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QUEST MEANS BUSINESS

IMF's $500 Billion Plan; World Bank Warns of New Global Recession; Greece Credit Talks Resume; Goldman Sachs Earnings Down in Fourth Quarter of 2011; US Feds Charge Seven in Insider Trading Scheme; Cocoa Trading

Aired January 18, 2012 - 00:14:00   ET

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


RICHARD QUEST, HOST: Hopeful, not confident. Tonight, I speak to the man leading negotiations for the banks in Greece.

SOPA so bad. Wikipedia takes a stand against internet regulation. I'll be joined shortly by the man who founded Wikipedia.

I'm Richard Quest with an hour together, we mean business.,

Good evening. Tonight, the IMF and World Bank both at the top of the news. As one organization sounds the alarm, another's getting ready to race to the rescue.

The IMF and the World Bank both sense tough times ahead for the global economy, and they've made no bones about it, and the prospects of many billions of dollars will be necessary to sort it out.

(RINGS BELL)

QUEST: Join me at the -- in the library and you will see what I mean. The IMF is now seeking to raise $500 billion. It is looking to its membership to raise that amount of money so that in total it can have a trillion dollars of increased firepower.

There's no exact mechanism for how they want to get to this sort of number. They haven't decided whether it'll be ad hoc. What they do say is it probably will not be a general raising of IMF quotations.

In other words, members -- wealthy members will be asked to put their hands in their pockets. One big problem, the United States has made it quite clear there's no more money, especially when most of it's headed towards Europe for bailouts.

Meanwhile, the World Bank, the other Bretton Woods organization, has slashed growth forecasts and warned of the possibilities with further recession. In a damning report, it has lowered growth by the most in three years.

It says global growth will be 5.4 percent, the eurozone will be in recession, advance countries will only grow by 1.4 percent, and developing countries will grow by barely 5 percent, numbers that are down sharply, and they're also worried that an oil shock will cause a hard landing for the economy.

Of course, the big worry both for the World Bank and for others: Greece and the eurozone crisis. Creditor nations have -- creditor banks are now talking with the Greek government and the ministry of finance and the prime minister.

The issue at hand is the haircuts, the amount of debt default -- or the amount of cutback that the banks have to take. Now, we had thought the number was 50 percent, but the banks are seeking a different mechanism, because what the government's saying is that they will actually have to take further cutbacks to reduce Greece's debt burden by half.

Now, sitting at the head of the negotiating table for the banks is the Institute of International Finance, the IIF. In an exclusive interview, its managing director told me earlier today that even though he knows there will be huge cuts and haircuts for banks, he believes a deal could be thrashed out.

(BEGIN VIDEO CLIP)

CHARLES DALLARA, INSTITUTE OF INTERNATIONAL FINANCE (via telephone): I would not say that I'm confident, but I am hopeful that we can reach agreement. We are resuming discussions this evening. I know that both the Greek authorities and we come with common intent of finding common ground.

But this is a complex negotiation. It involves many parties in Europe, international institutions, European institutions. So, it's not just a matter of the Greek authorities --

QUEST: Right.

DALLARA: -- and the private creditors sitting down and finding common ground, we have to find common ground that others can share.

Nevertheless, in spite of those complexities, I remain hopeful that we can reach agreement in the days ahead, Richard.

QUEST: What is the stumbling block? Is it the interest rate? Is it the maturity? I realize you won't want to get me too deep into the weeds of detail, but tell me what the sticking block is.

DALLARA: Richard, the interest rate on the restructured loans is a key issue. We've agreed in principle and we intend to follow through with this, to voluntarily eliminate roughly half of that debt, 50 percent of the total private claims.

The remaining part of it will be 15 percent of it will be paid down in cash, and the remaining 35 percent will be restructured as new loans with very long maturities and very concessional interest rates.

The interest rate on the new loans is a key issue here. Some seem to have a view that we should actually extend the loans at interest rates even lower than what the IMF and the ESFS extend their loans at, and there's not much logic in that, in our viewpoint.

(END VIDEO CLIP)

QUEST: Jim Boulden is here with me to talk more about this. So, we're going to break down what Charles Dallara was saying. It's a rare chance that he speaks, and he's talking to us exclusively, there.

So, he's hopeful but not confident. At this stage, should we be worried of that?

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, I think maybe he doesn't want to say "I'm confident" because he's -- he's on one side, and obviously, we've got all these other players on the other side.

So, hopeful is good, because as of last Friday, I'm not sure we were all hopeful at all that they would even get back to discussing it, but thankfully, they have gotten back to discussing it, and I think they only have days to sort this out.

QUEST: But they are -- the issue is this question of the interest rate versus -- the maturity is going to be 30 years out --

BOULDEN: Yes.

QUEST: And what the difference, of course, is between the face value and the net present value of the bonds going out.

