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QUEST MEANS BUSINESS

Google Says It Found A Bug That Meant The Private Data Of Half A Million Users Was Left Unprotected; The So-Called BRICS Nations Are Being Buffeted By Political Stresses; In Brazil, Stocks Are Surging As The Country Appears To Be On The Verge Of A Seismic Political Shift; The World Has 12 Years To Get Climate Change Under Control Or The Results Could Be Catastrophic; Donald Trump Calls For Oil Prices To Fall; Italy's Deputy PM Calls Top EU Officials "Enemies of Europe"; IllyCaffe in Deal with Jacobs Douwe Egberts; Banksy Artwork Shredded After Selling at Auction May Have Increased in Value. Aired 3-4p ET

Aired October 8, 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: We're getting used to it, a classic see- saw session for the Dow as stocks climb back in the last hour of trade. This is what's driving the day on Monday, October the 8th. If data is

exposed on Google Plus and no one is around to seal it, does it make a sound? Investors seem to think so. The shares are falling this minute on

Wall Street. Meantime, China and the United States fall out again over trade and now China's banks are getting some government help and an

emergency economic overhaul.

The UN calls for radical efforts to avert a climate disaster. I'm Paula Newton and this is "Quest Means Business."

Tonight, the glitch that Google didn't want to you know about is finally exposed. Google Plus, the company's failed social network that was meant

to actually rival Facebook was apparently left vulnerable. Google says it found a bug that meant the private data of half a million users, not just a

few dozen, half a million users was left unprotected.

Now "The Wall Street Journal" says the situation went on for nearly three years. Google says there is no evidence any users' information was misused

in their words, but it will be shutting down the entire network.

"The Journal" says Google chose not to make the bug public because executives were worried it would be bad for the company's reputation, and

might lead -- drum roll, please -- to tighter regulations.

Samuel Burke is covering this for us in London. I mean, this really dropped -- as you say it, dropped like a bomb in front of our desk a few

hours ago. And the reason is that when we looked at Google's explanation first, they knew about this starting at least in March 2018. They admit

that and yet, they're saying they didn't disclose it because they were afraid of regulation, they probably just made their best case for

regulation.

SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: Absolutely. I mean, keep in mind, as you pointed out, this is something that started in

2015 according to "The Wall Street Journal" report and they only discovered it in 2018, and they didn't have any reason, any laws to make them come

forward. I mean, this really gets to the heart of GDPR, this European data law, Paula, because now you just saw with Facebook, they had their hack and

they had to talk about it within three days.

You've got 72 hours to discuss it and then inform the public of it. In this case, this is something that happened before GDPR went into effect.

Now you have a lot of people who are arguing, it's too fast. Companies shouldn't have to come forward within three days, when the hack could still

be going on. You don't want the hackers to know. You might want to follow them, but if anybody ever gave a good reason for GDPR to have this three-

day window, it would Google in this situation because what this shows that if a company is not compelled to come forward and talk about a data breach,

and let the users know about it, they may never come forward until journalists do their excellent work, in this case from The Wall Street

Journal" and then they have to come forward about it.

So I think that we can this to see the before and after of these incredibly stringent laws here in the European Union that are having effects all

across the world from my side of the Atlantic to yours, Paula?

NEWTON: Yes, and users won't appreciate the way Google even wrote this up in terms of the explanation. It was buried in a release, I wouldn't even

call it a release, I think they called it a blog. We've asked Google to come on, we're still waiting for an answer. They decide that they will

speak to us, we will definitely take them anytime, anywhere.

Samuel, in the meantime, in terms of getting to the tech nature of this, you're saying, this isn't hack, why?

BURKE: This isn't a hack because it's not as if some outside group came in and tried to get in through the servers. This is an error that Google made

in its code, so beginning in 2015, according to this "Wall Street Journal" report, basically a lot of the personal information that you put on Google

Plus or that Google Plus got about you was exposed.

Now, Google is saying, "Listen, nobody seems to have known about the fact that if you had this bug, you can get in and -- you could have gotten in

and gotten your hands on this information, so at the end of the day, this is a mistake on Google's part, a self-inflicted wound if you will because

they screwed up on the code.

Luckily, if Google is correct, it doesn't look like anybody got it. I mean, this is really a bad situation for Google to be in. I spoke to

somebody, a former employee of Google who works specifically on this Google Plus social network and they said, "Good riddance Google Plus."

Keep in mind, the very reason that they wanted to have this social network was to get more information about you. They saw Facebook leaping ahead of

them on this front, a front that they weren't prepared to fight on social media, and so they said, "How are we going to get all of these personal

information," so they used this social network to do that, and it's exactly ...

[15:05:16]

BURKE: ... that information that they wanted so desperately that could have been exposed by this poor coding that they have.

NEWTON: Yes, and they wanted it so desperately because it can make a lot of money for them and they should have been protecting it apparently more

thoroughly. We are keeping Samuel very busy on these issues. We will continue to have more on that fallout in the coming hours and days. Thanks

so much, Samuel, appreciate it.

