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QUEST MEANS BUSINESS

Indonesian President Set to Win Second Term; Sudan's Ousted Dictator Moved to a Notorious Prison; CNN Uncovers Venezuela's Multi- Billion Dollar Drug Trade. Aired 3-4p ET

Aired April 17, 2019 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: Sixty minutes to go. The last hour of trade on Wall Street. We have betwixt in between

and a little bit middle along the way.

You can see the numbers. Look, hardly anything really to get excited about, but in a funny sort of way, the mere fact that the numbers are so

small is of interest. It shows a calmness in the market. And if you look at the Dow, you've got Intel at the top, you've got Merck at the bottom --

sizable losses and gains, but the rest, no general theme throughout the course of the market. We need to put it all together and understand what's

been driving the day.

Grounded. Jet Airways have suspended all operations. First, it was domestic; now international. Now, it is all finished. Ready for lift off.

Pinterest is pinning its hopes on Wall Street. And rebuilding, the French Finance Minister is turning his support behind Emmanuel Macron's five-year

ambitious plan to rebuild Notre Dame.

We are live in the world's financial capital, New York City on Wednesday. It is April the 17th. I am Richard Quest. I mean business.

Good evening, the French Finance Minister tells me tonight, Notre Dame can be restored and within five years. Investigators are yet to determine the

cause of Monday's blaze. Dozens of employees working on the site have now been interviewed about what happened. And CNN has learned, none were on

the site when the fire began.

The Culture Minister says, $900 million has now been pledged to reconstruct the Cathedral.

Few hours ago, Cathedrals across France tolled their bells in solidarity, but at the same time as the fire started.

The French Finance Minister, Bruno Le Maire told me exclusively, there is now an opportunity to rebuild the Cathedral. And in doing so, the unity of

the French nation along with it.

(BEGIN VIDEOTAPE)

BRUNO LE MAIRE, FRENCH FINANCE MINISTER: Of course, it is a very ambitious plan and that's why we need the support of media people. And I must tell

you that we have -- we are being touched by the support of all the people across the country especially by the support of American friends. I

received a lot of phone calls coming from America to either support, financial support, but also moral support due to the fire of Notre Dame and

I want to tell you that we are really very grateful to the American people for their very strong support.

We have been really touched to the heart by gratitude and the reaction and the support of the American people.

We will gather all that financial support and we will use all of that money to fund the skills and the talent that are required to rebuild Notre Dame

within five years.

QUEST: How realistic is that estimate? And I understand, we could go backwards and forwards describing what does rebuild mean? Does it mean

completion? Does it mean starting? I mean, it's not worth going down that line, but is your understanding as the reality of it could take two to

three years just to come up with a plan for restoration.

LE MAIRE: I know that some people are already recognizing the delay of five years, but I must tell you that our ambition with Emmanuel Macron is

we would be able to have the new Notre Dame within five years. We want to show to the people, the French people and also to the rest of the world

that we are ready to gather all the positive energy, all the skills, all the talents to rebuild Notre Dame. It will be a new Notre Dame, albeit but

the same, but we will use all of the skills, all the new technology to be able to achieve that new Notre Dame within five years.

QUEST: It's fascinating. I'm wondering. I understand obviously, that the government isn't going to write a blank check for this, but it is going to

require serious amounts of government expenditure to be put in on top of the public donations. How much are you allocating at the moment?

[15:05:09] LE MAIRE: We will use a very generous tax credit so that all our funds for the reconstruction of Notre Dame will be very attractive for

French people, of course, but also for foreigners, and I want to tell all the American people listening to me that we have a fund in which they can

put money to help us to rebuild Notre Dame and we have started to have that tax credit, which is something very interesting for the French people so

that we can have as much money as possible with a very limited amount of time.

QUEST: Last night I was talking to Antoine Arnault on the program who said that this could be an opportunity to bring France together. Sad

circumstances to be sure. But in these dark days, this is an element. Would you agree with him bearing in mind the civil unrest of late that this

is a moment of reflection and perhaps a new beginning?

LE MAIRE: I would fully agree. I think that we need a moment of unity. We need a moment where we will build Notre Dame, but we will also -- we

will build the unity of the French nation, and I think that is really a good occasion to rebuild on a very solid basis the unity of the nation.

And the truth being that really struck me is the beginning of the end, is first of all the fact that the French nation is united and second, the full

support of many people especially the support of the American people and I want to tell to the American people that I am only personally very grateful

for their support and for their ways of explaining the pain and supporting the French people.