BOULDEN: The way I look at it, if you talk about 35 percent of it being restructured, you're talking about 70 billion euros plus that has to be restructured. At 4 percent, 4.5 percent, 5 percent, there's a big difference between Greece having to pay back 4 percent our having to pay back 5 percent on top of all of that.

QUEST: I'm going to take the banks' point here, there's a big difference from the banks, as well, in the money they'll get back.

BOULDEN: Well, of course. That's the huge deal, isn't it? I mean -- and as you said earlier, if it's more than 50 percent restructured, then they're going to get even less money back. But then the worst part, of course, is that they don't get any of their money back.

QUEST: Let's listen to what Charles Dallara had to say on the question of whether or not Greece actually defaults on the creditors and how they actually get their money back.

(BEGIN VIDEO CLIP)

DALLARA: The creditors are not just concerned about losing their money to Greece. They've already recognized that a substantial portion of that has to be written off. They are concerned, however, not just about what is the value of the remaining claims on Greece, but what happens to the broader stability of the eurozone if there is a default.

I personally believe that there is no such thing as an orderly default for Greece. If they do default, unfortunately, it is likely to be very disorderly and very damaging to the overall confidence in the eurozone's otherwise forward-moving efforts to stabilize sovereign debt problems here.

(END VIDEO CLIP)

BOULDEN: So, "no such thing as an orderly default." It reminds us of Argentina, doesn't it? 2001, when they defaulted on about $80 billion. That was after the pain they had gone through with the IMF and being dollar-pegged, so there are some differences.

But the big difference here, Argentina could go it alone afterwards and suffered a great deal. But Greece is inside the euro.

QUEST: OK. In what he said then, and I'm just looking at the script, "There's no such thing as an orderly default." There's a popular view that Greece should just be allowed to default and get it over with. It's a view that I, perhaps, subscribed to until I actually started reading a bit more about it.

BOULDEN: Yes. When you think of Argentina's example, as I said, $81 billion. Some of the creditors are still chasing that money. Argentina's debt --

QUEST: But from Argentina's point of view, that might have been the best way out of it.

BOULDEN: Yes. No, exactly. I mean, I'm not saying it wasn't. Because they went through the pain first. This is -- and so, Greece has only gone through a couple years of pain. They went through a decade of pain, then they -- of course, they had a hell of a lot more pain after that, but in inflation as well.

QUEST: Finally, Charles Dallara talking on the question of Europe and the promise of what might happen to further countries if Greece does default with the bailout. I asked him if giving up too much on the haircuts would set a dangerous precedent.

(BEGIN VIDEO CLIP)

DALLARA: And European authorities have not been 100 percent clear about their intentions going forward, here. As far as we're concerned at the institute and representing this group of creditors, Greece really is a unique situation here. There is no other country in Europe, no other troubled debtor.

I believe that there is a concern, it's a latent concern, and I believe it would be very useful for European authorities to definitively make clear that they do not intend to pursue this kind of approach in other sovereigns.

QUEST: That battle is between those who say the creditors should take a big hit, those who say, no, they lent to sovereigns, and sovereigns is supposed to be as good as it gets. And both sides have basically woken up, haven't they?

DALLARA: Well, I think that's right, Richard. Every sovereign in Europe goes to the market regularly, and there is no compelling requirement that investors -- banks, pension funds, insurance firms, individuals, whomever -- show up and buy that sovereign debt. They have to believe that it is a safe, secure, and attractive investment.

So, it is in every sovereign's interest throughout the eurozone and throughout Europe to resolve this in a cooperative manner so that investors in sovereign risk have a sense of confidence that their claims are solid.

(END VIDEO CLIP)

QUEST: Jim, let's just talk more generally, now. What Dallara is saying is that they will give ground, but they won't give too much ground. They know they're going to have to take a haircut, but they don't want to take a bath.

BOULDEN: No. And a 50 percent -- if you remember back in July, it was going to be 35 percent haircut, then all of a sudden, it became a 50 percent haircut. I think most people in this system already know that 50 percent isn't going to be enough anyway, but you've got to get this deal done first in order for Greece to get that second huge bailout agreed in October.

But it has to be seen as voluntary. This is what's so fascinating about it, because this whole idea of a credit default swap trigger being -- and the default --

And I've got a lot of information, I'm going to get my head around it, that the thing is is that if you -- if you make it voluntary and then have some of the ones who disagree come in there and be non-voluntary, do they then trigger a credit default swap? Then that opens a whole new can of worms and it's very -- very interesting to see how that process comes about.

QUEST: How -- how -- look, I can hear some of our gentle viewers saying, how can it be voluntary if you stick a gun to somebody's head and say, "Take this haircut or you'll get nothing"? Where's the voluntary nosh --

(CROSSTALK)

BOULDEN: The man you spoke to, he's the one who's making this voluntary, because he's bringing the banks along in this discussion without the IMF, without the ECB, without the European Union. It has to be done between the banks and the government that issued the debt, and nobody else is supposed to be involved. That's why you have other people there who are doing --

QUEST: It's a fiction, Jim.

