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Afghan Bank Faces Massive Fraud Allegations; M23 Rebels Prepared to Leave Goma; China Responds to Concerns Over New Map in Its Passports

Aired November 28, 2012 - 08:00:00   ET

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


KRISTIE LU STOUT, CNN ANCHOR: I'm Kristie Lu Stout in Hong Kong and welcome to NEWS STREAM, where news and technology meet.

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STOUT (voice-over): And we begin in Afghanistan, where a bank once hailed as a symbol of the country's future is facing massive allegations of fraud.

Also ahead, a potential breakthrough in the Democratic Republic of Congo. Rebels say that they are preparing to leave the key eastern city of Goma.

And the feud over disputed territories: China responds to international concerns over a new map in its passports.

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STOUT: It was supposed to represent hope for Afghanistan's fragile economy and Western-style banking. And now Kabul Bank, the country's largest private lender until its collapse in 2010 has been slapped with major allegations of fraud. Fake companies, forged documents and counterfeit loan books -- and the scandal touches many including the brother of President Hamid Karzai.

It was first reported by "The New York Times" after a 277-page audit of the bank was leaked. And in a new report released on Wednesday, an independent inquiry said that the bank's controlling shareholders, key supervisors and managers led a, quote, "scheme of fraudulent lending and embezzlement."

And it says that these insiders siphoned off around $935 million, taken mostly from the bank's depositors.

Nick Paton Walsh has more on the story. He joins us now live.

And, Nick, just stunning details in this audit report. Just how extensive was the fraud?

NICK PATON WALSH, CNN CORRESPONDENT: Quite remarkable, really, we're talking about as you say, over $800 million, dispensed, it seems, through a series of -- I think it's fair to say bad loans, fraudulent loans, fraudulent activity, the report alleges, to a total of 19 companies or individuals.

Let me give you some examples. We're talking about lavish expenses for things that may never actually have been incurred. We're talking about a senior member of management giving his brother a $96,000-a-year salary, despite him never having done a day's work.

This allegation that money was, in fact, ferried out of the country in an airline partially owned by some of senior management; they had to use food trays on that commercial airline to shift the amount of cash, even allegations 11 properties in Dubai were purchased with some of this money, and it's now -- they're now trying to resell them for the estimated value, about $40 million.

So quite a remarkable, extensive fraud here, Kristie, is alleged.

STOUT: Yes. Now the brother of Hamid Karzai is said to be a beneficiary. What is he saying?

WALSH: That's the accusation made in the report. The report doesn't name Mahmood Karzai himself; it just refers to a brother of the president. But we did speak to him, and he acknowledged that many of the reports floating around do implicate him.

And (inaudible) says, look, he's repaid all the money he was loaned by Kabul Bank, $4.2 million, with 9 percent interest -- he says about $5 million in total. He says he took allegations of the problems he's seen there to the government.

He said this is all political about trying to place pressure upon the Afghan government in many ways, and says it's down to managerial incompetence and fraud, and also said quite specifically that, "I know my brother very well, and there is no way on Earth that he would do such a thing." That is the allegation in the report that there may be some sort of political interference with the investigation.

He goes on to say, "I have been under scrutiny from my brother for 10 years and there is no way he would mention to anyone in the government to help me." So a flat denial here, but really the report's most key allegation is the suggestion that some kind of high-level political interference may have impeded their work, Kristie.

STOUT: In the end, over $900 million was siphoned away. Who are the victims? And will their money ever be recovered?

WALSH: Very hard to say if the money will ever be recovered. Of course, there's been this forensic investigation to try and locate where it is. But there are a still very many loose ends and all that.

But these are ordinary Afghans. In fact, in many ways, a sort of vanguard, if you were, of what the West was trying to create in Afghanistan, with a nascent state there, soldiers, teachers, police, people taking money from that Afghan government so often under siege from the insurgency around it, people who looked at this banking system as a way to transparently get the money they thought they'd earned rather than, as in the past, relying on their superiors to hand it down to them.

That scheme often opened to corruption, but they saw a run on the bank when it was said to be insolvent. And now, of course, they're seeing that a coterie, an elite people, who allegedly have links to senior Afghan officials, lined their pockets with their own hard-earned money, Kristie.

STOUT: Yes, it's a story of shameless corruption.

Nick Paton Walsh reporting, thank you.

Turning now to Congo, and the M23 rebel group is promising to meet a key demand of regional leaders and the African Union by withdrawing some 20 kilometers from Goma, the city that the rebels captured last week. The situation, though, it remains volatile and the rebels, they will keep their administration in Goma as well as a 100-strong contingent at the city's airport.