(BEGIN VIDEOTAPE)

QUEST: Later in the hour, Minister Le Maire tells me how he's trying to avoid a race to the bottom on taxes when it comes to the G-7. The French

obviously at the Presidency of the G-7 at the moment.

India's Jet Airways, the mighty carrier is grounded after failing to pull out of a financial tailspin. The airline suspended all flights, a move

which it claims is only temporary, but the picture is not promising.

Jet Airways has failed to secure emergency funding from the banks. If it does eventually fold, it will join a long list of airlines that have gone

bankrupt. Jon Ostrower is the editor-in-chief of aviation publication, "The Air Current," joins me from Seattle.

Do you -- good to see you first of all, Jon. Do you expect Jet to resurrect itself in some shape or form or not?

JON OSTROWER, EDITOR-IN-CHIEF, THE AIR CURRENT: Well the track record of airlines that that cease operations for financial reasons is pretty dismal

as far as their ability to make a comeback. Certainly, the biggest stakeholder here is this consortium of Indian banks. That will be a big

determinant about whether or not Jet comes back to life.

Another big one here is Boeing. Boeing has a massive, massive order with Jet Airways 737 Max's, 200 of them actually and that airplane fleet is of

course grounded right now, but certainly, Boeing was counting on that for its future production and also Jet was counting on that for its future

profitability.

So whether or not as a creditor, they begin to step in in a way to help facilitate this, they've already taken steps to get financing for those

airplanes and other aspects of the airline. So yes, it's going to be a tough road back, but there's certainly those that want this airline to

survive.

QUEST: You know Naresh Goyal, the guy who started the airline, what went wrong here? This airline started, raised standards dramatically in India,

started to fly the flag. Created its Brussels hub. What went wrong?

OSTROWER: Well, I think the Indian airline market looks a lot like the U.S. post-deregulation. When you had all of these carriers popping up

around the country to provide low cost, high quality service and eventually what happens is that there is a bloodbath.

There are price wars, there are turf wars where everyone is competing for the same passengers and resources. So as you look at this, what has

happened -- there are more than a thousand airplanes that have been on order with Indian Airlines for a while with Boeing and Airbus and they're

growing at a tremendous rate and over -- effectively demand, it has not kept up with the amount of airplanes that are going in. So you're flying a

lot of expensive flights with airplanes that that aren't flying with passengers who are paying for seats.

[15:10:10] QUEST: The low end of course. You've got Indigo, Spice, even Vistara, but you've also got Air India and the accusation has always been

that the subsidies paid to Air India make it just about unprofitable for anybody else to compete at the top end or at least, in the long haul and do

you buy this?

OSTROWER: Well, you've got a market that is both behaving irrationally and irrationally, you've got startup airlines who are trying to add new service

and adding new airplanes and increasing the standard of flying, but again, you also have perennially unprofitable Air India, which is a vehicle of the

state.

And so you have this distortion that is taking place that's effectively preventing a sort of rationalization of the overall Indian market, which

does in contrast to neighbor next door, China with also another billion person market has a very, very, very radically different structure in terms

of how it operates.

And I think comparing and contrasting those, it's a very different kind of hybrid situation in India that has caused a tremendous amount of

dysfunction and overcapacity in the overall system.

QUEST: Good to see you, Jon, thank you. Watch it closely and come back. There is more to talk about there. Thank you.

After the break, unicorns are rushing in where there is fear to tread, Pinterest and all the other unicorns going to the market in a moment.

(COMMERCIAL BREAK)

QUEST: Netflix, Netflix, Netflix. Excited to compete. The diplomatic response after a quarter that saw the likes of Disney and Apple come for

its streaming crown. Join us, as always, and the QUEST MEANS BUSINESS living room where it's time to watch a little bit of television.

All right now, as you can see, can't beat a good old wall of veneer. Netflix shares are around about 2 percent lower, the earnings beat

expectations, but there was also a warning that new subscriptions might slow down the quarter. Now in the short term, investors are worried about

the cash burn as they churn out new content at a blistering pace.

Netflix says it will hike prices in Brazil, Mexico and some other countries to help compensate. But the cash burn is huge when you're spending $8

billion, $9 billion, or $10 billion a year on actual production.

[15:20:05] QUEST: In the long term, it's the threat of competition from Disney, Apple and Hulu. It's becoming very real by the day. Netflix --

there's plenty of room for everyone. Consumers are cutting the cable cord. They don't seem to be cutting back on streaming devices. Samuel Burke is

in London. There we go, we get a decent picture when you want one. But there you are. Definitely look good on television.

