's presidential victory and the stock market rally shows no sign of letting up. The Dow, the S&P 500,
and the NASDAQ have all hit new highs once again today. I showed you at the open but it's worth showing you again. This is the Dow Jones
Industrials it opens out the gate higher and it goes higher steadily throughout the course of the session with a particular rise after 3:00.
We're still working out what happened at 3:00, except Donald Trump was speaking. Now the Dow has risen every day this week. It went up 46, up
36, Wednesday is a whopping 298, and Thursdays up 67. Today of course, up 135. One more week of these sort of numbers, and we will have hit 20,000
on the Dow Jones by the end of next week. In the last half hour, Mr. Trump hailed this market rally as proof that his economic message was already
resonating.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT-ELECT: You see what is happening with the stock market and a lot of things? Because they understand. We know what
we're doing. We're knocking a lot this happen. We can't let it happen. Our country is being drained, drained of its jobs. And it's good jobs.
And they're going to other countries and it's just not going to happen.
(END VIDEO CLIP)
QUEST: It's that sort of talking that seems to be moving the markets. Let's go to the traders, Tim Anderson, is managing director at TJM
investments. All right, Tim, we need to take this slowly, carefully, and pass fact from fiction. How much of this rally is Donald Trump related?
TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: That's the question of the day. It certainly feels like a good chunk of it is. Particularly when
you saw the very sharp reversal from where the Russell was November 3. Now a 20 percent move higher. It's gone from an under performer to a
overperformer in five weeks. That's very striking. I'm watching that and the transports, which was up about 16.5 percent. Very closely it would not
be unusual to see a little pause in either one of those. But we're not seeing it yet. I think the other thing that's very interesting to watch is
the U.S. dollar. Has had incredible strength and it's striking that oil continues to hold its gains from the recent OPEC meeting despite the
incredible strength in the U.S. dollar. So, if you even had a little pull back in the dollar, oil could maybe make a move up above 55.
QUEST: What happened at 3:00 this afternoon that caused this quite dramatic spike in the Dow? Why at three?
ANDERSON: The transports have made a new high for the first time in two years a couple of days ago, and they were up in the morning. And they were
actually down marginally most of the day. And then when they didn't really sell off and you didn't really have a wave of selling, you have a feeling
that OK, we're not going to sell off. And the buying just built on itself for the last hour as it has a number of other days in the last couple of
weeks. It feels like institutional portfolio managers want to go home with as close to zero cash as they can at the end of the year.
[16:05:00] QUEST: It' also starting to feels like a rally feeding on itself. Not speculative as such, but that more investors are going to feel
for concern that they're missing out.
ANDERSON: You know, you haven't heard this term in a long time, maybe since the mid-90s. This is a classic multiple expansion rally. The big
bet is that corporate earning the will come out of their doldrum, where they've had the declines for the last five or six quarters. And you're
going to get an uptick in the economy and that's going to be very positive for at least the next couple of years. Now will like to see if that
happens, but clearly this rally is an expectations rally or really creating a multiple expansion before the fundamentals really develop.
QUEST: I shall watch closely on that question of multiple expansion. Tim Anderson, good to see you at the New York Stock Exchange.
There were deals that were being made in Europe. Fox has reached for the sky, literally, and it has made it this time. Rupert Murdoch's 21st
Century Fox has agreed to a takeover of the broadcasting group Sky. You remember, they tried this once before in 2011 and it failed. Here you have
the share price of Sky, and it tootles along and all of a sudden it goes wow, right up and that's because they jumped more than 30 percent to match
the bid price to exactly at 10 pounds per share. It comes off of this a bit that raises the question as to whether there may be some issues as to
will this deal complete. Paul La Monica is with me. The last time Murdoch tried to take Sky, they failed on pretty much public policy grounds.
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Right, you had the phone hacking scandal in the UK which really derailed any chances of Murdoch
doing this deal. But that was now several years ago, you have James Murdoch, the CEO of Fox, Rupert son, is back at Sky as well, as chairman.
So, I think people felt that the timing was right, enough time had passed for Murdoch to make a run at this company.
QUEST: Is it a done deal, this?
LA MONICA: Nothing is ever a done deal, but I would suspect that shareholders probably will like the fact that it's a nice premium and that
regulators probably have may be forgiven, if not entirely forgotten the drama from a few years ago, with the hacking in the U.K.
QUEST: So far, I don't see too many critics coming out of the wood work on this. It always felt this was going to happen, in 2011 it didn't because
of the phone hacking scandal.
