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Volcanic Ash Forces Obama to Leave Ireland Early; Europe's Debt Crisis Sparks Market Selloff

Aired May 23, 2011 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: President Obama's travel plans reduced to ash. Volcano forces him to fly early.

Down on debt. Europe's crisis sparks a sell off on the markets.

And all this week, on this program, human trafficking and forced labor, what travelers and the travel industry can do make that difference

I'm Richard Quest. I mean business.

Good evening.

When nature speaks even the most powerful men in the world, the leader of the Western nations, even Barack Obama has to listen. Barack Obama and the first lady have been forced to leave Ireland early tonight because of that new volcanic ash cloud. The president had to leave for Britain a night before he was due to arrive amid fears that the ash spewing from an Icelandic volcano could have further disrupted his six-day swing through four European countries.

At the same time Iceland is reopening its main international airport. There have been no flights in or out of the country since Sunday, following the new eruption.

And in the U.K. tonight, a different message from Iceland. We can't rule out disruption, says the authorities. U.K. aviation officials say they won't know until late tonight what the real impact could be from this new ash cloud. Hence the president's decision to get on the place early. I suppose that is one of the advantages of having your own 747. It leaves when you want it to leave, not when the schedule says so.

Europe's most active volcano, Grimsvotn, starting making itself known on Saturday. British official say the thick cloud could cover much of Stockholm by Tuesday morning. And that means if you are one of 60,000 daily passengers who use their airports, then of course, you need to be in touch with the airline. Logan Air canceled 36 flights tomorrow.

Now, of course, last year it was a different volcano that snarled air traffic for weeks. Are we about to have a repetition? Is this going to be 2010 all over again?

Well, the president is clearly seriously concerned enough to actually leave earlier. So I turned to the foreign minister of Iceland and I asked the minister why did he believe it wasn't last year all over again?

OSSUR SKARPHEDINSSON, ICELANDIC FOREIGN MINISTER: Well, I mean, this is quite another thing since last year. We know this one much better. We know its-know how it works. So, the history is such that we know that in two, maybe 10 days it will be over.

QUEST: It will be over. And hopefully, and I know, your flights have been canceled. It won't have disrupted much more of European aviation?

SKARPHEDINSSON: Well, it is the European aviation that makes the decisions. It is not the Icelandic authorities that do that. And it is not the same panic as last year. We have greater experience.

QUEST: Let's talk about that experience. What if-what did we learn from last year, in terms of flying in and around these ash clouds, do you think?

SKARPHEDINSSON: Well, I mean, at least we, in Iceland, we know how to maneuver around them. But (UNINTELLIGIBLE) European authorities they have much better experience, much better equipment, they have laid down new rules that are not as stringent. So, it will be possible to fly, even in conditions that-well, well, definitely will not be as bad as they were last year.

And this time, as well, we already find that the volcano is going down, today. Today it spewed out only 5 to 10 percent of what it did on its first day.

QUEST: Living in Iceland, as you do, with the ever present threat of these volcanoes, it sort of makes one realize, doesn't it, Minister, that we are at the mercy, to some extent, of the Mother Nature. We may be almighty man, but Mother Nature can still give us a bloody nose.

SKARPHEDINSSON: Yes, but that is something we know quite well from history. This is something that we live by, but here in Iceland we are very well prepared. We have a well-oiled machine that takes care of the people if something happens. But luckily this time the eruption was in the middle of the glacier, quite a long distance from any inhabitation. We didn't have to evacuate anyone. So, life goes on.

QUEST: I do need to ask you, completely off subject minister, but it wouldn't be right having you on the program without asking you. It is QUEST MEANS BUSINESS, after all. Minister, are things improving economically yet. Are things getting better? Do people feel that the worst of the crisis is past?

SKARPHEDINSSON: Yes, I think everyone, or most people, feel that. But there is still a lot of anger and resentment among the population. But things are looking up and the economy is growing. We managed to finish our economic plan with the IMF, as you may remember. It was tried by some other nations to hold it up. But I mean, it is on track and things are definitely going in quite a positive manner now.

QUEST: Do you think the failure to resolve the compensation issue, which of course, was rejected by a second referendum, is going to damage your relations and the potential for the joining of the European Union?

SKARPHEDINSSON: Well, if one is to believe the politicians that lead those countries and the European Union, then the answer is no. Everyone that has been in the leadership of the European Union has stated quite clearly that it is not going to impair our possibilities. But of course, I live in the real world. It remains to be seen. But I don't think so in the long run.


