BUSINESS-01
Aegean Islands in Greece; Migrants Deported From Greece to Turkey; Pope's
Trip to Greek Island Set For April 16th; ANC Secretary General Defends
Zuma; Kasrils Leads Calls For Zuma to Step Down; Pressure on South African
President Intensifies; American Growth Figures Cut; DOW Logs Worst Loss in
6 Weeks; U.S. Economic Growth Forecasts Cut; Panama Creating Independent
Committee on Tax; Tracking Down the Psychic, Maria Duval, That "No One
Sees" - Part 1>
Kasrils, Former Minister, South African Intelligence Services; Mohamed El-
Erian, Chief Economic Adviser, Allianz>
attention to the migrant crisis. The Governor of the South Aegean Islands
says the deal between the EU and Turkey is being implemented and migrants
are being sent back. The constitutional court in South Africa could not
rule on whether President Zuma should step down. Kasrils is leading a call
for his removal and wants civil society's voice heard on Zuma's corruption.
U.S. will grow about 2 to 2.5 percent this year. The difference today is
that the world economy is not just slowing down but becoming unstable. Who
is Maria Duval and did she know about the worldwide scam bilking millions
of dollars from people. Maria Duval's son says she received money at first
but she didn't get nearly as much as the people behind the scheme.>
Union; Turkey>
[16:00:00]
RICHARD QUEST, HOST: Oh, deary, deary me. Awful day on Wall Street. The Dow Jones is up best of 1%. It is a loss of 170 odd points. The market opened down and never recovered. We look at why that happened after this gentleman -- that's what you call a robust gavel. Even on a dreadful day, on Thursday, it's the 7th of April.
(BEGIN VIDEO CLIP)
QUEST: Tonight, time for transparency. Panama vows, fix its offshore tax system. I'll be speaking live to Panama's Vice President on this program.
The chief executive of GE lights up Bernie Sanders. It's a disagreement between the politician and the chief exec.
And Iceland's finance minister has had a tough week. Tonight, he tells me he is not going to quit.
(END VIDEO CLIP)
QUEST: I'm Richard Quest. We have an hour together. And I mean business.
Good evening, tonight, Panama's government is jolted into action by the "Panama Papers" scandal, with promises to reform the offshore tax system. After this week's giant leak of tax documents, the government is now vowing to improve transparency with the rest of the world. It comes as a host of the world's largest economies are announcing their own plans to tighten up rules on offshore accounts after seemingly decades of inaction.
And that's what we're going to be looking at this evening on the program. How the rest of the world is determined to get to grips with the Panama problem.
(BEGIN VIDEO CLIP)
QUEST: The U.S. Treasury says it will force banks to identify who is behind shell companies. Currently, companies can shield their owners. Earlier proposals in 2012 and '14 stalled after opposition from banks.
Across the Atlantic the United Kingdom is to give banks one week to say they have ties with Mossack Fonseca, the law firm that created all these offshore countries. It applies to 20 banks.
The European Union is vowing to close loopholes and create a blacklist of tax havens. You'll hear from the commissioner, Pierre Moscovici, on tonight's program. And Panama itself announces an independent commission into its financial system. The president says he will work with the international community.
JUAN CARLOS VARELA, PANAMANIAN PRESIDENT: (As translated) We will work not only internally in our country, but also we will direct efforts to benefit the rest of the world. I want to make it clear that Panama will continue to cooperate with other (inaudible), as we have traditionally, to pursue crimes which have been identified in our criminal code.
(END VIDEO CLIP)
QUEST: Joining me now from Panama City is the country's vice president, Isabel Saint Malo. Madam Vice President, thank you for joining us. We appreciate it.
ISABEL SAINT MALO, PANAMA VICE PRESIDENT: Thank you, Richard. Thank you for the opportunity.
QUEST: Whichever way you look at it, however unfair you may think it might be, having it been called the "Panama Papers," the reality is, Madam, tonight your country is tainted with the brush of scandal from this -- from the "Panama Papers," isn't it?
