UK Treasury: Brexit Could Cost 820,00 Jobs; Far-Right Candidate Narrowly Defeated in Austria; Manchester United Sacked Louis van Gaal; FIFA



Narrowly Defeated in Austria; Manchester United Sacked Louis van Gaal; FIFA

Fires Deputy Secretary General; Bayer Offers to Buy Monsanto for $62

Billion; U.S. Markets Finish Flat; Stocks in Europe Close Mostly Lower;

Battle For Control of Viacom; Obama Lifts Vietnam Weapons Embargo; San

Francisco Fed: 50 percent Chance of Rate Hike;Seidman: CEOs Cannot Avoid

Controversy; AXA to Quit Tobacco Investments. Aired 4-5p ET - Part 2>

Stelter, Saima Mohsin >

Steenland >

With a month to go before the EU referendum, the government has issued a

warning to voters. Austria elected a left wing economist as its next

president backed by the Green Party, the independent candidate, Alexander

Van der Bellen has defeated the Freedom Party's candidate, Norbert Hofer,

just by over half percent of the vote, preventing Hofer from becoming the

EU's far right head of state. Manchester United has fired its manager,

just two days after he led the team to an FA cup victory. Louis van Gaal

was in the second year of a three-year contract. Marcus Kattner, the

acting number two at FIFA has also been sacked after a so-called breach of

fiduciary responsibilities. Kattner was the head of finance at FIFA.

German drug giant Bayer is offering to buy U.S. agriculture company,

Monsanto. The offer for $62 billion in cash and if approved it would be

the largest merger so far this year. The U.S. markets finished today

somewhat flat. European markets closed lower on Monday with the exception

in Greece. The Chief Executive of Viacom, Philippe Dauman, has filed a

lawsuit in New York. What he's calling an unlawful corporate takeover.

It's been more than four decades since U.S. troops pulled out of Vietnam

and now the countries are setting up new and deeper ties. In Hanoi,

President Obama announced the end of a decades old ban on the sale of

military equipment to Vietnam. It's all about risks and what CEOs are

saying. The head of the San Francisco Federal Reserve puts the odds of a

June interest rate rise at some 50 percent. Quitting smoking is hard and

for the world's largest insurer it will be also be extremely expensive.

AXA will sell $2 billion worth of tobacco assets.>

and Acquisitions; Sports; Tobacco; Asia; Television and Radio; Trade >

STELTER: is charging that Shari Redstone is manipulating her father and doing it in an illegal way. They are calling this an illegal corporate takeover. And of course we're talking about so many brands under Viacom. Also, Sumner Redstone has some control of CBS. We've heard nothing out of CBS today.

QUEST: If I want to read reliable sources, which is you're excellent, how do I sign up for it?

STELTER: We'll be covering this all night long.

QUEST: You can sign up for Brian's superb daily reliable sources briefing on the media industry.

STELTER: Thank you.

QUEST: We continue from pointing weapons of each other to selling them to each other. The U.S. is opening arms to Vietnam. We'll have that story. This is QUEST MEANS BUSINESS.


QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. I'll be talking to the world's biggest insurance company, which says it will no longer invest in tobacco. Decades after they went to war United States is now lifting the arms embargo on Vietnam. For all of that, this is CNN and on this network the news always comes first.

ISIS claiming responsibility for a series of attacks that left more than 120 people dead. State media said a least 78 people killed in explosions in 2 Syrian towns. Three bombs went off at a bus station, four others in a residential area.

And in Yemen, local officials say at least 43 people are dead and 2 more explosions.

Operation to drive ISIS out of the Iraqi city of Fallujah is under way. Iraqi troops have moved into the city backed by U.S. and coalition air strikes. The Iraq military reports suggest early progress and predicts quick victory.


KHALED AL-OBEIDI, IRAQI DEFENSE MINISTER (through translator): The operation's going very well. More than expected. The enemy is completely collapsing. Our troops' spirit is very high because of the victories and due to all of that we think the battle of Fallujah is sealed soon.


[16:35:00] QUEST: About a month to go before the U.K. votes on whether to leave the EU. There's been a strong warning from the British government. It says a Brexit would lead to the end of economic growth and a recession. Speaking to me on QUEST MEANS BUSINESS, the leader of the house of commons, a Brexit supporter, says he doesn't believe the U.K. treasury report.