Now, as we were just saying at the final hour of trading, it's been an interesting market to look at. The Dow has bounced back from triple digit

losses earlier in the session. The NASDAQ though is still down on the day. Investors are worried rising bond yields could hurt the tech companies that

rely on cheap financing.

I would say to the market, "What took you so long?" But there is major turbulence in the meantime for the world's top emerging markets, the so-

called BRICS nations are being buffeted by political stresses.

We first start with the B -- Brazil. Jair Bolsonaro sometimes called "The Trump of the Tropics" won the most votes in the first round of Presidential

elections. Stocks and the Brazilian real are up. Meantime, the S -- South Africa -- the President is under pressure to remove his Finance Minister,

the rand is down again against the dollar and of course, the C -- China -- the Central Bank is reducing the amount of money banks need to hold in

reserve, to get them lending more money, yes, stimulus to the economy and it hopefully will mitigate the impact of the trade war for China.

Now, stocks in Shenzhen and Shanghai fell nearly four percent, Monday. Wow, breathtaking losses there. It was investors first chance to react to

the past week's escalation and that rhetoric between the US and China on trade.

Cristina Alesci is following it all for us. You know, I woke up to the news about yet more what we would call -- to use the word, "easing" --

quantitative and monetary easing -- in China, and I thought, "Okay, a defensive move," and then I thought, "I don't know, it seems a bit canary

in the coal mine to me as well."

CRISTINA ALESCI, CORRESPONDENT, CNN: Right. And Chinese officials are trying to downplay this lower growth story, but investors are looking at

what China is doing, not what it is saying and this move to spur lending by essentially lowering capital requirements is an indication that the Chinese

government is nervous about the slow growth story.

And there are three main reasons, other ones, but three main reasons I am tracking. One is this ongoing trade war with the US, and that's actually

starting to show up in the Chinese numbers.

For example, in September, privately owned car and equipment manufacturers stopped expanding in China, so that was a major negative. At the same

time, retail spending is slowing down to the lowest in about a decade for the country and at the same time, Chinese companies are defaulting on their

bonds at a greater rate and that rate is accelerating.

So three of those things are compounding to create quite the slower growth story in China and to your point, this may be the beginning of a longer

trend.

NEWTON: Yes, and mark my words, we haven't heard the last of that debt story in China. And Cristina, what do you think in terms of the Chinese

government's ability though to have that defensive posture? I mean, we used to say this about the Fed, right? How many more tools does it have in

its toolbox? You don't want to use them all up. What about the Chinese government?

ALESCI: It's funny because I've analysts now really come out and say, "We're not sure if China is prepared in the same way," that -- or it has a

power to respond in the same way that it has in prior financial crisis. They are saying, "Look, they've already done tax cuts. They've already

done infrastructure spending, they've already done -- hold other monetary easing levers. What else is there to do?"

And you have the additional complication of the fact that interest rates in the US are rising and the Chinese government is trying to push interest

rates lower or at least keep them flat in China, and that's going to prompt capital to flow out of the country, perhaps despite the capital measures

that the Chinese government has put into place, to stop that from happening. So that's a major concern as well.

NEWTON: Yes, and we'll continue to do so as this whole trade negotiation with the United States continues. Cristina Alesci, thanks so much for

being here.

ALESCI: Of course.

NEWTON: Now, in Brazil, stocks are surging as the country appears to be on the verge of a seismic political shift -- seismic. Listen to this, BOVESPA

is up nearly 4% and the real is climbing against the dollar. Far right candidate, Jair Bolsonaro won the most votes by a distance in Sunday's

first round of Presidential election, but not enough to win outright.

Now, his campaign rhetoric has been at times, misogynist, racist, homophobic and offensive to many, but none of that seems to matter to the

markets because he's also seen as the pro-business candidate. Many Brazilians blame left-wing leaders for dragging Brazil right into

recession.

Shasta Darlington now joins us live from Sao Paolo. Shasta, really good to see you. I can think of no one better to break this all down for us. I

mean, he didn't get to the 50% threshold, but awfully close. What does that tell us about how Brazilians are feeling about really switching from

what was a more left-leaning government to way over to the right.

SHASTA DARLINGTON, CORRESPONDENT, CNN: Well, Paula, this is all about voter anger and frustration. They are shouting out and they don't want to

see any more politics ...

[15:10:16]

DARLINGTON: ... as usual, anymore political corruption. They are also really frustrated with the high levels of crimes and violence. So this has

allowed Bolsonaro, who for years, was sort of a marginal figure in Congress, best known for his outrageous outbursts defending the military

dictatorship in Brazil, attacking women and gays and blacks.

It's allowed him to sell himself as this anti-establishment figure. He says, "Listen, there is this massive corruption scandal that's engulfed all

of the top parties, but I'm on it. I may be rude and I may be crude, but I am honest, so vote with me." And it really has won over a huge chunk of

Brazilian voters.

He got 46% of the vote in a field of 13 candidates, so he's really well- positioned to go into this second round of voting against the left wing candidate, Fernando Haddad who represents the Workers Party, who many

Brazilians blame for the recession and the political corruption here, Paula.