(BEGIN VIDEO CLIP)
MALO: It is, Richard. It quite is. And we are working very hard, in order to convey our message. We are a government with zero tolerance to irregularities. We are truly committed to transparency. The steps we have taken in these 21 months in government speak for themselves. We have placed into action a specific loss against money laundering.
As of January 2016, bear shares are no longer possible in Panama. We've made serious, serious transformation to our system. And we regret, we truly regret that this scandal has shed some light into a Panamanian firm that has been kind of misconceived into -- into Panama. While Panama is a country and a government committed to transparency, we've worked very hard.
(END VIDEO CLIP)
QUEST: The OECD, the head of the OECD yesterday on this program, Angel Guerra, and indeed Pierre Moscovici tonight on this program, the E.U. Commissioner, they both make the point that Panama still has not signed up to all the anti-corruption, the anti-money laundering, the cross-border information flows treaties that they need to do so. When will you sign up to all the relevant treaties?
MALO: Richard, we signed up a while ago. When I had a conversation, a very honest, positive conversation this morning with Angel Guerra over the telephone, and I was telling him, I do not understand why OECD has not read into Panama's commitment. Last year, last September at the General Assembly, President Barilla announced Panama's commitment to automatic exchange of information.
[16:05:15]
MALO: Panama has almost 30 treaties of double taxation, with different jurisdictions that are in place and have been in place. Panama is currently negotiating additional treaties. Where has Panama's difference been with the OECD? The difference we have been to the common reporting standard. Yes, we commit to the common reporting standard. But for now, we commit to it on a bilateral basis, for different reasons. That has been the difference, but, yes, we have committed. Not now, we committed a while ago. So we need to get our story straight, Richard.
(END VIDEO CLIP)
QUEST: Even if Panama has cleaned up its act, and I take you at your word, ma'am, that greater transparency is coming. Mossack Fonseca was dealing with many of these other jurisdictions, these tax havens in the middle of anywhere, where the rules and transparencies did not exist. So how can you stop law firms doing business in Panama, but actually taking advantage of other jurisdictions? Can you?
MALO: Well, as I mentioned, January, this year, a legislation that had been passed a few years ago, but that the country had been reluctant to put in place, was put in place. This legislation, establishes that in Panama, it is no longer possible to issue bear shares. It is no longer possible.
The way that business has been done in many jurisdictions over the world is changing - is changing for the good it's changing for transparency. As well as is Panama changing. The actions that we have taken speak for themselves. And an example of this is a decision taken by FATF to remove Panama from the -- from the bear list, and that is a result of the recognition of Panama's effort. What we need to do in order to move forward is to ensure that the institutions that we have put in place and we actually put in place last year, a new institution with the objective of ensuring oversight.
QUEST: Can I finish by asking, I mean, do you think Mossack Fonseca, they should just disappear now? They should be prosecuted, this law firm? I mean because they say specifically they've never broken any laws. They've acted with the highest level of reputation, they have no problems. So you see Madam, you see this disconnect between a law firm saying we've done nothing wrong and everybody else, including yourself saying, we've got to clean up our act. Is it time for this law firm to go?
MALO: Richard, I have spoken about Panama. The Republic of Panama has cleaned up its act. Now, if there have been irregularities and the publications are disturbing I need to say that the system needs to take care of that. Our Attorney General said last Sunday that they would initiate an evaluation. We need to allow the appropriate institutions to take their - to take their steps and that is certainly not the responsibility of the executives. But Panama, yes, Panama has cleaned up its act and we need to ensure oversight, to be certain that these new regulations are in place.
QUEST: Madam Vice President, thank you. You've been kind and generous with your time tonight and I'm very grateful that you've come on the program to talk to me. Thank you.
MALO: Thank you very much, Richard.
QUEST: Panamanian Vice President, you'll hear more about that as the program wears on. Because what we were talking about there with the Vice President is the way in which the rest of the world is now looking at the country.
The European Tax Commissioner, Pierre Moscovici says he's outraged, furious with the panama Papers revelations and he says that the tax avoidance is unethical. I spoke to the commissioner earlier and I asked Pierre Moscovici his thoughts on those who have legally - remember much of this is about legal behavior using tax loopholes.