Samuel is in London. How much is Netflix is sort of whistling in the dark when they say they welcome competition versus really welcoming competition?

SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY CORRESPONDENT: Well, I think what's interesting is that if you look at the growth, Richard, they still

have incredible growth in terms of subscriber numbers overseas. And I think one of the reasons they're not as worried about competition, as you

might think, is because so many of these streaming platforms are only focused in the U.S.

If you go through the list of them, you don't see any international strategy, so if I were advising any of the other companies that want to

compete with Netflix, I would say don't forget about the international markets. Companies like Hulu, which have great success in the United

States, don't do anything outside of the United States. Go after the audience that we've always had here on CNN International. That's part of

that global conversation.

When you turn on this channel, you know that everybody who is watching is watching the same thing at the same time.

QUEST: Except Samuel, the international audience is far harder to cater to. A. You've got much of a difference regulatory regimes. B. You've

got language problems, as well. If you have you're going to broadcast internationally, and your own you're going to broadcast in English, you are

restricting yourself which is fine on a news channel, but not necessarily of your general entertainment.

BURKE: Although Netflix is finding ways around this, we've feature the Israeli show "Fauda" for example, that means chaos in Arabic. This show

has done even better in Arabic speaking countries then it has done in its home country of Israel and Netflix has really gone with a strategy of

taking more of the series and not building them as foreign language series, and have shown that they're able to do something where really other

networks haven't been able to do that.

QUEST: Ultimately, though, how important is the Netflix 150 million -- 200 million obviously in five years or so that that subscriber advantage. Is

that the killer app?

BURKE: Exactly. That's the killer advantage, but I think the other thing you have to think about here is a lot of these companies are thinking about

how they become Netflix and Netflix -- one executive told me the media industry is already thinking about how they can become the next version of

themselves.

Don't forget that this was a company that was delivering envelopes, and then basically created streaming television. And so these companies need

to think not just about how they can compete with Netflix, what they're going to do to differentiate themselves not just in terms of content, but

in terms of delivery and how they make that next step. And so far, we haven't seen that, although I might argue with the NBC product, they're

talking about making that ad supported. That's a differentiator in terms of business model.

QUEST: The overall goal at the end of the day, how many of us -- I mean, I'm just wondering -- how many will we all subscribe to? At what point

will they be bundled together? And if they do start bundling, does Netflix decide to stay on its own?

QUEST: Yes, I mean, you've got Netflix, Amazon Prime, the Warner Media offering that's coming, Disney, Hulu, et cetera. That's where you get into

the interesting part of Apple that might be looking to bundle all of these together.

A lot of them won't want to join, and I don't think Netflix will certainly -- they won't join in the short to medium future. But once there are

enough of these, certainly some of the small and medium players are going to have to come together because that's how they'll get money so it will

look more and more like the cable bundle package price.

QUEST: This can never got a decent signal. Thank you, Samuel. I'm not paying a penny extra for that. I can tell you that. Choppy day for the

U.S. markets. Almost 85% of the S&P 500 companies have now reported and earnings are beating expectations. We have a green and we have two reds.

I think we declare that as a red for today's trading.

There we go red, but I warn you, it might turn into a green before we're finished. The numbers have been strong in terms of the earnings season.

Today, it's just a bit of a selloff in healthcare stocks. It's pushing things down.

United Health CEO said that the healthcare proposals by Democratic lawmakers will negatively affect the industry.

Pinterest or Pinterest -- you know which one I'm talking about is preparing to go public on the New York Stock Exchange. They are expected to price

shares after the bell -- the closing bell and begin trading on Thursday.

So as Eleni Giokos reports, after Lyft's rocky IPO launch last month, tech investors are pinning their hopes on a smoother debut for Pinterest.

(BEGIN VIDEOTAPE)

[15:20:01] ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): Wall Street is on pins and needles awaiting the stock market debut of

Pinterest. Ticker symbol PINS. Launched in 2010, Pinterest is a digital scrapbook service that lets pinners share their hobbies and passions with

online posts or pins.

It is a digital shopping platform, too. Pinterest doesn't get as much attention as other social media sites and its monthly user base is just a

fraction of Facebook's. But CEO Ben Silbermann says, his slow growth approach is paying off.

(BEGIN VIDEO CLIP)

BEN SILBERMANN, CEO, PINTEREST: There are a lot of things that we could do in the product that would grow the number of users faster, but that

wouldn't be in line with the spirit of it being a tool to give yourself inspiration.

(END VIDEO CLIP)

GIOKOS (voice over): As Pinterest operates under the radar, its financial outlook has strengthened. Revenues rose more than 60 percent last year.