NEWTON: Yes, and in terms of who is to blame, literally, they have already blamed the other political powers that be and have said that this is a

change for them, and yet, materially, if he wins later this month in the second round, how will the complexion of Brazil actually change despite

what he's saying on the elections now?

DARLINGTON: Paula, he is a real unknown. Ironically, for many years, he was radically opposed to privatization, but with these elections coming up,

he has brought to his side a figure, a University of Chicago educated economist, someone who said he is going to privatize all of these state-run

industries. They say they are going to implement all of these business friendly policies, so he's got markets on his side.

I think one of the big questions has been whether or not he has any power to get really sorely needed reforms through Congress, and initially the

thought was no, but one of the big surprises coming out of Sunday's election was how well his allies did in Congress from his tiny party, 52

allies looked like they are going to get seats in Congress. Before the elections, they only had eight seats. So this actually does put him in a

good position.

The bigger issue for his opponents going forward is more this concern over his authoritarian tendencies, how he has really stood up for the

dictatorship in the past, that's why we've seen massive protests in the country, saying they would vote for anybody, but Bolsonaro. He's got three

weeks to get a few more, really, just a few million more votes that would take him over the middle there, Paula.

NEWTON: Yes, and it's been stunning to watch especially after he was obviously injured severely, so in that rally, he's just been recovering. A

lot of what you hear from him has been on social media. Our Shasta Darlington will continue to cover this for us. Appreciate it.

Now, the final piece of our emerging markets puzzle and South Africa may wish not to be in this group right now. The South African rand is falling

on reports that the country's Finance Minister has asked to be replaced. Nhlanhla Nene was swept up in a long-running political drama after

admitting he visited the Gupta brothers -- remember them? Prominent businessmen accused of wielding influence over former leader, Jacob Zuma.

President Cyril Ramaphosa is playing down today's reports saying he is not aware of his Finance Minister's request to step down. Our Eleni Giokos is

live for us in Johannesburg following all of this.

Really, you've got to try and unravel this one for me. I mean, do you think they're trying to make it a little bit more orderly? It's like, "I

quit." "No, you resign." "No, you can't. You remain as Finance Minister." Exactly what's going on?

ELENI GIOKOS, BUSINESS AFRICA CORRESPONDENT, CNN: Yes, I mean, Paula, I mean, look, you mentioned the Gupta brothers, and yes, do you remember

them? This is a very influential family that has been implicated before President Jacob Zuma and of course, state captured.

Now, there is an inquiry about state capture on the go. And Nhlanhla Nene, the current Finance Minister testified last week at this Commission of

Inquiry and it was revealed that he had visited the Gupta brothers around 11 times, some of which was actually at their private residence.

Now, he landed up apologizing last week, Friday, saying, "I have, of course, done something wrong and these are lapses, and I beg South Africa

for forgiveness." And then we've got this rumor swirling around that he did ask President Cyril Ramaphosa to replace him so that he could resign

and it's been very interesting watching the rand respond to this and of course, dropping on the back of this news.

Remember, this is the man that was sacked at the end of 2015 and it was also revealed that he was the one man who saved the country from an $80

billion nuclear program with the Russians that would have crippled South African economy.

So, are the meetings with the Guptas going to be the big Achilles heel where he will fall on his sword or will South Africans and President Cyril

Ramaphosa perhaps focus on the fact that he saved the country from this $80 billion nuclear deal, and now, Cyril Ramaphosa is in a very difficult spot,

Paula because he either has an opportunity here to teach of course, by the opposition party to replace this ...

[15:15:16]

GIOKOS: ... man that's clearly been tainted and he even admitted saying this is a shadow on me, or is he going to say, "Listen, this is the man

that we've chosen to lead the treasury and he's gone to stick his guns." It's a very difficult spot, Paula to be in and of course, you've got the

markets and the rand stuck in the middle of all of this.

NEWTON: Yes, and that's the last thing you want from that crucial lynchpin in your Cabinet that's got to keep it together in these very, very

tumultuous times. Eleni, thanks so much. Appreciate it.

Now, we have 12 years to get our act together. This is not funny. That's the stark warning for all of us as experts warn of a climate catastrophe.

But today, there is little incentive to buy more fuel efficient cars. Oil prices are dropping. Iran may get a break from new sanctions.

Okay, our next story tonight is of course controversial and that's why we want to hear from you. We are about to open our daily "Quest Means

Business" question. It's my first time doing this, so pile in and join me, go to cnn.com/join. You can use your phones, laptops, whatever you have,

voting is about to begin, so get that webpage open.

Now, as we have been saying, the world has 12 years to get climate change under control or the results could be catastrophic. That's the conclusion

from the United Nations top environment experts. The landmark report says that human activity has already pushed the planet two-thirds of the way to

a climate tipping point.

Without radical action to cut the carbon dioxide emissions, we will reach that point as early as -- get this -- 2030.

(BEGIN VIDEO CLIP)

PETTERI TAALAS, SECRETARY GENERAL WORLD METEOROLOGICAL ORGANIZATION: This extreme urgency in countries giving their pledges after the Paris agreement

and so far, the progress hasn't been good enough that we would move towards 15 or 2 degrees targets, so there is really a need for much higher emission

level to reach even 2 degrees target.