LA MONICA: Sorry, I was just going to say, you have the newspaper split off from Fox. Also, news Corp. being a separate company, although that's
obviously still controlled by the Murdochs.
QUEST: Other big news at happen today, Muhtar Kent is stepping down as chief executive of coke. He stays on his chairman. The COO takes over as
this. What do we make of that? Why? Why is Muhtar going now?
LA MONICA: I think this is pretty interesting. Coke has lagged its top rival, Pepsi, over the past couple years. The company has made moves to
diversify a little bit and realize that Diet Coke sales in particular, have been slowing dramatically. But Coke I think it's going to be interesting
to see what happens going forward. Warren Buffett blessing this deal, Berkshire Hathaway is a big shareholder and Coke, but Warren's son, Howard,
just stepped down last night from the board. So, that I think is a bit interesting that he's no longer on the Coke board. And there has been
speculation that Anheuser-Busch InBev could eventually make a takeover to run at Coca-Cola. So, it'll be something to see --
QUEST: That would be extraordinary.
LA MONICA: It would be extraordinary. And give that AB InBev has had backing --
QUEST: Yes, but Coca-Cola is Coca-Cola. It's huge.
LA MONICA: It is huge, and we know our friends in Atlanta, obviously, look at it fondly, of course, but I don't think any deal will be off the table.
This would be gigantic if it happens.
QUEST: So, the chief operating officer whose name immediately escapes me.
LA MONICA: Quincy.
QUEST: Thank you -- is taking over. The COO -- James Quincy -- also took over Starbucks -- does the COO, is the COO cap rapidly becoming the CEO in
waiting.
LA MONICA: I think a lot of times people view that position as the heir apparent, especially when you bring in someone with such fanfare. In the
case of Coke, you have Quincy is a long-time executive.
[16:10:00] But with Starbucks, they brought Kevin Johnson from the tech world in a couple of years ago, and it was pretty clear that with Starbucks
morphing into more of a tech company in the way they order. He was going eventually be the CEO.
QUEST: But within the C suite you have the chief exec, the chief marketing, the chief information, the chief operating, the chief financial,
the chief tech, and a few other chiefs. But the CEO, the chief op, is starting to be regarded as the replacement?
LA MONICA: Yes, I think that is definitely the case. And for whatever reason there is speculation, could Mark Zuckerberg ever be interested in a
political career. If he were to ever step back at Facebook, I think Sheryl Sandberg, the COO, is a likely successor. Except for the fact that she
also has been viewed as someone that could be a political contender in the state of California.
QUEST: A fascinating day in politics. A fascinating day in business. Muhtar Kent good friend of this program by the way. Sorry to see him leave
Coca-Cola. Good to see you. Have a good weekend.
LA MONICA: You too.
QUEST: The markets in Europe they took their cue from the U.S. They were all up after the ECB -- you remember, there extending the bond buying, but
they changed the parameters of how much they're going to buy. The Zurich SMI was the best performer. It was up the best part of 2 percent.
As we continue tonight, the political scandal in South Korea taking a very interesting turn. Thousands of people who witnessed a historic vote to
impeach the country's president. The constitutional court now takes up the issue. The question becomes what does it mean for South Korea? In a
moment.
(COMMERCIAL BREAK)
QUEST: A wave of anti-establishment populism that swept the West, has now over into the East. And reaching all over Asia's largest economies. South
Korea's president has been impeached by Parliament on Friday. Over the corruption scandal involving the country's most powerful businesses.
That's the sound of jubilation of the protesters as they heard the results. President Park has been temporarily stripped of her duties and has been
replaced by the prime minister. Following the vote, what happens now is the constitutional court is to begin deliberations on whether to ratify the
impeachment. Our correspondent in Seoul is Paula Hancocks and as she now tells us the political uncertainty in the country is only just beginning.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Protesting outside the gates of power. Calling for President Park and her to be
impeached for her alleged role in an ever-widening corruption scandal. Sometimes a tense wait for lawmakers to decide her fate.
Parliaments vote was convincing, 234 opted for impeachment, just 56 said no. Meaning, many of Park's own party must have voted against her. The
reaction outside was one of delight. Including from Seoul's Mayor, himself a presidential hopeful.
[16:15:00] PARK WON-SOON, SEOUL MAYOR: It is a great victory of Korean in the victory of democratic.
UNIDENTIFIED FEMALE: I'm so happy. I'm very proud of my people.
HANCOCKS: President Park met with her cabinet after the vote, apologizing once again.