The company is close to making a profit and its business model is getting more noticed from advertisers.

(BEGIN VIDEO CLIP)

ANDREW LIPSMAN, PRINCIPAL ANALYST, EMARKETER: Major marketers are looking for more brand safe environments, and I think that Pinterest has proven

that they are maybe the most brand safe environment of all the platforms. So I do think it's time that brands are going to start giving the platform

a second look.

(END VIDEO CLIP)

GIOKOS (voice over): Pinterest is selling 75 million shares and hoping to raise more than $1 billion from its IPO. The company still has fierce

competition from Instagram and users don't spend as much time on the site as they do on other social media platforms. But Pinterest is seeing user

growth soar overseas and if it can monetize those users, expect to see lots more Wall Street interest in Pinterest.

Eleni Giiokos, CNN, New York.

(END VIDEOTAPE)

QUEST: So it's been the busiest week of the year for IPOs. Pinterest, we add to our board. We've already got lift that is up and trading.

Pinterest, unlike many unicorns, it isn't profitable. Zoom which is IPO -- and Filed is the rare exception. We use it on this program all the time to

communicate, train the staff, as you've explained before. That is also expected to raise the price of the stock tonight, $9 billion. Uber has

filed paperwork. And so whichever way you look at it, there's an unprecedented debt of any company prior to an IPO that's in that case.

And now more indeed expected. You have Airbnb, Palantir Cloudflare -- all expected to come along in the near future. Kathleen Smith is the principal

at IPO for Renaissance Capital. She joins me from Stanford. Good to see you as always. We've always talked about these IPOs.

Now look, let's discuss Pinterest first. I mean, at what point do these companies make money and how important is it do you think in the IPO that

they are showing a reasonable opportunity of making money?

KATHLEEN SMITH, PRINCIPAL, RENAISSANCE CAPITAL: It's very important to investors that these companies have a path to profitability, and they're

easier to value if we know what they're going to earn and what the business model looks like.

So, Pinterest, our model show that this company, it has been profitable in the fourth quarter of 2018. It is a seasonal business, that within about a

year and a half, we should be able to see profits on the bottom line for Pinterest. That's important to investors that distinguishes Pinterest from

the Lyft IPO, which broke its IPO price and has traded terribly. Investors couldn't figure out when is Lyft going to earn money.

QUEST: And that's the same thing with Lyft into Uber where, you know, Uber says it may never make money. Well obviously it has to make money at some

point, or you're not running a growing concern. But how much wiggle room, how much patience does the market have for these non-profitability unicorn

IPOs?

SMITH: Well, it depends if the market is really frothy, they'll have a lot of patience, but in this current market, investors are still somewhat

valuation sensitive. It hasn't been that long since the end of 2018, when markets were pretty weak. So I think that the issue we have with Lyft and

I think we will have with Uber is they're very large IPOs and they've had very high valuations in the private market.

And the question is, how do public investors figure out whether, in fact, they're worth that high valuation? And it's an interesting thing because

Pinterest is coming to market below its 2017 private round, whereas Lyft had quite a premium above its last private round. And even though these

companies are ultimately compared with trading comps, it still tells you that they push the envelope on the Lyft IPO.

QUEST: Zoom is an interesting one, isn't it? Because we've done several stories on Zoom here on the program. It's actually something we use all

the time between the New York Stock Exchange, our producers in London, Atlanta, and here in New York, but I don't know how they make any money.

Because we don't pay. I don't pay a penny when I use it, which begs the question again.

[15:25:09] QUEST: IPO into what?

SMITH: Zoom is making money, and in fact, some money on the net income line but a lot more money in cash flow. It's because they sell enterprise

-- licensed enterprise subscriptions, where they get paid up front for providing Zoom. It's likely that your company is paying for Zoom. So they

do have a profitable business model.

Interesting thing about Zoom is that you know, it's last round of financing and 2017 valued at $1 billion. This IPO is going to value Zoom at $10

billion. So Zoom has really been under the radar for a lot of people who look at the big unicorns and their size and how they've been valued

privately. Zoom didn't have such a big product valuation, so it's coming under the radar and that is why I think now we're saying somewhat that it

probably will trade well. It's not one of these retail concepts that people are jumping in because they know the name. That's not related to

valuation.

QUEST: Whenever there's IPOs that we talk about, we turn to you and we're grateful that you give us time. Thank you very much indeed for joining us

from Renaissance.

SMITH: Thank you.