(END VIDEO CLIP)

NEWTON: The tone was calm, but the information is quite sobering and that's why we want to know what you think. If you go to cnn.com/join now,

the question we are asking you is, "Who has most responsibility to tackle climate change? Is it governments? Businesses?

[15:20:15]

NEWTON: Or individuals? Go to cnn.com/join. Place your votes and you'll see them live on your screen. We will give you the results later in the

program. Now, this report calls for governments and businesses to make changes that would completely overhaul our society as we know it today.

Main point, coal would need to be phased out as a power source by 2050. That's not that far away, and proposed carbon taxes far outstrip what

businesses and politicians would do. I want you to take a look at the world's top sources of greenhouse gasses and several of these, there are

political forces trying to maintain that all important status quo.

China is still reliant on coal. The US has pulled out of the Paris Climate Agreement and the frontrunner is Brazil and Brazil's presidential campaign

that we were just talking about, he would pull Brazil out of that Paris Accord as well. Now, the carbon disclosure project tracks efforts to

combat climate change, the group says the governments need to become more ambitious than their efforts.

The CDP CEO, Paul Simpson joins me now. You know, we've been talking about these warnings and people seem to get these warnings and it seems that they

are easily dismissed. Why? And what would the consequences be if this continues?

PAUL SIMPSON, CEO, CDP: Well, Paula, what this new report shows is that business as usual is over and we really need a rapid transition, a

transformation of the global economy to avoid catastrophic risk from climate change. We have seen many of those this year from heat waves,

droughts and floods and predictions of a hot house if we don't change. So business and governments really need to act and they need to act now.

NEWTON: Do you think they will though? We have had so many of these reports. We had a recent UN report that even indicated that it would

actually be a game changer and a profit maker if businesses went in this direction and still very little action. In fact, we've had almost the

opposite.

SIMPSON: Well, I think the good news is that many large leading businesses are now acting. Through our work at CDP, more than 7,000 companies this

year disclosed on climate change what their emissions are, what they are doing to reduce them and then building off that, more than 500 companies

have now committed to a science-based target, that's reducing their emissions in line with or below the 2-degree target, and a number of

leading companies now are paying attention to this new report -- BT and Tesco in the UK, Carlsberg, Auto Desk and Caesars Entertainment saying,

actually we want to transition our business to 1.5.

So many businesses are acting. Their investors are putting pressure on them to do that increasingly and we really see the start of the

transformation of the global economy.

NEWTON: Will it be enough though?

SIMPSON: I think the great news from this report, there's also a bad news. The good news is that we have the financial resources and the technology to

make these changes. It's really about will, a desire to do it. I think with that, we know that businesses wonderful innovation, we see now a big

revolution in electric vehicles, in renewable energy and battery storage.

If you think 30 years ago, no one thought the internet would do for business what it's done today. If we think of a low carbon economy, we can

see the same transition. So ultimately, we must make these changes. We can make these changes and therefore, I think, we will.

NEWTON: And in terms of our question today, we are asking who should shoulder the responsibility of this? I mean, you're probably going to tell

me everyone should, but do you think that businesses should really lead out of this, especially when even countries like the United States are pulling

out of Paris and as far as Donald Trump is concerned, he wants coal to come back and stay.

SIMPSON: Paula, you are right. Everybody has to take responsibility, but that responsibility sits somewhat in different places and clearly, big

government, particularly, of developed and wealthy countries, and companies and their investors have a key responsibility as stewards of capital and of

society.

So, what we see now, many governments -- all the world's governments committed to the Paris Agreement, yes, the White House has now certainly

intends to pull out, that doesn't have so much effect on the real world economy in the short term.

Climate change is a long term challenge that needs rapid action and we know that political cycles shift and fall and will change, so investors and

businesses planning for the long term have to make this transition and I think the more business does, the governments feel empowered, the more

signals from governments, the more business can do.

NEWTON: You seem fairly optimistic and calm. The report's tone was not that today. I mean, what makes you optimistic that we can actually avoid

what is very clearly a cliffhanger, quite a drop, we're all waiting to see every year what the implications of that climate change will be?

SIMPSON: Well, through our work at CDP, I have the pleasure of working on this issue for some 18 years. Eighteen years ago, it was very hard to get

interest and ...

[15:25:16]

SIMPSON: ... attention in climate change. Now, virtually all of the world's large companies are working on it. They are disclosing through CDP

what they are doing. They are setting targets to reduce their emissions. More and more companies are procuring renewable energy. Some 150 companies

now are committed to go 100% renewable energy, that's what the report says needs to happen.

Google, Amazon, and many others making these commitments, so I think this is absolutely possible. The momentum is with us. Yes, the report is very

concerning. We cannot stay where we are. We cannot continue with business as usual, but business can change really quickly and business can innovate

really quickly. There are real benefits of doing that financially and that's what really makes business turn.

