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QUEST MEANS BUSINESS
US Senators Slam JPMorgan; Record Insider Trading Settlement; Too Big to Jail; European Bailouts; Ireland's Progress; European Markets; Dow Winning Streak in Jeopardy; Diageo-Guinness Ready for St. Patrick's Day; More Troubled Waters for Carnival
Aired March 15, 2013 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: Tonight, deceived, disappointed, let down. A former JPMorgan executive says the London Whale losses weren't her fault.
Carnival cuts forecasts and brings a defective cruise ship back to port.
And the eyes have it. The technology behind the latest of Galaxy's gimmicks.
I'm Max Foster in London. This is QUEST MEANS BUSINESS.
A shameful, reckless runaway train. US senators have slammed JPMorgan over its multibillion-dollar trading losses. The bank's executives have been hauled in front of lawmakers in the government's first major inquiry into last summer's bad debts.
And this can all be traced back to one employee: that is the London Whale, real name Bruno Iksil. His team ran up thousands of losses of around $6 billion, which prompted this investigation.
Senior senator Carl Levin, who's heading the committee said the bank's laissez-faire culture was to blame.
(BEGIN VIDEO CLIP)
SEN. CARL LEVIN (D), MICHIGAN: Our findings open a window into the hidden world of high-stakes derivatives trading by big banks. It exposes a derivatives trading culture at JPMorgan that piled on risk, that hid losses, that disregarded risk limits, that manipulated risk models, that dodged oversight, and that misinformed the public.
(END VIDEO CLIP)
FOSTER: Well, CEO Jamie Dimon is not testifying at this hearing. He famously described the whole affair as a tempest in a teapot before admitting he was wrong. Instead, the highest profile name to testify is Ina Drew. She was the chief investment officer when those trades were made, and she quit once the losses came out.
In today's hearing, she said she'd been misled and let down by a financial tool that should have sounded the alarm. In bank-speak, it's called the Value at Risk, or VAL model.
(BEGIN VIDEO CLIP)
INA DREW, FORMER CHIEF INVESTMENT OFFICER, JPMORGAN: The company's new VAL model was flawed and significantly understated the real risks in the book that were reported to me.
And second, some members of the London team failed to value positions properly and in good faith. They minimized reported and projected losses and hid from me important information regarding the true risks of the book.
(END VIDEO CLIP)
FOSTER: Well, Maggie Lake has been following the inquiry from CNN New York. Maggie, what did you learn that was new today?
MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Not much, Max, except that the conversation that we've been having ever since the financial crisis doesn't seem to have progressed anymore.
While we were watching this, we had the same uncomfortable feeling, or I did, when Goldman executives were testifying back in 2010, that here you have the smartest bankers out there, people paid millions of dollars for what they do, who are saying over and over, essentially, "I don't recall," "I'm not sure what happened," "the risks controls didn't work."
That does not make one feel very good. Clearly what we can take away from that is that these banks are far too complicated to police. For those who believe they are too big to fail, the question remains, should they be engaging in this activity at all, in this sort of derivatives, in highly leveraged bets? Or should they get back to the basic business of banking?
That question still out there years after we saw Lehman fail and that sort of chain of events almost bring down the financial crisis. Which is why, five and a half hours into this today, a lot of people are saying what a monumental waste of taxpayer dollars.
FOSTER: And extraordinary at the same time that we have the FCC saying it's agreed the largest ever settlement over insider trading in history. So what can you tell us about that?
LAKE: Yes, so that is also interesting. And I think it maybe is going to sort of draw upon the same level of frustration. This is the largest settlement for insider trading, so it is significant in that. And this is millions of dollars, $612 million for these two different unites of FAC -- FAC is really been in the spotlight for insider trading.
The government's circling around Steve Cohen in this very lucrative hedge fund. You see some of the details there. Steve Cohen himself not charged with any wrongdoing in this. But Max, $612 million, $614 million is a drop in the bucket for this type of fund. Steve Cohen's net worth something like $9 billion.