QUEST: That is the Icelandic foreign minister talking to me earlier. Forecasters predict the latest plume could make its way across the U.K., France and Spain, on Thursday. And that depends on the winds. The important forecast, Guillermo is that the World Weather Center.

We need to take this slowly and in some detail. Where is the cloud at the moment? Which way is it moving? And how fast?

GUILLERMO ARDUINO, CNN METEOROLOGIST: Well, it is hard to know because the winds are variable right now. So, what I can show you is the forecast coming from the authorities. And this is what they are saying: We are going to take it one day at a time; unlike what we did last year, that we would go three days into the forecast.

At the same time, I was reading "The Wall Street Journal" and they are saying that the airport in Reykjavik is restarting operations tonight, Monday. And they anticipate that everybody will be on schedule tomorrow, Tuesday at Reykjavik International, according to "The Wall Street Journal".

But back to the ash cloud, you see, according to authorities this is the area of warning. It may go into northern parts of Ireland, and also Britain, especially into Scotland, tomorrow, and also these areas here that are not going to impact greatly the air traffic activities.

I'm going to show you also what we have as we speak, in Europe. Of course, each icon represents a plane. And you see that everything is fine, even here in northern parts of Scotland, in Ireland, Northern Ireland. But the forecast that I was showing you is basically for the next 24 hours. Because the winds are variable as we speak, it is difficult to predict what is going to happen. But it seems that it is not going to be as bad as we had last-the last time, with the other volcano.

Also, according to the authorities in Iceland, the activity of the volcano, and actually the minister emphasized that, has ceased for the time being, but it is difficult to predict. So it may happen again. But they are sure that the activity has ceased, so no more new fresh ash is coming up right now.

So, the forecast is promising, with an area of warning, the winds appear to be moving away from Europe, so for the next 24 hours we should be OK.

Was that clear enough?

QUEST: It is perfectly clear. And we'll talk more about it in the hours ahead. You have a busy few hours ahead of you Guillermo.

ARDUINO: Thank you.

QUEST: The airlines are fearing a repeat of last year's performance, or at least, the market fears that the airlines will be hit. Airline stocks have been dragged down and they have dragged all the major markets. Ryan Air was off 6 percent, despite having impressive profit numbers. Air France, EasyJet down 4 percent, to name but a few. It pulled the markets down. The Xetra DAX was off-excuse me-2 percent on a day of economic and political chaos. And the CAC was down 2 percent, as well, and the FTSE down, well, 2 percent, give or take. It is all around 2 percent.

The reason it is not just ash clouds, there is very nasty murky weather when it comes to the Greek debt crisis and European sovereign debt issues. John Defterios will be with me after this short break.


QUEST: Welcome back.

A severe reaction from the markets across the world tonight as Europe's debt crisis intensifies on three fronts. Investors are scurrying. They are wanting safe havens as two more peripherals feel the heat with Greece.

Let's have a look and see. Spain is the latest troubled nation. They have the, of course, elections of Prime Minister Jose Luis Rodriguez Zapatero. And more and more in serious trouble after days of demonstrations against his party's economic policies last night, protestors hit him where it really hurt, at the polls. The Socialist Party crushed in regional elections. A classic rejection of Zapatero's efforts to fix the worst jobless numbers; 45 percent of youth unemployment.

Change has been in the air for weeks now. Ivan Watson is in the Spanish capital for us tonight, at the makeshift meeting place. The campground that has taken place, that is supposedly illegal. But it seems to be thriving.

IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: The numbers were a bit smaller earlier today. But the place is packed, you have thousands of people here. They are camping out here. I'm going to take you on a little tour around here. And what is striking is that it is, you know, millions of Spanish citizens (AUDI GAP) and voted yesterday.

QUEST: Oh, there we are.

WATSON: And that has had virtually no impact on the people camping out here, in commune, if you will. (AUDIO GAP) elections, they are going to stay here at least another week. Until they get the changes they are demanding from the government, Richard.

QUEST: Ivan, your signal is breaking up quite a bit, so we will leave it there. But we certainly get the mood, and the size and the scale of what is happening in the center of Madrid. Go unwind the elastic band a bit more for next time.

Now, there is political unrest across the Mediterranean. If you go to Italy, and S&P has downgraded Italy's credit rating, from stable to negative and cites political gridlock in the attempts to tackle the deficit. The government is aiming to balance the books by three or four years hence.