BOULDEN: It's a political -- it's politics --

QUEST: It's a fiction when you have a haircut of 50 to 60 percent because the alternative is a default to say it's voluntary.

BOULDEN: But they know that the option could be much worse except for the hedge funds, and that's a whole other issue, who would like possibly to see a default, because then they can get their money back through some of the credit default swaps --

QUEST: Sorry --

(RINGS BELL)

QUEST: I'm getting a bell on that. Go home. Jim, many thanks, indeed. The views of Charles Dallara -- not he views, the actual policies of Charles Dallara, the man sitting down with the government in Athens tonight.

In a moment, students, researches, and pub quiz enthusiasts, it's been a bleak day. Wikipedia's gone dark to shine the light on a controversial piracy bill. The co-founder, Jimmy Wales, will be here shortly.

(COMMERCIAL BREAK)

QUEST: Goldman Sachs saw its fourth quarter earnings slide 58 percent. America's fifth-biggest bank still managed to beat estimates after slashing expenses. And even after cutting costs, the Wall Street firm will still pay out more than $12 billion in salary and bonuses to its staff.

The chief, Lloyd Blankfein, said he sees encouraging signs that economies and markets will improve. Goldman Sachs' results come a day after CitiGroup missed estimates. CNN's Felicia Taylor is at the New York Stock Exchange.

We always pay such huge attention to Goldman Sachs' numbers. Felicia, I'll be quite blunt. When I read them today, I had no idea what to make of them, they were so complicated.

FELICIA TAYLOR, CNN CORRESPONDENT: They are complicated. And frankly, what the street is really focusing on is those forward-looking comments that came from Lloyd Blankfein. That's what they want to hear, is that things are getting better down the road.

Because the only reason that Goldman was able to eke out this profit of a billion dollars in the fourth quarter was by slashing compensation, getting rid of employees, and making other cuts throughout the company.

Because frankly, business on Wall Street hasn't been that great. But Goldman is the behemoth, so it actually did miss forecasts on revenue, and the only reason that it met expectations was because those expectations were actually lowered. If they had maintained the expectations that originally were forecast, they would not have met it. So --

QUEST: OK --

TAYLOR: -- this is its second-lowest quarterly since the midst of the financial crisis. And like I said, in order to get that profit, they had to make deep cuts.

QUEST: But if we look at the business itself, and actually take me into the minutia of it, the investment banking, the trading, the deal- making, how did they actually perform --

TAYLOR: Right.

QUEST: -- not just trading, but how did they actually perform as a bank?

TAYLOR: Mediocre at best. There isn't that much trading going on out there. There isn't that much M&A happening right now. I mean, you've got to remember, the banking sector has really been beaten down. The deals that we saw five years ago aren't happening.

Nevertheless, though, when you hear Lloyd Blankfein say that things are beginning to look a little bit better, that gives an encouraging sign to the street.

The stock itself has been beaten down, off 44 percent in the last 12 months. So, right now, you're seeing a gain of almost 8 percent, but that hardly makes up for the last 12 months. So, frankly, business is -- like I said, not bleak --

(CROSSTALK)

QUEST: OK, all right, but --

TAYLOR: -- but mediocre. Things have to improve considerably.

QUEST: Let me jump in here, though. When you talk about business has to improve, compare Goldman to its peers, BOA, CitiGroup, JPMorgan Chase, and then you start to see --

TAYLOR: Right.

QUEST: -- whether or not this behemoth which, frankly, has successfully always managed to trounce the competition, is actually struggling or not.

TAYLOR: It -- well, in comparison to -- JPMorgan Chase's numbers were dismal. And CitiGroup also missed earnings estimates.

QUEST: Aha!

TAYLOR: So, Wells Fargo was the only one that's in line. Compared to its -- compared to its peers, it's doing OK. But its peers aren't doing very well at all, so when you're making that kind of a comparison, in the days of old, when we saw -- we talked about Goldman Sachs, they trounced the competition, absolutely.

And now, they're kind of neck-and-neck with them. We'll find out about Morgan Stanley and Bank of America, which both report tomorrow, on Thursday.

QUEST: And before the end of the week, you will have wrapped it all up for me and given me an overview. Felicia Taylor, who is in New York for us tonight.

The US government is intensifying its war against insider trading. Federal officials announced charges against seven individuals on Wednesday for taking part in what they're calling a record insider trading scheme.

The scheme allegedly netted almost $62 million in illegal profits in one stock, Dell computer. The government has dubbed the probe and what they call it, the "Perfect Hedge."

Amongst those charged, Anthony Chiasson, the co-founder of the hedge fund Level Global, Jon Horvath, an employee at a financial institution affiliated with the hedge fund giant SAC Capital Advisors.

According to the US attorney's office, those charged in the scheme allegedly used confidential information to profit in shares of Dell computers.

To talk more about this, joining me via Skype, the significance of today's action, Jacob Frenkel, former state and federal criminal prosecutor and SEC enforcement lawyer. Now, he's a partner in the law firm Shulman Rogers in Washington.