QUEST: As the race to 5G accelerates, one of the contestants is dropping out. Intel abandoning plans to launch 5G smartphone modems. No money. It

said it is trying to figure out if it sees opportunities for 5G modems in PCs. Cisco remains one of the biggest players. It says -- thinks 5G

reality could match the hype.

Guy Diedrich is Cisco's Chief Innovation Officer, joins me. I don't understand. I don't understand 5G. One moment I'm told it's going to be

the next Nirvana. Then I'm told it's not going to do exactly what we say. What is 5G going to do?

GUY DIEDRICH, CHIEF INNOVATION OFFICER, CISCO: 5G is going to completely change the landscape for users. It's a massive leap forward from 4G. It's

going to allow for things like healthcare to be available to users in rural environments. Education to be accessed by people in underserved areas.

It's a full spectrum. So it will allow for very low-end IoT like sensors and meters all the way up to smart and connected cars and cities.

QUEST: So how far behind is the U.S. in 5G -- and I guess, you know, this isn't just a Huawei issue. It's a question of whether the U.S. has put the

necessary investment and does actually have the necessary wherewithal in the 5G market.

DIEDRICH: Well, the U.S. is -- we don't have a Federal plan. So we do not have a national digital agenda here in the U.S. But what we do have are

incredibly strong states, many of which have larger GDPs and greater populations than many countries that are in the 5G race.

So it's not that we can't catch up -- being the largest, most diverse economy in the world, we can always catch up. But we better get started

soon.

QUEST: What does that require? I mean, you said it, you said there's no Federal plan, which is fascinating, because I can hear two arguments going

on here. Those who sort of say a Federal plan is the last thing you want with government bureaucracy, and those who say, no, a Federal plan is the

closest to an old style industrial policy, which is exactly -- where does this Cisco stand?

DIEDRICH: Well, I run a program called Country Digital Acceleration, where we partner with governments around the world, now 26 different countries,

to help them digitize faster, to get the value of digitization much faster. And so in some cases, it requires a national digital agenda where you lay

out the goals, the things that are really going to increase GDP to create new jobs and the like. So some countries require a digital plan.

QUEST: I was surprised Intel pulled out on chips. I suppose once Apple had gone to Qualcomm, Samsung and Huawei make their own. I guess you're

left with what are we doing it for? Were you surprised?

DIEDRICH: I wasn't surprised, and it's because 5G is the Brave New World, right? It's a new marketplace. There are going to be companies for the

next several months and next couple of years even, they're trying to find where they fit in the 5G landscape. I mean, that's why Cisco's so

fortunate. We know exactly from day one where we fit. We're at the heart of the network. We are the unifying factor. We connect people. So there

are going to be others that aren't as fortunate as Cisco and they're going to have to find their place over time.

[15:30:00] QUEST: Good to see you, sir, promise me you'll come back and help me understand the hype from the reality as we move forward.

GUY DIEDRICH, VICE PRESIDENT, CISCO SYSTEMS: Anytime, Richard, thank you - -

QUEST: Right, good to have you with us, thank you. As you and I continue tonight, France's Finance Minister tells me about his ambitious plan to

overhaul the global tax system. We'll talk about that, this is QUEST MEANS BUSINESS live from New York.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in just a moment. When the French Finance Minister tells me how he plans to stop the

race to the bottom on the question of taxes. And a superhighway for illegal drugs is cutting through Venezuela, making some very rich and

others starve. An exclusive investigation from Nick Paton Walsh. Before all of that, this is CNN, and here on this network the facts always come

first.

Early results appear to show Joko Widodo is set to win a second term as Indonesia's president. Hundred and ninety million Indonesians were able to

vote and they cast ballots for thousands of legislative seats. It's the biggest election day in the world. It will take more than a month to get

official results.

An 18-year-old woman who allegedly had threatened to attack schools in Colorado has been found dead. She was described as infatuated with the

Columbine massacre that happened almost 20 years ago. Most of the 120 school districts shutdown while the police searched for the woman.

Sudan's deposed dictator is now being held in the same notorious prison where his political opponents were often tortured or worse. Officials at

Kober Prison in Khartoum say Omar al-Bashir was transferred there on Tuesday. Sudan's current military rulers are vowing to prosecute him at

home instead of sending him to the International Criminal Court.

[15:35:00] The former President of Peru killed himself today. Authorities say Alan Garcia shot himself as police were preparing to arrest him.

Garcia had been under investigation in a massive corruption scandal.

