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Quest Means Business
Nissan Chairman Ghosn Arrested Over Financial Misconduct; U.S. Senate Democrats File Lawsuit Challenging Whitaker's Role as Acting AG; Saudi-Backed Yemen Government Agrees to Peace Talks; Malaysia's PM-in- Waiting Sends a Warning to Goldman Sachs; Top Auction Houses Celebrate Bumper Week of Sales; AI Art Sells for $432,500 at Christie's; DRC Fights Corruption and Exploitation; Tech Sector Leads Markets Lower. Aired 3-4p ET
Aired November 19, 2018 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CORRESPONDENT, CNN: Ah, yes, as you can see there, not a great day again on the markets. The studio crew says, "Hey, buy low." This
is what's driving the day on Monday, November 19th. Tech stocks are actually malfunctioning at the moment, they're taking down the entire
broader market in the process. Meantime, Nissan shares sink on the bombshell news of Carlos Ghosn's arrest, and China left out in the cold in
Papua New Guinea, a major summit ends with no deal on trade. I'm Paula Newton and this is "Quest Means Business."
Good evening. Tonight, Carlos Ghosn is being removed from the companies he controls, share prices are way down, and the accusations against Nissan's
Chairman are sending shockwaves through the entire auto industry. Now, prosecutors in Japan arrested Ghosn after an internal investigation that
Nissan revealed significant acts of misconduct over the course of many years by Ghosn and another top executive.
Now Ghosn is accused of underreporting his compensation and using company assets for personal reasons. Anna Stewart has been following all the
developments for us and you know, you can't understate the shock in fact here across three continents and so many different corporate boardrooms
when the news of this arrest came down.
ANNA STEWART, REPORTER, CNN: The press conference this morning, Paula with the CEO of Nissan really conveyed it all. It was shock, it was very
emotional. He actually said he felt despair, frustration, resentment towards Mr. Ghosn. It was a very emotional event. And part of that is
just because this guy is an industry legend. He turned around two car companies. He created one of the most successful alliances in the auto
industry across world. Take a look at his legacy.
(BEGIN VIDEO TAPE)
STEWART: He's one of the auto world's highest profile and highest paid business leaders. Nissan Chairman, Carlos Ghosn, arrested in japan after
claims financial misconduct. The company he built into a global car giant, preparing to oust him.
Born in Brazil, educated in France, Ghosn started at Renault in the 1990s where his radical restructuring of the French auto firm earned him the
nickname, "Le Cost Killer."
When the Renault team got with Nissan in 1999, the Japanese firm was struggling and Ghosn was ruthless, cutting thousands of jobs, closing
factories and selling off assets. His plan worked. He returned Nissan to profit.
Over the next two decades, he continued to expand taking control of Russian carmaker, Avtovaz and the Japanese rival, Mitsubishi. By 2017, the
Renault-Nissan-Mitsubishi alliance was the third biggest car seller in the world.
Carlos Ghosn, a globe-trotting business leader and a massive name in Japan. Known for his work ethic, Japanese media dubbed him 7-Eleven for the hours
he worked. And his jet-set lifestyle, he split his offices between Paris and Tokyo.
His life story was turned into a superhero comic. Carlos Ghosn sat down as Nissan's CEO in 2017, but stayed on as the head of Renault and chairman of
the alliance until 2022. With a heavy investment in electric cars and a partnership with Google, he pledged to lay the groundwork for the company's
future. Now his own future is very much in doubt.
(END VIDEO TAPE)
STEWART: Now, of course he was arrested earlier today by Japanese authorities, and next of course is, will he be able to stay on as chairman?
It would seem very unlikely. The CEO this morning said he is proposing to the board that they remove him as Chairman and there is a board meeting set
for Thursday, Paula.
NEWTON: And are we getting a better sense of the collateral damage that this will impose on all three of these car companies?
STEWART: Yes, of course because he's not just the Chairman of Nissan, he's also the CEO and Chairman of Renault and the Chairman of Mitsubishi and he
oversees the entire alliance. All three companies are having to go to crisis management over this.
The Renault board met just a few hours ago. We hasn't heard what that decision will be or whether that decision will be made now or in the coming
days. Mitsubishi have just said they're ready to launch their own investigation into what will happen, whether there was any other sort of
misconduct from Carlos Ghosn in that company.
Essentially, I think everyone will be waiting to see what happens with Nissan and I think that decision will have ramifications for the other
companies. It would be unimaginable really for a Chairman to be ousted from one company and to retain his position in the other ones, particularly
when he's under arrest under such serious, serious allegations, Paula.
NEWTON: Yes, you did such a good job of framing the way this really shook corporate Japan, and how revered he is there as a CEO. Anna Stewart there
following developments for us. Appreciate it.
Now, as Anna was saying it is difficult to overstate Ghosn's important here. The empire, and it is an empire he built includes all these
companies -- Renault, Nissan, Mitsubishi, Datsun, Dacia and Lada.
[15:05:09]
NEWTON: These companies employ nearly 500,000 people in 122 plants. Last year, they sold more than 10 million vehicles, about one in nine. Ghosn's
removal would leave a leadership vacuum of course that explains the violent market reaction.