Some background now: Goma is the main city in the east of the Democratic Republic of Congo. It is situated on the border with Rwanda and Uganda. The United Nations has accused Rwanda of supporting the M23 rebels, something it denies.

Goma has been embroiled in violence since 1994. That's when Hutu forces crossed the border from Rwanda fearing reprisals following the genocide. And now it has a population of 1 million and is a major processing point for minerals coming out of the country.

For more on the latest situation there, David McKenzie joins me now live from Nairobi, Kenya.

And David, are the rebels pulling back? Is there any sign of movement today?

DAVID MCKENZIE, CNN CORRESPONDENT: Well, there's no sign of movement yet, Kristie, and I fear that this isn't the last we've heard of this tit- for-tat diplomacy going on between the rebels, the M23 group, and the regional powers and the Congolese government. The rebels announced today, going back on their statements yesterday that they would, in fact, withdraw from Goma.

So far, as I mentioned, no one, none of those soldiers have, in fact, left. In fact, they've been holding a large rally in downtown Goma, in support of the rebels and effectively slamming the president, Joseph Kabila, of the Democratic Republic of Congo. Many of the signs people holding calling for him to abdicate his seat and get out of the way.

So it's certainly some strident comments from their supporters today. However, they have indicated they're willing to leave Goma and also the other towns to the west of Goma that they have occupied to create their 20- kilometer buffer zone.

They say that this is in respect of the elders, as they put it, of the Great Lakes region and so that they can get to the negotiating table with Joseph Kabila, the president, to get some key demands met. But this isn't over yet.

They have already indicated it might only happen by Friday and, really, the kind of back-and-forth on this is less important, but it's more important is that the fighting and the continuing targeting of civilians in eastern Congo stops something that, as you described, been going on since the mid-'90s.

STOUT: Yes, and tell us more about the victims in all this. New figures out from the United Nations, how many families have been displaced by the violence?

MCKENZIE: Well, the UHCR, the refugee agency of the U.N., says more than 140,000 people have been displaced in this recent round of fighting. Now let's put that in perspective. The Eastern Congo has been a volatile region for many years.

And people often displaced, displaced again and displaced again. Some of the key civilians that have to flee in this round of fighting were actually people who fled displacement camps. The great irony of this conflict is that though it's around military minerals often and wealth and also identity and tribalism, it's the civilians who are the pawns in all of this.

More than 800,000 people in the Kivus, North and South Kivu are displaced because of fighting. There are more than a dozen rebel groups and militia groups in this area, not just M23, but the M23 is certainly a force to be reckoned with. They are well trained, it seems on some level, and have pretty impressive hardware.

So the government and M23 seem like they don't want to continue the fight, though the M23 has threatened to take Kinshasa. Seems like there are moves toward negotiating. But those steps seem to be muddled, seem to be certainly complicated and we'll have to wait until they physically leave town before we know if it's happening.

STOUT: And, David, also a question about the U.N.'s peacekeeping role in all this. I mean, it has been urging the rebels to lay down their arms. But how exactly has the U.N. peacekeeping mission been responding to this conflict in Congo?

OK, it sounds like we just -- we just missed David McKenzie there, dropped signal. Our apologies for that. But that was our David McKenzie reporting live from Nairobi, giving us the very latest on the situation inside Congo.

You're watching NEWS STREAM and when we come back, Tahrir Square in Cairo is again the epicenter for protests. Now this time, they're aimed at President Mohammed Morsi and what critics see as a power grab.

Now dozens more die in Syria as car bombs explode on the outskirts of Damascus. We'll bring you the very latest.

And why a map on the new Chinese passport is raising eyebrows beyond Beijing's borders.

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STOUT (voice-over): Live from Hong Kong, you're back watching NEWS STREAM.

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STOUT: Now on Tuesday night, thousands of Egyptians again gathered in Tahrir Square, this time to condemn current President Mohammed Morsi. And one protester was killed as early protests turned violent. President Morsi has split the nation since decreeing that the courts cannot challenge his decisions until Egypt has a constitution.

Some protesters are still in the square this Wednesday, and they're furious about what they see as a dictatorial move. The protesters, they want President Morsi to reverse his decision or resign. But so far he is showing no willingness to do either.

Reza Sayah joins us now live from Cairo.

And, Reza, the protesters, they're not backing down. I mean, they just continue to put the pressure on Morsi. What have you seen today?

REZA SAYAH, CNN CORRESPONDENT: Well, Kristie, a couple of thousand demonstrators still here in Cairo's Tahrir Square, including those who pitched their tents to camp out the past several days. And incredibly, those seemingly endless clashes between protesters and police continue on the side streets, leading to Tahrir Square.