The Italian treasury says it will boost and step up the budget reform program. But, of course, it is in Greece where most of the problems are. Asset sales are underway, Hellenic Postbank and two ports are to be sold. The restructuring is also taking place. The EU has agreed to restructure the Bank of Greece.

Greece was supposed to sell $50, or so, of asset sales. Certainly it should have been underway by now.

John Defterios is with us.

A soft restructuring is still on cards, of the debt, according to some?

JOHN DEFTERIOS, CNN FINANCIAL CORRESPONDENT: Yes, it looks like Greece got the message that was given to them by the Eco Fin, the finance ministers, last week. Let's take a look at what is on the table right now. They had a cabinet meeting today with Prime Minister Papandreou and the Finance Minister Papaconstantinou. They said they were going to come up with $10 billion worth of cuts, or 6 billion euros, Richard. And you talked about 50 billion euros in privatization. In total it is $85 billion. They want to see specifics, the economy ministers, by the end of this week. And the Greeks are awaiting a $17 billion payment from the troika in June. So if they can produce a credible plan to take the deficit from 9.5 percent down to 7.6 percent and push forward the privatization. So, you have a bank on the table, two ports, even a water company, and a restructuring of one of the banks.

But can it really happen? There is a poll that came out today that showed that 80 percent of the Greek people are not ready for more cuts. And this is the real test going forward.

QUEST: You know the old saying, John? You know the one I'm talking about that says, I owe the bank 100 pounds, that's my problem. I owe the bank 100 million it's the banks' problem. The EU, the troika, the IMF, they are so much in their neck up to Greece, it is not an option just not to continue to pay.

DEFTERIOS: Well, this is the huge challenge. The auditors go back in to look at the plan that has been put on the table. There is new language that has come forward, but the markets are speaking the language here or potential restructuring. The 10-year note hit a record today. Over 17 percent, if we can take a look at it. And the yield on the two-year shot up above 26 percent. So, look at the spread between Italy and Spain. Better than 12 percentage points on the 10-year note, and you can see the two-year bond here at 26.25 percent.

QUEST: At what point are they going to recognize the reality and do something serious? Everything I've read, "The Economist", "The Financial Times", all the learned journals, they all say some form of restructuring is not just desirable or warranted, but is essential.

DEFTERIOS: Well, in fact, the head of the Euro group, who we talked to in Brussels last week, again held some interviews today and another journal was talking about a reprofiling, or potentially this light dusting where you don't kind of erode the net present value of the bonds and swap them out for longer maturities. But the cart before the horse, is what we are talking about tonight, Richard. Is the plan being put forward by the Greek government credible enough on reducing the deficit near term? And the privatizations, they even talked about setting up a sovereign fund this year to park that money once the sales are going forward.

There is a great concern. I had a conversation with an investment banker that covers Greece, saying that if you are forcing the hand on the privatizations you could create a fire sale and it could hurt the Greek government because they know they have to push these out in a hurry. But the market is actually pressing the panic button, a little bit today, and that is the result of the downgrade by Fitch, and the rocketing up of the yields yet again to a record.

QUEST: Can't buck the market. Margaret Thatcher taught us that many years ago.




QUEST: Coming up, next on QUEST MEANS BUSINESS a future city that is resigning fossil fuel power plants to the history books. We're in China.


QUEST: Providing energy for the Chinese cities of the future. We are back in Tianjin in a moment.


QUEST: In a city of the future coal just isn't going to cut it. Tonight on "Future Cities" we're in Tianjin, in China, again. With more than 11 million inhabitants it is a big city. And that, of course, means big energy requirements.

It's cutting its dependence on the highly polluting fossil fuels and is turning agricultural waste to its advantage.


QUEST (voice over): Since civilization began to build it people's needs have been growing. The energy demands of cities are massive. Huge urban cores, every person, every home, requires heat, air conditioning, light, and more. China is the world's biggest consumer of coal. But here in Tianjin things are changing.

(On camera): The energy needs of a growing city like Tianjin are simply enormous. If you are going to wean 11 million people off coal, you'd better have something good to replace it. And here they believe they have found it-biomass.

UNIDENTIFIED MALE: (through translator): Biomass fuel comes from agricultural and forestry waste such as peanut shells, rice husks and straw, which is left over from the harvest.