Reports of the arrest came out after markets closed in Japan, but Renault shares in Paris and Nissan shares in Lisbon and Frankfurt both fell sharply
as you can see there. Rebecca Lindland studies the car industry for Kelley Blue Book, and she joins us now.
We're all just still trying to absorb this, but when you look at this car alliance automotively and you're looking at with what all car companies are
grappling here. The new emission standards, trade issues, driverless cars, how do you take an alliance like this, so reliant on its CEO and say to
yourself, we need to pick ourselves up and move on from here?
REBECCA LINDLAND, EXECUTIVE ANALYST FOR KELLEY BLUE BOOK: Well. Paula, for sure, I mean, when I saw this news at about 5:30 this morning, I thought,
"You've got to be kidding me. I must not be reading this correctly." It was really my first thought, and then a second one came through and I
thought, this is crazy because it was just really shocking.
And so, in terms of the alliance, you know, I do have faith in their ability to continue it because it has been going on for 20 years. At least
the Renault-Nissan part of it. The Mitsubishi part is only from the last couple of years. So I think that there's a good future ahead and I think
that there's a good foundation there.
But this is certainly going to rock the automotive industry. And, you know, keep in mind we're only just recovering from the loss of Sergio
Marchionne back in July, and so he ran Fiat Chrysler, another huge personality, character, great quotes, just an incredible leader. And so
the industry itself is just still recovering from that. So this is just another big blow for us as industry analysts.
NEWTON: And Rebecca, I would argue that a lot of this had to do with poor succession planning. Because even if this was such a shock to all of us,
if the succession planning is in there, then yes, people would be able to take over. But when you see it and you see the way these car companies are
structured, it is a problem with governance? I mean, what is going on in these large companies which as we just pointed out, they employ half
million people, 500,000 people all over the world.
LINDLAND: Right. And that came out in the press conference, you know, this morning or last night in Japan. They were very clear that they felt
that there had been a problem with how long Ghosn had been in charge and his power. It was so centralized just to him.
There has been talk of succession because he was planning on stepping down in 2022. But that's, you know, three years away and that's a long time.
So this abrupt change will really cause some disruption and some power struggles internally as well. So we're going to see a lot of jockeying for
position because this is a really unexpected gap that needs to be filled and the companies need to continue.
One thing to keep in mind is from a consumer standpoint, if you own these vehicles, I don't think you're going to be affected by this at all. The
companies are going to stand behind their products. This is more of an issue with the stock and the management itself rather than a consumer
problem.
NEWTON: Yes, and that might be something that's, you know, certainly good for the consumers who have these products and these brands and continue to
look at them and of course for the employees. Rebecca, thanks so much. Really appreciate it.
Now, Wall Street again this short holiday trading week with heavy losses as we were saying. They're selling right across the board. I have to tell
you right now, looking at the stock market that is off its lows. At one point, the Dow off better than 2%. Now, stocks fell right out of the
starting gate over renewed concerns about trade. Leaders meeting over the weekend at APEC ended with deep divisions on full display. They couldn't
even agree on a joint communique.
Now, things are worse over at the NASDAQ, it is still down as you see there, better than 2.5%. Fears are ripping through the tech sector on
reports that iPhone sales may not be going as well as hoped. Samuel Burke is in London. Christina Alesci is at the New York Stock Exchange and
Christina, I turn to you first. You know, there's plenty for the market to worry about here including trade and the fact that we've got still that
matchup between the US and China over trade.
We had Goldman come out here, that also lower expectations for US growth. Is this just more of the volatility that analysts quite frankly have been
telling us about for the last six weeks?
CHRISTINA ALESCI, CORRESPONDENT, CNN: Definitely more of the volatility, but there is also a real sense of pessimism, that investors need some good
news in order for this market to really come back at this point. There's uncertainty as you mentioned as far as trade and the ability for the US and
China to strike a trade deal.
[15:10:00]
ALESCI: Although, one thing to keep in mind, despite some of the political posturing that we heard over the weekend in that Asia-Pacific Summit you
mentioned, you know, I'm that hearing work is still being done towards a trade deal, but nonetheless investors are not convinced that the US and
China as of this point will reach a significant trade deal against the backdrop of lower global growth. When you have that much negativity out
there and the fact that investors in that kind of uncertainty, usually would run to the darlings like Facebook and Netflix and Apple and now those
companies are beginning to show signs of stress.
Apple as you mentioned with their new iPhone orders and now Facebook potentially facing a political backlash and maybe new regulations. All of
that is not giving investors a place to go ahead and get long in this market. And as you mentioned that the shorter trading week, so investors -
sophisticated investors out there may not want to hold their positions over the long holiday weekend.
So that's also a factor this particular week. We're really going to have to see how things play out. One additional thing that I just want to point
out broadly speaking. You know, on these dips, Paula, what we've seen over the last couple of years is investors coming in to buy on these dips.
We're not seeing that level of buying on the dips which really again speaks to investor sentiment and psyche, that they're just not optimistic at this
point.
