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QUEST MEANS BUSINESS

Butcher of Bosnia Captured; Interview With CEO of Heinz

Aired May 26, 2011 - 14:00:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Ratko Mladic captured at last, after 16 years in hiding. EU President Barroso says it makes it easier for Serbia to join Europe.

Also tonight we'll hear from the chief executives of Heinz, ALCOA, and Qualcomm, as you can tell, it is a busy hour. I'm Richard and I mean business.

Good evening.

As one door swings shut on Ratko Mladic, another opens for the country, Serbia; tonight the man dubbed the Butcher of Bosnia is in Belgrade preparing to face a war crimes court. Mladic is accused of war crimes, including genocide and crimes against humanity. And because of the arrest, Serbia is one step closer to gaining entry to the European Union.

Mladic was captured in Lazarevo, a village just about 60 kilometers from the Serbian capital. He was living under a false name, Milorad Komadic (ph). Now Mladic is accused of involvement in the murder of 8,000 Muslim men and boys in Srebrenica in 1995. It remains one of the worst atrocities, one of the darkest moments in Europe since the Second World War.

The arrest comes on the same day that Baroness Catherine Ashton, Europe's foreign policy chief is in Belgrade. Our Correspondent Atika Shubert is with me.

We need to know more about the arrest. The circumstances under which it took place. Was this a-was this like Karadzic or even bin Laden? You know, man living in the middle of where everyone could see him and knew who he was.

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Well, he was in quite a remote village, weren't many people there, it now appears. He did have some relatives there that do seem to have been sheltering him. Serbia media reports have been coming in and, in fact, the minister of labor has said on state TV that he was actually armed with two hand guns. But he did not resist arrest. He went quietly.

(BEGIN VIDEOTAPE)

SHUBERT (voice over): The world knows Ratko Mladic like this, a hardened military commander, and an alleged war criminal, indicted for genocide by the International Criminal Court.

But this was Ratko Mladic in hiding in Serbia, dancing at a wedding, a christening, taking a snowy walk in the country. Sarajevo Federation TV aired this video in 2009, saying the video clips dated from as recently as 2008, when the Serbian government was supposed to be hunting him down and handing him over to the International Criminal Court.

Sixteen years after Mladic's indictment, he has finally been arrested by security forces in Serbia. But why did it take so long? And where was he all these years. Serbian President Boris Tadic offered few details.

UNIDENTIFIED MALE: Today we closed one chapter of our recent history that will bring us one step closer to full reconciliation in the region. I believe that every other country must be responsible for closing their own chapters. All crimes have to be fully investigated and all war criminals must face justice.

SHUBERT: Mladic is wanted for the siege of Sarajevo, and the massacre at Srebrenica, where almost 8,000 Muslim men and teenagers are believed to have been killed. For those international forces that tried to put an end to the bloodshed in the Balkans, the news was welcome.

The mixture of great pleasure, relief-well, and why do I say that? Because hopefully Mladic's arrest was the last outstanding, unfinished business from that dark decade the Balkans had to endure, in the `90s. I hope a line can now be drawn under all of that.

SHUBERT: But the wheels of justice turn slowly. Former Yugoslavian President Slobodan Milosevic was handed over to the ICC in 2001, after he was deposed from power, but he died of a heart attack five years later; his trial was never completed.

Radovan Karadzic was captured in 2008, living as a new age guru, disguised with a beard and a completely new identity. But his case stalled at the ICC when he refused to show up to court. He didn't face is first trial witness until April 2010, and the case is still ongoing.

Serbia has promised to expedite Mladic soon, but has given no time frame. There is an incentive, however, for quick delivery. Mladic the fugitive was the main stumbling block for Serbia's succession into the EU.

UNIDENTIFIED MALE: They do deserve credit, and particularly President Tadic. And he has been very strong on this issue. And he has always understood, too, that there would be no EU speeded up entry into the European Union, until General Mladic was apprehended and was in the Hague. So, I expect to see him in the Hague very soon, and I think that justice will then be done, and not before time.

SHUBERT: For victims, and their families, justice for Ratko Mladic may finally be on the way, better late than never.

(END VIDEOTAPE)

QUEST: If we take a look at the-what happens next. He goes to the Hague, and a process begins. But as your report makes clear, it is a long winded process.

SHUBERT: It is a very long-winded process, just at the ICC. And first he has to get to the actual extradition in Serbia. The good news is he is already at that special war crimes court, in Serbia, with a hearing with a judge. So clearly Serbia is trying to push this through as quickly as possible.

QUEST: Is it fair to say. Serbia now wants him out the door, in the trial, off their backs so they can move forward with the EU membership?

SHUBERT: Yes. I think that is very clear and President Boris Tadic made it very clear in his speech today that this is the way forward for Serbia.