(BEGIN VIDEO CLIP)
PIERRE MOSCOVICI, EUROPEAN TAX COMMISSIONER: We need first to know precisely what we are talking about. And this is why I advocate for a Pan- EU blacklist of non-corporative jurisdictions. Let's call them tax havens. We don't have that at the moment. I want us, the E.U. to have one in six months from now.
Second, we need to be whatever the situations are in full cooperation with the member states or member states concerned. And for example I regret, I do more than regret that Panama is not cooperative approach in the framework of the OECD. And I urge the Panamese authorities to be in a cooperative mood.
[16:10:10]
MOSCOVICI: And third, we need to reestablish legal mechanisms that create a level playing field. If i look at multi-national company, operating in Europe, in different member states, what I ask for is that this company or the companies which are under its responsibility, pay their fair share of tax, fair share of tax, which means that they pay the taxes and create profits. This is, I think, good sense.
QUEST: Can you get the E.U. members to agree to give you that authority, to put together that list, when you have disparate views, and many countries will not want this to be dealt with at an E.U. level, will prefer to deal with it at their own national level.
MOSCOVICI: First in our decision-making process I need the agreement of member's states to commission proposes, then the commission implements, but the decision relies on the member states. And for that kind of decision, we need unanimity among 28 member states. And I know that it's always very difficult to meet.
But secondly, yes, I'm confident that we will get that.
QUEST: Do you have any problems or qualms or any unease that, frankly, the Panama Papers, very likely, are the result of theft. A law firm has had its own privacy broken into, details hacked, and now leaked. So is there not an element of hypocrisy by many who now say how dreadful it is, but at the same time, are choosing to ignore the fact that this may be the fruits of ill-gotten theft?
MOSCOVICI: I can understand what you say. And certainly I believe that full transparency would be better. And this is why at the level of the E.U., we are going to propose by next week, that for the activities, for example of multi-national firms, which represent something like, and strong firms, which represent something like 95% of the economic activities in Europe, we have a country-by-country reporting, that is going to be public. I prefer transparency within the rules. Then, to have transparency obtained, because there are no convincing rules, or because those rules are not followed enough.
But I want to say that while the consortium made a good job, and that's not regarding the masses, but this job is useful. It's very useful for the world, and it will have us to make progress.
(END VIDEO CLIP)
QUEST: Pierre Moscovici on the Panama Papers. )
Now, in the United States, a most extraordinary war of words has broken out between business and politics.
(BEGIN VIDEO CLIP)
QUEST: You've got Bernie Sanders who fired the opening salvo when roundly criticizing G.E. But far from just taking it lying down, G.E.'s CEO has launched back. We'll talk about Sanders versus General Electric after the break. It's "Quest Means Business."
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:15:00]
QUEST: Welcome back. Politics and business butted heads today, as one of America's top chief execs came out swinging at Bernie Sanders. Now, Sanders, who has been criticizing - Sanders the socialist, has been criticizing corporate America, and specifically about G.E. He says G.E. is destroying the moral fabric of America. Those words were a red rag to the bull. Sending, he says, jobs to low-wage countries, and then going even further by saying that they pay nothing in taxes.
G.E. was having absolutely none of it. The chief executive is Jeffrey Immelt, who doesn't often speak out on these issues, but he immediately responded in an op-ed, saying, "we've never been a big hit with socialists." Arguing that G.E. has businesses in 180 countries, competes globally, and then saying Senator Sanders is lying about G.E's taxes.
Throughout this election, Corporate America has been a frequent target for Senator Sanders. He's also singled out J P Morgan Chase, and he was highly critical of the Pfizer Allergen deal. It's not just the left with Sanders that's decided to beat up on Corporate America.
Agreement from the Republicans too where Donald Trump blasted the Pfizer deal, blamed politicians, and not only Pfizer, but has also criticized Nabisco and the Ford motor company for shifting production to Mexico. Put it all together, whether it's Sanders or Trump, everybody, it seems, is going after Corporate America.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, DEMOCRATIC PRESIDENTIAL CANDIDATE: I want to go after the hedge funds that have bought up drug companies. You know, Valiant pharmaceuticals, Touring pharmaceuticals.