These are usually the troublemaking elements, the teenagers who keep throwing rocks at police. Police are responding by throwing rocks back themselves and firing stun guns. But most of the crowds from last night are gone. A lot of people were curious how big this demonstration would get. It got pretty big.

One report said 200,000 people were here last night; they were loud. They were excited, animated, all of these are factions that have banded together, Kristie, in opposition to Mr. Morsi and his decrees.

STOUT: And, Reza, when we look at the video, the pictures of the protests in Tahrir Square, it really brings to mind the days leading up to the fall of Hosni Mubarak in February of last year.

Are there some protesters right now who are asking for more than a rescinded decree? Are they-- some asking for the end of Morsi's rule?

SAYAH: They certainly are. We spoke to a lot of these demonstrators last night, and they said they want him gone. That's how outraged they are with his decree. And in the coming days, there's going to be a lot of interesting developments in monitoring the -- what happens moving forward.

One of the factors you look at is how much stamina, how much staying power these protesters have, how long they're willing to keep coming back out here in Tahrir Square. And then you have to look at the president, what is he going to do to try to defuse this situation? For now, he doesn't seem to be backing down from his positions and his decrees.

STOUT: Yes. Now President Morsi, he has been on the defensive these last few days. He has said that the powers that he's taken is only temporary and that he gave himself these powers to run the country until there's a new constitution.

Tempers, anger, everything else aside, is what he's saying, is that a reasonable defense?

SAYAH: He'll tell you it's reasonable and his supporters, the Muslim Brotherhood, will tell you that it's reasonable. And in the past couple of days, it seems like they've reshaped and refocused their messages.

You mentioned they're saying, look, these decrees are temporary and they're rejecting claims that they give him sweeping dictatorial powers. They say they're only designed to protect the formation of the parliament and the drafting of the constitution. Obviously, these opposition factions completely reject those positions.

STOUT: And looks like we're seeing another day of protests today. How paralyzing is it? I mean, what impact is it having on Egypt's economy and daily life in the country?

SAYAH: It's certainly having an impact. Remember when Mr. Mohammed Morsi took over as president, the stock market went up in the months that followed, about 35 percent. The first day of trading after the president announced his decrees, the stock market plummeted about 9.5 percent. It has recovered somewhat, but investors and people here in Egypt expect more volatility in the days ahead.

And certainly the impact on the economy, investors putting money into Egypt, certainly going to be a factor in the days ahead.

STOUT: All right. Reza Sayah on the story for us as always, thank you.

Now Syrian state TV reports that at least 34 people were killed by a double car bombing in the city of Jaramana. It's near Damascus. Anti- government activists put that number at 45. The town has provided a refuge for pro-government Syrians displaced by war. And explosions occurred after a deadly Tuesday in the war-ravaged nation with opposition group saying at least 131 people lost their lives.

Meanwhile Turkey has raised the prospect of a missile defense system on its border. Russia is expressing concern about that, saying it would create more problems that it solved.

Now the remains of former Palestinian leader Yasser Arafat are back inside his mausoleum in Ramallah this Wednesday. But the details of his death eight years ago could soon be out in the open. Arafat's body was exhumed Tuesday as forensic experts looked for evidence that he was poisoned.

Frederik Pleitgen has the story.

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UNIDENTIFIED MALE: (Speaking foreign language).

FREDERIK PLEITGEN, CNN CORRESPONDENT (voice-over): This was all the public was able to see of the exhumation process, a solemn ceremony at the end with members of the Palestinian leadership laying wreaths to commemorate the last Yasser Arafat.

Before that, medical and forensic teams from France, Switzerland and Russia as well as Palestinian doctors worked behind this blue tarpaulin, opening the late Palestinian leader's grave and taking samples from the remains.

DR. ABDALLAH BASHIR, PALESTINIAN MEDICAL INVESTIGATION TEAM (through translator): Everything was carried out with all ease and clarity and exactly as was agreed upon by all. There were no problems, thank God, and all matters took place in an orderly and agreed-upon way.

PLEITGEN (voice-over): Eight years after Arafat's sudden, severe illness and death, the cause is still unknown. Palestinians say Israel is behind any poisoning but claim the Israeli government refuses to comment on.

The experts involved in the case will examine the samples for possible traces of poison, especially the radioactive substance polonium 210, which has been used in assassinations in the past.

PLEITGEN: It was an emotional day for many Palestinians. The Palestinian Authority described Arafat's exhumation as a sad but necessary process. The samples will now be independently analyzed in labs in Russia, France and Switzerland and results are expected in about three months.

PLEITGEN (voice-over): Even after his death, Yasser Arafat remains a towering figure for Palestinians and not everyone agrees with the exhumation.

"Of course, I am against it," he says. "It is insulting to the martyr and to the Palestinian people."