So critics who say that insider trading and that banks overall -- hedge funds overall -- cheat, gain the system for their own profits, are going to look at this and say nobody's gone to jail. Why isn't anyone going to jail for any of this?
So, along that same vein, a little frustrating. There are those who say the government is having an impact, they are getting these big settlements and they're sort of getting closer, but we still don't see people going to jail for this, Max.
FOSTER: That's it, isn't it? Maggie, thank you very much, indeed. Todd Benjamin is a CNN contributing editor.
TODD BENJAMIN, CNN CONTRIBUTING EDITOR: Good to be here, Max.
FOSTER: It does -- you do get this sense that as painful as these hearings are, no one's really suffering as a result of them.
BENJAMIN: Absolutely not. In fact, if you look at Jamie Dimon's pay for 2012 because of what happened with the Whale and the $6 billion in losses, they cut his pay by 50 percent. But you still got $11.5 million.
Now, $11.5 million is still a tremendous amount of money, and it sends to me the wrong signal in terms of culpability and really feeling contrite about this. I think Jamie Dimon cares about this because of what it does to his reputation and ego, not because he really feels badly in terms of what this means on the larger picture.
Also, he was the one who apparently took this chief investment office and transformed it from a fairly conservative operation into taking more risk. So, he has to have some of the blame. Ina Drew, who we heard there, said listen, it wasn't my fault, the model didn't work. Well, I'm sorry, when you have a culture which takes on risk, then you have to expect possibly something like this happening.
And finally, if you look at the amount of pay that these traders were paid, let me just point a couple of things out to you, OK? The person who basically was -- the trader who was behind the expansion in this office, all right? In two years -- in two years -- he made $22 million, OK?
The Whale, before everything exploded, he made $14 million in two years. And as supervisor, made $24 million in two years. They were being extremely well compensated to take on risk because they were making a lot of money for the bank, and everything was fine until it all blew up. Something has to change.
FOSTER: What's Washington doing about this? Seeing these people appear in Washington, but where's the Washington reaction to make sure it doesn't happen again?
BENJAMIN: Well, you heard what Carl Levin said, and I agree 100 percent with him. Do I think a lot will change as a result of this going forward? I'm skeptical, and the reason is because Washington is basically fueled by money. The lobbyists, of course, have the politicians in their back pockets, all right?
Wall Street contributes a lot of money, JPMorgan, Goldman Sachs, a lot of money to politicians. At the same time, those politicians know they have to have a lot of money to get reelected, and therefore, they will vote in the interest of Wall Street, not in the interest of the public. So, I am somewhat skeptical.
FOSTER: In terms of the idea of corporate responsibility here, as you say, the chief executive ultimately responsible. But you don't get the sense that he feels that way. He's not -- he shouldn't be accepting these big pay packets, as you say, is one thing. But also this idea that people at a lower level were to blame. And isn't that the role of a chief executive to take responsibility?
BENJAMIN: Well, I think he takes responsibility. But I don't think he feels terribly badly about it. The only reason I think he feels badly about it is because of his ego and the reputation to him and his firm.
But I don't think he feels enough contrition to say no, I don't deserve any pay at all. He still got $11.5 million, even though there was a massive screw-up on the part of the JPMorgan trading organization, which he basically gave his blessing to to expand to become more risky.
He was aware of these pay packages and he was the one, according to Bloomberg, which published several stories last year, that said let's expand and get more risky.
FOSTER: OK, Todd, thank you very much, indeed. Now next, bailouts old and new. As officials draw up a rescue plan for Cypress, we'll look at how Ireland is getting ready to go it alone once more.
FOSTER: Well, Cypress could soon be the fifth eurozone state to receive a bailout. Tonight, European officials are working in Brussels to finalize a rescue plan that's likely to include strings such as tax rises and privatizations.
The size of the plan won't be anything like what we've seen in Europe's four other bailouts. Cypress accounts for just a fifth of one percent of Europe's GDP.