GRAYLING: It's a bit rich at this stage to be saying doom, gloom and disaster would follow. We've heard a whole of string of arguments from the remain campaign, about how disaster of things will happen if we leave. And I think people are now seeing through that, and saying, look, this is a bit over the top, guys.


QUEST: A French navy is continuing the search for wreckage of EgyptAir flight 804. The plane with 66 people on board went down in the Mediterranean Sea last Thursday. Some debris has been found and at this point the plane's fuselage and with it the flight data recorders are still missing.

The Baltimore peace officer Edward Nero has been found not guilty of all charges in connection with the death of Freddie Gray. Mr. Gray died in a police van while in custody. His death sparked protests and became a symbol of distrust between Baltimore's black community and the police.

It's been more than four decades since U.S. troops pulled out of Vietnam and now the countries are setting up new and deeper ties. In Hanoi, President Obama announced the end of a decades old ban on the sale of military equipment to Vietnam. Mr. Obama denied that the move aimed at countering China's growing strength in the region. CNN's Saima Mohsin, has this report from Hanoi.


Reporter: in the first trip to Vietnam, President Obama said he was looking to make a significant upgrade in cooperation and then came this.


BARACK OBAMA, U.S. PRESIDENT: The United States is fully lifting the ban on the sale of military equipment to Vietnam that's been in place for some 50 years. As with all our defense partners, sales will need to still meet strict requirements, including those related to human rights.


SAIMA MOHSIN, CNN CORRESPONDENT: This American B-52 bomber brought down in 1972. It remains here as a symbol of the Vietnam War. President Obama has termed this trip symbolic of the renewed ties between the two countries. And the lifting of the complete ban against sales of arms to Vietnam is perhaps symbolic of how the two countries have moved on from a relationship of one of being enemies to friendship and real partnership.


MOHSIN (voice-over): President Obama's historic move paves the way for Vietnam to import a range of U.S. defense technology and experts tell me it's the quality not quantity of equipment Vietnam is looking for.

NGUYEN NGOC TROUNG, VIETNAM CENTRE FOR STRATEGIC STUDIES AND INTL. DEVELOPMENT: How to protect our maritime security and coast that is priority. And in that I think that Americans equipment at best. There would be some radar for airplanes, radar for the ship, radar on the mainland.

MOHSIN (voice-over): analysts say Vietnam will use its enhanced maritime capabilities to stave off China's aggressive expansion in the South China Sea. They expected China to view this as further U.S. interference, but when asked about the move, Beijing appeared to welcome it.


HUA CHUNYING, SPOKESWOMAN, CHINESE MINISTRY OF FOREIGN AFFAIRS: We hope the lifting of all such bans will benefit regional peace and development. And we're happy to see the United States and Vietnam develop normal cooperative relations.


OBAMA: And I want to congratulate Vietnam for the extraordinary progress that it's made.

MOHSIN (voice-over): President Obama's move has been slammed by human rights activists saying he's disregarding Vietnam's human rights record. Recent protests against an environmental crisis have been suppressed with a stern government crackdown, a sign freedom of speech is far from free in this communist state. Which is why rights group are saying the United States has rewarded Vietnam for nothing in return. Saima Mohsin, CNN, Hanoi, Vietnam.


QUEST: Wherever we look in the world there are risks. Whether it's Brexit, the interest rates, foreign exchange, the dollar, we're going to be talking about those sort of risks and CEOs are doing.

[16:40:00] Dennis Nally is with us and Dov Seidmen is here. Gentlemen, we have seats for both in the C-suite. Risk, it's all about risk. It's all about risk. You can say whatever you like. Over there.


It's all about risks and what CEOs are saying. The head of the San Francisco Federal Reserve puts the odds of a June interest rate rise at some 50 percent. John Williams says the U.S. economy is back on track and there could be two or three rate hikes this year. In the C-suite, real C- suite heavyweights. Dennis Nally, Chairman of Price Water House Cooper International, which recently came out with a survey. And Dov Seidmen, the head of LRN which promotes good governance and business ethics. You are in the wrong place here.

DOV SEIDMEN, CEO LRN: It's nice to be here.

QUEST: Let's start with what your survey is showing at the moment of what the risks are and CEOs are failing to do.

SEIDMEN: CEOs are slowly coming to grips with the fact that we are living in a reshaped world. The world not just dramatically changed, its dramatically reshaped. It operates differently. The idea that business and business are somehow separate from society is over. That business no longer --

QUEST: Surely they only fooled themselves if they believe that in the first place.