PARK GEUN-HYE, SOUTH KOREAN PRESIDENT: I solemnly accept the voice of the Parliament and the people and sincerely hope this confusion is soundly
resolved.
HANCOCKS: Suspended from power, her Prime Minister Hwang Kyo-ahn, is now in charge. Addressing the nation, he assured citizens the focus will now
return to North Korea. Warning the military to be on alert for Pyongyang taking advantage of the destabilized situation and referring to U.S.
President-elect Donald Trump, he promised to strengthen the U.S./South Korea alliance.
The constitutional court now has up to six months to decide whether they agree with lawmakers and uphold Park's impeachment. If they do, elections
will be held within 60 days. But if less than six of the nine judges agree with the evidence against Park, she'll be immediately reinstated. Many
lawmakers though are focusing on the here and now. A symbolic walk of the nation's flag to the nations Parliament.
CHUNG DONG YOUNG, SOUTH KOREAN LAWMAKER: I'm very much satisfied and I'm very happy for our peoples democracy.
HANCOCKS (on camera): Night has fallen here in South Korea, and Park Geun- hye is no longer in charge of this country. But this is by no means over. A final decision on her fate and also on who will ultimately rule this
nation of 50 million could well still be months away. Paula Hancocks, CNN, Seoul.
(END VIDEOTAPE)
QUEST: A White House spokesman said the U.S. remains a steadfast ally and a friend in a partner to South Korea, will work with the acting president.
We've also learned separately that President-elect Trump has requested a special briefing on North Korea. Which perhaps is not surprising.
Ambassador Christopher Hill joins me now. He is the former U.S. ambassador to South Korea. Former chief negotiator on the North Korean nuclear talks.
If anyone knows the machinations of this part of the world, it is you, dear ambassador. And thank you for joining us.
Firstly, is it your feeling, and I know you can't prejudge a constitutional court, but is it your gut feeling that the constitutional court upholds the
articles of impeachment?
CHRISTOPHER HILL, FORMER U.S. AMBASSADOR TO SOUTH KOREA: Frankly speaking, Richard, it's kind of hard to say. Certainly, a lot of what has happened
has kind of come out very publicly. Park has acknowledged this terrible mistake. I must say that I would be surprised if this were reversed. But
I want to add that in 2004 when the then president Roh Moo-hyun was accused of manipulating elections and impeached. The constitutional court did not
go along with it and he was restored to his office. So, I think anything can happen. But I must say, a lot of this evidence is kind of out there.
It's very familiar, and we'll have to see.
QUEST: How likely is it that the North decides to make mischief or to play this somehow to its advantage and how would they do that?
HILL: First of all, what the North has in terms of a testing program is really a military testing program. They're not testing us as much as they
are testing missiles and potentially another nuclear device. So, I think that's really what's going on in the North. I must say they have never
liked Park Geun-hye. They've always looked at her as much too much of a hardliner. They've never liked her because of her father. So, I'm sure
they're enjoying this, but at the same time they've been rather restrained in recent weeks in talking about it. And I think they want to see it play
out. Certainly, I think as South Korea would move more leadership, the North Koreans will learn that there's nobody in South Korea particularly
interested in coddling up to the North.
QUEST: This news today that the President-elect is only getting one presidential daily brief a week. The vice President-elect Pence is getting
the daily brief. It's not the first President-elect to have chosen to limit. But he has asked for a Pacific brief on North Korea.
HILL: I think it's a good sign, he's asked for a brief on North Korea. I can't think of an issue, that frankly is more dangerous to the world and
potentially more dangerous to his own term. Because it looks like probably in the next few years, probably in the next four years, North Korea will
have a deliverable nuclear weapon. Something they didn't have before when they were just testing nuclear devices. So, at that point, you have a U.S.
president who'd be asked by the electorate four years from now what have you don't about this?
[16:20:00] I don't think president Trump wants say, well we're trying to be patient and work with our allies and supporting the six-party process. He
probably wants a more robust answer to that question. And so, I think this starts with a briefing, and I see that as a good sign. And who knows,
maybe he may go to a two a week briefing schedule.
QUEST: Finally, to any incoming president, even somebody -- assuming for the purpose of the question -- Hillary Clinton one steeped in foreign
policy, North Korea and South Korea with the bilateral treaty that the U.S. has with South Korea, is one of his most intractable problems, isn't it?
HILL: Well you got it, because when you have a treaty -- I mean, we have a security treaty -- meaning an attack on South Korea is like an attack on
the United States. In short, we're at war if the South Korea is attacked by North Korea. This is not just figuring out what is going on there
halfway around the world. This is something that could really involve presidential decision making. And by the way, when you have to make these
decisions, you've got to make them pretty quickly and you better have the in facts, or at least the concepts of what's going on well under your belt.