QUEST (voice over): The Tianjin government is switching from coal to biomass, replacing all boilers within the city's boundaries by the end of 2011. Biomass, at its cleanest produces virtually zero emissions.

(On camera): Coal is the mainstay fuel for the huge heating plants with their giant boilers, providing the heat for offices, hotels, homes, nearby. It is hard to imagine any other fuel getting a look in. But here in Tianjin, as growth increases, they know they have to think differently. And that means rethinking coal.

(voice over): Mr. Guo manufacturers biomass boilers, a local entrepreneur who stands to do well.

GUO YUXIN, PRES., TIANJIN FUYEN CENTURY BIOMASS TECHNOLOGY: (through translator): This is my biomass boiler. It can supply heat for over 1,000 square meters, and provide hot water for over 200 households.

QUEST: To date, he's sold 60 boilers. He has the capacity to make 600 a year.

GUO (through translator): China is a huge agricultural country. We produce over 600 tons of agricultural waste each year. And that waste can be turned into fuel. Simple, but it is good, it's effective.

QUEST: Straw, peanut shells, rice husks, sawdust and other agricultural waste are ground down and packed together into pallets.

GUO (through translator): This is my biomass factory. And these are my biomass pellets. This is what they look like.

QUEST: As well as cutting emissions, burning biomass instead of coal reduces the amount of dust in the air. A welcome advantage in the polluted skies of Tianjin.

UNIDENTIFIED MALE (through translator): Tianjin is actually well- known for its bad pollution. Recently it has seen some improvements but it still has a long way to go. More local, renewable energy will help to clean Tianjin's air.

GUO (through translator): Every ton of coal produces 2.5 tons of carbon dioxide, 35 kilograms of sulfur dioxide, and 35 kilograms of dust. One ton of biomass material is equivalent to one ton of coal.

QUEST: The coal industry here doesn't want to be left out. It knows it must contribute to cleaner air.

LI XINLU, BEIJING COAL POWER PLANT (through translator): This brick I'm holding, reproduced from coal ash, dust and residue.

QUEST: Beijing coal station makes bricks from the leftovers of the electricity process.

LI (through translator): 80 or 90 percent of the material in the brick is made of waste. We grind the waste, mix it together and then use steam to form the bricks. Every year this plant produces around 300,000 cubic meters of bricks like this, which are then used for construction.

QUEST: As China tries to reduce its reliance on coal and its reputation as the world's largest emitter of carbon dioxide, it is cities like this that will bear the brunt of change.

UNIDENTIFIED MALE (through translator): I've seen some big changes in renewable energy in China, over the last few years. Chinese government has ordered and pushed local government at all levels to make energy efficiency their priority in economic development. I fully believe that biomass is an important future fuel for Chinese cities.

QUEST: Tianjin is a city bucking the national addiction to coal. In the process it is becoming an example of a place that fuels the future.


QUEST: The reports from Tianjin, as part of "Future Cities". After the break CNN is taking a stand against modern-day trafficking and slavery. And it is QUEST MEANS BUSINESS this week that looks at the special coverage from the disturbing world of child sex tourism, after the break.


QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN. And on this network the news is always first.


QUEST: According to the White House, the president will fly from Ireland to London early because of a change in the recent trajectory. He is due in the U.K. tonight to begin his state visit.

The president said, while he was in Ireland, that he felt quite at home while in the country, enough to sip a pint of Guinness at a local pub.

The search for survivors is underway in a U.S. city that was leveled by a tornado. Authorities in Joplin, Missouri say they've now pulled five fimil -- families out of the rubble following Sunday's tornado. The storm also destroyed a hospital. The tornado killed at least 89 people.

In Pakistan, officials say a Navy base in the coastal city of Karachi has been, "cleared from the terrorists," in their words. There was a fierce gun battle that broke out on Sunday night, after Taliban militants stormed the compound. At least 10 Pakistani troops were killed.

Manchester United's Ryan Giggs has lost his battle to keep his name out of the media. Giggs was identified by a member of parliament at Westminster. He had a so-called super-injunction over an alleged affair that he had with a reality TV star, banning the use of his name. A court order restrained the media while the information flowed freely on Twitter and that set off the debate over the UK's privacy laws.