SEIDMEN: But the ability to maintain a separation of business and society is over. Millennials, the largest group joining the workforce are insisting, and they're more vocal. They're not the first to discover meaning but they are insisting on working for bosses that are inspiring and for companies that solve real problems in a world and do good.

QUEST: Good luck to them.

Dennis, the biggest risk at the moment are your members, your clients or your customers, are they worried about Brexit?

DENNIS NALLY, CEO, PWC: Absolutely. You know, I would say on a broader scale, Richard, I think the whole issue around when's happening from a geo political standpoint is top concern to CEOs. In fact, as you know, when we release our global CEO survey in Davos this year, the geo political risks were number two area that the CEOs where most concerned about --

QUEST: Which risk in particular?

NALLY: Well, just all the uncertainty around what's happening from a geo political standpoint, whether it's the Middle East, whether it's Brexit -- I put that in that category. All of this creates uncertainty. As you know, business CEOs want certainty. They want predictability. They want stability.

QUEST: But if I think back over the last eight years, since the great recession, before what, I mean, ERM crisis, U.S. various crisis, uncertainty is not new. What's different now?

[16:44:42] SEIDMEN: What's different now is that we can see an unprecedented -- companies not just x-rayed they are getting MRIs. From Panama papers, Sony gets hacked, Panama Papers, we are seeing deep into the inner workings of organizations and the attitudes and beliefs and mind-sets of the people who run them.

[16:45:00] There's unprecedented transparency. When you get a hold of it you can cheaply tell the whole world about it. And the companies for the first time are dealing with moral issues, gender equality, religious freedom laws, pay equality. For the first time CEOs have to stand -- come forward and say this is what I believe and there's no way to say it's just business. You have to have a point of view.

QUEST: This is fascinating but I wonder in the past, Dennis, let's take North Carolina at the moment. Now, we have had, you know, we have had the proponents of the bill on this program saying this is what we believe in. But surely, Dennis, CEOs on the North Carolina anti-transgender law have to say we won't -- as PayPal did -- we won't invest. We're going to stand by our principles.

NALLY: Well, absolutely, Richard. It is a great example where I think if you would have gone back five, ten years ago you would have seen CEOs more reluctant to take that type of a position.

QUEST: OK, to both of you. Do we have the CEOs -- I was going to use a rude word here but I won't, with the necessary equipment to take these decisions? CEOs in many cases just want to avoid controversy.

SEIDMEN: You cannot avoid controversy. Moral neutrality in a morally interdependent world where we rise and fall together is no longer an option. They're going on a journey to try to come forward by an attachment to a purpose that allows people to say this is what the company is about and this is how we're going to operate.

NALLY: Let me build on this one because this is really important. I think the CEOs don't have a choice today because the millennials, the people they're out there trying to hire today, they want to join institutions that stand for something. More than a paycheck. They want to make a contribution for the greater good, greater society.

QUEST: I disagree with both of you.

NALLY: That's one of those where we can agree to disagree.

QUEST: No, no. On the fact -- I'm sure but I disagree with you. I think CEOs in many cases lily livered, weak and cowardly waiting to see which way the wind is going to blow before they take a position on something of morality.

SEIDMEN: But CEOs are leaders and good leaders don't just look at the headlines, they're looking at the tread lines. And they're seeing where the world is going. And they're going on this journey and first of all one adage is true in business. You manage what you measure and what you measure is what you get. And right now we have measured this. Companies that are putting purpose and values at the center are starting to outperform those that don't.

QUEST: Do you have a position on North Carolina?

NALLY: I certainly do. And we would say it ought to be open. We should accommodate the wishes and needs of all of our people and that's the way we would think about it from a PWC standpoint.

QUEST: Do you have a position on Brexit either of you?

NALLY: Absolutely. Personally, and at PWC, because we've done a very interesting report that's been released. We think the exit of the U.K. from the EU will be a disaster from an economic standpoint. A disaster to the U.K. A disaster to the EU and a disaster to the global economy. Why? Because of all the uncertainty that this is going to create. All the unknowns, all the unintended consequences that nobody has really put their fingers on at this point in time. And that is exactly what is not needed at this point in time in terms of the global economic recovery.

QUEST: Nobody will accuse you on being on the fence. Gentlemen thank you very much indeed.