NEWTON: Yes, and many are hoping that they really will get on board along with local governments, even when national governments are not on board. I

want to thank you for this as we continue to follow this story. Appreciate it.

Now, all of these warnings we've just been talking about come as Donald Trump calls for oil prices to fall. Now, he got his wish today at least.

There are reports the White House may give Iran a break from some planned oil sanctions. I asked our emerging markets editor, John Defterios how

that would affect prices.

(BEGIN VIDEO TAPE)

JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: Well, if you believe Donald Trump, he wanted to take Iranian exports down to zero from around two

million barrels a day right now, then we have administration officials suggesting there could be some exceptions. We have Indian buyers back into

the market. The Indian government say they want to stay with Iran. China is still ordering from Iran, but not as much as it did even two months ago

and South Korea and Japan cutting orders severely.

There's a couple of other factors at play here. Saudi Arabia is living to the pledge to replace the oil lost by Iran. We have seen a boost in

production of about 300,000 barrels a day, sources in Saudi Arabia tell me that they Crown Prince Mohammed Bin Salman is very sensitive to the needs

of Donald Trump. They are even suggesting they could test 1.3 million barrels a day if the demand is there.

Now, the path is prologue, the US under President Obama and President Bush allowed even under sanctions for Iran to export a million barrels a day, so

which is it? Donald Trump going to zero or allowing humanitarian relief, if you will, for a million barrels a day and the final factor, Paula, the

emerging market tensions. US-China trade tensions, but also the emerging market currency crisis. This could hit demand in 2019. We even see

downgrades from consultancies like JBC Energy saying they are seeing the drop already.

So you don't want a case where you go to $100.00 a barrel, then demand drops and we have this scenario that we had in 2016 and 2008 where prices

collapsed. Clearly, Russia and Saudi Arabia, the major players don't want to see that.

NEWTON: Yes, and that's the key issue here and a lot of players have trouble getting to that equilibrium price. I just want remind everyone.

We've talked about keeping the President happy, that means keeping prices lower. We are headed in the midterms here in the United States, the

President has tweeted several times about the fact that OPEC is artificially keeping prices high. You know, you talked about it a little

bit, but how sensitive is the Trump administration to that and Saudi Arabia by definition given the fact that it is election season here?

DEFTERIOS: Well, you raise a very good point. Since, February, we've seen the average price of petrol or gasoline in the United States go from $2.50

a gallon up to $2.90, so there's a real chance we could average about $3.00 a gallon here by election day depending on what happens to Iran's exports,

and perhaps, that's why the Trump administration is beginning to back off.

I also thought it was interesting in the Bloomberg Wire interview on Friday, Mohammad Bin Salman, the Crown Prince of Saudi Arabia made it

clear, we are here to fill the void for the United States even though you have family members or friends speaking critically of OPEC. We even had to

debate a legislation in Congress for the no OPEC legislation to lift the immunity for the major oil producers around the world and find them for

collaborating to see that recovery in prices and what Donald Trump says, artificially propping up prices. So they are very sensitive to this.

The other point I would make, Paula, is that the US at nearly 11 million barrel a day stands toe to toe with Russia and Saudi Arabia. They are less

dependent on the Middle East today and I think they feel they are emboldened to take stronger action against other exporters of crude even if

they are a friend like Saudi Arabia.

(END VIDEO TAPE)

NEWTON: And our thanks there to John. Keep voting. You can see it down there on the screen. Meantime, after the break, Airbus lands a new CEO,

but he will take over at quite a turbulent time.

(BREAK)

[15:30:00] NEWTON: Hello, I'm Paula Newton, coming up on the next half hour of QUEST MEANS BUSINESS, Italy's deputy Prime Minister says Jean-

Claude Juncker is the quote, "enemy of Europe" as their budget dispute continues.

And it was the weekend's biggest viral video, but did Sotheby's get Banksy or was it actually in on the joke? We've got a new statement from the

auction house. First though, these are the headlines we're following at this hour on Cnn.

Mankind only has about a dozen years to get its act together and fix our climate change problem. Now, dire warning comes from a panel of UN climate

experts who say that if we don't reduce greenhouse gas emissions by 2030, the earth will reach a climate tipping point that could change life as we

know it.

Turkey's president is calling on Saudi Arabia to prove that a missing Saudi journalist has indeed left the Saudi Consulate in Istanbul. "Washington

Post" contributor and prominent Saudi critic Jamal Khashoggi hasn't been -- hasn't been seen since he entered the consulate in Istanbul last week.

Saudi Arabia denies any role in his disappearance. President Trump says he has no plans to fire deputy Attorney General Rod Rosenstein. Both men were

on Air Force 1 earlier today on a trip to Florida where they were attending a convention for the nation's police chiefs.

The two were scheduled to meet last week after a "New York Times" report filed Rosenstein's job was in red. China is finally confirming the former

chief of Interpol is being detained and is under investigation for alleged corruption. Meng Hongwei vanished last month after he flew from France to

China.

Interpol says he resigned on October 7th with immediate effect. There are new developments in that tragic limousine accident that left 20 people dead

in New York. The limousine's driver did not have the appropriate driver's license and vehicle failed inspection last month and was not supposed to be

on the road.