Mr. Frenkel, how serious is this particular action, do you think? We've seen so many actions on insider trading taken recently, why is this one a step further?

JACOB FRENKEL, PARTNER, SHULMAN ROGERS: It's a step further for a number of reasons. One is, as you pointed out already, the magnitude of the trading in one stock. The other, I think it shows the persistence -- I almost want to call the pre-productions, the investigations that have been undertaken by the United States attorney in the southern district of New York.

Many would have thought with the Raj Rajaratnam conviction. Not only was that sort of the tip of the iceberg, that was planting the flag at the top of the mountain, and that might be the end of it.

But here, what we're seeing as part of this broad investigation that has been going on for five years now with people on tape, and the most important issue being cooperators. What we're seeing here is the results of at least two of the Dell insiders who already have pled guilty, the results of their information becoming known to the government and, in turn, resulting in prosecutions.

Bottom line, it means that this broad, wide-ranging investigation into the hedge fund industry is continuing, and we're going to see more cases.

QUEST: Do we expect in this case, do you think, to hear anything of the sort of controversial and somewhat eye-opening evidence of wire taps that we heard in the Raj Rajaratnam case, which gives us a very good insight into exactly what some nefarious doings going on?

FRENKEL: Well, not having read the criminal complaint, yet, which is the charging document that enable the FBI make the arrest today, not the actual criminal indictment or information, I don't know how deep the evidence is.

Certainly, if there are audiotapes or videotapes or any type of recordings, we will see those as part of the evidence, because those are critical bridges for evidence and to help the government make such cases.

Yes, we'll see it if they have it, but I think it also highlights the importance of cooperators for the government to enable the government to build these large-scale, high-profile prosecutions.

QUEST: Finally, Mr. Frenkel, tonight on Wall Street, the city of London, wherever it might be, should those who might be tempted to go the errant path, should they be sitting more uncomfortably? Should they be looking over their shoulder and thinking what used to be, "Eh, no one will ever know. Eh, we'll get away with it." Now, they may be thinking --

(RINGS BELL)

QUEST: -- we'd better be careful.

FRENKEL: That's the exact question that the United States attorney for the southern district of New York wants anyone who is treading into accessing and using to trade for profit material, non-public information to think.

Ultimately, as we know, it's impossible for the United States government to bring every insider trading case or, for that matter, every fraud case that is out there.

But it can send a broad deterrent message, such that people are believing if they're talking about insider trading on some medium of communication, there's a possibility that is going to get into the hands of the United States government. That is the deterrent effect intended by these prosecutions.

So yes, that is the message, and certainly, people are taking note, as they did in Raj Rajaratnam in particular, with the use of these much more aggressive investigative techniques being brought from drug cartels, not Wall Street.

QUEST: Jacob Frenkel, you'll be with us in the future, I know, to help us understand these cases as they wend their way through the courts, your good, strong common-sense and plain English helping us understand insider trading. Many thanks, indeed, for joining us tonight.

Now, in just a moment, we continue our Freedom Project and we'll be investigating how vulnerable cocoa growers are. Before that, we'll look at how cocoa traders handle such a volatile commodity. QUEST MEANS BUSINESS, good evening.

(COMMERCIAL BREAK)

QUEST: Revisiting the Fair Trade movement right now, as it protects its producers by putting a flaw under cocoa prices. From January last year, Fair Trade Cocoa changed hands for a minimum price of $2,000 a ton. There was a $200 premium on top of the traded price.

It's practically impossible for small growers to get access to the exchanges in London and New York, where cocoa's traded. So, they have what's called pooling production through Fair Trade cooperatives. It helps smaller growers benefit from important markets.

CNN spent the day with a cocoa trader who showed us why it's such a volatile commodity.

(BEGIN VIDEOTAPE)

(PHONE RINGS)

NICK GENTILE, ATLANTIC CAPITAL ADVISORS: Hello, Atlantic.

My name's Nick Gentile. I am a senior trader and vice president of Atlantic Capital Advisors. We're based out of Jersey City, New Jersey.

We're here since 2000 -- 2007. This is home base. Our office is across the street, but my heart will always be in lower Manhattan, even though I'm upstairs in an office, and I can trade any commodity I want in the world, somehow, I always come back to the boutique market of cocoa. It's in my blood.

As you can see, cocoa is the first market that I have on my quote board.

My co-worker, Steve Lampe (ph), is based out of London. We're on Skype.

STEVE LAMPE, ATLANTIC CAPITAL ADVISORS: Grains are in bad shape.

GENTILE: Yes, the grains are getting hit.

This is the cocoa market live right now. I'll actually do a live trade for you right now. Her we go.

(PHONE RINGS)

GENTILE: OK. We're filmed. We're speculating on the price. We think the price is going lower, so we want to capture a move and generate revenue for our clients.