The French Finance Minister is telling me of an overhaul of the global tax system is within reach. France is proposing a minimum corporate tax at

this Summer's G7 Summit to stop a worldwide race to the bottom. France holds the presidency of the G7 at the moment, and of course the meetings

will be held in France. Bruno Le Maire told me he has the support to make it a reality.

(BEGIN VIDEO CLIP)

BRUNO LE MAIRE, FINANCE MINISTER, FRANCE: We need to have a minimum level of corporate tax. And this minimum taxation or corporate tax will be

really at the core of the rules and objectives for the French G7. We have the full support of the Americans could be of the Treasury, expect the

military(ph).

We also have the full support of Germany. So asking that we can move very fast on that key question of having a minimum level of corporate taxation

as international led. Is --

QUEST: Is it well -- before you go, before you go on that second point, is it your goal to get a numeric number, a figure, you know, the minimum level

of corporate taxation should be 21 percent, should be 18 percent. Or are you looking more for principles which would then lead individual countries

to define what is their minimum?

LE MAIRE: I will be -- with an efficient decision based on principles, yes we do. We need the EU(ph) if we want to be efficient in inducting minimum

taxation. And I can tell you that I'm really willing to get a very concrete results with Steve Mnuchin, with Olaf Scholz on that key issue.

Because people do not accept anymore to have huge companies avoiding the payment of taxation because there is no efficient minimum taxation. That's

why I'm really devoted to get a very concrete results with figures on the level of minimum taxation at the international level.

(END VIDEO CLIP)

QUEST: Coming up, a multi-billion dollar industry that operates on the margins of a crisis-stricken economy. Our special CNN investigation

uncovers how the illegal drug trade in Venezuela is making some rich and ruining the lives of many more.

[15:40:00] (COMMERCIAL BREAK)

QUEST: Now, as you well know, we cover all types of business on this program. If somebody is making money at it, we cover it. It doesn't mean

to say we approve and we often shine the spotlight on those who are doing something wrong. So the illegal drug trade is no different. It operates

in a shadowy black market.

Its reach extends far further than most of us ever realize. According to the UN, around 275 million people worldwide say they have used illegal

drugs in the past three years. That's roughly one in 20 people aged between 15 and 64. Understandably precise numbers we just imagine possible

to come by.

And some estimates suggest the global drugs trade generates between $300 and $600 billion each year. One of the biggest money spinners in drugs

trade of course is cocaine. The vast majority of it comes from South America. Now, here's the tricky bit. Linking the cocaine producers in the

south with consumers in North America.

And to do so, a narcotic superhighway has been created stretching right through Venezuela. The economic crisis has left many Venezuelans

struggling to find food and water, others are making millions from the drug trafficking. CNN's Nick Walsh with this exclusive report.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN CORRESPONDENT (voice-over): Below is a cocaine superhighway enriching Venezuela's corrupt elite and bringing coke to

American streets. These lines a secret pathways from Colombia's cocaine farming heartland below across into neighboring Venezuela. From there,

billions of dollars of the drug are smuggled north in tiny planes.

U.S. and regional officials have told CNN aided by Venezuela's army and elite. The Colombian military we're with don't get any lower to stay out

of the range of traffic and machine guns. I talked to locals mostly through the leader of the state drug.

We've stopped drug flying out of Colombia, he tells me, but not from places we don't control. Venezuela just 5 miles away. Below, they think they've

spotted a cocaine laboratory, one of many fueling Venezuela's role as a cocaine courier which a CNN investigation has learned is booming just as

the country collapses.

Two hundred and forty tons went from Colombia to Venezuela in 2018, up a third in one year, a U.S. official told us which could fetch $40 billion on

U.S. streets.

(on camera): That traffic happening down below, one possible reason it's alleged why so many in the Venezuelan army and government are reluctant to

give up on Nicolas Maduro, they're simply making too much money.

(voice-over): The trade remains mostly secret inside Venezuela on the other side of the border here. But we were able to learn more about these

legal routes in from recent defectors from the Venezuelan Army Border Patrol and about how their officers, all of them to let cross specific

trucks carrying cocaine. For five years, this sergeant got those orders often three times a week.

UNIDENTIFIED MALE (through translator): The cartel cross both weapons and drugs or pick-ups, and we would be told the color and make of the truck and

when. Usually just after dawn or dusk. Everything was coordinated by the brigade commander.

He'd send a lieutenant to tell you what needed to cross, and this was arranged high up above. Those who didn't agree were swapped out

automatically.

WALSH: We fled to here, Colombia, when the pressure to comply go too much and his unit found themselves confined to base.