[15:35:00] Airbus is looking for a new start under a new CEO. Guillaume Faury has just been chosen to lead the company after Tom Enders stepped

down -- steps down next year. The French man is an Airbus veteran, he's currently the head of the commercial aircraft division.

He'll take charge now at the turbulent time, Airbus is struggling with delivery problems, the corruption investigation and the potential shock of

course of Brexit. I'm joined by Richard Aboulafia; Vice President of the Teal Group. And I have to ask you, this is a safe pair of hands -- he's

from within the Airbus system.

And yet, does it give you any confidence that really it is an important time really, a turning point for Airbus, that they can go -- get over a lot

of their problems, job one being the production problem, the back quarters.

RICHARD ABOULAFIA, VICE PRESIDENT, TEAL GROUP: Yes, you know, I think it's important that they hired somebody who really knew the industry, someone

who has a track record of managing complex aerospace programs, somebody who knows the company too. I think it was the safest in giving the

circumstances, the best choice.

NEWTON: But in terms of that choice, you know, when we talk about the Boeing and Airbus problem of course, and the fact that they're undergoing a

radical change in terms of the way they make their planes, but obviously intense competition. They really have become the two main players right

now.

What gives this guy the urge? Is it truly his engineering background?

ABOULAFIA: Yes, I mean, I think most importantly, he brings stability because it's been a remarkable turn of events over the past 12 months for

Airbus. You had pretty much everyone who was anyone on the executive leadership being forced to step down or stepped down.

They had commercial tails, commercial -- technology executes, planning optics, the list goes on, and then finally Tom Enders; the CEO who was a

true reformer and a very respected leader. So against this set of circumstances, the best they can do I think is just to get somebody who

knows the company, knows the industry and can restore thoroughly.

Because it was just a couple of weeks ago that the newly appointed head of sales who replaced the wrong running head of sales also stepped down. So

there's so much change, so much happening.

NEWTON: Do you think Enders was the right CEO at the right time, and I know he's leaving, but the point is he kind of saw them at a point where

you needed division. You needed to see where the industry was going next, and then more of a caretaker is needed now.

So this could be the right choice.

ABOULAFIA: Well, what is Enders job really finished I think is the question. Brought a great deal of energy to the idea of carrying Airbus

into what we reformed, private sector company rather than something more state-owned, state managed. You give fantastic work with -- is it truly

done?

And all the people are asking that question because historically, there was a kind of -- well, agreement, with alternate French-German CEOs and now

we're back with French one. Are we going to see a return to greater levels of state intervention especially since so many of the seasoned veteran

private sector managers have stepped down.

That I think is one of the three big questions.

NEWTON: For you in terms of an Achilles heel, when you look out what they're going to put out in the next three to four quarters, what are you

really looking for to see that he is getting the job done?

ABOULAFIA: Getting production back on track for the next generation A320neo family. Which is easily their biggest revenue earner. I think

they've got to make a bunch of other very tough decisions in terms of their twin(ph) product line. But just getting customers reassured that they have

a way back to continue the production ramp, ultimately getting a hope of about 60 he singled out just per month by next year.

That's a lot of work, and it has to be done in coordination with the engine manufacturers of the subcontractors pending in the background as you say is

Brexit which really complicates things. So they need someone who knows that all of these moving pieces function and how things can get distracted.

I think the markets are going to be looking for already who has that in their work(ph).

NEWTON: And he is 50, relatively young in our speech, right, Richard? So hopefully he'll have a lot of stamina for what will be a very difficult job

ahead. Richard, thanks so much, appreciate it. Now, it's a big week for Airbus, its A350 ultra long-range jet formed by a single pair of airlines.

This week starts a non-stop scheduled service from Singapore to New York, it's a record-breaking 19 hours near, of course, we all know, this is

Richard's dream come true. He will be on board the first flight -- of course, he's going to be on that first flight and we will bring you his

report on the longest flight in the world on QUEST MEANS BUSINESS this Friday.

[15:40:00] I'm almost positive, he is the guy who made this flight happen, I'm telling you. When we return, the enemies of Europe, Italy's Interior

Minister has some very harsh words for Brussels and it's making investors nervous(ph).

(COMMERCIAL BREAK)

NEWTON: Italy's deputy Prime Minister Matteo Salvini is calling top U.S. officials the quote, "enemies of Europe". The government in Rome is on a

coalition course with Brussels over its budget plan. The EU says Italy's proposed 2019 budget will break Eurozone's spending rules.

The war of words has pushed Italian bond yields to their highest level in years, and today, it sends stocks falling in Milan.

(BEGIN VIDEO CLIP)

MATTEO SALVINI, DEPUTY PRIME MINISTER, ITALY: The enemies of Europe are the European people, of the happiness of the European people are Jean-

Claude Juncker and Pierre Moscovici who have brought fear and job insecurity to Europe and they refuse to leave their job.

We are working to give the future back to 500 million European citizens, primarily, Italian and French citizens.