And some international experts doubt that polonium 210 could still be traced in Arafat's remains eight years after his death.

LAWRENCE KOBLINSKY, JOHN JAY COLLEGE OF CRIMINAL JUSTICE: At this point, the body being totally skeletonized, without any soft tissue, there's very little that they can do. Poisons are not going to be found essentially looking in skeletal remains.

PLEITGEN (voice-over): If these forensic experts do find high levels of polonium in the body, the next question investigators will try to answer is who is behind the death of Yasser Arafat -- Fred Pleitgen, CNN, Ramallah.

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STOUT: Up next on NEWS STREAM, a make-or-break game in Germany's football league.

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STOUT (voice-over): Reigning champions Borussia Dortmund blown their chance to close on Bundesliga leaders Bayern Munich.

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STOUT: Welcome back. Now UEFA's Champions League is already one of the most prestigious competitions in world football and it may become even more important in the years ahead. Let's join Alex Thomas in London with more.

Alex?

ALEX THOMAS, CNN CONTRIBUTOR: Hi, Kristie. There is a chance that football's Europa League could be scrapped in favor of an expanded Champions League competition from the start of the 2015 season. Neither Europe's governing body UEFA nor the European Clubs Association denied the possibility when contacted by CNN today.

Speaking to a French newspaper, Michel Platini seemed to suggest the option was being considered.

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THOMAS (voice-over): And the organization representing Europe's top clubs told us, "As a principle, ECA is happy with the competition structure as it is. However, we are open to discuss changes and/or improvements in light of the 2015-18 competition cycle."

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THOMAS: Bayern Munich could go 11 points clear at the top of Germany's Bundesliga later after closest challengers and reigning champions Borussia Dortmund were held to a draw in their latest game on Tuesday night.

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THOMAS (voice-over): Dortmund (inaudible) to take all three points against Fortuna Dusseldorf, when Jakub Blaszczykowski put them ahead before the break, volleying a goal after a quick passing move. And they kept that advantage until nearly 10 minutes from the end, when Stefan Reisinger headed an equalizer for the visitors.

Dusseldorf held on for a point because, despite this effort from Kevin Grosskreutz, Dortmund couldn't find a winning goal, and that finished 1-1.

Here in England, the top 15 clubs in the Barclays Premier League are all in action later. Rafael Benitez will hope for a better reception from the Chelsea fans for his second match in charge at home to West London rivals Fulham, as well as West Brom's bid to stay in a surprise third place. The leaders Manchester United will be aiming to strengthen their grip on top spot with victory over West Ham.

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THOMAS: Golf's two governing bodies are expected to announce a rule change later that will effectively ban the use of long putters, often referred to as belly putters. Three of the last five men's major champions have used one, including American Keegan Bradley at last year's U.S. PGA championship.

The new rule is likely to make it illegal for a player to anchor the top of the putter grip to a part of the body. It's thought the change will take effect in a few years' time to allow people to revert to a conventional short putter.

KEEGAN BRADLEY, PRO GOLF CHAMPION: I know players are very passionate, obviously, about this decision. You've got some guys that are going to be using this style of putter for almost 20 years. So that's a little bit of a scary position that they're in.

We'll have to wait and see. You know, I'm not going to cut -- you know, I'm going to obviously obey the rules and respect what U.S. PGA does. I'm not going to cause a big problem or anything like that.

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THOMAS: And we'll have more on this debate in "WORLD SPORT" in just over 31/2 hours' time.

For now, Kristie, back to you.

STOUT: Yes, that's a good one.

Alex Thomas there, thank you.

You're watching NEWS STREAM. And still ahead, China's passport controversy: why the U.S. is now weighing in over a new map placed inside.

And she is one of the most powerful women in technology. But what are Marissa Mayer's priorities? We'll hear from the Yahoo! CEO.

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STOUT: I'm Kristie Lu Stout in Hong Kong. You're watching NEWS STREAM, and these are your world headlines.

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STOUT (voice-over): Now a new report says shareholders, supervisors and managers in Afghanistan's biggest bank led a scheme of fraudulent lending and embezzlement to the tune of more than $900 million. Massive losses led to the bank's collapse in 2010.

Congo's M23 rebels say that they are preparing to pull out of the city of Goma. M23 officers and soldiers tell CNN they will pull back to a position 20 kilometers north of the city after demands by regional leaders and the African Union. But there has been no sign of movement so far. The rebels say that they will keep their administration in Goma.

Egyptian police have fired tear gas at protesters in another day of unrest in Cairo. There are clashes and arrests reported. Demonstrators are refusing to move from Tahrir Square, demanding the president reverse his decision to expand his own powers. But it seems Mohammed Morsi is still now bowing to public anger.