NEWTON: Yes, and Christina as you were talking, we were bringing up the year-to-date charts. It's going to be a rough year for 2018, if it keeps
up this way and as you said, not a heck of a lot of buyers that are still on the sidelines.
Samuel to you, you know, Christina was just mentioning certainly the route with Apple, but even Google, Facebook, Amazon, what is going on in the tech
sector and has the blue really come off now? It would be very difficult even with the good earnings reports that we've seen to convince investors
that the valuations are worth it.
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: Well, Christina said, investors are looking for good news and if they want that certainly
don't go to Tim Cook. Some of what he has been saying is really indicative of this new situation, this new reality that tech finds itself in.
Regulation from both sides of the Atlantic. Users and investors turning on Apple. It's fascinating to think that not that long ago, we were almost
laughing off regulation in the United States after Mark Zuckerberg testified and it didn't seem like Congress even understood technology. But
after GDPR, that privacy data rule went into effect here in Europe, all of a sudden, it's becomes much more likely in the United States, and Tim Cook
is calling these competitors of his that collect data, the data industrial complex.
Not a very favorable phrase, of course, coming off of the military industrial complex. But our colleagues over at "Axios" interviewed him and
pushed back and said, "How can you point the finger Tim Cook when he have these multibillion dollar contracts with Google and well, they collect
plenty of data on people." Take a listen.
(BEGIN VIDEO CLIP)
TIM COOK, CEO, APPLE: One, I think their search engine is the best and that's very important, but two, look at what wave done with the controls
that we've built in. And so we have a private web browsing, right? We have an intelligent tracker prevention, and so what we've tried to do is
come up with ways to help our users through their course of the day. It is not a perfect thing. I'd be the very first person to say that, but it goes
a long way to helping.
(END VIDEO CLIP)
BURKE: Paula, the folks I'm talking to in Silicon Valley say this is Tim Cook kicking us when we're down, and certainly the tech industry is down
right now. I just want to broaden this out. This is all on the background, Paula of the trade war affecting everything from Bitcoin, and
every time I talk to a CEO whether it's the head of Go' Pro, you hear about of all this adjusting that they're having to do. They won't quite say that
the trade war is hurting them.
But if you listen, they're spending more time dedicated to trying to figure out how they can go around this. You see Bitcoin there. You're probably
thinking how did the trade war hit them? Well, the equipment they use is now classified as mining equipment even though it's mining data
information.
So this trade war little by little is chipping away at the tech industry, not giving investors the good news that Christina Alesci told us at the top
of the segment investors so desperately want right now.
NEWTON: They need it in order to convince themselves these low prices are a time to get in. Samuel Burke in London, Christina Alesci at the New York
Stock Exchange. Thank you both so much, and of course our other favorite topic, another thing that's rattling the markets, Brexit.
Now, get this, keep up here, no deal. My deal or no Brexit. UK Prime Minister Theresa May just keeps repeating that. She has outlined these
options for her country last week and keeps reiterating them.
Today she pitched her deal as best for British business. Now the reception from business leaders as you would imagine to Mrs. May's plan was warmer,
definitely warmer than it had been from her Cabinet or the House of Commons.
[15:15:05]
NEWTON: The Director of the Confederation of British Industry warning those in Westminster willing to risk a no deal Brexit.
(BEGIN VIDEO CLIP)
CAROLYN FAIRBAIRN, DIRECTOR, CONFEDERATION OF BRITISH INDUSTRY: So while other countries are forging a competitive future, our sense of here,
Westminster seems to be living in its own narrow world. It seems to be playing a high stakes game of risk where the outcome could be an accidental
no deal. Surely, surely we can do better than this.
(END VIDEO CLIP)
NEWTON: Some people are not so sure. Bianca Nobilo is in London. And Bianca, two things to update us on. Thankfully, it's been a relatively
quiet three days on this front. Two things, one is the fact that this deal, this deal that's on the table now, that some people are actually
saying that it isn't the final deal, that perhaps an extension is in the works and two, bring us up-to-date on the future of Theresa May?
BIANCA NOBILO, CORRESPONDENT, CNN: Wow, two big questions, Paula, starting with the first one. When we're looking at it deal, it's important that we
distinguish between two parts. We have the withdrawal agreement, that's essentially the divorce. Matters relating to some of money that Britain is
going to pay the EU around 39 billion pounds to leave, how they are going to handle avoiding a hard border in Northern Ireland, and issues like
citizens' rights. So that is the divorce part.
That's the 585-page document that we got last week. Now, that draft text is all but agreed and I've heard from sources in the EU and also sources in
Parliament that that is pretty much a done deal. It's taken them so long to negotiate that part of it.
No, the other section of this deal is the political declaration on the future relationship. Now at the moment, I've re-read that just a few
moments actually. It's around eight pages. That gives an overview of what the EU and UK envisage themselves to be like in the future. So how will
they trade? What will their security relationship be? How will they conduct foreign affairs with each other? All of these types of issues.