The feeling in the cocoa market right now, we're oversupplied. Demand is running at a steady pace right now, but demand is not increasing. That will drive the price of cocoa lower.

And we also have to take into consideration what's going on in the world in Europe with the sovereign debt crisis. When there is a macro event, all of the markets feel it.

The market's live right now. I am out $1,560 on the trade that I initiated two minutes ago. It takes a certain personality, in my opinion, to trade this -- to trade these markets because of the volatility. It's sort of like an adrenaline rush to me.

2011 was a roller coaster year in cocoa. A slow jump out of a plane with a parachute, and then we jumped on the rocket ship, and the market exploded.

This is when we were seeing some upheaval. Fighting in the Ivory Coast. As the fighting was going on, right? The market gradually worked its way higher. So, after that, the market has slowly but surely declined.

If I could forecast where we were going to close at the end of the year, I wouldn't be sitting in this chair right now.

Today, we actually had a very nice day. We made money today.

We're winding down our day. We're -- it's come to an end. And I can actually shut off my trading platform and say it's time to go home.

I will give you call later.

LAMPE: Good night.

GENTILE: When my day ends, I come to the store across the street and today, I'm going to buy a Snickers bar. Got to keep consumption of chocolate up. And we had a good week this week, so we all deserve a treat.

(END VIDEOTAPE)

QUEST: Now you've seen how it's traded, you want to see how it's harvested. Chocolate and child slavery is still an all-too-common combination in West Africa. We'll talk about how to end that deadly, destructive combination of commerce after the break.

(COMMERCIAL BREAK)

GENTILE: I will give you a call later.

UNIDENTIFIED MALE: all right.

GENTILE: Well, my day ends, I come to the store across the street. And today, I'm going to buy a Snickers bar. You've got to keep the consumption of chocolate up. And we had a good week this week, so we all deserve a treat.

(END VIDEO TAPE)

QUEST: Now, you see how it's traded, you want to see how it's harvested. Chocolate and child slavery is still an all too common combination in West Africa. We'll talk about how to end that deadly, destructive combination of commerce, after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

This is CNN. And on this network, the news always comes first.

Emergency crews say they plan to blast more holes into the shipwreck off Italy to give divers better access to the interior rooms. These are the latest pictures into CNN of the now suspended search. About two dozen people are still missing five days after the crash.

Italian prosecutors say they may appeal a ruling that allowed the ship's captain to be placed under house arrest instead of remaining in jail.

Russia won't back sanctions for Syria despite the continuing crackdown against pro-democracy activists. Russia and Moscow also ruled out sending foreign troops. The EU, however, is pushing for new sanctions against the regime.

The Arab League's monitoring mission to Syria, meanwhile, is scheduled to end on Thursday.

A controversial oil pipeline which would run through the heart of the United States is unlikely to win the support of the Obama administration. A Democrat source says the White House could soon announce its opposition to the project. Supporters say it would have created much needed jobs. Opponents are worried that the pipe may leak. Last November, they took their protest to Washington.

Several major Web sites have at least partially blocked out their pages in protest against two anti-piracy bills before the U.S. Congress. The Web sites say the legislation would open the door to censorship. Media companies, including Time Warner, the parent company of CNN, say the laws are needed to protect their content.

Protesters in Romania are demanding the government resign and that new leaders organize an early election. Opposition and government leaders met on Wednesday to try to resolve the escalating crisis. They agreed to set up a joint council to find ways to create jobs. Romanians are angry over austerity cuts, unemployment and corruption.

Chocolate should taste delicious and it should be a treat that we all enjoy -- probably, possibly, every day. But it doesn't taste good in the mouth when we discover it was produced by forced child labor.

CNN has found hard evidence that children are working on chocolate farms in West Africa. And on Friday, we're going to be airing a special documentary as part of our Freedom Project, which showcases this evidence.

Frank admissions you will hear from those in charge.

From Nairobi, our correspondent, David McKenzie, joins me -- David, the abuse and misuse and illegal activity in the use of children has gone on for too long. And yet you have discovered that it is, putting it bluntly, thriving.

DAVID MCKENZIE, CNN CORRESPONDENT: Well, that's right, it is thriving. And, you know, the chocolate industry is thriving. It seems to be almost a recession-proof industry, Richard, an $80 billion annual industry, really, one of the sort of hallmarks of corporate -- the corporate world and of sales in confectionary.

But on the flip side of that, you have in the farms of West Africa, particularly in Ivory Coast, which is the largest producer of chocolate, Richard, nearly 40 percent of the world's chocolate comes from that country.

And we went there, as you said, to investigate what the situation is for child labor and trafficking. And the extraordinary thing, Richard, that we saw was when we went into these farms in the remote parts of that country, people were pretty open about it.

They said, the owners of those farms, the coop owners and the sharecroppers that, sure, they use child labor and it's everywhere to see.

(BEGIN VIDEOTAPE)

MCKENZIE: Leaving the capital city behind us, we drove to the remote northwest of Ivory Coast, the center of the cocoa trade.