The United Kingdom says it will not support a bid to upgrade Palestinian status at the United Nations in its present form. The general assembly is expected to vote tomorrow on whether to grant the Palestinians recognition as a non-member observer state.

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STOUT: China is at the center of growing international tension over a new map in its passports. It appears to show disputed territories as being Chinese, and that has outraged countries like India, Taiwan, Vietnam and the Philippines. Jaime Florcruz reports from Beijing.

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JAIME FLORCRUZ, CNN BEIJING BUREAU CHIEF: With a few subtle strokes, China has again infuriated some of its neighbors, this time with a map printed on the newly issued electronic passports that show territories claimed by China and some of its neighbors.

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FLORCRUZ (voice-over): The map includes a border region claimed by China and India and most of the South China Sea, parts of which are also claimed by the Philippines, Vietnam, Taiwan, Brunei and Malaysia.

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FLORCRUZ: Although these contested regions have been put in official maps before, the move to put them on new passports, however, is seen as a provocative act. Vietnam and the Philippines have lodged official diplomatic complaints. The United States have also weighed in.

VICTORIA NULAND, STATE DEPARTMENT SPOKESPERSON: We do have concerned about this map, which is causing tension and anxiety between and among the states in the South China Sea. We do intend to raise this with the Chinese in terms of it not being helpful to the environment we all seek to resolve these issues.

FLORCRUZ: China's foreign ministry spokesman defended the move.

HONG LEI, CHINESE FOREIGN MINISTRY SPOKESMAN (through translator): China's purpose in making these new passports is to improve the passport's technical function and provide convenience for Chinese nationals to travel abroad.

FLORCRUZ: This passport applicant has no problem with the map.

UNIDENTIFIED MALE (through translator): It's an accurate map. It's China's map. Is there a problem? No, there's no problem.

FLORCRUZ (voice-over): This would-be traveler hopes the controversy will be resolved.

UNIDENTIFIED MALE (through translator): This is an issue between governments. There might be some implications for ordinary Chinese citizens traveling to those countries. But I think the problem will not be too big.

FLORCRUZ: The map on the new passports has put other territorial claimants in a bind. If they affix official stamp on Chinese applications for visas, experts say, it could be interpreted as endorsing China's territorial claims. Vietnam, for instance, refused to stamp visas on the new passports. Instead, it stamps on a separate piece of paper, thus avoiding the appearance of accepting China's territorial claims.

The Philippines says it is keeping its options open -- Jaime Florcruz, CNN, Beijing.

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STOUT: Now Marissa Mayer is one of the most famous women in technology, becoming CEO of Yahoo! after a high-profile move from Google in July. And in her private life, she recently gave birth to her first child.

And now in her first public interview since taking charge at Yahoo!, she told "Fortune" magazine's Pattie Sellers that her priorities are God, family and Yahoo!, in that order. And she spoke out about how she's managed to balance it all.

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PATRICIA SELLERS, "FORTUNE" MAGAZINE: What is the most surprising thing to you about your life and career in the last few months?

MARISSA MAYER, CEO, YAHOO!: I think that there's two surprising things. And I can summarize it -- I knew that the job would be hard and I knew that the baby would be fun.

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MAYER: And I -- and the thing that surprised me and really puzzled me so is that the job is really fun --

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MAYER: -- like Yahoo! is a really -- Yahoo! is a really fun place. Yahoo! is a really fun place to work. And, you know, and I really, I love the people there. I love the spirit of the place. You know, there's an irreverence.

And because we're entitlement and sports, that's great. And the baby's been easy. The baby's been way easier than everyone made it out to be. And like that is -- and I know not -- I think I've been really lucky that way. But you know, I had a very easy, healthy pregnancy. He's been easy. And so those have been the two really terrific surprises, that the kids have been easier and the job has been fun.

SELLERS: What is the most -- what's the most important thing that you do to get it all done?

MAYER: You have to ruthless prioritize. And I do. And that's one of the reasons I haven't been talking and I'm going to go back to not talking for a while after tonight. I've been really internally focused. You know, I'm from Wisconsin and in Wisconsin, there's all kinds of people. But the one thing that's true of all of us is we all follow the Green Bay Packers to different degrees.

And you know, it's the -- the Green Bay Packers, the legacy and the lore there comes from their first coach, Vince Lombardi, who coached them to their early Super Bowl wins. And he's actually quite a pundit, like he -- it turns out these kind of phrases you hear, like "Quitters never win and winners never quit," that's a Lombardi quote.

Right? You know, "The only time success comes before work is in the dictionary." That's a Lombardi quote. Right?