Now, that has the potential to be fleshed out. So when people talk about sweetening the deal, a lot of the time, they're referring to trying to add
some flesh on the bones of that political declaration because then, people wouldn't feel as much that they were signing up to this deal of 39 billion
pounds being handed over to the EU without knowing exactly what Britain was going to get in return or a so-called blind Brexit, which is a really big
concern of remainers and pragmatists in the middle here.
It's only real Brexiteers that feel we could crash out with a no deal or leave the European Union and we wouldn't have as many of the negative side
effects as other people envisage.
NEWTON: See, Bianca, I gave you that tall order and you were able to do it. I'm glad you read those eight pages because I have to remind everyone,
no but it's true, I have to remind everyone that they pour over these words. They pour over each and every word. It's important for us to
continue to parse it as this deal continues to morph. Bianca, I know you will continue to stay on it. We'll continue to see you, I'm sure every day
this week. Appreciate it.
Up next, 20 versus one. China finds itself isolated at the APEC Conference. We break down what went wrong next.
[15:15:00]
NEWTON: So China was left isolated after a major Asia Pacific Summit ended without a joint statement. Now, this comes amid rising tensions between
China and the United States. The two countries clashed on the wording of a paragraph about trade. No surprise there.
Surprise here though, Chinese officials allegedly barged into the host office in an attempt to influence the phrasing. Canadian Prime Minister
Justin Trudeau outlined the disagreement.
(BEGIN VIDEO CLIP)
JUSTIN TRUDEAU, CANADIAN PRIME MINISTER: There was broad agreement on how we need to support our citizens and work forward towards better
cooperation, but I don't think it'll come as a huge surprise that there are differing visions on particular elements in regards to trade. And those
prevented there from being full consensus on the communique document. That's why there's going to be a chaired consensus.
(END VIDEO CLIP)
NEWTON: Understatement of at least the week, by the Prime Minister there. Joining me for more is Patrick Chovanec. He is chief strategist at
Silvercrest Asset Management. Thanks so much for being here. What do you think? Negotiating strategy here in terms of the tension out of the APEC
or something else?
PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: So what this shows is that while a lot of the countries in Asia and the Asia-
Pacific region are not particularly thrilled with the Trump administration or its belligerent attitude on trade, China is not able to fill those shoes
of US leadership.
There's a lot of skepticism, a lot of concern. The things that Vice President Pence has stated, the concerns about China whether it's on
security, human rights, on trade are concerns that are widely felt throughout the region. And so when China sort of steps in and says, "Okay,
we're the leader now, we're going to set the agenda," there's a lot of push back.
NEWTON: And when we talk about that push back though in terms of China really trying to get its way, does it come in, though, with a better hand
especially when - look, it wasn't the President at the summit, was it? It was Vice President Pence.
CHOVANEC: But again, they have the policies that aren't necessarily welcome throughout the rest of the world. I just got back from Ethiopia,
and Africa has been the recipient of a ton of Chinese investment.
Interestingly enough, I never heard a good word said about China. Very critical from average people about they're taking over our country. So
there is on the one hand, people want to do business with China, on the other hand they're starting to wake up to the fact that it's not always on
an even playing field, it doesn't always benefit them.
NEWTON: Which the Vice President pointed out very bluntly in those speeches. I want to go now to some pictures which I am sure you will
remember from the G-7 Summit, okay, this was another summit, and you remember, Angela Merkel et al sitting there trying to twist the arm of
President Trump. We're showing the pictures now. I mean, incredible that happened during the G-7 summit. Do you think this is, though, the Trumpian
style working its way into these conferences?
We have that picture whether it's true or not of the Chinese trying to barge in trying to change the statement. Do they feel that, look, it's
time for us to bring it all to the table - decorum, diplomacy are out. We're going to strong arm our way in here.
CHOVANEC: Most countries in Asia and this includes the Asia-Pacific region including Australia and New Zealand, they have lived in fear for the past
decade of being forced to choose between the United States and China. They want both. They want to be friends with both. And now, given the tensions
between the two countries, it looks like they're going to maybe be forced to choose, and that's a very difficult position for them.
China is being more assertive, the US is being more assertive. I think that they don't like the pressure they're getting from China and they don't
necessarily like what China has to offer, but what they'd like to see is a more proactive offer from the United States in terms of what security or
prosperity means as opposed to a more selfish vision which is what they're hearing with America First.
NEWTON: The America First policy. I don't have a lot of time left, but go to Patrick's Twitter handle. He live tweeted World War I quite eloquently.
It was in fact epic. Xi Jinping talked about a hot war. You pointed it out to me before this segment started. You know, when you look at the
lessons of World War I, can we learn anything?
[15:25:00]
CHOVANEC: A difficult question indeed, but the challenge is when a rising power meets with an established power and how they resolve those
differences, and some people refer to this lucidities trapped, this is the big challenge. It's how can the world accommodate a rising China that's
not going anywhere. It has problems, it has economic troubles but it's not going to disappear anytime soon.
How do you accommodate that with a very different kind of system into the international system without conflict? There's plenty of flash points for
conflict between the South China Sea, East China Sea, not just trade but actual military conflict and hopefully we'll avoid them.