QUEST: But then this will raise a very difficult question, could they have got him sooner? Was there something a quid-pro-quo, that has allowed it to take place now?

SHUBERT: Well, this is the inevitable question. And this is what a lot of analysts are asking. But in respect to Tadic, he can say, well, I can only control what was in my administration for the last two years or so. So, that is what the president is saying. But could it have happened sooner? A lot of people say yes.

QUEST: Atika Shubert, keep watching. Many thanks, indeed.

Now, Ratko Mladic has been on the run since 1995. He was indicted for war crimes, including genocide and crimes against humanity. He was in hiding in 2000, when the former Yugoslav President Slobodan Milosevic was removed from power. And the following year Milosevic, as you will remember, was of course handed over to a U.N. tribunal.

2008 saw the capture of Karadzic, the Bosnia-Serb political leader and Mladic's actual boss. Karadzic is currently on trial. It is a long trial that is taking place at the Hague. Now, last year, Serbia offered $40 million for information leading to the arrest and capture. The reward, we don't know yet-I don't believe, whether or not reward played a role in his final capture today.

The failure to capture was so seriously undermining Serbia's efforts to join the EU. Last week, the Commissioner Jose Manuel Barroso told Serbia, time was running out to make crucial changes. Today, with the arrest of Mladic the EU enlargement (ph) commissioner said, a great obstacle to membership has been removed.

All this takes place while the leaders of the G6 are getting underway for their conference in Deauville in France. Brianna Keilar is our correspondent covering that.

I mean, they have got many items on their agenda, but the arrest of Mladic is, I suppose, a welcome-a welcome gift at the start of the proceedings?

BRIANNA KEILAR, CNN CORRESPONDENT: Hugely welcome, Richard. And the response is so overwhelmingly positive. We heard earlier on today from White House officials who said they were delighted. And then President Obama put out a statement calling this justice. He said that the U.S. is recommitted to reconciliation in the region. We heard from Prime Minister David Cameron of the U.K., he said-he issued a congratulations to the government on this capture. And we heard from French President Nicolas Sarkozy; he said this is very good news.

So, you can see the response there, very positive. This really certainly does pave the way for Serbia to seek entry into the EU, which of course would still take some time, for sure. But this was really the single biggest obstacle, so much suspicion that the Serbian government had not been doing enough to capture Mladic. It may even have been harboring him. So the response here, Richard, no surprise, very, very positive.

QUEST: So President Obama, this is in some ways, twice in as many months. You know, whether bin Laden and whether the Pakistanis had turned a blind eye to bin Laden's presence so close, and now Mladic. Do you think that-from the U.S. point of view, they will be prepared to basically ignore what might be obvious in the case of Serbia?

KEILAR: You know, I think the difference here, because the similarities between those two situations certainly struck me. But the difference that is obviously is so stark, and really sticks out, is that the U.S. went into Pakistan to find Osama bin Laden, without even telling Pakistan. And here you have the Serbians, who have done this, themselves. So, certainly a lot of criticism, but I think the sense here is that because the Serbians did it themselves that you are getting these congratulations, not just from President Obama, but from other leaders, as well.

QUEST: In a word, in a sentence, a paragraph, how would you sum up what then will be the key agenda point for the G8 now that they've got this out of the way?

KEILAR: Libya, I think that is really they key agenda item. Some European allies wanting the U.S. to do more. And the U.S. asserting that it is doing everything that it can in a myriad different kind of ways. And also the Arab Spring uprising, looking for economic support, certainly the U.S., in getting some support, it appears from European allies to get some money into the region, including Egypt and Tunisia.

QUEST: Brianna, many thanks, indeed. Brianna Keilar joining us from Deauville in France. And we'll be hearing a little bit later in the program from the U.S. undersecretary of State, Bob Hormats, on exactly what the U.S. hopes will come out of the G8 as it relates to the Arab Spring.

Our business agenda is neigh, after a short break. Heinz has a record-breaking year. The chief executive will be telling me why. And more importantly, the emerging market factor. In a moment, after the break.

(COMMERCIAL BREAK)

QUEST: The food company Heinz says strong growth in emerging markets (UNINTELLIGIBLE) to record sales, almost $1 billion in profits last year. Today Heinz announced it net income grew 14.4 percent in the last fiscal year. It is a record. Now the Chief Executive William Johnson puts that down to the growth in markets like China, India, Russia, Indonesia.

Classic-it's a classic emerging market play. They helped drive overall sales by 2 percent, $7 to $10.7 billion. It means Heinz is also raising its dividend from 12 cents, from $1.8 to $1.92.

The Chief Exec William Johnson joins me now, live, from New York.

Good to see you, Mr. Johnson. Kind of you to be with us.