CNN has taken to heart the plight of those involved and suffering from human trafficking, slavery and sex tourism. This week it's the turn of QUEST MEANS BUSINESS to shine the light on this nasty unsavory matter. Our attention is on travel and tourism a part of the Freedom Project. The Project itself is a year long initiative. In terms of this program, you will know, of course, that we are very at home of where we deal with travel and tourism issues. So it was appropriate that we took it to heart for the Freedom Project.

I first became aware of how travelers -- and that's you and me -- how we can have an impact for the worst on these incidents when I saw this clip a few years ago.



It's a hidden crime.

It's happening all around us.

Open your eyes to human trafficking.

QUEST: The message from that public service announcement was, of course, that as travelers, business and leisure, we all need to keep our eyes open and see what is in front of us and take notice of what's happening.

Well, this week, we'll be showing you how we can travel responsibly, how we -- you and me -- can recognize exploitation and, most important, what we can do about it.

The travel and tourism industry one of the most profitable, one of the most luxurious, one of the most desirable and what you should know about how to deal with these issues. We will be looking at what the companies are doing, the airlines, the tour representatives, the hotels. These things happen under their very nose.

What can they do to actually make sure we put an end to it?

And, of course, government -- government action preventing abuse. Tourism growth has enabled international travelers easy, affordable access to potentially vulnerable communities -- Cambodia, Vietnam and the like; those that are experiencing high levels of poverty, in some cases, in the continents. The debt levels of low inflation and education.

What are countries doing to make sure communities reap the economic benefits of travelism and tourism but do not become a magnet to those who would otherwise take advantage of it?

We're going to start by looking at one of the most disturbing aspects of human trafficking, the exploitation of children for sex -- sex tourism.

Thailand's Health System Research Institute estimates that 46 percent of the country's sex workers are children -- 46 percent. From Chiang Mai in the north of the country, our correspondent, Dan Rivers, now reports on what's been done to help them.


DAN RIVERS, CNN CORRESPONDENT: (voice-over): The police in Northern Thailand are breaking a child sex slavery ring. In this house in Chiang Mai, they find nine boys aged 13 to 18 years old. A Buddhist monk is among those who's admitted abusing the children. Police footage shows him in possession of several fake guns. Experts working the case say he and another Thai man brought boys, held them prisoner and then sold them to Westerners for sex.

RONNASIT PROEKSAYAJIVA, COUNTER HUMAN TRAFFICKING UNIT, THAILAND: They are scared of them. They don't have the ability to go anywhere. They don't have the ability to escape. So they just wait there, be in there to for help.

RIVERS: Ricky Tan offered that help, taking in one of the boys to his orphanage. He shows me where he lives now.

RICKY TAN, DIRECTOR, CARE CORNER ORPHANAGE FEDERATION: And so this is Rainbow Home, which is for boys who are HIV positive.

RIVERS: The boy on the left contracted the disease after years of sexual abuse. He's just one of 58 children here still too traumatized to talk about his imprisonment. Many are sold to traffickers by those they trust the most.

TAN: Usually it's the family or the mother or the -- if -- if the child has got no parents, it would be the uncle or the aunties that will be negotiating and -- and sell the -- sell the child for -- to anyone.

RIVERS (on camera): Orphanages like this plug a vital gap in child protection in Thailand. They keep vulnerable youngsters off the streets, in school and out of the hands of the traffickers.

(voice-over): The problem of child trafficking is huge in Thailand. This is a police raid on a karaoke bar in Subhanpura, where five girls from Laos were rescued. The police have covered their faces because one is just 13 years old. They were sold to this bar for $300 each.

Paveena Hongsakul has crusaded to stop sexual slavery for 20 years and says the trade is spreading.

PAVEENA HONGSAKUL, CHAIRWOMAN, PAVEENA FOUNDATION: But now, Thai -- Thai girls are forced to be prostitution in neighbor -- neighborhoods by the militia for (INAUDIBLE), you know, are some of the places that (INAUDIBLE) some things. We are -- we're very upset in our -- these cases because they are so young.

RIVERS: The Thai police say they are making progress.

UNIDENTIFIED MALE: Put your hand away, please.

RIVERS: Arresting those who buy children for sex, like this Swiss man who bought two boys from the Chiang Mai trafficking ring. When they raided his house, they found several half naked boys.

Gauging the true scale of the problem, though, is difficult. Estimates of the number of child slaves in Thailand vary from 10,000 to 200,000 -- part of a vast criminal industry which treats children as commodities.

Dan Rivers, CNN, Chiang Mai.