NEWTON: Patrick, thank you again and we'll continue to watch those live tweets from World War I. I really enjoyed - I found out about that today
and loved it.
Now bad news for China out of that APEC Summit as we were discussing, but good news for the country's Apple rival Xiamoi. Now, the smart phone
maker's earnings beat expectations with a 49% rise in revenue. No such luck for Chinese e-commerce firm though, JD.com; shares are down 6% after
it reported its slowest quarterly revenue growth since its 2014 IPO.
Now, all this week we're looking at the Chinese tech sector beginning with a visit to the country's new Silicon Valley. CNN's Matt Rivers takes us
there.
(BEGIN VIDEO TAPE)
MATT RIVERS, CORRESPONDENT, CNN: Forty years ago, none of this existed. The buildings, roads, none of it. Shenzhen was a little more than a poor
fishing village on China's southern coast, but today, it's home to 12 million people and growing. It's the world's greatest or biggest boomtown.
That's because it's one of the top centers of Chinese wealth, and this is the man who started it all.
That's Deng Xiaoping who led China from the late '70s to the early' '90s, and it was his idea to open up China to the rest of the world. He did that
in part by creating with these special economic zones which included Shenzhen. They got preferential tax treatment, more direct foreign
investment, and that more than anything else helped create all this.
Western firms flooded in like China's first McDonalds and factories popped up churning out boatloads of cheap electronics and consumer goods and
amongst them were a whole bunch of knock offs until manufacturers here realized.
ANDREW HUANG, AUTHOR, THE HARDWARE HACKER: You can't really actually make a big profit just pure copying, so they learned how to actually add value
to the designs, so now they're coming up with like new designs.
RIVERS: Tech startups lured by easy access to the global supply chain of gadgets flourished in this warmer less polluted city far away from Beijing.
Innovating in AI, robotics and electric vehicles. This isn't the stuff of the future. It's happening right now from facial recognition --
So right now when you walk into the subway here, they take a picture of your face. There's lights there. They take a picture of you every time
you walk under the subway.
To an entire market, the world's largest operating almost entirely almost cash and card free.
So every little store here that you can buy fruit or whatever you need, you go on your phone, you scan a QR code like this one, so this is WeChat Pay
and that's that, simple as that. I just bought fruit from this woman.
All of these innovations supported by the government in a bid to rebrand "Made in China" to "Created in China." To be sure, much of the world is
wary of China's rise. Can it truly challenge the US for economic dominance? That's not clear. But if it does, Shenzhen, the city built in
just a single generation will likely be the force that makes it happen. Matt Rivers, CNN, Shenzhen.
(END VIDEO TAPE)
NEWTON: Incredible growth there now, and Enron, WPP, Tyco now at Nissan, Renault and Mitsubishi, the leaders of these companies were some of the
wealthiest in our society, so what drives them to risk it all for a few more dollars? We'll try and find the answer next.
[15:30:58]
(COMMERCIAL BREAK)
[15:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, coming up in the next half-hour of QUEST MEANS BUSINESS, Malaysia's
next Prime Minister vows to make Goldman Sachs pay if they're found to be complicit in the 1MDB scandal. And I'll speak to the author who's teamed
up with Ryan Gosling to tell the story of Congo's fight against corruption.
First though, these are the headlines at this hour. Nissan is recommending the company's board remove Carlos Ghosn from his position. Authorities in
Japan arrested Nissan's chairman on Monday. Carlos Ghosn is accused of significant financial corruption including underreporting income and using
company assets for personal reasons.
Three U.S. Senate Democrats have filed a lawsuit challenging the appointment of Matt Whitaker as acting Attorney General. One of them calls
Whitaker a lackey of President Donald Trump whose main purpose is to undermine the Russia investigation.
Whitaker has repeatedly criticized that investigation which he now oversees. Yemen's Saudi-backed government is pledging to participate in
U.N. sponsored peace talks. Now, it's the first of the warring groups to publicly commit to the negotiations. This comes on the heels of Houthi
rebels saying they will stop attacking Saudi coalition targets as a good- will gesture.
Shares in Goldman Sachs are off more than 2 percent, now down 13 percent since the scandal broke involving the bank and Malaysia's sovereign wealth
fund. Now, it's alleged Goldman helped raise more than $2 billion that was then siphoned off to pay for jewelry, fine art, bribes and kick backs.
Now, Richard sat down with Malaysia's Anwar Ibrahim; the president of the People's Justice Party and the man widely expected to be the next Prime
Minister. Anwar says there's no way Goldman didn't know and insists the bank will be brought to justice.
(BEGIN VIDEO CLIP)
ANWAR IBRAHIM, PARTY LEADER, PEOPLE'S JUSTICE PARTY: The Commission's almost 600 million is huge by any standards, and it is not possible for the
entire institution of Goldman Sachs not to know. Now, secondly, the deed was certainly dubious and just to protect that any other due diligence
would prove otherwise.