WILLIAM JOHNSON, PRESIDENT AND CEO, HEINZ: Good afternoon, Richard.

QUEST: The results you've got, and you are moving more production and more distribution to emerging markets, the balance is shifting and your company is evidence of it.

JOHNSON: Well, there is not doubt about it, there are 6.7 billion people outside of the United States, and 6 billion in the emerging markets, and that is really where the growth is. And you have two choices, you can either fight it or you can join it. And we choose to take advantage of it and I think we are well-positioned, certainly relative to most of our peers.

QUEST: And yet, at the same time, you have, of course, a dollar question, a currency issue, which always affects-you know, on a single bottle of ketchup, a dollar doesn't-the currency doesn't matter. But in the volumes that you are dealing with, it most certainly does.

JOHNSON: Well, it makes a big difference and with 65, 66 percent of our business this year, outside the United States, currency has a huge impact. And obviously the dollar has been moving in the right direction for us probably not for the U.S., but certainly for the Heinz Company, and I think you will continue to see the dollar weaken relative emerging markets, because that is where the economies are going to be the strongest. So, I think overall, we are well-positioned to capitalize on whatever direction the currency chooses to go.

QUEST: That is a very-it is a very comfortable position to be in. But let's just pause and talk about the rising price of raw commodities. Agricultural products, the sort of food pain that is now being experienced; what is driving it? Is it speculators? That need to be regulated?

JOHNSON: Well, I think there is a big debate on what I termed personal inflation, which is fuel, and commodity costs that lead to higher food prices. And I think we can debate whether it is cyclical or structural. I personally think it is more structural, as more meat consumption is occurring around the globe; as it is more difficult to grow in some of the emerging markets, in terms of water availability and logistics. And in terms of dietary changes that are occurring as the middle class emerges in these markets. So, I think you are going to see structural changes over time. Having said that, ultimately, in the emerging markets, wages will equilibrate with these costs. So, actually, I think, longer term the impact is probably going to be greater in the developed economies, which are not growing as well. But clearly at a short-term basis it is an issue we all have to be very careful about.

QUEST: Chief execs tell me time and again, forget China as being a low-cost production base. It is a tough-you know, getting and keeping top talent is difficult. And, in fact, now if you are talking about low-cost production you are not looking at China. Is that your experience?

JOHNSON: Well, I think it is a little different for the food business. We still feel China is a low-cost producer, but we provide most of our products on a localized basis. But there is not doubt the labor costs are escalating in China. And I put China somewhere between a classical emerging market and a classical developed market as their economy continues to grow and their infrastructure gets build out. I think they are probably far more developed than say in Indonesia, or Vietnam, or a Russia, or India, for example. So, I think I put them somewhere in between, but there is no doubt labor costs are accelerating and we are all going to have to wary of that as we look for production alternatives, to the higher more expensive developed markets.

QUEST: Let me take you back to your home country, whether it is the budget debate, whether it is the unemployment rates at 9, and change, do you fundamentally, Sir, feel that the U.S. economy is on the right track?

JOHNSON: No, I think the U.S. economy is not doing as well as it could. I mean, I think the unemployment report came out this morning. And it was not as good as we would like to see. The GDP at 1.8 percent was below what economists had said it would be, at 2 percent. So, no, I don't think the U.S. economy is robust in any sense. And I'm concerned about employment going forward.

I'm also concerned about the fix we find ourselves in from a debt standpoint, versus the need to possibly create new sources of revenue while also reducing expenses.

Having said that, the U.S. economy, fundamentally is a sound economy, but I think over time you are going to see the emerging markets occupy say five or six of the top 10 spots, and so I think all of us have to acclimate to that. But nonetheless, the U.S. economy is not where it needs to be and I hope we see some changes coming down the road that will improve the environment for all of us.

QUEST: Mr. Johnson, your results clearly prove the point that you've just been talking about. As always it is wonderful to have you on the program. And please come back again to talk more about this.

Bill Johnson there, from Heinz, joining me from New York.

Heinz could soon face paying more for its tin cans, just another example of the rising prices, if you believe forecasts from ALCOA, the aluminum giant. Maggie Lake has been talking to the chief executive of ALCOA, Klaus Kleinfeld. And he says the need for metal-well, it is not surprisingly-the need for metal, only going to grow.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT (voice over): It is in everything from planes to cans to our kitchens. Aluminum may not be a precious metal, but it is in demand.

VINTAGE AD, ANNOUNCER: The aluminum from the nation's first and leading producer.

LAKE: ALCOA has been a major player in the industry for over 100 years.

VINTAGE AD, SINGERS: ALCOA and aluminum know the way.

LAKE: As CEO Klaus Kleinfeld says the need for aluminum is only going to grow.