UNIDENTIFIED MALE (through translator): We were locked on the base. The general would say everyone must be with us, leave or speak against the

government you'll get arrested. They had us brainwashed with food hand outs. One night, I couldn't take it anymore. I went home and told my wife

to leave for Colombia.

My son started crying and said, dad, what are we going to do? But I knew if they stayed without me, they'd be captured or interrogated.

WALSH: Venezuelan state TV occasionally shows how their Armed Forces cracked down on the trade here, intercepting Mexican pilots, they have

previously rejected allegations they're actually running the drugs and did not respond to several requests for comment.

But a U.S. official has told CNN, these flights are surging, they used to take off from the remote hidden runways in the southern Venezuelan jungle.

But in the last three years have moved north, a U.S. official told CNN to reduce flying time. There used to be three a week, but last year they were

almost daily.

[15:45:00] This year, they've seen as many as eight in a single day, a regional official said using 50 hidden runways. CNN has seen a

confidential U.S. radar map approximated here that shows the sharp turn left that planes from Venezuela take before landing on the remote Central

American coastline off of Honduras before the cocaine travels north through Mexico into the United States.

Honduras is where we pick up the trail of this booming trafficked cocaine on the coastline below turned into a surreal graveyard of narco planes.

Cocaine cargo that carried is worth so many millions, the plane itself is just a fraction in a billion dollar deal. So many are discarded like used

plastic bottles all over the jungle or crammed here into one river bend.

The troops we're with don't want to be on camera for their safety.

(on camera): Some of these have their markings torn off to make the job of working exactly where they came from even harder.

(voice-over): America's drug habit is where the money, the rot all begins. But that same open market also supplies a key part of the logistics here.

Well, the fire has deprived most of this plane, of kind of distinguishing characteristics, but you can still see N4 there, meaning this plane

originated in the United States.

Brokers and U.S. officials tells me buy up dozens of old planes at auctions in the United States and hide their ownership in shell companies to send

them south to start their cocaine journey north from Venezuela. Again, another N, which means another plane that started its days in the United

States.

It's not just traffickers in Venezuela and the U.S. making billions, the entire region is in on it. This is surely Honduras' biggest industry, the

billions at stake everywhere from this jungle road which is actually a hidden runway up to the Honduran president's brother indicted last year on

trafficking charges which he denies.

You can't stop the planes being sold or taking off one officer tells me. So, they instead just have to try and make landing harder by blowing holes

in the runways.

(on camera): Just even slowing down this multi-billion dollar trade requires so many more holes to be blown in this vast expansive jungle.

(voice-over): The amounts of money cocaine brings here literally dwarves any effort to fight it. Insane amounts of cash into some villages along

this coastline that have none. In fact, the Honduran army tells us, traffickers flying towards these villages often kick their cargo overboard

when they think they're about to be intercepted.

Each 30 kilogram bundle of cocaine is attached to floats and then drifts ashore. They then pay these communities of fishermen $150,000 for each

recovered bundle. It's a calculus of corruption that most officials I spoke to admit they just believe, and that no police or aid operation can

really hope to challenge. One that sees the collapsing Maduro government as the alleged couriers cashing in fast in a region desperate for delivery

men. Nick Paton Walsh, CNN in Colombia and Honduras.

(END VIDEOTAPE)

QUEST: Breaking news into CNN. Local officials say at least 28 people have been killed in a tour bus crash in Santa Cruz; a small city on the

Madeira Island of Portugal. We may have details on the cause of the crash, as we get more details who was on the bus, the nationalities and what

actually happened, we will of course bring it to you.

[15:50:00] (COMMERCIAL BREAK)

QUEST: Three hundred and forty climate change protesters have been arrested in London. Demonstrators by the extinction rebellion, campaigners

are in their third day. Protesters glued themselves to trains and attached themselves in the fences in front of the home of the Labor Party leader

Jeremy Corbyn.

And you might think Michael Phelps is an unlikely person to be talking about conserving water. After all, he's made his career basically living

in as much water as possible and swimming through it as humanly as fast as possible. He won 23 Olympic gold medals and is the most decorated Olympian

of all time.

And now, he's trying to educate the world about water scarcity as a global ambassador for Colgate. His new add explains why you should turn off the

tap while brushing your teeth. Michael Phelps joins me now from the New York Stock Exchange where he's going to be in the closing bell. Michael,

good to see you, sir --

MICHAEL PHELPS, RETIRED SWIMMER & 23-TIME OLYMPIC GOLD MEDALIST: Thank you.

QUEST: And it is a strange relationship that you have with water having swim in it and made your entire career -- playing and swimming and using

it. Now, you want me to stay away from it or not use as much from it.