(END VIDEO CLIP)

NEWTON: Anna Stewart has been following all of this from London, it's quite a ring-side seat there, very entertaining and yet, I'm sure a lot of

people and Italian business would rather this deal just get done. I mean - - and why can't they get this done? Because if you look at it from Italy's point of view, technically, they are under that 3 percent, you know, cut

off.

ANNA STEWART, CNN CORRESPONDENT: Yes, technically for you, absolutely right. In terms of the deficit, they wouldn't be breaking any rules, it's

just three times more than the last Italian government promise. And the reason it had committed to a much smaller deficit with the EU for next few

is because its debt levels are insanely high.

It's got its second biggest debt in the EU, second only to Greece 130 percent debt to GDP ratio which is over doubled the upper threshold or the

EU lines, so it's already breaking the rules there.

NEWTON: Yes, and I mean, Europe has a good point with that, and certainly, when you look at the spreads on the bonds, that speaks for itself. But I

want you to hear from someone else though. On Friday, Richard spoke to the chairman of Italian coffee company Illy, you know, a legendary coffee

company there in the private sector.

Now, he said he wasn't worried about the rhetoric coming out of Rome. This is really interesting because he thinks this could be a negotiating

strategy.

(BEGIN VIDEO CLIP)

ANDREA ILLY, CHAIRMAN, ILLYCAFFE: I consider this a kind of protection against the possible creative fiscal plans. Because you have two things

which are really representing two kind of barriers to like spread, financial market reactions on one side and on the other side the European

Commission, and then you also have the rating agency.

[15:45:00] So there are plenty of, let's say hardest to overcome before to really be in the capacity to issue a fiscal maneuver which is not so

effective.

(END VIDEO CLIP)

NEWTON: He seems pretty calm, but how about everyone else? Because when I look at those spreads, I think this isn't just about the tussle with

Europe, it's the very existential crisis which Europe never wants to hear about when it comes to another European country in financial trouble.

STEWART: Particularly, members like Germany who really have had enough of bailing out countries, they've got bailout fatigue. If anything, the

environment's got harder and harder since. For instance, the Greek debt crisis and the problem with Italy and I love the optimism from this

earlier, but the issue with Italy is, this is a populist government that was elected on a manner that they promised to decrease taxes, to increase

spending.

And in order to deliver that, it's definitely going to break with certain EU rules, and we're -- you know, we're seeing already the fallout from that

and is not even finalized yet.

NEWTON: Yes, not even finalized in so many battles, now the common and that populism which has taken over in certain factions of politics in

Italy. We saw there with Salvini was Marine Le Pen who is of course a populist there and a nationalist in her own right.

You know, he was very -- Salvini was -- he was very -- I would say sly in tweeting only debt is irreversible. Very daunting(ph) like all of them,

what he's talking about is the single currency, and I think that's what has investors rattled. Can we go right back to the Italy view of this. This

is all just a negotiating position, we will get where we need to be in the next few weeks.

STEWART: And it's a negotiating tactic, but you perhaps see from the U.S. president that maybe even with Brexit, you know, go for something really

hard. I have to say, as you say, very poetic, obviously Italian. But yes, maybe him at the worst possible scenario, an Italian exit.

But just hinted it, and maybe that will scare the EU. I don't think it would work, to be honest, given what we're seeing as Brexit negotiations

play out, but it certainly one view and I hope maybe Mr. Illy is right and maybe this is just negotiating tactic, but it keeps popping up and it's

getting investors very worried, the back and forth, all this rhetoric.

NEWTON: Yes, and the spreads would worry anyone in Europe right now. Anna Stewart, thanks so much, appreciate it. Now, Richard also spoke with

Andrea Illy about the company's own plans. It's currently got its sites on a major overseas expansion, that's sort of a deal with coffee giant Jacobs

Douwe Egberts which will make Illy Coffee capsules for retailers.

On Friday, the chairman said Illy isn't going to change its basic strategy though.

(BEGIN VIDEO CLIP)

ILLY: Illy has a strategy to stay independent by design because we are a family business, an Italian family business because we also take in account

our country. And we do so by first of all having a unique quality based on unique technologies well protected, continue to innovate.

We do so also by having a business model which is more focused on the hospitality, which is a less competitive market rather than retail.

RICHARD QUEST, CNN: So you provide coffee to say for example United Airlines, Marriott and another big brand.

ILLY: Cafes, restaurants, hotel chains normally --

QUEST: Is that better than providing coffee to people's homes than Espresso model. The -- which I know you do with the pods. But is that --

you know, as you balance between commercial customers versus consumer customers.

ILLY: It's very good to position a premium brand in the hospitality because you get brand recognition. You'll be acknowledged in equity, brand

equity in a place and then consumer wants to consume the product at home as long as he's exactly the same product, it's fine.

Not like -- another example is San Pellegrino, they do the same with this nine San Pellegrino bottle in the middle of the table, and then people buy

San Pellegrino home as well. So it's very effective. It's kind of a case- study for marketing.