KLAUS KLEINFELD, CHAIRMAN AND CEO, ALCOA: We saw a growth rate worldwide of 13 percent last year. In our market we project 12 percent this year. We actually believe that demand, worldwide, is going to double until 2020.

LAKE (on camera): Does that forecast mean that you are optimistic about global growth. Because again, you know, some places doing well, but there is a lot of concern that it is slowing, even in those fast-moving emerging markets.

KLEINFELD: Yes, I am optimistic. We actually see that in pretty much all of our end markets. A lot of them building and construction here in the U.S. and in Europe, we have seen growth. And we will continue to see growth there. And I have heard this kind of concerned about growth in the emerging markets, I mean, for a long time. I have just spent the whole week, last week, in China. And convinced myself, again, with my own eyes that things are pretty good. And the numbers for the first quarter came out, 9.7 percent growth in China. I mean, whoever considers that a slow down.

LAKE: Right.

KLEINFELD: OK, I can live that slowdown.

LAKE: When you look at ALCOA, through the financial crisis and the difficult times, you have gotten a lot of credit for doing great cost cutting. But it seems that investors are a little bit worried about demand. What is your outlook for sales?

KLEINFELD: Well, we are pretty positive on what we see out there. We see that coming through pretty much a lot of applications that we are growing. Applications that we are in today, already, from aerospace to transportation, but then when you look at what is going on in the automotive industry. I mean, the automotive industry, now here in the U.S. has pretty strict emissions regulations. What are people going to do? I mean, they have to find a way how to make the car safe, but at the same time, lighter. The material that is the material of choice is aluminum. We know that we can shave off 40 percent of the body weight, 10 percent of the total car weight, which means 7 percent fuel efficiency.

Consumer electronics has been a market that, where aluminum didn't played at all. If you, today, if you go into any shop, around us, we have a couple here. And if you look at how the casings are built for consumer electronic products, from laptops to tablets. You look at those, most of those, actually are cased with aluminum today. And the reason for that is because it really-lot of things come together. It is a nice surface, it is harder, you can slim it down, and it works as a heat sync.

LAKE: Yeah.

KLEINFELD: You know? That is the others, it has a huge functionality and when you put a lot of electronics together in a very, very small place, you have a lot of heat.

LAKE: So, ALCOA has a play on mobility?

KLEINFELD: Absolutely. Absolutely. Absolutely. And it is a big play. It is a big play because you see the average innovation rate on consumer electronics if very fast.

LAKE: Staggering.

KLEINFELD: Staggering fast, but that has an advantage when you are in it. But it also-if you think that if the industry uses the wrong materials, right, what implications this has for the waste that is produced around the world. I mean, I you have an average life cycle of six to nine months, and you throw your computer away after that. Where is the garbage going to god, right? If you can increase the recycling rate-and that is the other beautiful thing about aluminum, it is infinitely recyclable. And it always goes back into original form; 75 percent of all aluminum ever produced on this planet is still in use.

(END VIDEOTAPE)

QUEST: That is the CEO of ALCOA talking Maggie Lake in New York.

In a moment, we'll consider being stuck in second gear, for the U.S. economy, which is clearly not firing on all cylinders. Wall Street is bracing for a long miserable summer. "The New York stock exchange after the break.

(COMMERCIAL BREAK)

QUEST: U.S. economy is slowing down. The U.S. government confirmed that GDP growth in the first quarter was 1.8 percent. The graph really shows it. Not only is that well below the previous quarter's growth. It is almost below most economists predictions. That first quarter would be revised upwards. So the growth is slowing down. It is not growing fast enough, stuck in second gear. And also, you have got to rising inflation in commodity prices. The slowdown in consumer spending is also taking its toll.

What will be a major concern for President Obama is a surprise jump in weekly jobless claims, that are now comfortably 400,000. This is not a scenario that you hope to be looking at, as recovery should be picking up. The mood on Wall Street is that we may be in for a rough summer.

Alison Kosik is on the Street. Whether it is the GDP or the jobless numbers that we have been hearing about, the scenario is not good.

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: No it is not. And you just mentioned two reports. I mean, you think about just sort of in the span in the past two weeks, Richard, I man, durable goods orders down 3.6 percent in April after a 4 percent gain from the month before. We had three disappointing regional surveys on manufacturing last week. The reality is this is really causing big worries that all these downbeat economic reports are going to wind up affecting corporate earnings, Richard.

QUEST: So, the core question, what is going wrong?

KOSIK: You know what, you think about the jobs market. It is not turning around fast enough. Even the numbers we got today we are finding out that people are still waiting on the unemployment line, filing those first-time benefits, filing for those first-time claims. People are still out of work. We still have 13 million people out of work. And I'm not even mentioning the housing market. I mean, you are not going to see an economy firing on all cylinders until the housing market gets out of the doldrums.