So, the trouble with these foreign-policy issues, is you don't usually get to pick and choose and say, well I like that one so I'll get a little
interested in it. These issues tend to pick you. So, I think it behooves him to be as well briefed as possible for things that could be extremely
fast moving as they develop.
QUEST: Final quick question, sir. Behind you over your right shoulder, who is that picture of you shaking hands with? Can you see, look over your
right shoulder?
HILL: I don't want to turn around and look, there's a number of pictures from my tenure of shaking hands. I think I may have George W. Bush there.
I think I may also have Condoleezza Rice. I have a lot of memorabilia and it's kind of fun to point it out to the students here at the Korbel school
in the middle of Colorado.
QUEST: Brilliant, Thank you, sir. We'll find out what was, thank you.
Now, Donald Trump wants to drain the swap in Washington. And he's hiring the brightest minds from Goldman Sachs to help him do it. According to
multiple reports Goldman's president and chief operating officer, Gary Cohn, is to head up Trump's White House Economic Council. When I spoke to
Cohn at the world economic forum in Davos, he focused on something that many of Trump's appointments have railed against, overregulation.
(BEGIN VIDEO CLIP)
GARY COHN, GOLDMAN SACHS PRESIDENT AND COO: Get used to more volatility. This has been created by what we have done in the regulatory community to
some extent. Remember, we in the last five years have spent an enormous amount of time regulating all of the global financial institutions to the
point that we've all deleveraged our balance sheets. We have all been forced to be very conservative with what we do. We no longer can trade the
way we used to trade. We used to feel at Goldman Sachs that it was our job to dampen volatility. When access of selling came in we were there to buy.
The flipside, when excessive buying came in there, we were there to sell it. We're not in a position to do that anymore.
(END VIDEO CLIP)
QUEST: Now, Trumps cabinet appointments so far, have met two distinct flavors. They are military might and multimillionaires. On the
millionaire front you've got Betsy Devos who is education, a billionaire married to the Amway fortune. We're familiar with Wilbur Ross on this
program he's the commerce secretary and he's a billionaire investor. Linda McMann is a small business administrator and the WWE chief executive.
Steve Mnuchin is in for treasury and is a partner at Goldman. Andrew Puzder is the Labor Secretary -- or will be -- chief executive of Carl's
Jr. And Hardee's. And as you just heard, Gary Cohn, economic Council at Goldman Sachs. They are the millionaires.
Now to the military. And the military minds, national security advisor, retired Army Lieutenant General, Michael Flynn. Homeland Security, retired
Marine Corps general, John Kelly. And Defense Secretary, retired Marine Corps general, James "Mad Dog" Mattis. So, military and millionaires.
General Spider Marks is in Washington. He's our CNN military analyst. Military and millionaires, now look, I said yesterday to you that the
military take orders and will be comfortable. You nearly leapt out of the chair and formulated against me on it, but the military are better in that
environment, aren't they?
[16:25:00] GENERAL SPIDER MARKS, CNN MILITARY ANALYST: Well Richard, as we discussed, and as I took my hands off your throat -- what we discussed,
Richard, was the fact that military leaders understand that the art of decision making has a process to it and there's a desired outcome. And in
order to get to that desired outcome, there will be differences, there will be contrary views that will really permeate the discussion. But at the end
of the discussion a decision must be made. The person in charge has to raise a hand and say, OK, I've taken everybody's ideas, we're all on board,
right? That's an interrogative. I'm going to make a decision. We're going to go forward. But guess what? When everybody departs this room,
when that door opens up, we are all on the same line on the same handle.
So, what happens is that type of a process certainly is a disciplined kind of an intellectual leadership type of a process. Business people on the
other hand still want to achieve a level of a desired end state, a shared view of what we're trying to achieve here, but it may be more chaotic. I
think that is where we agreed at the end of that little wrestling match in the green room.
QUEST: Right, but which do you think is going to have more trickiness. Not success, but trickiness. Military or millionaires. Because some of
those millionaires are billionaires. They've run large companies in their own right, and they are used to defining strategy and executing it
themselves without too much to do.
MARKS: Well, I have seen both, Richard. In my brief business career, I have been blessed to have mentors and leaders in the business community
that of come to me and have demonstrated these -- what I would call these characteristics of leadership that are not dissimilar from what we see in
the military. But what you are saying is very true. At the end of the day, that individual business leader maybe spends more time herself or
himself in terms of the visioning and in terms of the final decision making without a lot of the fuss that might come from the contrarians in the room.