RICHARD QUEST, CNN: If they are complicit, do you believe it was an overt way, they actually -- they knew what was going on or at least turned a
blind eye?
IBRAHIM: It's not enough they had enormous experience dealing with these things. They knew, and I think we as a government need to be very tough in
our negotiations either through the legal process or in our negotiations for a settlement.
QUEST: So does that mean seeking the revocation of Goldman Sachs' banking license if necessary?
IBRAHIM: No, I don't think we would venture to that extent. What we need is to get back our money so that we can serve the people in the right
manner.
[15:35:00] QUEST: Well, I think I suppose I'm guessing you're going to get your money back in some shape or form because this is a scandal of
giant proportions. But if you don't --
IBRAHIM: No, it's not just 600, they have to pay for the compensation, the losses, they make sure the country, the loss of years of --
QUEST: How much are you looking for?
IBRAHIM: That, I would leave it to the Ministry of Finance.
QUEST: You must have a number in mind, $1 billion, $3 billion, $5 billion.
IBRAHIM: Well, it should at least be double of this certainly.
QUEST: Really?
IBRAHIM: Yes --
QUEST: Ten billion?
IBRAHIM: No, I mean, the -- double of what we lost.
QUEST: Oh, so you're talking about over a billion?
IBRAHIM: Yes --
QUEST: And if they don't pay, what will you do?
IBRAHIM: Go to the courts in every country possible where they were involved. You know, but here in Malaysia, in the United States, sure --
QUEST: So you're determined to make as much trouble for them as you can?
IBRAHIM: No, we want -- we want enough resources back to serve our people. I don't believe that the country must suffer or the people must suffer just
because of the greed of some of these corporate leaders.
QUEST: If that's true, then taking away their banking license maybe at some point, because after 2008 and 2009, and you were Finance Minister in
earlier times during the financial crisis -- maybe, it is the banking license has to be taken away to prove the point that this won't continue.
IBRAHIM: Well, that is for the authorities and the United States to decide. Our interest is purely to prove our case to show malfeasance and
to get back our funds.
QUEST: You've painted an extremely grim picture of the situation, correct?
IBRAHIM: Yes.
QUEST: Why would anybody invest in this country? Why would anybody willingly put a dollar or a ringgit into this country until it's cleaned
up?
IBRAHIM: It is the process of cleaning up better than most countries that you have seen. We are determined at least in this country from out there
downwards, we're committed to good governance, transparency, ease of doing business. And this, we are committed because people have suffered enough,
and we therefore have this commitment to do.
QUEST: You are now back in coalition with the man who locked you up. How on earth do you sit opposite him in a room over a cup of tea and not want
to bear resentment?
IBRAHIM: You talk about the times when we were working together rather well wonderfully, working together. I mean, why can't we also look at the
positive side? But more important, it's not the past, it's how then we program, work together to chart a new future for the country. We -- both
of us were perplexed. We say that the thing is -- the system is so rotten we had to save it.
QUEST: Does he have to say I'm sorry for what I did before?
IBRAHIM: He does not need to say that -- listen, come on, as long as he says look, we have to change, we cannot be stuck to the old obsolete
corrupt ways of the past. To me, it's in the positive. Look, people don't compel people to and humiliate them unnecessarily. It's enough for him to
say, look, we are grateful, we are thankful to Anwar and the family for having suffered for the last 20 years.
I mean, I think to me, to me personally, it's a great remark by him that is so satisfying. But to the country, here comes a man who talks -- look, if
you want to save this country, get rid of corruption, get better government and reform the entire institutions of governance. What else can you expect
from a 93-year-old man?
(END VIDEO CLIP)
NEWTON: Up next, it's Autumn, that means big money pouring into the largest auction houses in the world. Sotheby's and Christie's are
applauding a bonanza sales season, plus the art of artificial intelligence. We're not in Kansas anymore, I'll look at the brave new art world.
[15:40:00] (COMMERCIAL BREAK)
NEWTON: So it's a very Happy Thanksgiving indeed for the two big auction houses here in New York. Now, both Sotheby's and Christie's say they each
sold about a billion dollars worth of art in just one week. Sotheby's says it sold $835 million worth of art in New York alone.
And not to be outdone, Christie's posted even bigger numbers, it sold $1.1 billion worth of art as part of its 20th century week. OK, so when it
comes to art, you think of creativity, inspiration, but where does all that come from? For a French collector called Obvious, they come from
algorithms.
Three friends used artificial intelligence to make a portrait that sold at Christie's for nearly half a million dollars and here's how they did it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Artificial Intelligence is about replicating human intelligence. The part we focus on is related to inventiveness and
creativity. Obvious is a collective of three friends, we sold algorithms and we're capable of creating new images and we were astonished by the
potential they had.
We were looking at this portrait the same way the painter would do it, like working in a gallery, taking some inspiration. Except that we feed this
inspiration to the algorithm, and the algorithm is the part that does the visual creation.
The work is called Edmund Bellamid(ph) and it's created with Artificial Intelligence. You have in our example 15,000 pictures and you feed them to
the algorithm and the algorithm learns how to create new examples of these images. It analyzes the pictures pixel by pixel, so it can recognize shapes
and colors and create based on those features.