Here, dirt tracks turn to footpaths. Turi Draman (ph), the boss of a local coop leads us through the dense bush to one of his farms. Like most cocoa plantations, it's a tiny plot of land run by sharecroppers in neighboring Burkina Faso.

(on camera): So this is a week old?

(voice-over): Cocoa beans dry in the sun. It's the middle of the harvest, he says, and they have no choice but to use children.

(on camera): Everybody helps, adults, children?

(voice-over): "Yes, the children who are old enough to work," he tells me. "While people are emptying the shells, the children can be next to their parents, emptying shells, too."

He says most of the children are just helping their parents.

But UNICEF tells a different story. It estimates that more than one half million children work on cocoa farms across Ivory Coast, most engaged in the worst forms of child labor, many trafficked across borders.

We asked Turi about that. If children work here, shouldn't his coop take some of the blame?

TURI DRAMAN (through translator): We work to earn money. We work to earn money. We are not interested in other people's problems. We are all born into this world with our own problems. We all go through hardships. And we all fight to get through them as best we can.

MCKENZIE: He's heard of the Harken-Angle protocol, he says, but he's had no help from industry implementing it. Since the protocol was signed, no one has visited his farms.

DRAMAN (through translator): In 10 years, nothing has been done, nothing at all.

(END VIDEOTAPE)

MCKENZIE: Well, Richard, all of the farmers we met in this investigation were -- had similar words to say. They said they hadn't been met by a single representative by the government or by the cocoa coops or even by the -- the cocoa initiatives that are trying to stop child labor.

And we didn't go to some obscure part of Ivory Coast. This is the really Africa -- you know, this ground level of the cocoa production, of where most of the cocoa comes to the commodity trades and into the chocolate companies -- Richard.

QUEST: All right, David.

If the whole -- if the whole protocol, as you seem to suggest, is basically not working, just how difficult would it be for monitors from either cooperatives, from large companies with vast resources, to get their back sides on planes to go and see for themselves?

MCKENZIE: Well, they don't even need planes, Richard. They could just get in a car. You could even walk from some of the major centers of cocoa. This doesn't need a sort of international response in terms of people. What it needs is an international response in terms of money and thinking process and a change of attitudes.

You know, let's put it this way, last year, we know that there was a major political crisis in the Ivory Coast. You had a presidential election that ended in chaos. And yet, cocoa production was up by 25 percent, Richard. It was a bumper year for cocoa production and cocoa exports from that country despite the crisis.

So if you can get the cocoa out, why can't you get people in to fix this problem, because if it really was up to the companies or if the companies really thought they could change this problem, if the message came from the consumer to these companies and to the government of Ivory Coast, then possibly, you know, the effort will be made, as much, to fix the problem of child slaves working on these farms as the effort is made to get this out to market and to make profits.

QUEST: David McKenzie.

And you can see David's full documentary "Chocolate's Child Slaves" on Friday night, 8:00 in London. It is 9:00 in Central Europe.

The only way you can make sure that a child didn't help produce your chocolate bar is to look for one of the certification labels, 'fair trade." Organizations like Fair Trade and Rainforest Alliance work along the supply chain. And I show you what I'm talking about. By doing that, they work with the growers on issues of education, fair prices, fair labor practices. They basically have either, through themselves or their representatives or through the cooperatives that work with them, they put in place their own schemes for certification to ensure that people are paid fairly and work them to introduce fair and humane labor practices. Then you've got the processors and you've got the manufacturers. But ultimately, you have the retailers.

Now, some retailers, most of the large ones, do actually have certain products. So Cadbury dairy milk, for example, has a certificate, as does some Mars Galaxy, as does Nestle for -- for fingers of Kitkat. They all have.

However, this is the number you need to look at. Look at it. It's absolutely tiny. The sad and palatable fact is you and I are still buying chocolate that doesn't have any form of certification. Fair Trade's Barbara Crowther is here with me in London.

Edward Millard of the Rainforest Alliance joins me via Skype from lima in Peru.

Barbara, Fair Trade, we know what you do.

But why is it so difficult to get the companies to sign up to it?

BARBARA CROWTHER, FAIR TRADE FOUNDATION: Well, I think it's right that companies will do what their customers are asking for. So they -- they will follow what they think the market wants. And so I think it's up to all of us to say to companies, we want you to pay fair prices for all -- all the cocoa that you buy, because, actually, a lot of these cocoa farms, when I was in Cote d'Ivoire, I was just struck by how incredibly poor many of these communities are. They don't have schools in many of the rural villages. And we need to start with fair prices for the cocoa farmers and start helping tackle the poverty and help them build their communities.

QUEST: All right, Edward Millard in Peru, I'm going to put the other side of the view here. You know, the -- the companies say, look, we're doing what we can. We're putting in place measures, to use a cliche, Rome wasn't built in a day.