QUEST: The leader of that ring was sentenced to 84 years in prison for human trafficking and sexual abuse. That sentence was hard, because the judge has said he'd cooperated with investigators and the court.

The monk, who has been expelled from the clergy, received a 21-year prison sentence for trafficking and sexually abusing underage children.

So the Association of Southeast Asian Nations, ASEAN, says its own areas has progressively hit high levels of child sex tourism compared to the rest of the world. And this map will show what I'm talking about.

In Cambodia, police are working together with U.S. authorities to stop children from being exploited by the American sex tourism industry. It's a in -- it's an initiative that's called Operation Twisted Traveler. And it's run by the U.S. Immigration and Customs Enforcement, the help from NGOs, Cambodian authorities and the U.S. State Department.

They want to make it clear that pedophiles in the U.S. can't use foreign shores as safe havens to abuse children.

Now, John Morton is the director of U.S. Immigration and Customs Enforcement.

Director Morton told me that working across borders to clamp down on abuse is no easy task. And, importantly, it's a task that's made easier, frankly, with our help.


JOHN MORTON, DIRECTOR, U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT: It requires tremendous amounts of investigation, and, obviously, a very close working relationship with the local police force, because you're investigating in another country. You're investigating people who don't want to be caught and for whom the penalties are very severe if they do.

QUEST: And yet that is also reflected in -- you know, there have been some successes, as -- as we were seeing, but relatively low numbers of prosecutions and even fewer convictions.

MORTON: Listen, it's hard work. You're dealing with individuals who don't want to be fined -- found, who are intentionally abusing small children who can't speak up for themselves or go to the police or help with investigators. And most domestic laws don't reach this kind of behavior, which is why the United States is actually fairly unique in this area. We assert extra-territorial jurisdiction over our citizens going overseas to abuse and assault someone else's children. And, you know, rightly so, and with fairly significant penalties, up to 30 years. We've had about 90 successful prosecutions to date in the last eight years. And we're going to continue to go after these people wherever they are, no matter how much it costs and how long it takes. And, as you note, it -- it's difficult work. It's hard work.

QUEST: Right.

MORTON: But when you're dealing with -- with child victims who can't speak up for themselves, that's what you've got to do.

QUEST: And yet the -- the interesting part of this is that your aspect of it, if you like, the criminal investigation -- whatever success level it has, it could be bolstered if everybody else kept their eyes open and was more aware of it, particularly fellow travelers who may suspect what's going on around them. That's core.

MORTON: That's absolutely critical. We don't generate the vast majority of the leads in these cases. We get them from non-governmental organizations, from people who are paying attention on an airplane and notice that a child is traveling with someone that they really shouldn't be traveling with, who see something amiss and report it to authorities or to a group that specializes this -- in this kind of work. And then we get involved.

QUEST: OK. Now, let's just say, so I'm sitting on a plane or I'm in country down -- down route and, you know, one's making polite conversation or you're walking through a market or you're in the hotel lobby and you see something going on that you're pretty sure is -- is not decent and honest in that sense.

What do you do?

MORTON: You contact the local authorities and you can also contact the many local non-governmental organizations that are trying very hard to investigate these kinds of people and let them know what's going on, let them know what you saw, and they can take it from there.

QUEST: How can you tell our viewers watching globally that this is something they need to be aware of and to take part in -- you know, every one of use who's a business traveler or a leisure traveler has a duty, in some human sense, to get involved?

MORTON: Well, let's start with that right there. You've hit it on the head.

Listen, why is this important?

We are not talking about some ordinary crime. We are talking about the assault and abuse of small children, as young as three or four years of age, usually in circumstances of grinding poverty, very difficult cultural conditions. And if they don't speak up, chances are the crime is going to go uncovered and that child's life is ruined. They need to say something. They need to allow us to get in there and investigate and put these people away.

I can tell you, we've done a number of these cases. Unfortunately, they often invi -- involve prior sex offenders who are traveling overseas in the belief that they're going to be able to escape the domestic law enforcement regime, say, in the United States or in Europe, and literally get away with abusing someone else's child.


MORTON: And we all have to stand up and vindicate those children, because they can't stand up for themselves.

QUEST: I mean I do feel the need to -- if I may just push you one point though, because I can hear some of my -- you know, some people would say, look, we fully understand what you're seeing on this truly heinous crime, but if you're merely talking about a business traveler who decides to engage in a bit of prostitution, goes and gets a call girl, an escort girl for the night, that's not your remit, is it?