Now, Portugal has been given an extra year to meet the conditions attached to its rescue package. The European Central Bank, European Union, IMF say the prospects for growth are now weaker and Portugal can't keep to the path it set out for it. Portugal now has until 2015 to cut its budget deficit to 3 percent of GDP.
And Ireland returned to the ten-year bond markets this week, two and a half years after receiving its bailout. It raised $6.5 billion and turned away almost the same amount. IMF head Christine Lagarde says Ireland is setting standards in terms of success in reforming its public finances.
As deputy prime minister, Eamon Gilmore joins us now from CNN Center in Atlanta. Thank you so much for joining us. You've been through a hell of a ride, haven't you, over the last few years? Where would you define where you are right now in terms of the economic recovery?
EAMON GILMORE, DEPUTY PRIME MINISTER OF IRELAND: Well, we have been through a very difficult period over the last number of years, and Irish people have certainly endured a lot of hardship. We've seen reductions in income, we've seen new taxes increase.
But there's been a determination, both by the government and by the people of Ireland, that we are going to emerge from this crisis, that we are going to emerge from the bailout that we were put in almost three years ago now, and that we were going to succeed.
We've done a number of things. We've got down our budget deficit. We're now on target to get that down to 3 percent by 2015. We very quickly decided to recapitalize our banks and to get to the bottom of the problem that there was with our banks and to restructure them.
We have dealt with the legacy of the bad bank that we inherited. We've recently liquidated that, and we've secured agreement from the ECB for a longer-term arrangement. And this week, we're back in the bond market for ten-year money.
So, we're making progress. We've still a lot to do. We still have a very high level of unemployment, particularly among young people, and that is why we're putting a very big focus at the moment on attracting investment to Ireland to create the jobs that are necessary to make our recovery sustainable.
But whereas two years ago people were talking about Ireland needing a second bailout, now we're looking at emerging from the bailout that we were in. We will be out of the EU-IMF program this year.
FOSTER: Yes, you were talking about the bond sales. The bond sale this week, I think 12 billion euros worth of bids. An extraordinary auction, wasn't it, in the end? Where are you in terms of what you need?
GILMORE: Well, in terms of money to run the state, we are now in a situation where we will be able to raise that in the normal way in the markets. There is clearly a lot of interest.
We're very encouraged by this week's auction. It's showing that there is renewed confidence internationally in Ireland. And that is, we believe, is going to continue. We've met all of the targets in the bailout that was provided for us, and we have taken some very difficult decisions.
This has been a difficult two years for us. We've taken difficult decisions in reducing public expenditure and getting our public finances under control and introducing a range of structural reforms. We have a much more competitive economy now.
We are a good place in which to do business. We have sorted out the bank problem. We have sorted out the problems in our public finances. Now what we have to do is to press ahead, to get more growth in our economy.
We do have growth. This is the third year that we're going to see growth in the Irish economy. It is small growth. I was very encouraged, I must say, by the figures that were published a couple of weeks ago. We show that for the first time since 2008, we've seen an increase in the number of people at work in our country.
But we have a lot more to do on that front. We have to increase the number of jobs that are being created and we have to increase the amount of investment in our country.
FOSTER: You took 85 billion euros worth of loans, didn't you? There was a criticism at the time that the conditions attached to that were draconian and that you wouldn't manage it. You clearly have managed it, because you've actually stuck to those draconian terms to the -- to the very letter.
What do we think -- the other countries going through the bailout process can learn from that? Because again, there's an accusation that these terms coming out from Brussels are just too strict.
GILMORE: Well, I think the first thing is that we showed a determination that we were going to get out of the program, that we were going to implement the program. By showing that determination and by meeting the targets that were set for us, we were able to renegotiate a lot of the terms of that original bailout.
We did succeed in getting a very significant reduction in the original interest rate, which had additional interest piled onto us. We succeeded also in getting agreement about issues like the sale of state assets.
And of course, recently we succeeded in getting agreement about the repayment of what were called the promissory notes. This was a payment of over $3 billion a year that was required to be put into what was essentially a dead bank.