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: I would tell the people at Ford, I don't want you to do that. I don't want you to close your plants. I want you to build new plants. You don't have to have the old ones, and I don't care, it can be anywhere, but it has to be in the United States.
BERNIE SANDERS, DEMOCRATIC PRESIDENTIAL CANDIDATE: He said I was dangerous, and he is right, I am dangerous for Wall Street.
(END VIDEO CLIP)
QUEST: Rana is with me, CNN's global economics analyst and author of "Makers and Takers."
Rana, good to see you.
RANA FOROOHAR, CNN GLOBAL ECONOMICS ANALYST: Nice to see you.
QUEST: This is unusual.
FOROOHAR: It is.
QUEST: Not just that they've - I mean bashing corporate America is (inaudible) --
FOROOHAR: Certainly in this campaign season.
QUEST: But, a) Sanders appears to have picked on the wrong target with G.E. and Immelt is furious as a result.
FOROOHAR: Yes, I think he has picked on the wrong target. I mean look nobody will say that a global company like G.E. isn't putting jobs wherever it's best for them and doing tax optimization, but the thing that's different about G.E., is when you go to places like Davos, when you go and talk to global CEOs, they will actually hold up, and policymakers too, they'll hold up G.E. as an example of how they create manufacturing jobs in rich countries like the U.S.
(BEGIN VIDEO CLIP)
FOROOHAR: They've actually done a lot with sort of regional hubbing.
(END VIDEO CLIP)
FOROOHAR: I've visited some of their factories in Schenectady an old rust belt city in New York. And they're doing a lot better job than most. So this is a very different target than, say, Pfizer.
QUEST: Right, were you surprised, though, that Immelt chose to come out with an article? He says they you know, we're competing globally with foreign companies. It's easy to make hollow campaign promises and take cheap spots in speeches during editorial board sessions, but U.S. companies have to deliver for their employees.
FOROOHAR: I was surprised, for two reasons. For starters, Immelt hasn't been in the news a lot lately himself. You know G.E. was in the news a few years back, they actually tried to get out of the finance back. They've been one of the too big to fail banks for a while pre-2008, then they shifted over to manufacturing. He's been quiet during that time. The fact that he's striking out is very important.
But actually, I think its part of a bigger shift. Because if you go back to the 1990s, celebrity CEOs were big. Then after the financial crisis, nobody wanted to put their heads above the parapet. Now I think you may see folks coming back and starting to speak out.
QUEST: But we also have -- just to prove that they're all equal opportunity offenders, you have Trump, a businessman. Blasting --
FOROOHAR: Of sorts.
QUEST: Blasting Wall Street and hedge funds. But also corporate America, for shifting jobs. And invoking the ire of Mark Fields' Ford.
FOROOHAR: Yes, well I mean, and this just goes to show you, it's not -- all businessmen are not created equal, for starters.
(BEGIN VIDEO CLIP)
FOROOHAR: I mean I've always found it very interesting that Donald Trump blasts Wall Street, when this is a guy who's done highly leveraged deals in the casino business. You know, I think that's it's all part of a conversation about how should wealth be shared? Who are corporations run for?
(END VIDEO CLIP)
QUEST: Which is what you talk about in your book.
FOROOHAR: It is.
QUEST: Should we expect Wall Street to be - I'm sorry not Wall Street -- Corporate America, to be bashed more in this election campaign? Because at the moment, you know as well as I do, a CEO will never say something controversial, unless they're absolutely certain it's not controversial.
[16:20:03]
FOROOHAR: Right, which is kind of why Immelt's letter is so fascinating frankly because it's no-holds-barred. You know this is really interesting. I think what's going to happen, let's imagine that it's -- in the general, it's Hillary/Trump. I think at that point, you may see Trump really going after certain corporate targets, and Hillary becoming the sort of more moderate defender of a kind of, you know, broader global stakeholder capitalism, that sort of, you know, keeps big companies under the tent. So, you know, I think that the debate will continue. Who's blaming who is going to change.