And, you know, Vince Lombardi says, you know, "In my life, there are three things: God, family and the Green Bay Packers, in that order." Right? And like -- and you know, and I think that, you know, for me, it's God, family and Yahoo!, in that order.

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STOUT: For the full interview with Marissa Mayer, head over to our website. You'll also find out how Yahoo! wants to push ahead in the field of mobile technology. Just go to CNNMoney.com.

Now some reports of severe weather in southern Europe. Mari Ramos is back to tell us all about it. She joins us from the World Weather Center.

Mari?

MARI RAMOS, AMS METEOROLOGIST: Hey, yes, Kristie, we're just starting to hear reports of some nasty weather that continues to cross central parts of Italy as we head over to the south. And I'm going to show you that satellite image in just a moment and talk a little bit more about that.

But I want to start you off from north to south, where the weather is slowly starting to improve is across the U.K. After days and days of rain. It started last week (inaudible) some scattered rain showers. But for the most part the heaviest rain has stopped here across (inaudible). I want to show you very quickly this map right over here. It's a little confusing ,but let me go ahead and show you.

This is the -- right off the Web of the U.K. Environment Agency and we're looking at one town here in Wales. And you can see these areas in red. Those are the areas that have the flood warning. And this is what it looks like on the map. But on the ground, wow, it really is breathtaking. Let me go ahead and show you. Let's go ahead and roll those pictures.

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RAMOS (voice-over): And there you see it. This river, not only did it burst its banks, it cut off some major roadways. At least one person is dead as a result of this massive flooding that continues. The river levels here are slowly starting to come down.

There were rescues that were ongoing as people were trapped not only in their vehicles but also in their homes, extremely dangerous situation, people trying to get out with whatever they could carry. Sometimes that meant only the family pet, as you can see in these pictures. And it's going to keep going.

And we need to see one more picture here of a rescue, went inside a home there. You saw a little bit of that. These pictures here -- I guess we switched. Little different. This is from Italy, and we were going to talk about this in just a moment. What we have over here is a lot of heavy rain and can we go back to the pictures of Italy for a moment? There you go.

We have a lot of rain here and the reports of the tornado are actually south of Florence, southeast of Florence, I should say, in southern Italy. The local media reports are saying as many as 20 people may have been hurt.

This is all part of a larger storm that has been affecting this area. As you can see there, this is coming on the heels of some severe flooding that happened less than a week ago. So the ground already saturated; people just have had enough. Come back over to the weather map now. Here you have that area of low pressure. This is causing a lot of problems.

First of all, we have a pool of cold air that's coming down here. That is mixing in with all of this moisture that's in this area. So one of the results that we're going to see from this is going to be very heavy snowfalls across this northern area here of Italy, Switzerland as we head back over into France, that's going to be concern number one.

Concern number two is the potential for severe weather, and that's what we're starting to see already, Kristie. You mentioned a tornado. That happened here in the south of Italy. This storm has produced some very heavy rain across this area, and also some severe weather, as you just mentioned.

The other thing that we have to worry about is in places like Venice, for example, that push of water that continues to affect this region,, high water again a concern, aqua alta. They could go up to code orange already from now until Friday. That means about 50 percent of the city could be flooded by the high water.

So that area of low pressure will slowly lift to the north. The potential for severe weather stretches from southeastern parts of Italy all the way to the other side of the Adriatic, as you can see here, heavy snowfall into this area.

And then back over toward the west, some of the coldest temperatures so far this season. It will be cold, maybe 5 degrees below the average. You'll definitely feel the difference, and that's in your daytime highs. At night it will even be colder than that.

We are going to take a break right here on NEWS STREAM. But don't go away. More news right here on CNN right after the break.

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STOUT: You're looking at a digital rundown of all the stories in today's show. Now we've told you about the massive banking scandal in Afghanistan and a controversy over belly putters in golf. But now we're going to talk about something completely different, the ethics of robotics.

The use of drones in the military is probably familiar to most of us. But even though drones like this don't contain a human pilot. They are still operated by humans. And now a report is raising concerns about the next generation of autonomous robots, robots able to find targets and carry out attacks without any human intervention.

Human Rights Watch, along with Harvard Law School, released a new 50- page report on the concerns arising from this fully autonomous weapons. It says the robots' lack of human qualities is dangerous, like being able to distinguish between a soldier and a civilian. And the lack of accountability is a concern.

Now just who takes responsibility when something goes wrong? The report, it says a number of governments in the world are currently developing these types of weapons. But not all robots are killer. The driverless car is an automated technology that is already street legal in three U.S. states, California, Florida and Nevada.