PHELPS: Oh, yes, of course, I mean, for me, like you said, I've lived in water my whole entire life. And I'm asking everybody with our (INAUDIBLE)

coming up as we are going into our third year of Colgate to just turn the faucet off. I mean, honestly, when you're brushing your teeth, make sure

you turn the water off, it's going to save -- if one person -- the average person weekly, if you leave it running when you're brushing, you're wasting

900 cups.

You think of a site like that or if you think -- you know, I just came back from India, you think 1.4 billion people are there and less than 10 percent

of people or around 10 percent of people have running water. So it's things like that for me, now as a dad and you know, just realizing what we

can do to make a difference, it's something so small.

And over the last two years, we've been able to do some really amazing things, and numbers have gone down --

QUEST: Right --

PHELPS: We've saved a bunch of water. But we've got to save more, I mean, there's a chance in the next 10 years that 40 states could be in a serious

risk, and that's something that I don't want to chance.

QUEST: I think about this every morning, when I'm having a shave and then when I'm brushing my teeth, and I think, oh, I really should turn the tap

off. And then I think to myself, hang on a second, I'm living in New York where it's always raining and there must be a gazillion amount of rain and

water.

But you're telling me, I'm wrong, is that right?

PHELPS: A 100 percent, yes, I mean, it's -- we as Americans are wasting so much water daily, it's honestly like our country is probably one of the

worst for conserving water, and that's something that has to change or we're not going to have it. And it's something that we have to have and we

have to have every day.

So you know, for me, like I said as a dad, I want my kids to enjoy what I had the privilege to live with every single day. And that's this amazing

resource. And you know, before too long, it's going to run out, and we're not going to have it, and that's something that you know, like I said, does

frighten me, it scares me.

And you know, for us, it's something, it's very important that we're trying to continue to spread this message.

QUEST: Do you find -- you have to be very careful circumspect over what you put your name to.

PHELPS: Oh, a 100 percent, yes --

QUEST: In terms, you know, I mean, we're a business show and you can earn a gazillion by putting your name on anything you want. But there's a

dividing line, isn't there? There's those that you would sponsor --

PHELPS: A 100 percent --

QUEST: Commercially and those things you will do for the common good. How do you decide?

PHELPS: I mean, it has to be fitting in our family, and that's everything that we've done. You know, with my goals and the mission that I have

outside of the sport with water safety continue to teach the importance of -- excuse me, with mental health, water safety with water conservation.

[15:55:00] All of these things are something that's so important for me, so they're something that really are just a no brainer and a perfect fit.

So I've been very fortunate into my second retirement now, and getting to just enjoy myself. You know, it's kind of easy to get off and talk about

things that, you know, you've already -- I already --

QUEST: Right --

PHELPS: Had such a massive passion for throughout your life. So you know, for me, it's just a dream world.

QUEST: Be careful being at the New York Stock Exchange, there could be quite a few people there that will remove the shirt from your back on the

way out with a good investment. Good place to be, nice to see you, Michael, thank you --

PHELPS: Cheers --

QUEST: Good -- thank you for giving us time --

PHELPS: Thanks so much --

QUEST: Tonight --

PHELPS: Don't worry --

QUEST: Now, before I leave you tonight, I do need to remind you of some breaking news that we're following for you serious. A deadly, in fact,

local officials say at least 28 people have been killed in a tour bus crash in Santa Cruz. It happened on the small city of Madeira on Portugal, no

details yet on the course of the crash, obviously.

We will watch this closely, 28 people staggering a large number -- we need to understand more details of who and why? We'll be back in a moment, this

is CNN.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. I listened very carefully to Michael Phelps. We are to understand there was an air of authenticity that you

always get when an actress, celebrity, somebody famous chooses to go into a campaign or a course related to something of which they feel strongly or

they have a direct connection.

It is the most powerful form of advocacy I think you can perhaps find in that sort of genre. On the question of water, it bedevils me every time

when I think about it. I remember once opening a water well in Ethiopia so that it would save -- it turned out to be women mainly, having to shed

miles to get water.

They could now get it in their local town and village. I realize then just how precious it was. And yet, I still waste it when I turn on the tap and

have a shave or brush my teeth. I can't seem to somehow square that circle, that if I save water in New York or London, then it will actually

make a difference somewhere else.

Which is why it was important tonight that we heard from Michael Phelps and the good job he did too. And that's QUEST MEANS BUSINESS for tonight, I am

Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.

(BELL RINGING)

The bell is ringing, the Dow is up. The day is done.

END

END