And we have also got analysts at Standard & Poor's, Richard, they are predicting that the stock market could be in for a 10 percent correction over the next month. You know, the S&P 500 is already down 3.3 percent from a tie for the year, that we hit at the beginning of May. You know what analysts are saying that we are seeing stocks kind of wrestling with this paradox of rising earnings estimates, and this declining global economic growth. And I have even heard the word "stagflation" being passed around here, every now and then. That is pretty scary, Richard.

QUEST: And, you know, I was just about to take the words out of your mouth, if you take the U.K. that is exactly what it is, stagflation. And you are too young to remember the last incidence of stagflation. Those of us on the wrong side of 40.

(LAUGHTER)

KOSIK: Yes.

QUEST: Alison, good to see you tonight. Many thanks, indeed. One night we'll-in fact, maybe tomorrow well explain to you in case you are not as familiar with the histories of stagflation, which is basically stagnant growth and inflation. And why that is such a serious worry for policymakers and how they will respond.

Now, here in Europe, there was a mixed session. Early gains disappeared as the day progressed. The lackluster numbers from across the Atlantic didn't certainly help. Continued concern for what is happening in Greece pulled down banks across the continent. The DAX saw the worst losses. It was off 0.79 percent. The FTSE was-well, you know, let's not talk about a 0.1 of a percent, 0.2 of a percent. Commodities was the driving factor there.

In just a moment, the "Freedom Project" and our coverage tonight. Fighting the sexual exploitation of children. In a few moments we'll speak to Hilton Hotels about what they are doing and how they are doing their part, in a moment.

(COMMERCIAL BREAK)

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

Serbia media is now reporting the so-called "Butcher of Bosnia" is being transferred to the special court for war crimes in Belgrade, as it's called. It's for a preliminary hearing.

The former Serbian commander Ratko Mladic will eventually be extradited to the Hague. He's accused of the massacre of thousands of Bosnian Muslim men and boys in Srebrenica, the massacre of Srebrenica in 1985 -- in 1995.

World leaders at the Group of Eight summit in Deauville in France have welcomed word of Mladic's capture. The French president Nicolas Sarkozy said the move should open the door to Serbia's inclusion within the European Union. He said Serbia's destiny is to join the EU.

Authorities in the US city of Joplin, Missouri, have now released a list of 232 people missing after last Sunday's devastating tornado. And there could be more missing who are -- who have been unreported. At least 125 people are known to have been killed by the twister as it tore through Joplin. City officials say no one was rescued, and no body was recovered on Wednesday.

Aside from the news of -- from Serbia, today, the G-8 summit has been dominated of talk about how to support the countries in transition after what's known as the Arab Spring. Egypt, Tunisia, and the like.

President Obama is expected to be one of the biggest cheerleaders for plans to offer aid to countries like Egypt and Tunisia. I spoke to the US Undersecretary of State for Economic Affairs, Bob Hormats, who's in Paris for the OECD meetings, and I wondered, the G-8, is it still a group capable of getting meaningful results?

(BEGIN VIDEOTAPE)

ROBERT HORMATS, US UNDERSECRETARY OF STATE FOR ECONOMIC AFFAIRS: First of all, I think the G-20 is capable of making important decisions. For the moment, though, the focus is on the G-8 because, of course, the meeting is coming up in a couple of days in Deauville.

And I think the importance of the G-8 is A, that it is not dead, as you correctly point out. And B, that it really has the capability of coming together to deal with very important issues. The most significant, of course, is the Arab Spring, is dealing with the Middle East and North Africa, organizing in a coherent way, efforts that the member countries of the G-8 can make themselves in cooperation with the multilateral institutions.

And certainly in support of the kinds of reforms that are underway in Egypt, Tunisia, and other parts of the Arab world and the Middle East, also.

QUEST: So, Mr. Undersecretary, what needs to happen? Because in concrete terms, what can the G-8 do to facilitate that Arab renaissance?

HORMATS: It can do several things. One, it can organize economic and financial support for the region in a variety of ways, which will be discussed when the heads of state and government get together.

Two, it can be helpful on trade, helpful in facilitating the ability of these countries to export more and --

QUEST: Right.

HORMATS: Third, it can help to create opportunities for more foreign investment in these countries. As you well know, and I've been there three times in the last month or so, one of the big problems is employment opportunities or lack thereof for younger people, and I think by encouraging investment, supporting investment --

QUEST: But --

HORMATS: -- in small and medium-sized enterprises and working with a multilateral development institution, such as the World Bank, the African Development Bank, the European Development Bank and, of course, the IMF, it can help to deal with their need for capital, but also support their economic stabilization and their desire to create new job opportunities --

QUEST: Right, but --

HORMATS: -- through investment.