All the data have similarities, so common features. So first algorithm creates new examples of those images and tries to fool a second algorithm
into thinking that those pictures created are actually real portraits, so human made. I think it has its space in the out world because it tries to
replicate what any artist would do, like trying to create from what he knows.
It forces you to try to understand your own creativity and how you would be able to replicate it.
(END VIDEO CLIP)
NEWTON: Battling greed and exploitation, the people of the Democratic Republic of Congo have had enough of corruption. The author of "Congo's
Stories" tells me why the world's view of the Central African nation may finally be changed.
[15:45:00] (COMMERCIAL BREAK)
NEWTON: Returning to our top story tonight, auto industry titan Carlos Ghosn has been arrested in Japan after Nissan uncovered evidence that he
lied about his income and misused company assets. Now the stage is set for a spectacular downfall at the top, Nissan, Renault and Mitsubishi.
You know, grade is a familiar refrain in the C-suite. Earlier this year, Martin Sorrell was accused of misusing company money as CEO of WPP; the
public relations firm he founded. Sorel denies any wrongdoing. Famously Enron executives took millions of dollars in deals that were kept off the
books.
And the CEO of Tyco got prison time for using company money to pay for birthday parties and $6,000 shower curtains. Carlos Ghosn is a millionaire
many times over, he's known for his tireless work ethic and has been well compensated for it. This is what he told Richard at the World Economic
Forum in 2015.
(BEGIN VIDEO CLIP)
QUEST: You're keeping a pace that would put a man half your age into a comfortable chair in a sleep. How do you do it?
CARLOS GHOSN, CHIEF EXECUTIVE OFFICER, NISSAN, RENAULT & MITSUBISHI: Yes, look, discipline and organization will lead you anywhere.
(END VIDEO CLIP)
NEWTON: Tim Hubbard joins me now, he's an assistant professor at Notre Dame's Mendoza College of Business. You know, quite a line from him in
terms of the discipline. Does this surprise you at all, and do you believe that this is the problem in a lot of C-suites today? This omnipotent
person that clearly has a vision, but perhaps takes that hubris too far.
TIM HUBBARD, ASSISTANT PROFESSOR, NOTRE DAME'S MENDOZA COLLEGE OF BUSINESS: Yes, I think that this is one of those cases where it is a little bit more
understandable that this happened. If you look at what the French government has been pushing in terms of pay change for the CEOs, he's
always been in contention with the French government.
And if you look at Japanese CEOs, they make much less. So for example, Toyota's CEO makes about four times less than he made, and so I think he
always wanted to be compensated at a higher level, and yet the constraints based in France and based in Japan both led him to be able to be
constrained in a way that he didn't like very much.
And I think that this misrepresentation of his financial earnings was just one way for him to make the money that he wanted to make without actually
having to be public about it. And unfortunately, over time this is becoming more common in the C-suite.
NEWTON: Yes, and it's not just won't be public about it, not accountable at all. How do CEOs, these celebrity CEOs get to the point where, you
know, they're in power many times for so many years and believe that they are basically priceless, like any amount of pay that they get is deserved?
[15:50:00] HUBBARD: Yes, definitely, I think this is one of those cases where CEOs get embedded in their firms, and the longer that they're there,
not only are they more entrenched with them at the firm, but they're more entrenched within the board.
And so the board is more likely to support them in the decisions that they make and that includes pay. So in this case, I think it's another one of
those cases where the board of directors was at least one member potentially complicit in this financial fraud.
NEWTON: Yes, what's interesting here is we're talking about it even today, right, board governments -- governance. That has come up in companies like
Uber, it's coming up at places like Facebook, but it seems that we do not learn any lessons.
I mean, once we saw this we thought, well, of course he had been in the position too long. People say of course he was paid too much money. And
at the end of the day, what is changing going forward? Because I have said many times that at the board level, governments have not given those
boards any teeth whatsoever even though they are answerable in the least to shareholders if not their employees as well.
HUBBARD: Yes, I think the board of directors, they really have a lot more independence, a lot more power to be able to, you know, push the CEO in a
way that they need to be able to be pushed. And for example CEO dismissal I think is the ultimate way in order for a board of directors to start to
impact those firms that they're overseeing.
And as time goes on, I'm hopeful that we'll see more dismissals because I don't think that there are very many other punishments that have quite the
same esteem for a chief executive officer as being fired from their company.
NEWTON: Yes, absolutely, what a fall from grace. Tim, we'll continue to follow this story, appreciate it. Now the Democratic Republic of Congo
knows about struggle, of course it does. Ebola right now, insider corruption, child labor in cobalt mines as you saw from Cnn's reporting
earlier this year.
Now, a new book looks at the country's resilience, great word, especially in its fight against corruption. "Congo Stories" is written by John
Prendergast; he is the founder of the Enough Project which kind of works to end the crimes against humanity and he is here with me on set.