We were able to get agreement from our partners on that because they saw that we were serious about making recovery, that we were serious about implementing the terms of the program, and of getting out to it.
We set ourselves determinately as a country to recover from the -- what had happened in our economy, to get back on our feet, to get back into the market, to recover our economic sovereignty. And we are now doing that.
It has been a difficult task. It has been a difficult journey for us. It's been a particularly difficult journey for our people, who stuck with this and who understood that it is necessary to make difficult decisions in order to bring about the stability.
And the basis on which investors will have confidence to put their money in a country and to invest in a country where they can make a return and where jobs will be created. And that's our -- we're now entering a new phase of this, and the phase of this now is to press on with the investment --
GILMORE: -- with the job creation that will make our recovery sustainable.
FOSTER: Eamon Gilmore, thank you very much, indeed, for joining us.
Much of Europe's main stock indices ended Friday's session in the red in the end. Energy shares dropped. Shares in Total and Shell each fell more than 1 percent. Car makers also fell. Volkswagen was the worst performer on the DAX, down by around two and two thirds of one percent. Renault closed 2.4 percent lower. Zurich SMI the only one up.
If we look at the figures over the course of the week, it's not as gloomy. The SMI managed gains of more than 1.5 percent.
Stocks on Wall Street are heading lower after a record-breaking run for the Dow. So, it's not too bad, Alison Kosik.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Hi, Max. It looks like with 45 minutes left to go before the closing bell, the Dow's winning streak is coming to an end.
A weaker than expected report on consumer sentiment from March weighing on stocks a bit, but what a run it's been for the Dow, ten winning sessions in a row. But we are still on S&P 500 record watch. It is still within striking distance of its record high.
So, you know what day it is? It's only a couple days before St. Patrick's Day, and what better way to celebrate than be with Diageo, the world's biggest spirits maker. And with me right now, joining me, are Greg Kryder, he's the CFO of Diageo North America, thanks for joining us, and Sheila Stanziale.
SHEILA STANZIALE, PRESIDENT, DIAGEO-GUINNESS USA: Yes.
KOSIK: Thank you. It's -- she's Diageo-Guinness USA president. I want to talk about St. Patrick's Day and Diageo. It's an important day, isn't it?
STANZIALE: Big day, and big weekend, really, Alison. And we've really started celebrating the holiday already. We promote great brands, like Guinness, Bailey's, and Bushmills this weekend like never before.
And for all the consumers out there who will enjoy our big brand, Guinness, they really have a chance to do it two ways. First with a pint of Guinness. We'll serve probably 33 million pints this weekend, or even with a Guinness black lager, a light, crisp, refreshing beer. And we know we're going to sell a lot of those this weekend, too.
KOSIK: Yes, Guinness is sort of expanding into lager. Why now?
STANZIALE: Why now? Well, it's -- the Guinness brand is doing very well. There are a lot of lager drinkers, more lager drinkers in the US, actually, than stout drinkers. And we -- so our strategy really is to bring the Guinness brand into this gigantic pool of lager drinkers and bring some of those drinkers into the Guinness franchise.
KOSIK: OK, so Greg, I know the share price has certainly been on quite a run, up -- what? -- 30 percent over the past 12 months. Up 60 percent over the past two years. Can this kind of growth continue?
GREG KRYDER, CHIEF FINANCIAL OFFICER, DIAGEO NORTH AMERICA: Our business at Diageo is thriving right now, and it's really the result of our -- the strength of our global brands, our leadership in the US spirits market, as well as an increasing presence in the fast-growing emerging markets.
So, we have a proven strategy of investing behind our iconic brands, whether that's Johnnie Walker, or Smirnoff, or Crown Royal, or Captain Morgan, or Guinness, or many others.
And we're also in vesting behind new products. Sheila talked about Guinness black lager. We also have for St. Patrick's Day, we have Bushmills Irish Honey, which is a great new variant from Bushmills. And Baileys hazelnut, which is a new flavor that tastes great, like Baileys.