Which is what defines what I would say, the art of military leadership, which is a lot of discussion in advance of execution.
QUEST: How will those military minds reconcile and become comfortable dealing with civilian problems? Even if you take Homeland Security -- at
the end of the day there is a lot of civilian employees and it deals with civilians in a way that the DOD doesn't. It is essentially a civilian
institution.
MARKS: Yes, but realize that senior leaders, general officers, we spend a lot of time in a very volatile and uncertain environment where the inputs
are not strictly military. They represent all those elements of power, diplomacy, and finance and information, et cetera. That's kind of a world
that these senior military leaders live in.
What we want to see out of these leaders that are going to now lead the Department of Homeland Security and the Department of Defense, is an
understanding of -- look those large bureaucratic organizations will have a recidivist type behavior. They've got a life of their own. I don't want
Jim Mattis, for example, to "fix" the inside of DOD. I want him to lead DOD with maybe three or five priorities. Let the folks who understand how
the machinery works. Let them work it, and then periodically check it to make sure that everything's aligned to meet those goals.
QUEST: We need your help in the future, sir, as we move forward in this transition and into the next administration. Spider Marks, good to have
you on the program, sir.
MARKS: Thanks, Richard, thank you.
QUEST: Amid allegations of Russian hacking into U.S. elections. One American company is actually hiring Russian hackers. Will explain why.
It's QUEST means business on a Friday.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. As the head of the U.S. anti-doping agency tells me, the
U.S. could boycott athletics if Russia doesn't clean up its act.
And Samsung tries to kill off one of their own phones. The most extraordinary story on what they're suggesting. Now one of the biggest
American networks won't let them do it and for a reason that you might not immediately think of. We'll talk about that as we continue because this is
CNN, and on this network, the news always comes first.
Egyptian officials say policemen were targeted in two separate roadside bombings on Friday. Six officers were killed in Cairo when a blast ripped
through a checkpoint on the main road leading to the pyramids. Another bomb targeted a police vehicle in northern Egypt killing one civilian.
South Korea's Parliament has voted to impeach President Park Geun-hye over a corruption scandal. The country's constitutional court will now decide
whether she should be kicked out of office. President Park apologized again on national television after the decision. The Prime Minister will
be acting president during the process.
(BEGIN VIDEO CLIP)
HWANG KYO-AHN, SOUTH KOREAN PRIME MINISTER (through translator): I stand here with heavy hearted sadness. The Parliament passed the president
impeachment motion today. As an aid to the president, I feel deep responsibility about the situation we have come to face.
(END VIDEO CLIP)
QUEST: The president of Ghana has conceded defeat in Wednesday's national election. A spokesman said, John Mahama called the opponent, Nana Akufo-
Addo, on Friday. Ghana has a record of peaceful elections, and this is the third time since 2000 that voters have rejected a government.
One big name is out of the running for U.S. Secretary of State. CNN has learned that the former New York Mayor, Rudy Giuliani, is no longer under
consideration to be America's the number one diplomat. Sources say the President-elect is now taking a closer look at Exxon Mobil's chief
executive, Rex Tillerson.
President Obama has ordered a review into allegations that's Russians influenced several U.S. elections through hacking. Claire Sebastian is
with me now. What are they alleged to have done? How serious is this? A lot of accusations about hacking. Is this -- what's he getting to with
this?
CLAIRE SEBASTIAN, CNNMONEY CORRESPONDENT: Well, you remember, Richard, that the intelligence agencies came out in October and said they had a high
degree of confidence that Russia was behind the hack on the Democratic National Committee emails. Well this is designed to build on that. Not
only to unearth more evidence, not just about the DNC hack, but you know, important figures like John Podesta, Clinton's campaign manager. But it's
also about learning lessons. The White House saying today that they really want to take stock, they said of their defensive capabilities. Make sure
that they could really commit to the integrity of their election process.
The Russian government coming out and saying the foreign ministry spokeswoman saying that they would like to learn more about this. This is
a tone they've struck all along saying that the U.S. needs to prove it. Lavrov said to Christiane Amanpour back in September, let them prove it.
Well this is exactly what Obama is trying to do.
QUEST: He is trying to prove something that might not necessarily be provable easily. But in doing so, many of us are trying new techniques to
learn about Russian hacking?
SEBASTIAN: Absolutely. Whether or not Obama can prove it we may never find out. We don't know how much of the report is going to be made public.