And thank you so much for bringing along as well as your book that is released in early December. You know, the book begins with this horrific
anecdote from Onorata(ph), and she talks about being kidnapped essentially, held for several months, obviously the sexual violence
unspeakable.
And then disowned by her own family as an irony as not being honorable enough because she had been raped. You talk about resiliency and yet it's
a story that's all too common. You know, Onorata(ph) says that it is greed and grievance, and that she wants peace for Congo.
But John, what you've learned from Congo stories, what is the hope? We talk about resiliency, but what will change?
JOHN PRENDERGAST, AUTHOR: I think Onorata(ph) is a perfect example of a symbol. You know, here's someone whose life has been shattered just as
Congo through its history of exploit, massive exploitation by the outside world has been shattered.
Yet, she makes this comeback, this incredible against all odds comeback and becomes a role model and a teacher and a person who can inspire other women
who have experienced similar pain and devastation and will help them rebuild their lives.
And similarly within Congo, people are fighting against this history of exploitation and against dictatorship and against stolen elections, against
massive human rights abuses, and saying enough is enough. We want to change the course of our country's destiny and sacrificing their lives to
see that change.
And people outside, all throughout the international system especially young people in the United States, students are excited by that mission and
are supporting them in their mission.
NEWTON: And one of the reasons that I wanted to have you on was to talk about how our phones, our laptops, electric cars are unfortunately
intimately connected to the horrors that Onarata(ph) has gone through in her life. This is at the bottom line, it's about greed. How and how are
we unwittingly really contributing to this?
PRENDERGAST: It's amazing, I didn't realize the extent of it until we dove into the history, but for 500 years, Congo, whenever America, even when we
were the new world and Europe, would have -- would advance technologically. They need not raw materials.
First human beings for the plantation economy, then all of the natural resources that the raw materials that go into the products that advance our
civilization. So throughout this 5 century history, Congo has supplied our progress, but done so in a way at extraordinary costs to the Congo because
the United States and Europe had just gone in and taken what they wanted over the course of this period.
And one of the latest chapters of course is cellphones, laptops and any other electronics product you can think of where the key raw materials in
these devices originate in the Congo.
[15:55:00] And so of course, people just went and took it, companies, multinational companies, neighboring governments conniving with warlords
and other unsavory characters in Congo and strip-mined and extracted and smuggled these minerals -- have been smuggling these minerals out into our
cellphones and our laptops. Companies making billions of dollars a year off of this trade in human misery.
NEWTON: I want to get to the point, and you know, this has a celebrity angle. Ryan Gosling who has been committed to doing this for several
years, he didn't just come into this, you'll see some of his very provocative pictures now, and he was trying to document this with you.
How important is that advocacy from somebody that is so well-known? And I ask you this question because so many people feel helpless. Like what does
what's going on in the Congo have to do with me right here? I mean, many of us saw it in the Cnn report earlier this year where we proved that child
labor was being used in the mining of cobalt, cobalt that is integrated into electric cars right now. But really, what can we do -- I think that's
why Ryan Gosling kind of got involved with you, right? Because he thought he could do something to change.
PRENDERGAST: It's kind of exciting, I think. You know, the people like Ryan, like George Clooney, like Angelina, you know, they've dedicated much
of their lives, their adult lives now to -- their adult lives now to taking the spotlight that shines on them and redirecting it on these countries and
these people who have no platform, no chance to tell their story.
And when they do, a lot of millions of people suddenly learn about an issue or a situation that they didn't know about, and many of those people become
active. And the more voices that are calling on companies to pay attention where they're making their money, that it's not acceptable for us as
consumers of a cellphone that the companies that we buy that cellphone from don't pay attention to where they get their raw materials from.
And it forces a behavioral change and supply chain change on the part of these companies. And they also with these celebrity help, people who
become active on these issues can also change government policies. where regulations can be established and force transparency in the supply chain,
and that's exciting.
NEWTON: And in this book "Congo Stories", I have to leave it there, but I will say there's anecdote as well about what Steve Jobs did, you know, now,
the head of Apple, the former head of Apple who's now sadly passed away, how he was one of the firsts to really look into --
PRENDERGAST: Yes --
NEWTON: This, and was very honest about what his company could and couldn't do to see this, so John, thanks so much for coming in --
PRENDERGAST: Thanks for having me --
NEWTON: The book is "Congo Stories", appreciate it. Now a brutal trading day is coming to a close thankfully, we'll have the final numbers on the
closing bell -- oh, look at that, still down 426 points.
(COMMERCIAL BREAK)
NEWTON: OK, we told you it would be volatile. We don't lie. Final moments of trading here on Wall Street. The Dow is just off the day's
lows, still pretty treacherous though out there. Both the Dow and the S&P 500 have gone negative for the month now and one of key drivers in today's
fall, a drop in that home-builder confidence.
Tech shares took on the worst of it, and I'm sorry to say the last time I looked, the Nasdaq was down more than 3 percent. I leave you with that,
that is QUEST MEANS BUSINESS, I'm Paula Newton, the closing bell now on Wall Street, and I leave you to "THE LEAD" and in the capable hands of Jake
Tapper.
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END