Let's continue with the thought about CEOs taking an issue of morality. Smoking is prohibited in the AXA offices. Now investing in smoking is banned, as well. I'm told why AXA waited until now before disinvesting from tobacco. This is QUEST MEANS BUSINESS.


[16:50:55] QUEST: Quitting smoking is hard and for the world's largest insurer it will be also be extremely expensive. Let's talk about AXA, which will sell $2 billion worth of tobacco assets. That the insurer currently has across the portfolio. Now, the reason is AXA can't invest in an industry that kills 6 million people each year for the very obvious reason it's an insurance company. So it's paying out of the door for one hand, while investing in the product that's killing people.

Some public sector funds have already quit, notably, Norway's Sovereign Wealth Fund. California employees, CalPERS, has also with their retirement scheme, has also pulled out. And famously, CVS pharmacy stopped selling tobacco products in 24 hours. The company says overall sales dropped as a result, but they maintain their position. The other big drugstores in New York, Dwayne Reed continues to sell. Which all seems a bit weird since in the left aisle they're selling health care goods and the right aisle they're selling cigarettes. But that gives you an idea.

However, investing in the smoking industry and in tobacco, certainly pays. The major tobacco firms are up some 33 percent since 2015. If you take this and you compare it to the tobacco and S&P and get an idea and look at the gains they have seen by contrast. The S&P is flat and if you look -- just look at this. There you start in January. Tobacco goes up like a rocket. S&P just to tootles along. Alice Steenland, is AXA's chief corporate responsibility officer. She joined me live from Paris, when I asked her why AXA waited until now to divest.


ALICE STEENLAND, CHIEF CORPORATE RESPONSIBILITY OFFICER, AXA: The nature of disease has changed. So 68 percent of deaths worldwide now are caused by non-communicable diseases. These are diseases not infectious diseases. These are lifestyle diseases. Things like smoking are driving this level of disease and of death. So the nature of health care's changing which means that both organizations like the World Health Organization, but also, anyone who works in health care like AXA, we are one of the world's largest insurance companies, and the nature of what we're doing is changing, too. Much more focused on prevention.

QUEST: But I realize that smoking is a more extreme example, but once you go down this road, it's not long before somebody says, well, you are investing in armament companies or any form of defense related. And then even if that's an easy get, you end up with alcohol companies and distilleries. And before long, you end up with fat food and manufacturing companies.

STEENLAND: Yes, you're right. We've heard that before, the slippery slope argument. Tobacco for us is a case that's very different in the sense there's no healthy amount of tobacco so unlike sugar or fatty foods or even alcohol, there is no safe threshold for smoking and for tobacco. So for us, it is quite a case of heart and when you think about the fact that two thirds of all people who start smoking will die from a tobacco related disease I think when you're in the health care insurance business this is really something that makes you think twice.

QUEST: But you can see that it is -- you know, if not a slippery slope then it certainly is a sliding flaw where you need to be careful. Because there are so many, you know, pressure is going to be brought to bear on AXA by a large number of lobbyists and pressure groups for various different causes. And there needs to be a certain robustness in standing up to that in many cases.

[16:55:00] STEENLAND: Yes. You're absolutely right. Last year, we had an announcement around the same time, which was the group's divestment from coal. And we were actually very surprised at the reaction because we were, again, the first insurer to make that choice. And immediately, we saw that the entire industry was going in the same direction. We're very much hoping that that's going to happen with tobacco, especially for insurance companies that are in the health care businesses. But, yes, it's something to keep in mind. But again for us tobacco is a very specific case that we don't see elsewhere.


QUEST: The problems of AXA and tobacco. We'll have a Profitable Moment after the break.


QUEST: Tonight's Profitable Moment. The U.K. treasury has brought out another report claiming doom and groom if the country votes to leave the European Union. The problem is that there's now a chorus of reports all saying that things will be dreadful. And it's ignoring the issue, in my view, for the undecideds. Many of whom don't really care about the question of economics. They know they will be in effect, but the actual vote is about more than just an immediate economic fallout if you like. It's a long-term forecast and that I think merely turns people off. When they see these report, one after the other after the other suggesting economic doom and gloom. It sort of makes people say, well, we'll have the final decision. Never mind what you say.

The vote takes place on June the 23rd. I'll be driving around the U.K. in my own 1970s Bedford caravan. We'll tell you more about that in the weeks ahead. And that is QUEST MEANS BUSINESS. For tonight. I'm Richard Quest in New York. As always, whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.


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