That's not what you're concerned about?

MORTON: Not at all. What I'm concerned is the sex offender, the pedophile going overseas and paying someone for the opportunity to sexually assault a 5 -year-old, an 8 -year-old, a 10 -year-old, a 12 -year-old, young boys and girls. And, sadly, that's what's going on in places like Cambodia, Thailand, the Philippines, Central America. And everybody has to do their part to stand up for these children. It -- these are very, very difficult crimes...

QUEST: Right.

MORTON: -- to uncover and they're going on all over the world.


QUEST: Our Freedom Project coverage is going to be about more than sex tourism. It's also about the exploitation of workers and labor that we see when we're on our travels around the world. And tomorrow, I'll be talking to Taleb Rifai, the secretary-general of the U.N. World Tourism Organization, and a good friend of this program, about how we can all make sure, when we are traveling, that our trip is an ethical one.

After the break, I'm back with more.


QUEST: All this time, the group supposed to be untangling the mess is still leaderless. I am, of course, referring to the IMF and the European sovereign debt crisis. On the day nominations opened for the IMF's top job, the main candidate says talk of her taking the helm is, frankly, premature. Christine Lagarde is now playing down speculation that she will replace Dominique Strauss-Kahn as the Fund's managing director. That's according to A.P.

Madame Lagarde has been the consensus choice for those hoping another European gets the job. And they are hoping that if they move fast enough, well, no one will really notice and she'll get the job before it's all done and dusted.

The prospect is far from certain. In the last 24 hours, a surprising new contender has emerged, Mexico's central bank governor, Agustin Carstens. He may be a known compared to Lagarde, but Mexico is officially endorsing him and that makes Carstens one of the leading candidates from an emerging market nation.

CNN has exclusively obtained the open letter sent by Dominique Strauss-Kahn to his staff.

Nina dos Santos has more.

It's an emotional letter from Mr. Strauss-Kahn. And it's very much about the work of the Fund.


Let's talk about some of the language, Richard, that he uses in this particular letter. It's actually very long. I did a word count on it just now, 656 words long, this letter is.

It talks about how this is a very painful time for his family, how he's living a nightmare, one that he doesn't want the burden to be shared with the Fund. And he also said, for that reason, he has to go.

He speaks of profound sadness. But as you just said, he took at least two paragraphs to stress the good work that he'd tried to implement during his time at the Fund to try and broaden things out to the European markets and, also, the eurozone sovereign debt crisis.

QUEST: All right. Barely is he gone and the skeletons are coming out of the closet, though.

DOS SANTOS: Yes, it's quite interesting. That's one thing that we should be talking about, as well, is that, you know, the scandal surrounding Dominique Strauss-Kahn, it seems, has prompted a larger debate within the corridors of power and, also, the lower echelons in the IMF. I've actually managed to get my hands on another series of e-mails sent between many female staff members. This was prompted in response to an article that "The New York Times" came out with just on Thursday...

QUEST: Wasn't it fundament...

DOS SANTOS: -- of last week.

QUEST: -- wasn't it fundamentally saying, what, that it's a sexist culture, that it's a harassing culture?

What's the core of their allegation?

DOS SANTOS: Well, let's talk about this article that "The New York Times" came out with. I mean it -- it more or less gives you the clue in the headline here. It says, "At IMF, Men on the Prowl, Women on Their Guard." Now this has prompted a furious response by many economists, female economists, inside the IMF.

But according to a number of the e-mails that I've managed to get my hands on and seen, they do say that, quote, "It would be naive to suggest that the atmosphere there wasn't a male-dominated atmosphere."

And just in response to all of that, the IMF itself, earlier today, actually said that it's going to be raising the number of -- the percentage allocation of women in senior management positions by about 10 percent before the year 2014.

So, clearly, something on the agenda -- Richard.

QUEST: Is there -- the -- the question that everyone is asking, or that I'm asking, is, is there a cultural harassment, a sexual harassment culture, discrimination of the IMF?

DOS SANTOS: Of course, we can't make those kind of allegations ourselves, can we, Richard...


DOS SANTOS: -- because we don't actually work there. But what we can say is that according to some of these e-mails I've got, it does seem to suggest that they are talking about the -- the statistics on gender, speaking to themselves, really. That's what one of the other e-mails says.

I should also mention, though, that this is the reaction from the IMF spokesman. He says, we are, quote, "not satisfied with the level of diversity in senior management"...