KOSIK: What kind of pressure has been on the company because of the recession in Europe, especially Southern Europe? I understand that sales have a hit as much as 19 percent in Southern Europe. How are you sort of making up for that?
KRYDER: Our business here in North America is very robust, and we represent about 30 percent of Diageo's sales, and almost 40 percent of the group's profits. So, the success that we're driving here in North America is having a big impact on our group results.
KOSIK: And with the economy just globally not really operating on all cylinders, do you see any kind of slack in sales for premium brands and more of a run toward the non-premium brands?
KRYDER: We actually see quite the opposite. Over the last couple of years, we've seen a move from consumers that more premium-priced products. And I think it's around affordable luxury and people treating themselves to a Tanqueray and tonic or a Johnnie Walker Blue Label. But we see that robustness right now.
And fortunately for us, our portfolio is premium-based. It's at the higher end of the price point, so we're taking real advantage of that.
KOSIK: OK, well thanks so much for joining us. With St. Paddy's day just a couple days away, I'm sure lots of people are going to be dabbling in a little Diageo brands. Max, back to you.
FOSTER: Alison, thank you very much, indeed.
Just ahead on QUEST MEANS BUSINESS, sailing into troubled waters again. A third Carnival cruise runs into problems in just this week alone, actually. We'll cross live to Miami for the very latest.
FOSTER: Carnival cruise lines has cut its revenue and profit forecast for the year after a third ship this week ran into trouble. The Carnival Legend is having technical difficulties affecting its sailing speed. Because of that, it's having to scrap a scheduled stop in Grand Cayman and head straight back to its final destination of Tampa, Florida.
Just last month, an engine room fire crippled the Carnival Triumph, leaving it adrift in the Gulf of Mexico with more than 4,000 people onboard. Carnival is the world's largest cruise line operator. Cristina Puig is outside the company's headquarters in Miami and joins me now. This is -- I mean, it's just extraordinary, isn't it?
CRISTINA PUIG, CNN CORRESPONDENT: Yes, Max. This is really unbelievable. Talk about bad luck, whatever you want to call it, a PR nightmare. The fact is that in the last month, they've had four ships that have suffered casualties, let's call it that.
It began with a month ago the Triumph, which as you remember, was floating at sea for about five days and had to be towed into Mobile, Alabama because of an engine room fire that disabled the ship.
Then there was the Elation last Saturday that apparently reported problems with the navigation of the ship. And then there was the Dream, which happened on Wednesday, and then just yesterday, the Legend. So, it can't get any worse than this.
FOSTER: And in terms of the reaction from the company, how are they reacting to all of this? How are they explaining it?
PUIG: Well, actually, the company has been reacting very well to all of our inquiries. They've really gone to social media, in fact, on Facebook, to get their message out to everybody, posting statements about exactly what's going on, what they're doing to take care of the situation, what they've been doing to provide comfort for the passengers.
And despite everything that's been happening and the passengers being so-to-speak stranded because -- in this case, they were lucky they weren't out at sea like those on the Triumph. They were stranded in a port.
Once those minor problems were taken care of with their generator, their backup generator, then things went back to normal. They just weren't able to actually leave the port and bring everyone back to Cape Canaveral.
But in the meantime, the guests onboard have been saying that things have been going on. Their daily itineraries, guests have been accommodated as if they were at sea.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Well, we didn't have any problems at all. We had an hour that you couldn't flush the toilets or use an elevator or the air conditioning wasn't on in some areas, but like I say, it was only about an hour.
And other than that, everything was good to go. They did everything possible they could to accommodate everyone and all their different situations. And I'm extremely pleased. No problems at all.
(END VIDEO CLIP)
FOSTER: Well, Cristina Puig, thank you very much, indeed, for bringing us that story. They just keep coming, don't they? Still to come on tonight's program, the fight against piracy at sea. We go aboard a NATO patrol ship in one of the busiest and most dangerous waterways in the world.