And these autonomous vehicles could one day be better drivers than you and I. But could they be wired to have ethical systems to determine what's right and wrong on the road? And what does that mean for the future of robotics? Let's explore machine morality with our regular contributor Nick Thompson. He's editor of newyorker.com and he joins us now live from New York.

And Nick, I'm trying to get my head around this. In the future, a driverless car, it could be wired to make moral decisions on the road. Can you give us an example of a moral maneuver?

NICHOLAS THOMPSON, NEWYORKER.COM: Sure. I mean, it will have to be wired to make moral decisions. So let's say there's a deer running across the street, and if you swerve to miss the deer, you might hit another car. There's a 20 percent chance you'll hit the other car. What should you do?

Let's say that it's not a deer that's crossing the street. Let's say it's a pedestrian. Or now let's say it's a bus and there's a bus full of children and if you swerve to miss the bus, you'll probably go off a bridge and you'll probably die.

So the machine will have to make a decision over how much it values your life, how much it values its own car and how much it values whatever it's about to hit. It'll have to make decisions based on all of that. It's just it's a reality. They're going to have to program that in in one way or another. It will be in the code which is kind of an amazing fact.

STOUT: Can we apply this same kind of thinking to military robots? I mean, "RoboCop" style malfunctions aside, should a military robot be programmed to be ethical?

THOMPSON: Yes, absolutely. That's something that is going to have to happen. We have a piece on newyorker.com by Gary Marcus (ph) that touches on this. There was some new -- the Pentagon just declared that from now on if a robot or a drone kills you, there will be a human who will -- who will be involved in flicking the switch and making the final decision.

So should robots have some kind of ethics programmed into them? They're going to have to. You're going to have to have some sort of -- some sort of way that a powerful robot will know when to stop, who to kill, who not to kill, what to shoot, what kind of buildings not to shoot.

It's just like the decisions that the driverless car has to make ,but with vastly higher stakes and much more complexity in the code. And we're going to have to really start thinking through these things. We're a little bit a ways from having to actually make the decisions and write these things in. But we're not as far away as you might think.

STOUT: Now let's bring up a truncated version of the three famous robotic ethics laws of Isaac Asimov. Now, number one, a robot may not injure a human being. Number two, the next one, a robot must obey the orders given to it by human beings. And then the last one is that a robot, it must protect its own existence.

Now assuming that artificial intelligence and robotics technology can truly create an autonomous robot one day, are these laws effective or not?

THOMPSON: Well, they're a good start, right? So first they'll have to be able to actually do them. We'll have to figure out how to make robots self-aware, but we will get to that step. Then the law that a robot should never harm another human being, well, that's a little tricky.

Like think about the example of the driverless car, where it can either hit a car or it can hit a bus. I mean, you may actually have to in order to produce less harm overall, you know, cause some harm in the beginning. And then there's another question.

Once the robots become extremely self-aware, once they actually are really thinking machines, so this is 20-30 years out, then under Asimov's laws, the robots actually really have no rights. You're treating them as slaves.

So that's then kind of a complicated ethical issue. At what level do robots have rights? Do they have the same rights as large animals? Do they have the same rights as small animals? I mean, these are -- they seem like zany questions, but they're actually important questions that people are starting to think through and that we're going to have to put a lot of -- a lot of thought into in the future for sure.

STOUT: Yes, we need to do this. But what kind of work is being done today developing machine morality?

THOMPSON: I think very little. I mean, there is the -- the Human Rights Watch report came out, and it's, you know, fascinating; it's important. It started a conversation. It's a little bit unnerving. You read it and you suddenly get the sense that, you know, Pol Pot's robot army is coming west on 42nd Street. It's a little bit over the top. But it does start a very important conversation.

There are professors who work on artificial intelligence who are beginning to think through these questions. The Pentagon as shown by the order put out last week or the statement it put out last week is starting to respond to some of these questions.

So what you have to hope is that these conversations begin in universities, begin in computer science labs, the people who are building these machines and then trickle up to politicians and people working in the Defense Department. And then also people working at Google. Google is going to build these cars and they're going to write that code.

So the initial code will all be done by engineers at Google. So the moral standards, you know, you choose utilitarianism? Do you choose absolute protection of the owner of the vehicle? Which one of these standards do you choose? That will probably be first made by somebody at Google.

So there's a lot of pressure on them. Eventually it'll be revised by somebody in Congress. But, you know, the way technology changes, the initial crucial decisions are made by these companies.

STOUT: Yes, and it -- robot ethics, a meaningful discussion and research needs to be done right now, starting today.

Nick Thompson joining us live from newyorker.com, fascinating discussion, thank you.

THOMPSON: Thank you, Kristie.

STOUT: Now speaking of machines, China has revealed its newest additions: drones. They've become quite a talking point online as both models bear striking resemblances to the American drones being used in Pakistan and Afghanistan.