QUEST: But do -- does the G-8 also have to turn a blind eye to some of the more egregious law and order issues as the greater good?

I'm thinking first of all, the speed with which many of the former regime have been tried, convicted, and imprisoned. The potential for, of course, the trial of the president Hosni Mubarak and his family. Whatever the legal merits of any of these claims, the speed suggests indecent haste.

HORMATS: Well, I think that the way I would answer that is that the G-8 is really looking at the economic aspects of support for the Arab Spring or the main renaissance, whatever one -- however one phrases it. And I don't think the G-8 is going to be getting into the domestic politics of --

QUEST: But should they?

HORMATS: -- these individual countries.

QUEST: Should they be using, to some extent, the power of the purse to facilitate better governance and transparency throughout the system, is what I'm asking.

HORMATS: Well, I think in some areas, the G-8 will. I think the G-8 is going to underscore the importance, one, of the support it provides, but two, underscore the fact that in a number of these countries, a greater degree of transparency, economic transparency is important.

Dealing with issues of corruption is important. Making reforms that give younger people opportunities is important. The role of women is important. Tolerance for various religious beliefs is important. These are all things that, I think, are likely to come up and are likely to be important items that will be discussed.

(END VIDEOTAPE)

QUEST: That's Bob Hormats, the US Undersecretary of State.

Now, the main news, of course, tonight, as we're telling you about is the arrest in Serbia of the war crimes suspect, wanted, Ratko Mladic, wanted for the 1995 alleged genocide of Srebrenica. He is now to be sent to the Hague after an -- after a preliminary hearing that's taking place in Belgrade about now.

That will be the main talking point, obviously, in the G-8 and amongst leaders, there. What does it mean for Serbia, that Mladic has now been captured? One of the big talking points is that it now frees up the possibility that Serbia joins the European Union faster. It removes a major obstacle.

The president of the EU commission, Jose Manuel Barroso, speaking to me just a short while ago made it quite clear, Mladic's arrest is an important step forward for Europe and Serbia.

(BEGIN VIDEOTAPE)

JOSE MANUEL BARROSO, PRESIDENT OF THE EU COMMISSION: It certainly makes it much more easy now to have progress in negotiations because we have said this to our Serbia friends.

I was there last week, exact on Thursday. I met extensively with President Tadic. I told him it was critically necessary to have this criminal given to the international tribunal in the Hague.

He promised me, promised me privately, and he made a statement, also, publicly, that he'll do everything in his power to get Mladic. Now, they have done it, so I think we can say they are really cooperating with the ICTY, and that's very good news for the future -- European future of Serbia.

QUEST: One doesn't want to necessarily suggest bad faith, but do you think this arrest could have happened sooner?

BARROSO: I cannot say that, really. What is important is that now it happened, and now it's important that Mladic goes to the International Tribunal in the Hague, because there are many victims of his crimes.

QUEST: Turning to the IMF, if we may. Well, it seems within days, the battle lines are starting to be drawn. Christine Lagarde on one side, Augustin Carstens on the other. There may be more along the way. What's your principle argument in favor of Madame Lagarde?

BARROSO: She's great. She has great international experience, she knows about the subject, she has been leading the G-20 at finance ministers' level, she has a lot of experience, she has a real global, economic culture. So, it's a great candidate for the job. That's why I'm happy that she decided to declare that she's a candidate.

QUEST: Right. And is Europe prepared to accept that it may be a non- European that gets the job? And we both know what we're talking about, here. We're talking about the matter of principle, whether or not she gets it is irrelevant, but on the matter of principle, is that now accepted, it might be non-European.

BARROSO: Of course. We said it, and we are committed to it, that the nationality should not be the criteria. But in fact, it should not be a criteria to have someone as executive director, but it should not be a criteria to avoid some European if the European candidate is, as it appears now, the best for that function.

(END VIDEOTAPE)

QUEST: So, let's bring you more details, now, on the arrest of Ratko Mladic, and particularly the latest pictures. Very latest pictures that are into CNN.

Serbian state television has broadcast these pictures of the arrest of war crimes suspect Mladic, he's being escorted by Serbian police to an interview with the investigating judge at the Special War Crimes Court in Belgrade. That's Mladic on the right. Surrounded by police officers.

Now, the very short sequence, just 15 seconds of pictures. Mladic is 69, and he's the one, obviously, as you can tell, wearing the hooded black jacket with the baseball cap. Apparently, he seems to be with a slight limp.

The reports say that when he was arrested, he was with members of his family, and he did actually -- he was armed. There were two arms, pistols, near him. But that, of course -- we're still waiting for further details.

What happens now, of course, is that a process begins. The Special War Crimes Court in Belgrade will have to determine, and probably will, remand him for trial and send him to trial to the Hague.