MAX FOSTER, CNN HOST: Welcome back. I'm Max Foster in London. These are your news headlines.
(BEGIN VIDEO CLIP)
FOSTER (voice-over): Just a few minutes ago, the United States announced extra steps to guard against a potential nuclear missile attack from North Korea and Iran. Defense Secretary Chuck Hagel announced plans to install 14 anti-missile interceptors in Alaska. Hagel said the plans were in the interest of national and international security.
CHUCK HAGEL, U.S. SECRETARY OF DEFENSE: The American people expect us to take every necessary step to protect our security at home and U.S. strategic interests abroad. But they expect us to do so in the most efficient and effective manner possible.
By taking the steps I'd outlined today, we will strengthen our homeland defense, maintain our commitments to our allies and partners and make clear to the world that the United States stands firm against aggression.
FOSTER (voice-over): One of the first Syrian rebel fighters trained by the U.S. military have returned home. A spokesman for the rebels says around 300 fighters received specialized weapons training and more are being trained right now. The U.S. denies providing any lethal assistance to the rebels.
Chinese President Xi Jinping congratulations his number two, his new one, Li Keqiang was confirmed as premier by the National People's Congress earlier today. He succeeds Prime Minister Wen Jiabao.
Boeing's Dreamliners could be back in the air within weeks, 50 of the 787s were grounded in January after battery related fires on two of the planes. Boeing says a redesign case has fixed the problem.
MIKE SINNETT, CHIEF PRODUCT ENGINEER, BOEING: This enclosure is very important because, number one, it eliminates the possibility of fire. I want to make this point very clearly: it has been misreported that all we're doing is building an enclosure around a potential fire. And I want to be very, very clear on this point. This enclosure keeps us from every having a fire to begin with.
(END VIDEO CLIP)
FOSTER: Tonight, sea pirates, many of them from Somalia, are holding 65 people and five ships hostage. That figure is dramatically down from five years ago. Pirates attacks, at least in the Gulf of Aden, are on the decline. International naval forces working together to combat the threat. Nima Elbagir is aboard one of NATO's patrol ships, the San Marco. She joins me live off the coast of Tanzania.
What have you been discovering?
NIMA ELBAGIR, CNN CORRESPONDENT: Well, I can tell you, Max, that that figure has dropped even further. Two more ships have been freed off the coast of -- on the coast of the Indian Ocean. And this is part of a broader operation that's been going on since 2009. This is the first year, really, where we're seeing such a dramatic decline. In 2012, there were 212 hostages.
Now in the early part of 2013, there are 60 hostages and three ships still being held. Of course, all this vigilance is coming at quite a cost for the international economy. Last year it cost about $7 billion. That's not just, of course, in terms of the ships patrolling these waters. That's also the rate insurance costs, the security contractors on board these commercial fleets.
Effectively, it acts as a tax on every good that comes through one of the world's busiest waterway, through the Gulf of Aden here.
And that's one of the reasons that NATO is now seeking to entrench cooperation with the regional navies in this area to try and make this operation more sustainable in the long term and to allow the countries overlooking the Indian Ocean to better police their back yards and to better police their economy, because this is also obviously having a massive impact on the economies along this coastline.
One of the Tanzanian generals that we were speaking to said that they've seen a rapid drop in cruise ship traffic through this area. So it really does feel like it's in everybody's interest to bring as many players into this game as possible. The admiral on board the ship that we're on today, Admiral Natali (ph), he's the commander of Operation Ocean Shield.
And he said that what everybody just has to accept is that not one country, not one coalition has been able to act on piracy. It had to be a conglomeration of nations and navies working together. And the more people that come to this table, the more sustainable this is in the long term, Max.
FOSTER: If it continues to be successful, is there a risk, though, the pirates will just find somewhere else to be based?
ELBAGIR: Well, you have two very different (inaudible). You have the piracy of the coast of Somalia and that, of course, a massive part of that issue is the lack of a stable state in Somalia. So they have the ability to go onto land and take their hostages onto land. And they have a retreat there.