EDWARD MILLARD, DIRECTOR OF SUSTAINABLE LANDSCAPES, RAINFOREST ALLIANCE: Yes, you can't just look to one of the supply chain actors to fix this problem. And as you rightly said in your introduction, it needs the commitment of government, industry and the implementing type of agencies, such as recertification bodies, to work together to make some real progress.

QUEST: All right...

MILLARD: Some real progress has been made.

QUEST: So -- so what's the difference between the two of you?

I mean why have two?

Aren't you just -- wouldn't you be stronger -- I -- I do know some of the differences. You know, you're -- you have much more environmental interest, maybe, in the Alliance, than in Fair Trade and you're much more concerning with other areas.

But why not join up rather than splitting yourselves?

I'll start with you, Edward Millard.

MILLARD: Well, we do join up working in the countries like Ivory Coast, as we're talking about here. Very often, the field operatives that we have are out in the similar communities training farmers, working to common good practices. There's a great deal in the Fair Trade and the Rainforest Alliance standards which unite us. And on the issue of child labor, there's really no difference between our positions.

So we're giving...

QUEST: Right.

MILLARD: -- you know, common messages and reaching a wider number of people.

CROWTHER: Yes. I would agree with everything that -- that Ed has said and that we are working together...

QUEST: So go work with them.

CROWTHER: -- on the ground.

QUEST: Listen, why -- why -- why have two?

CROWTHER: The big -- the one big difference between Fair Trade and Rainforest Alliance is that would have trading standards. And it's fair trade. And so we operate a system where all the companies that sign up with us have to pay this $200 additional premium on their cocoa and that that is for the cocoa farmers. That's to help that processor, getting the farmers working together improving their communities, improving the way they're managing their coops so they can do more of this awareness that is so crucially needed to tackle child labor.

So we do work a lot together and we are partners...

QUEST: OK.

CROWTHER: -- but there are a couple of significant differences.

QUEST: Edward, I hate to sort of be a downer when you're doing such strong work, both you and Barbara -- and you're going to get the same question in a moment, but the reality is you're failing. When you see the sort numbers that I've said tonight and the limited amount of -- of effect you're having, surely you're failing.

MILLARD: Well, you're not failing if you're making some progress. What you're doing is you're trying to bring a new solution, because, you know, certification in Ivory Coast has been (AUDIO GAP) four or five years. This is a systemic problem that's been going on for generations, which is rooted in poverty such as Barbara was saying, and lack of awareness and education. And if you're going to change people's habits and mind sets you...

QUEST: Right.

MILLARD: -- you can't do that in four to five years.

So when we see, for example, 40,000 farmers signed up to the Rainforest Alliance certification program, we can be sure that that's 40,000 farmers who are aware and committed to not percentage child labor.

QUEST: OK.

MILLARD: That's not failure, that's progress. But there's a great deal more to be done.

CROWTHER: I was in...

QUEST: But -- but...

CROWTHER: -- I was in Cote d'Ivoire a -- not so long ago. And I saw how, through a better deal that they'd received, through more direct trading relationships with some of the companies, those farmers had built a health center. They were building makeshift schools in their communities...

QUEST: But -- but how...

CROWTHER: -- so that the children could...

QUEST: -- we...

CROWTHER: -- start going to school. And I think...

QUEST: But when you have...

CROWTHER: -- those are very real differences.

QUEST: -- you -- hang on. When you have Cadburys only having one product dairy milk with -- with -- with a certification and you have Kitkat only with the four bars, not the two bars or the Kitkat Minis or whatever it might be, this is bordering on ridiculous.

CROWTHER: I think we all want all of the companies to do a lot more down this line. I think what is happening is moving in the right direction. I think we want them to all do a lot more, but also I think it's down to us. When we are buying chocolate, let's make those positive choices.

QUEST: Good point.

Edward Millard in Peru, good night to you.

MILLARD: Yes, you know...

QUEST: Good night.

We'll have to leave it there, I'm afraid. Do -- do forgive me.

Barbara Crowther, many thanks, indeed, for joining us here in the studio.

And one of the reasons why I do just briefly cut off Edward, not to be respectful in any shape or form, is to hear your views on the documentary. We've been Tweeting about it using the hash tag endslavery and sending links to our blogs, which is a surprising list about which countries consume the most chocolate.

Now, Belgium isn't even on the list. You can check it out @richardquest. And we will talk more about that, when we come back after the break.

QUEST MEANS BUSINESS.

Good evening.

(COMMERCIAL BREAK)

QUEST: Jenny Harrison, always good to see Miss. Harrison, only if she's got some decent news.

Look, I can't -- I can't decide whether it's getting a bit brass monkey out there or whether it's a bit warmer.

JENNY HARRISON, ATS METEOROLOGIST: Well, there's a bit of difference, isn't there?

Now, I think it's your age. You can't tell hot from cold...

QUEST: Hey.

HARRISON: It's very, very mild in London. The last time I checked, it was about 12 degrees Celsius. It was freezing cold everywhere else, but not for you.