QUEST: Fascinating. Thank you. Good to see you.
FOROOHAR: And you.
QUEST: The market, oh, have a look and then have a bout of indigestion.
(BEGIN VIDEO CLIP)
QUEST I have no idea why, when it looks as if the Fed is not going to move on rates anytime soon or at least there's a debate going on, on an average Thursday in April, U.S. stocks chose to log their worst loss in six weeks. Rana's still with me. I mean Rana, who on earth -- it's an average Thursday in April.
(END VIDEO CLIP)
FOROOHAR: It's amazing. I mean you know what the Fed is doing, what's going on globally, frankly, right now is amazing.
(BEGIN VIDEO CLIP)
FOROOHAR: I mean can I just, in the global front, 30% of bonds are paying negative yields right now, globally. You know this is a crazy world we're living in. Stocks and the real economy, totally disconnected.
(END VIDEO CLIP)
QUEST: And this -- so, is this just pure volatility? Because the volatility that we saw at the end of last year, the China-related volatility has gone away for the moment but --
(BEGIN VIDEO CLIP)
FOROOHAR: Indeed. I think what's happening is that because we're living in this bizarre-o world, where none of the old correlations hold, stocks and bonds are doing things that we never would have expected, at times we wouldn't have expected. The markets don't know what to think. I think that that's what's happening. Is everybody's trying to recalibrate and nobody knows how to do that.
QUEST: Recalibration with no map. Thank you, good to see you.
(END VIDEO CLIP)
FOROOHAR: And you.
QUEST: Let's have a look at the European stocks and how they ended the day, they were all lower, not surprisingly.
(BEGIN VIDEO CLIP)
QUEST: They seen what was happening on Wall Street and they decided to turn turtle and go home. The worst losses were, seems to be just about the Xetra DAX in Frankfurt which was off the best part of 1%. Banking stocks were hardly hit, were hard hit.
The ECB says it won't rule out further policy changes. And the global - the global outlook remains uncertain, tell me something that we don't know.
(END VIDEO CLIP)
QUEST: Iceland's finance minister says he's not going anywhere. The minister was named in the Panama Papers, along with Iceland's Prime Minister, Sigmund David Gunnlaugsson who said he wasn't going to resign and then promptly did so the day after.
(BEGIN VIDEO CLIP)
QUEST: Now the replacement was sworn in on Thursday. He has called for elections to be held in the autumn, but that is not soon enough for protesters in the capital Reykjavik. I was joined on the line a short while ago by Iceland's finance minister and I put it to him that elections, never mind being in the fall, bearing in mind the Prime Minister resigned, and the protests on the streets, those elections should be held as soon as possible.
BJARNI BENEDIKTSSON, ICELANDIC MINISTER OF FINANCE: It is very fair to say that a serious situation has arisen in Iceland crisis, I would not agree to that. There is good stability in Iceland, we are enjoying economic growth and the government is in the midst of concluding its program for lifting of capital controls. And one can say that more political stability is foundation for economic stability. And that is what we have been able to do in this parliamentary session, is to regain economic stability and we want to maintain that.
QUEST: How would you describe the revelations and the effects and the fallout from the so-called Panama Papers in Iceland?
BENEDIKTSSON: Well, I'd say, number one, the extent, the extent of this use of low-tax countries and regions is something that came as a shock, number one. Secondly, I think that people are still trying to figure out what this really does mean, in terms of true tax evasion, and I think that will always need to be kept in mind, that these documents do not, in themselves, reveal tax evasion from Icelandic tax authorities. But they can serve as evidence in the supervision that our institutions must be able to do. Obviously, as the Prime Minister has stepped down, the focus this week has been on the potential or possible conflicts of interest. I mean, this is what was the reason why the Prime Minister has stepped down.
[16:25:05]
QUEST: And now everybody's asking whether on the same grounds of perception, whether perception not real, but whether you should step down, too, minister.
BENEDIKTSSON: Yes, I have noticed that, of course. And I have given my explanations. There has never been an issue of potential conflict in my time assist minister of finance. This is an issue which was ended in 2008 and 2009, and it was a very simple transaction, where money went out of Iceland, and came back to Iceland, and everything was declared through the tax authorities.