But it's interesting, Richard, because this is a time in the U.S. where never has Russian hacking been so closely followed, so closely watched and
so greatly feared. And we have found a rather controversial company here in New York that aimed to enlist the services of these very Russian
hackers, perhaps not the same ones, but Russian hackers nonetheless, to actually try to provide cyber security services to American companies.
Take a look.
[16:35:00] (BEGIN VIDEOTAPE)
HILLARY CLINTON, FORMER DEMOCRATIC PRESIDENTIAL CANDIDATE: The Russian government has engaged in espionage against Americans.
SEBASTIAN: Long before the U.S. allegations of meddling in the election, Russian and Russian speaking hackers were known to be some of the most
sophisticated in the world.
DONALD TRUMP, U.S. PRESIDENT-ELECT: Russia, if you're listening, I hope you're able to find the 30,000 emails.
SEBASTIAN: Now in the postelection, U.S. fears of Russian cyber interference still linger. But one New York company is trying to turn the
tables to take advantage of that Russian skill set to actually protect American companies.
Cybersec is the work of New York-based lawyer Arkady Bukh, who has defended some of the world's most notorious Russian cyber criminals. Bad actors of
the hacking world, some of whom he is now working with.
ARKADY BUKH, FOUNDER, CYBERSEC: Our company includes specifically hackers who have been prosecuted, who -- some are still wanted. We will consult
with the criminals who explain how the hacks usually done. From the bot net, to the creation of the viruses to actual attacks.
SEBASTIAN: In Moscow, I met one of those consultants, Sergey Pavlovich, a prolific credit card hacker back in the 90s. He's already served ten years
in prison in his home country of Belarus.
SERGEY PAVLOVICH, FORMER CREDIT CARD HACKER: I explained to him what to do to steal money from someone's bank account.
SEBASTIAN: Pavlovich is still wanted in the U.S. in connection with a major credit card fraud ring. That hasn't stop him publishing a book
called, "How I Stole a Million."
Did you real steal a million dollars?
PAVLOVICH: Yes, one million and a little more.
SEBASTIAN: And then there is Vladislav Horohorin, known online as Badb. Currently in prison in the U.S. for selling millions of stolen credit card
numbers through online forums. He told me via email that former hackers have a "mind-set" which allows them to anticipate all the possible attack
vectors. "Hacking is not a skill," he writes, "it's an art."
SEBASTIAN (on camera): Russian hacking has been in the news a lot particularly around the U.S. election. How has that impacted your
business?
BUKH: We get more inquiries.
SEBASTIAN (voice-over): So far Bukh's clients have mainly been small and medium businesses.
BUKH: Some banks have been inquiring, but the main the problem is the use of liability of criminals, consulting and assisting.
SEBASTIAN: He is willing to take the risk, he says, because the dangers in cyber space are growing and these people may be some of the best qualified
to stop them.
(END VIDEOTAPE)
SEBASTIAN: You know, Richard, it's interesting because these hackers are not the ones tied to circle of patriotic attacks that the U.S. saw around
the election. But I did ask him about that and both the lawyer, Arkady Bukh, and the hackers themselves all agree that there has to be a money
trail somewhere that hackers after all our businessmen.
QUEST: Excellent reporting. Thank you, more of that please. With the new administration, find out more about it, thank you. Back to work.
We'll continue to talk about Russia. And the Russian sports ministry has denied that the country organize state-sponsored doping. A panel set up by
the World Antidoping Agency, WADA, found more than a thousand Russian athletes had been involved in doping. The panel says in a status report,
the problem affected 30 different sports. The athletes used performance enhancing drugs and then suppressed positive results. The report's author,
Richard McLaren, told Amanda Davies, he was stunned by the scale.
(BEGIN VIDEO CLIP)
RICHARD MCLAREN, AUTHOR, WADA REPORT: When I first learned about all of this, I thought it was fanciful and could not possibly be true. So, I was
expecting to conclude that it wasn't true. I had a complete 360-degree reversal and realized it was true and a lot more was true than was ever
published before.
(END VIDEO CLIP)
QUEST: The chief executive of a U.S. Anti-Doping Agency has told me that American athletes could start boycotting competitions. As he has yet to
see any evidence of a cultural change in Russia. I asked Travis Tygart, whether there was any doubt of a Russia's guilt in his mind.
(BEGIN VIDEOTAPE)
TRAVIS TYGART, CEO, U.S. ANTI-DOPING AGENCY: Well, Russians still today deny it. And are attacking the evidence that has been presented. So, I
think if you've read the reports, there's no question of what took place.