(END VIDEO CLIP)

NEWTON: OK, when we come back, quite a mystery, less of a who've done it and more of how they do it. Big question over the half-shredding Banksy,

who is the buyer and who else knew? We'll try and piece it all together.

[15:50:00] (COMMERCIAL BREAK)

NEWTON: OK, big questions remain about an act of expressionist arts, and by that, I mean, the looks on these people's faces in reaction to that

half-shredding of a Banksy picture moments after it sold for $1.4 million at auction. It really was breath-taking. Sotheby's says it had nothing to

do with it, the auction house won't deny that Banksy whose real identity is still not known, was in fact in the room and now says it's not sure if the

sale actually went through.

The Sotheby's website doesn't apologize, it merely says we just got Banksy and it calls for the -- it calls now the incident are world history, I am

sure it does. I'm joined by John Brandler, he is in London, he is a Banksy expert and dealer.

I mean, look, I -- this new statement from the auction house, I probably would equate to a nudge and a wing. What do you think? You're the expert.

Do you think there was -- you think Sotheby's had to be in on this, and even if they weren't, they must have known something was up.

JOHN BRANDLER, BANKSY EXPERT & DEALER: I think you're absolutely right. First of all, you wouldn't be able to take a sealed boxed unit into a major

building like Sotheby's, Christie's, Bonham's or Phillips auction house like this without them checking what's in the box.

You noticed that the only people that were allowed near the painting were the Sotheby's staff. That all those people that you just saw are Sotheby's

staff. Nobody else, the public, the buyers aren't allowed near it.

Secondly, by law, if any auction house, whether it's in America or in Europe, the moment the hammer falls, that is a legal contract. There's no

option. Now Sotheby's knew the financial details, names, addresses, telephone numbers, bank statements, you name it for everybody in that room.

So before you make a bid, they check you out, after you've made a bid, after you've won the item, it's a legal contract. It's not a case, oh,

maybe we'll sell it to you. So Sotheby's know a great deal more than they're telling you, and this has been the world's biggest -- it's not a

Banksy prank, you've got a long title on it.

It's not a prank, it's a marketing play, it's made Banksy's painting world famous.

NEWTON: Now for --

BRANDLER: It's gone from a -- it's gone from a value of $1 million to $1.5 million to $5 million, $6 million, $7 million overnight.

NEWTON: Yes, incredible --

BRANDLER: That's marketing --

NEWTON: Yes --

BRANDLER: That's not a prank.

NEWTON: Yes, and Sotheby's itself says, yes, of course, you could say that the value has gone up. But I want to ask you this about Banksy himself, he

is a such a mystery for a person who apparently doesn't want publicity, doesn't chase publicity, you're saying that that actually is not true. He

or she is a brilliant marketer.

[15:55:00] BRANDLER: For somebody that doesn't want -- OK, he doesn't want his face shown and he did a print a few years ago for time out when

Haiti got flooded, and he did a self portrait and the beauty of the self- portrait is that his face is covered. That's fair enough.

But he is a master of his -- of publicity. Every TV station around the world, every newspaper is covering this. A few years ago, I secretly built

a shredder -- oh, yes, what? Everybody believes that. If he did, the people that make the electric cars want to talk to him because he put a

battery in there that has lasted for an excessive six years.

You try finding another battery that can last for six years.

NEWTON: We were all trying to figure that one out ourselves. And also it just seems that Sotheby's, would you say had to be in on it because, you

know, in terms of the frame, the way it was placed on the wall, you pointed out many interesting things about the people that were in the room.

Doesn't this go to Sotheby's credibility? Wouldn't they be concerned that they will look like they're in on this kind of, I hate to call it, a scam?

BRANDLER: I think -- I think that's the better word for it than prank, to be honest. And I think that the other thing is that it would be very

interesting to see over the next few days whether Sotheby's demand their buying and selling premium because they are due something like $350,

$400,000 in buyers and sellers fees.

They know exactly who bought it, they know exactly who sold it. One thing that concerns me is when you look at that, when you show that clip, you'll

notice that the color is different at the top when it comes out --

NEWTON: Right --

BRANDLER: The bottom. So is it rolled up in there? But it doesn't matter whether it's rolled up, whether it's traded or not, it has become the

Banksy like the Mona Lisa, the Eiffel Tower. There are copies, there are variations, why did it stop half-way through?

NEWTON: Yes --

BRANDLER: If you -- if you put a piece of paper into an ordinary shredder, it goes all the way through and the shredder goes a little longer --

NEWTON: Yes, you're right --

BRANDLER: Than the piece of paper --

NEWTON: Right, you're making such great points here. All as we will continue to try and investigate to the best of our ability. Appreciate,

this is a little story that will endure. And so thank you very much, really want to appreciate that for your insight. It is in fact still the

last chance for you to vote on our question of the day on cnn.com-slash- join and we'll be right back in a moment.

(COMMERCIAL BREAK)

NEWTON: OK, after today's landmark UN report, we ask you who bears the most responsibility for tackling climate change? Yes, three-quarters of you

say it is up to the government to take charge. And that is QUEST MEANS BUSINESS, I am Paula Newton in New York. We take you now to Jake Tapper.

END