QUEST: At best, you may be accused, minister, of poor judgment. Do you accept that?
BENEDIKTSSON: I don't accept that. I have provided evidence and information, which I believe are sufficient to prove my point.
QUEST: Do you now accept, and does the Icelandic government accept that there needs to be greater transparency, greater rules, and a clampdown on offshore companies?
BENEDIKTSSON: Absolutely. And this is the reason why I participated in signing the OECD Standards for Exchange of Tax Information on Iceland's behalf. And Iceland is one of the earlier adapters to the new OECD standards on information exchange. We've already started that fight, and we're in the fight with the OECD and with newly amended rules and regulations in Iceland.
(END VIDEO CLIP)
QUEST: Iceland's Finance Minister talking to me earlier. It's "Quest Means Business," we have more in a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest there's more "Quest Means Business" in just a moment when we're going to bring you the final chapter in CNN Money's search for a mysterious psychic. Does she exist or is she just out to take the money?
The pressure is on and mounting on South Africa's President. We're going to be in Johannesburg with the former intelligence minister. Is it time for Jacob Zuma to go?
Before that, this is CNN and on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST: Belgium Police have released new images of the third suspect in the Brussels airport attack. Security camera videos show the suspect wearing a hat and walking from the airport in the hours after the attack. Belgian authorities have issued a wanted notice for the suspect.
Hundreds of people marched in the Bangladeshi capital to protest against the killing of a blogger who criticized Islamist extremism. Police say Nazimuddin Samad somehow was hacked with machetes and then shot. He's the sixth secular writer to be killed there in the past 14 months.
The British Prime Minister, David Cameron, has admitted he profited from a stake in an offshore fund run by his late father. The existence of the fund was revealed in the Panama Papers leaked. Mr. Cameron told ITV news he'd done nothing illegal.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: We owned 5,000 units in Blairmore Investment Trust, which we sold in January 2010. That was worth something like 30,000 pounds.
UNIDENTIFIED MALE: Was there a profit on it?
CAMERON: I paid income tax on the dividends. But there was a profit on it, but it was less than the capital gains tax allowance. So I didn't pay capital gains tax, but it was subject to all the U.K. taxes in all the normal ways.
(END VIDEO CLIP)
QUEST: Pope Francis is to visit the Aegean Islands, in Greece, a week from Saturday, aiming to draw attention to the migrant crisis. The system in place that returns migrants to Turkey that's aimed at reducing the strain on Greece, well, the Turkey/E.U. deal is controversial, at best, but it is underway now, and it remains to be seen how it's going to work. The Governor of the South Aegean Islands is George Hatzimarkos, he's with me here in New York. Sir, good to see you.
GEORGE HATZIMARKOS, GOVERNOR OF SOUTH AEGEAN ISLANDS: Good to see you, Richard.
QUEST: We'll talk about your industry and your tourism in a moment. Let's talk about the crisis at the moment.
HATZIMARKOS: The refugee crisis.
QUEST: The refugee crisis. How bad is it going to be this summer?
HATZIMARKOS: I don't think it's going to get worse. The deal between E.U. and Turkey is being implemented. On Monday, we had the first 202 people deported back to Turkey. It's not an easy job to do. It's not an easy situation. And I'm very optimistic that this deal is going to work. It's a very difficult deal. We have also issued technical issues, legal issues, it's a tricky job, right? But I think this summer, 2016, things are going to be pretty cooled down.
QUEST: Of the number of people coming across or that are still there, or that are still in Greece --
HATZIMARKOS: Yes, something like 60,000 people.
QUEST: How many eventually will have to repatriate?
HATZIMARKOS: All. The goal is to repatriate all of them, right. This is why E.U. had the vote.
QUEST: But I mean that would allow them to move. But some will be legitimate refugees, asylum seekers.
HATZIMARKOS: I would be, right.
QUEST: Yes.
HATZIMARKOS: Yes. That's why I told you that we have legal issues in this agreement, also. I believe that the majority of these people are going to be deported.