Until real reform and change can happen to guarantee clean athletes rights are upheld, the very organization, the Russian sports system has to
acknowledge the truth of this report. The evidence that has been disestablished and then put in the steps that need to happen to ensure
reform is done so that clean athletes are never faced with this situation again.
QUEST: Do you still believe that they are actually doping athletes? Or that athletes are doping themselves in Russia?
[16:40:00] TYGART: I come down to what the evidence in the report, and we know after the investigations started in 2015, there was still massive
doping at one of their national training centers. There was one where seven athletes tested positive for EPO when the testers finally got in
there. We know as recently as just a couple months ago, they're still not allowing international testers into certain areas. We know they're not
code compliant, and they have an accredited body that can collect samples or a lab that run samples. The system is in total chaos right now and
until it's fixed that's when we can determine whether or not they deserve an opportunity to compete again.
QUEST: Right, but when Lord Sebastian Coe, tried to ban all Russian athletes at the last Olympics, and the IOC at the final decision, decided
to come up with extremely complicated version of those who have not been doped or whatever. It is watered down the sanction that needed to take
place.
TYGART: Yes, they unfortunately and it's why there's been such an outrage from athletes, the public, the media, at the poor decision and the lack of
leadership that the IOC showed. At the very time, they could have sent a clear message that when they say zero tolerance, when they say therefore
clean athletes. It is not just words without any meaning, they can take action to back that up and that's not what they did, unfortunately. But
they have another opportunity here. And they could immediately suspend the Russian National Olympic Committee and show that no international events
are held in Russia until that entire system is code compliant. And immediately put end -- which they can do today -- the types of reforms that
WADA, the World Anti-Doping Agency, the global regulator, to ensure that something like this never happens again. We'll have clean athletes and
have the right to compete on a level playing field.
QUEST: Do you see the potential, the realistic potential for U.S. athletes basically boycotting world sporting events until there has been change? Is
that realistic?
TYGART: I hope not, but their voice has to be heard. And let's be clear, it's not just U.S. athletes, we've heard from U.K. athletes. We've heard
from German athletes. We've heard from other athletes around the world.
QUEST: Let me interrupt you on this though. Let me interrupt you. Why don't they just do that. There are your own statements in this interview.
There have been three Olympics where there have been clouds over the doping question that have simply got worse. So, I guess what I'm asking is, what
are these athletes waiting for since help from others is clearly not coming?
TYGART: Because they want help from others to come. If those that can help the power structures of sport, believe in what they say they believe
in, then they will help. And so, it's not yet time to give up hope and throw in the life preserver and not compete. Particularly when you they
have sacrificed several years of your life for this opportunity to compete in a world championship, for example. But it is getting closer and you've
seen athletes come together and start the discussion of whether or not they're going to compete in these events that are being held in Russia or
not. And unfortunately, that is happening because of the power structure of sport has yet to hear their voice in the way they should to provide
meaningful outcome and reform to again, ensure that this never happens again.
(END VIDEOTAPE)
QUEST: As we continue tonight, Verizon is refusing Samsung's plan to disable exploding phones. Verizon says customers need a working phone in
case of emergency. As for everybody else, the new plan basically makes it unworkable. What a mess.
[16:45:00] (COMMERCIAL BREAK)
QUEST: Welcome back, if the risk of explosion and fire were not enough to make you stop using your Galaxy Note 7, assuming you haven't already
returned it and if not why not. Samsung is going to do the job for you. They're releasing a update that will stop the phone from fully charging.
It means the device will be dead and can't overheat and explode.
The idea is you'll charge it, but it will never charge more than 30 percent and it is necessary, they say, because some users have refused to exchange
their phone. However, it seems good but Verizon is refusing to send the update to customers. The carrier says it is adding a risk to the user
because if an emergency -- their phone doesn't work and they have not have another phone. What a mess. Shelly Palmer is with me, host of "Digital
Living."
SHELLY PALMER, HOST OF "DIGITAL LIVING": How are you?
QUEST: Does the Samsung update make sense? In some countries, the update literally stops the phone from operating at all. Isn't that better?
PALMER: They first issued an update that got the phone to charge just to 60 percent. And they got 93 percent of the phones back. That is
incredible and now they want the rest of them. To encourage you to send back the rest of them they're putting this software update out. Verizon
doesn't want to do it but all of the other carriers are going to do it, and they want you to send the phone back. That's what they want.
QUEST: It's a question of go, do the update, the phone won't charge, it will be useless.