And there, an entire different, long process will begin. And if anything to do, anything like Slobodan Milosevic or Radovan Karadzic is anything to go by, what we are witnessing tonight is just the start of a multi-year process.

Mladic was arrested north of Belgrade. It was not a situation like with others, with like Karadzic, who had been living quite openly in the community. Here, he had been, perhaps, slightly more restrained in the way he had been conducting his life.

But in any event, the pictures now of the most wanted man in Europe, now in custody.

Businesses have codes for many things, conduct, for example. Now, there's one to protect the most vulnerable people in society. When it comes to the industry that sells dreams and delights, Hilton Hotels us tells us on the Freedom Project why nightmares form no part of their vacations.

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QUEST: The Freedom Project on QUEST MEANS BUSINESS, in which case this week we are focusing on travel and tourism and how, indeed, we must all keep our eyes opening for, not just only sexual exploitation, but also slave labor, indentured service, and all those sorts of practices which need to be stamped out.

On last night's program, you heard us with the co-founder of ECPAT, which aims to end the commercial sexual exploitation of children. ECPAT joined up a voluntary code for travel and tourism for the companies to help the cause.

Hilton is one of the latest to sign up, and Jennifer Silberman is Hilton's Vice President of Global Diversity and Corporate Responsibility. Jennifer joins me from Washington.

We know many, many tourism companies have refused to sign the pact -- the code or are basically ignoring the code or, preferably, preparing to believe it doesn't exist. Why did you decide and why did Hilton decide to sign?

JENNIFER SILBERMAN, VP OF GLOBAL DIVERSITY AND CORPORATE RESPONSIBILITY, HILTON: Well, for us, exploitation and trafficking is really location agnostic, and we realized that any kind of illegal activity poses a risk to our business, poses a risk to our guests, to our team members.

And so, obviously, we saw that we had a responsibility to do what we could in order to minimize that risk. And ultimately, at the same time, be able to provide a safe space for children where this activity wouldn't occur.

QUEST: Is the tourism industry, in some cases, chooses, and I use that word carefully, to turn a blind eye to what is going on, if only because it is an industry that is selling dreams, it's selling beautiful destinations, in many cases. And when you and I start talking about child sexual exploitation, it shines the harsh light on it, doesn't it?

SILBERMAN: Well, right. I mean, again, no -- no company, no industry wants to be associated with any kind of illegal activity, regardless of what it is.

But again, this particular illegal activity is location agnostic, and we look all the time to provide guest experiences, we want this to be a great place to work for our team members, but we also recognize that this activity, like any illegal activity, does pose that risk.

QUEST: Right.

SILBERMAN: And so, for us to be able to do things to minimize that is very important.

QUEST: So, what are you doing to put -- the code is quite -- it's quite vague in many ways. It does rely on people like you to put in place real policies and practices. Tell me some of them.

SILBERMAN: Sure. Absolutely. We put in a policy that absolutely outright condemns child trafficking. We have that in our code of conduct. We're beginning to implement training programs for our team members to be able to recognize the signs, to be able to report those activities as they need to.

And we're working across sectors with other industries, with government, with ECPAT, with other NGOs to bring awareness and understanding to this issue. Because again, we all play a role, and working together, we can all do something to prevent it from occurring.

QUEST: If we move away from the most egregious cases of, say, child sexual exploitation, but if we just look at exploitation of children in labor, in the way in which the manufacturing of cheap souvenirs or garments or whatever it might be, the industries that leech off tourism, where there's bad pay, bad working conditions, downright dangerous conditions. That's part of it, too, isn't it?

SILBERMAN: Well, again, every company has a code of conduct by which they expect their team members to adhere to, their business partners, their suppliers. And Hilton Worldwide is no different.

We have a very explicit code of conduct that absolutely outright condemns child labor, that basically looks at issues as it impacts children. And again, it's across our hotels, across our brands, and so we are very cognizant of the role that industry plays in preventing these activities from occurring.

QUEST: And would you agree with me that the traveler -- I'm on the other side, I check into your hotels -- that people like myself, we have to keep our own eyes open. You can't do it all. The NGOs can't do it all. And frankly, the traveler has to play their role.

SILBERMAN: Absolutely. I think that's a great point, and I think there's a lot of great organizations. In the United States, there's Polaris Institute, there's ECPAT, there's Stop the Traffic, that are really trying to create tools and ad campaigns.

The Demi and Ashton Foundation recently came out with a great campaign educating people on what to look for. And again, we all play that role --

QUEST: Right.

SILBERMAN: -- in being able to recognize those signs and report those activities.

QUEST: Jennifer, if I was wearing my hat, I'd take it off to you for coming on our program tonight and talking about this.