Now here's the Chinese drone and here is the American Reaper drone. The one way they don't resemble each other is in price. One of these Reaper drones cost about $30 million but the Chinese drone costs about $1 million.

Still ahead, you're watching NEWS STREAM. We got a do-it-yourself guide to help bring the sounds of Christmas to the office. Details coming up.

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STOUT: Now the much anticipated prequel to the "Lord of the Rings" trilogy is holding its world premiere in Wellington.

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STOUT (voice-over): Dr. Peter Jackson and the cast arrived on Tuesday. The film is generating Hobbitmania. It is the first of three installments of the book by J. R. R. Tolkien, and here's a sample.

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IAN HOLM, ACTOR, "OLD BILBO": My dear Frodo, you asked me once if I had told you everything there was to know about my adventures. While I can honestly say I have told you the truth, I may not have told you all of it.

IAN MCKELLEN, ACTOR, "GANDALF": Bilbo Baggins, I'm looking for someone to share in an adventure.

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STOUT: And even though the movie has already had its premiere, it won't actually open in cinemas in the rest of the world for another two weeks.

Now Christmas is still a few weeks away, but the season it's already in full swing with familiar decorations like these coming out of storage. And if you can't get enough of the holiday cheer, why not take it to the next level by performing your own carols? Jeanne Moos found out it might be easier than you think.

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JEANNE MOOS, CNN CORRESPONDENT (voice-over): It's one of those omnipresent Christmas songs you hear --

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MOOS (voice-over): -- played on cellos, or performed by vocalists. But now the ding dong is coming out of the office phone.

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JENNIFER BLAKELY, OWNER, ALPHABET PHOTOGRAPHY: The day of, there was over 250 takes.

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MOOS (on camera): It wasn't like you dubbed over sounds.

BLAKELY: No, no, all the sounds are real.

MOOS (voice-over): Produced at the warehouse where Alphabet Photography assembles their products in Niagara Falls, Canada. Owner Jennifer Blakely used a mix of her employees and local musicians to create a do-it-yourself version of "The Carol of the Bells."

BLAKELY: The janitor was also -- he's actually a local rapper.

MOOS (voice-over): The guy manning the phone like some demonic elf --

JOEL VAN VIJET, MUSICIAN: Demonic?

MOOS (voice-over): ... is a singer-songwriter named Joel Van Vijet.

VAN VIJET: I got excited.

MOOS (voice-over): Alphabet Photography is a small company, and unlike Walmart --

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MOOS (voice-over): -- unlike the NBA --

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MOOS (voice-over): -- Jennifer can't afford a big ad budget, so this is a sort of viral Christmas commercial.

Two years ago she organized a Christmas flash mob in a mall food court. That video now has 39 million views.

The new video starts with dial tone.

MOOS (on camera) Imagine all those folks at home who are going to be dialing 9591.

MOOS (voice-over) Take it from the demonic dialer.

VAN VIJET: If people are trying to play it, just know that not all telephones are in the same key.

MOOS (voice-over): My producer found a better combo.

UNIDENTIFIED MALE (via phone): Pound, eight, pound, four. Listen to this.

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UNIDENTIFIED MALE (singing): Pound, eight, pound, four. Pound, eight, pound, four.

MOOS (voice-over): It will either sweep you of your feet or leave you wishing for dial tone -- Jeanne Moos, CNN.

MOOS (on camera): What's the Beethoven one?

UNIDENTIFIED MALE: Oh. Five, five, five, seven.

MOOS (voice-over): -- New York.

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STOUT: Now we journalists, we will go to great lengths to get a story. Sometimes our efforts pay off. Sometimes not so much. But this week our hearts, they go out to a Japanese football reporter. His name? Daisuke Nakajima.

Japanese and British media report that he was sent to cover a match between the hugely popular but recently relegated Glasgow Rangers and their rivals, the Scottish 3rd Division Elgin City. I'm not exactly the Champions League final here, but the gallant investigator, he was committed to his coverage.

Now he boarded a flight from Tokyo and after 14 long hours on the plane, plus transfer, he had finally arrived in the Scottish capital of Edinburgh. Alas, Rangers, were not playing on home ground a mere hour away in Glasgow. And so he boarded a train and traveled five hours north to the small county town of Elgin.

But when he got there, the town was rather bare. The reason? Well, the pitch had been canceled due to fears of overcrowding by Rangers fans at the stadium. Now Daisuke, he didn't get the story. But he can take heart in knowing that he became the story and won a few fans of his own.

And that is NEWS STREAM. But the news continues at CNN. "WORLD BUSINESS TODAY" is next.

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