PALMER: You are not going to have a choice. It will happen automatically. They really want the phones back. I know you just said that that at the
low charge rate it's not a safety risk, but in fact it is a safety risk until you send it back. It's a recalled product, it should no longer be
out in the wild.
QUEST: Why don't they just use the update that stops the phone from operating as a phone, breaks the phone.
PALMER: Not being Samsung I can't tell you why, but this is as close as you're going to get. Once you unplug it, it's not going to work. Verizon
say it's is a safety issue, because you have to be able to dial 911. It is a safety issue, send the phone back. But Samsung just wants an abundance
of caution. They want their phones back, so they're going to make them almost unusable.
QUEST: We can sit here and talk about this, but how damaging has this been to Samsung?
PALMER: It is hard for me to tell how other people are thinking. From my perspective, they did exactly the right thing. They got out ahead of this
thing in fact they got in trouble for getting out ahead of it. They said we have a problem, it's been a recalled problem. They got 93 percent of
the phones back, and they just want to get past it. So, I think it is not going to hurt them that much.
QUEST: No, but what it does do is as we used to say in this thing dog bites boy. But what it does do, it creates more stories. You end up with
Samsung washing machines blowing up, and Samsung this, that, and the other.
PALMER: I don't know if I personally would have done this particular update and brought this back into the news, but I think they are so -- they
just so want them back and they want to do the right thing. I think ultimately it will not hurt them at all. I think their products are great
and I don't think it's going to hurt them.
QUEST: So, you're a fan?
PALMER: Yes.
QUEST: Ready for your blood pressure to go up?
PALMER: Yes, not again, Richard, please, the blackberry thing, I know you love it, there is nothing bad about it, but you have to join at least the
stone age. Come this far with us, seriously.
[16:50:00] QUEST: You will see the light someday. "MAKE, CREATE, AND INNOVATE" after you have had a break and a chance to think about me.
(COMMERCIAL BREAK)
QUEST: Former New York City Mayor Rudy Giuliani has removed himself from consideration as Secretary of State. Jason Carroll is in Grand Rapids,
Michigan where Trump is set to speak. He carried so much water for Donald Trump during the campaign, what went wrong with that relationship?
JASON CARROLL, CNN CORRESPONDENT: Huge supporter, as you know, Richard, throughout the campaign. One of his early supporters. What happened here,
Rudy Giuliani said the transition team, pulling his name out of consideration. But basically, what came down here is looking at it like
the game of musical chairs. It was not being pulled out for secretary of state. More likely for perhaps Mitt Romney, for Rex Tillerson, these
seemed to be the front runners now. Perhaps there's is the thought that there was too much baggage with Rudy Giuliani and some of his overseas
business dealings in Middle East, perhaps he didn't have enough supporters behind the scenes.
Certainly, there have been Mitt Romney critics, a lot of people support Rex Tillerson, but not enough support for him behind the scenes.
QUEST: They have known each other for decades and they have been friends. Maybe, we don't know, have they fallen out over this?
CARROLL: Perhaps tomorrow there will be an indication to the President- elect, Donald Trump, and Rudy Giuliani. They intend to go to the Army and Navy game. It could be a symbolic outward appearance. Clearly this is a
position that Rudy Giuliani was lobbying for and now he is simply not going to get it.
QUEST: Jason Carroll joining me now. Now the CNN QUEST MEANS BUSINESS newsletter arrives when New York closes and before Asia opens. Tonight, I
have been writing about Trump's cabinet. How do you subscribe? CNNmoney.com/quest. A perfect digest of what happened today and what you
need to look out for tomorrow.
[16:55:00] And it's free, a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the green on the screen tells the story of the day and the week. The Dow Jones industrials up 142. A record
high as indeed is the S&P 500 and the indeed the NASDAQ. The Dow has gained 3 percent this week, and what is more, it is the fifth week that has
seen the Dow actually go up in value. If you take in the S&P 500's point of view, this is the best weekly performance since 2014.
Why is all of this important? It's important because it's on the back of prospective policies from Donald Trump, including lower corporate taxes,
lower personal taxes, deregulation of the U.S. economy and the other variety of things he will do, for instance, to boost infrastructure
spending. The market likes what it sees, but at the moment it is only looking at the positive, it's not factoring or it is choosing to ignore
potential negatives, but maybe a trade imbalance, or trade war dispute with partners.
Putting it this way, most people I speak to in the market say this rally still has legs, and further to run, at least until the administration takes
office next year. Now that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York.
END