DOS SANTOS: -- "positions and we're working to improve this."

So, you know, if you believe that, that's his (INAUDIBLE)...

QUEST: Well, if Lagarde gets the job, they'll soon find out about diversity.

All right, many thanks, Nina.

Now, the spotlight, that article that we were just talking about, you'll want to read it yourself. The article is titled -- the article, "Men on Prowl and Women on Guard." It's about the culture between men and women at the IMF and you can see it yourself. I've posted it about And you can make your own judgment about whether or not you think there is a culture.

We'll have a break.

I'm back after a moment.


QUEST: Executives at Goldman Sachs could be in line for some tough questions from the U.S. government. "The Wall Street Journal" says the Justice Department is after details of Goldman's mortgage business.

Maggie Lake to spoke to an author who says the problem starts at the top.


LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: I didn't always live on this per -- on this perch.

MAGGIE LAKE, CNN BUSINESS CORRESPONDENT (voice-over): He is the public face of one of the most feared firms on Wall Street and a lightning rod for controversy. Lloyd Blankfein's five year tenure as CEO of Goldman Sachs has brought the bank record profits, but also the scrutiny of federal regulators, who are investigating whether the firm lied about its role in the U.S. housing crisis.

With the stock down 17 percent year-to-date, some say it may be time for Blankfein to step aside.

WILLIAM COHAN, AUTHOR, "MONEY AND POWER": It's not an operational problem, it's a public relations problem. And sometimes to solve a public relations problem, you have to change the channel at the top. And that's Lloyd's problem at the moment.

LAKE: William Cohen, author of the brand new book, "Money and Power: How Goldman Sachs Came to Rule the World" spent months with Goldman insiders and says the firm has a glaring blind spot.

COHAN: I think that they have completely failed to tap into the zeitgeist here, in other words, what people are so angry about and their role in that, as being an investment bank on Wall Street. Don't forget, this was a self-inflicted wound that happened on Wall Street, did not have to happen. So Goldman is a part of that. I don't think they believe and I don't think they necessarily did anything differently than other firms.

LAKE: They won out.

COHAN: But they were the winner. They came out the best. They have historically had the smartest people. And they were certainly clever to see the mortgage meltdown coming and do something about it, which every other firm didn't do.

LAKE: Would an -- an acceptance of some sort of responsibility have diffused all of this trouble for Goldman?

COHAN: Absolutely.

LAKE: Have they all done so well and made so much money that they don't know what it's like to live in the rest of the U.S.?

COHAN: I think that...

LAKE: Because that's what people felt like.

COHAN: I -- I think there's a real element of that. I mean, they like to get people when they're young and unmolded, who are ambitious, aggressive, team players, you know, great athletes, great students. And they like to indoctrinate them in the Goldman way.

LAKE: So they're -- they're all...

COHAN: They...

LAKE: -- they've all drank the Kool-Aid...

COHAN: Absolutely.

LAKE: -- and that's (INAUDIBLE).

(voice-over): Goldman Sachs continues to insist it acted lawfully and says it is cooperating with the authorities.

Cohan says despite this rough patch, this episode will not permanently damage the firm.

COHAN: You could go to anybody at JPMorgan right now and said, do you want to be -- go to Goldman?

Do you want to be a partner at Goldman?

They'd leave in a nanosecond. That's the way it's always been for the last 25 years. And it's still that way, despite the trials and tribulations that's going on at the top of the firm.


QUEST: Maggie Lake.

A Profitable Moment in a moment.


QUEST: Tonight's Profitable Moment.

This week's QUEST MEANS BUSINESS focuses our Freedom Project work on the world of the traveler. Whether for business or leisure, many of us love traveling the world and the passion to see new cities, experience new cultures. Just look at this program tonight, where we've taken you to Tianjin in China and to Thailand, as well.

It's also a chance for us to keep our eyes open against those who travel for illegal purposes such as child sex tourism and perhaps keep ourselves aware for all forms of exploitation. It may be in our hotels, where we see staff who are paid badly and treated even worse. We may find child labor in the markets where we buy souvenirs.

Travels take us to parts of the world with magnificent scenery, but we mustn't be blinded to the horrors of slave labor, cruelty and poverty inflicted on others. Like you, I love travel, but I don't want it to be at the expense of somebody else's life.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

"PIERS MORGAN" is after the news headlines.