Jennifer from Hilton, because I can promise you this, the number of companies, whether they have the policies or not, but who time and again took our calls, didn't return our calls, or simply didn't want to come on the program and talk about these issues. I promise you, there were many of them, and I applaud those who have signed up and decided to talk openly.

These days, when we come back in just a moment, we're going to completely change direction. We're going to talk about technology and the SmartPhone. It can be just about anything if your computer, your GPS, and now, it'll be your wallet, if Google has its way.

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QUEST: In the last couple of hours, Google has revealed its mobile payment system that lets you use your SmartPhone as a credit card. This is a development, indeed.

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QUEST: It's called the Google Wallet. It stores your card details on your phone, and you can pay at checkout simply by swiping your handset. The scheme initially runs with Citi MasterCards or Google's own pre-paid cards. Eventually, it will open up for boarding passes, tickets, even keys.

They've been promising this for years. Now, it seems to be on the agenda. The Wallet system, says Google, more secure than standard credit cards. It will store the data on a special chip, which can only be accessed through certain approved programs.

Now, Qualcomm is the world's biggest provider of wireless networking chips. Probably the sort of chips that will be used in the very phones. Well, not probably, will be. It'll be making the Wallet and the contact list cash transactions.

The chief executive of Qualcomm, Paul Jacobs, was one of the attendees at this week's EG-8 in Paris, which brought together leaders from government and the tech industry. He told me how the two are working closer together.

(BEGIN VIDEOTAPE)

PAUL JACOBS, CEO, QUALCOMM: Governments have to take -- acknowledge the power of the internet and what it does for individuals to express themselves and organize themselves.

On the other side, you have the incumbent players who are providing the foundations of the internet, and you have the internet players who see themselves as disruptors, and the government has to sort of referee that kind of give and take, as well.

QUEST: When we get the British Chancellor of the Exchequer talking about how many times the UK treasury is attempted to be hacked by people, and you find the Sony situation, with hacking, and you find the privacy questions.

I mean, let's face it, leaders and industry have to grapple with that and, frankly, there are no solutions yet, it seems to be.

JACOBS: Oh, I think that might be a little overstatement. People are working on solutions to make sure that there is both hardware and software that protects your privacy.

But it is also true that going on in cyberspace right now, there is a large, large amount of hacking, whether it's to PCs or to mobile phones, and so, it will, as I said, constantly be about measures and countermeasures. What do the bad guys come up with next? What do the good guys come up with next?

And so, you'll see this continue to happen, much as you see it happen on your computer today. This is a fact of life in cyberspace.

QUEST: If we look at your company, now, Windows phone and Qualcomm, you're very much involved with that. I suppose the core question, Apple, Android, Windows, the market is segmenting, but the also-rans have a long way to run.

JACOBS: The number of companies that are trying to find ways to build a platform that really appeal to the consumer. And clearly, Apple with the iPhone started this big rush by the industry to make things much simpler.

And I think, in the end, consumers are happy because they used to complain about their phone as being too difficult to use. And now, everybody wants the latest gadget. They want a microprocessor, now, with lots and lots of power, better graphics capability.

So, all of these things are good for the consumer because they're getting a tangible benefit out of that.

QUEST: And for your company, though, how do you position yourself so that you are ready to take advantage of the opportunities, but are not so tied to any individual system or device or mechanism that you stand to lose out. It's a challenge for you.

JACOBS: Well, we're in a very good position. We're the number one supplier of wireless chip set, so we have the scale to be able to have people who support all the different operating systems, and we do do that today. We really try and work with the various operating system vendors and make sure that they can get their devices out to market as quickly as possible.

And when somebody comes up with some new idea, whether it comes from Qualcomm or it comes form some third party, we try and be there to support it.

And when we work with the device manufacturers, what always happens is, towards the end of one of these development projects, something happens. They've got to hit their deadline.

And Qualcomm, because we have experience across all these different operating systems, we can put a significant number of people to sit with the development engineers of the other manufacturer and get their projects done. And I think that's a huge competitive strength for us.

(END VIDEOTAPE)

QUEST: And that's the chief executive of Qualcomm. More chief executives than you can shake a stick at on this program.

And if you want to keep in touch with us, well why not tweet and follow on Twitter. The Twitter -- and my name is @richardquest, and I can assure you that I do follow it individually and I follow it myself. There's no raft of people doing it for me.

And, of course, the e-mail address is quest@cnn.com, quest@cnn.com. Again, on this very computer, that's where I'll be reading your e-mails.

QUEST MEANS BUSINESS, I'm Richard Quest in London. Whatever you're up to in the hours ahead --

(BELL RINGS)

QUEST: -- I do hope it's profitable. Stay with us, please. The latest news about the arrest of the former Bosnian-Serbian military chief, Ratko Mladic.

END