QUEST: Yes, I -- well, it felt -- it felt a bit parky (ph) around certain regions.

HARRISON: Yes, well, you know, cover up your regions.

I'm going to start talking about, as you said, the weather in Europe. It is, indeed, very mild right now across the far northwest. But there's a huge difference, actually, in temperature, between London and Paris. It's below freezing in Paris.

But you see all those clouds. This is the next system coming in. So this is bringing with it the bulk of the weather.

But I also wanted just direct you to the Central Mediterranean, of course, off the coast of Italy. The last few hours, we have seen good, calm, clear conditions. Now these are two locations where we do get observations, nothing from Giglio Island itself. And the actual locations here are higher, above sea level. So the actual temperature of the location of the ship is a little bit milder than this five Celsius.

But, generally, we've got clear skies and the winds are quite light.

Now, the concern is, as we go towards the end of the week, this is likely to change. This is the Google image showing you the ship, just how close to the course, the shore. And as we know, it is on the rocks, which are obviously not that far below the surface of the water.

This is an actual photograph showing the same view, but an actual real view of the ship. And when we look at where it is right now, we've been talking about this for the last few days. At times, they've had to bring the divers out of the bulkhead of the ship because of the danger, because they've been feeling some movement.

But right now, it is believed the ship is resting on this slope. It's about 10 to 20 meters below the water.

Then the further away you go from the ship, and, obviously, from the shoreline, you can see by the lines here just how suddenly the actual surface or underneath -- the -- the ground underneath the sea, how quickly it drops away.

So the concern is, as we go into Friday, we are looking at a system coming across the central regions of Europe. It's that band of cloud I just showed you on the satellite.

This eventually is going to sweep all the way across into the Central Mediterranean. So stronger winds and, of course, the rain coming in with that, as well.

So it could certainly shift the ship and, at the same time, if that happens or if the ship continues to be rocked or moved by these winds, concerns, obviously, what might happen to the fuel tanks.

And another view, just to show you, look at this. You can just see how very, very close and how precarious it is perched right now, just right above those rocks.

So there's this system coming through as we head through the rest of Wednesday into Thursday. And it's this that's bringing with it the strong winds. Right now, we've got high pressure in control. So Friday is likely to be the day with some rain showers and also those stronger winds.

This is the wind forecast. And you can see, of course, it extends along the way down into the Western Med. And the darker the color, the stronger the wind.

The bulk of the weather is across central and eastern areas of Europe, moistly rain across the northwest. Delays at all the major airports. Snow in Berlin. Mostly wind, though, causing the delays elsewhere. Glasgow, Amsterdam -- on and on they go -- Paris, as well as, as we go through Thursday.

And as the temperatures -- look at that -- double figures in London.

Ten Celsius, Richard. And in your currency, that's, what, 50 degrees Fahrenheit.

QUEST: Oye, oye, oye, oye, oye, oye, Miss. Harrison.

Miss. Harrison?

HARRISON: Yes.

QUEST: Quickly, did I just hear you say snow in Berlin?

HARRISON: I did.

Why are you going to Berlin?

QUEST: Oh.

HARRISON: No, you're going to Davos.

QUEST: The prog -- the program is coming from Berlin tomorrow night.

HARRISON: Oh, you do get about.

QUEST: In the rain.

HARRISON: You do get about, don't you?

QUEST: Well, we hope it will, anyway.

Jenny Harrison at the World Weather Center.

Many thanks, indeed.

Assuming we ever get to Berlin.

I'll be back after the break.

(COMMERCIAL BREAK)

QUEST: If you're trying to visit Wikipedia's English language page right now, this is what you will find -- either one -- imagine a world without free knowledge?

It's Wikipedia's way of basically protesting against a new law in the United States that's potentially going to come in.

The information Web site is blacked out for 24 hours to protest against two anti-piracy bills in the U.S. which the critics say would be the death of -- of free and open Internet. This is how that subject, SOPA, is trading on Tweet Deck at the moment.

U.S. lawmakers are considering two proposals. The Stop Online Piracy Act, SOPA, and the Protect Intellectual Property Act. It's meant to help protect content.

The main targets are foreign and so-called rogue sites, like Pirate Bay, a treasure trove of illegal downloads.

It's hard for U.S. companies to take action against sites hosted overseas. So the bill requires, instead, U.S. search engines and other providers to cut them off.

That's the way things are looking for Wikipedia. And that is why today, Wikipedia is saying it's not available in English.

I'll have some thoughts on that after the break.

(COMMERCIAL BREAK)

QUEST: The markets have traded on what is obviously dangerous times in the global economy.

In New York, the Dow Jones currently up 72 points, 12554, a gain of just .5 of 1 percent.

It all puts into perspective when you bear in mind the warnings that we have seen from places like the World Bank, the IMF and, of course, the ECB.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Thank you for your time and your company.

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

The news continues, because, after all, this is CNN.

END