The phenomenon that we're seeing on the opposite coast, in the Gulf of Guinea, that's a very different phenomenon, because you do have stable states there. So the piracy there, I mean, and the statistics on this are still very scarce, Max.
But the sense that people have is that that is more violent. What they're speaking is they're seeking to take cargo rather than hostages. But that's something that people are watching very closely, Max.
FOSTER: OK, Nima, thank you very much indeed. Look forward to your reports coming out from there.
Next, look but don't touch. We'll show you how Samsung's latest smartphone can do what you want it to do without you even having to lift a finger.
FOSTER: Samsung has lifted the lid on its flagship Galaxy S4 smartphone. As well as being faster, thinner and lighter, it lets you use certain features without even laying a finger on it. (Inaudible)?
(BEGIN VIDEO CLIP, "MINORITY REPORT")
FOSTER (voice-over): Tom Cruise used this (inaudible) to report just by waving his hands around.
(END VIDEO CLIP, "MINORITY REPORT")
FOSTER: That's something you can now do for real with the Galaxy S4 if you don't mind looking a bit daft. Jason Jenkins is the editor at CNET UK. He talked to me about some of the Samsung Galaxy futuristic new features.
(BEGIN VIDEO CLIP)
FOSTER: So, Jason, three features, obviously very clever. We're going to go through them. We're going to find out whether or not they're features or gimmicks. You're going to be the judge.
So this feature, tilting scrolls the screen.
JASON JENKINS, EDITOR, CNET UK: Yes, that's right. As you kind of adjust the -- where the phone is, it moves the Web page down (inaudible) look at. So if you don't like touching your phone, you can just kind of dip your phone like that and the page will scroll.
FOSTER: And what's the technology that allows that to happen?
JENKINS: Well, inside, there's an accelerometer which basically knows which way the phone is up. So as you adjust it, the screen changes. It's quite simple.
FOSTER: Is that a feature or is that a gimmick?
JENKINS: Oh, I think that's a feature. That's quite clever. I think as you use it, I think it becomes more natural.
FOSTER: But what's the point?
JENKINS: I guess the -- if -- because it's such a big phone, it's actually quite -- it gets quite hard to sort of start doing things with different hands.
FOSTER: So it is useful?
JENKINS: It's useful. You can hold the phone with two hands and just sort of tilt it.
FOSTER: We'll give them that. This is quite clever, isn't it? When you're watching a movie basically, or something, a video, as you move your head around, it pauses. I can see the sense in that.
FOSTER: How does that work?
JENKINS: Well, I mean, there's a camera on the front. And use it for video calling. But it can -- it knows when a face is looking at it with two eyes. And as you turn your face away, it knows that's gone away and it just pauses the video. When it sees that shape again, it plays the video once more.
FOSTER: And the problem with some of these technologies, to me seems, as a small thing -- and maybe I'm being a bit vain here -- but you've got to look a bit silly doing them. You're moving your head around on the train. It's a genuine problem, though, for some people, isn't it? Shy people at least?
JENKINS: Yes, I think it's a problem for most normal human beings. Yes, I mean, that's -- it -- this one is a bit more of a gimmick, I'd say, compared to the last one, because it -- we found when we saw things before, you showed them off to your friends. And the first thing, it just turned off.
FOSTER: All right.
Gesture controls. This is where it gets a bit gimmicky, I would say. Would you agree?
JENKINS: Yes, absolutely. We're getting a bit too "Minority Report" now.
FOSTER: So you can move things on the screen without touching it.
JENKINS: Yes, exactly. You're supposed to wave in front. There's loads of little gestures that (inaudible) come up with and that really would make you look like a mad person on the (inaudible) -- on the train.
FOSTER: So perhaps a gimmick, but actually could (inaudible) to something useful in future technology?
JENKINS: Yes, absolutely. I mean, all the -- all the hardware manufacturers who are exploring new ways to talk to their gadgets and voice is really interesting, other technology, which is in part which is in this phone, and I'm not so sure about gestures. But everyone was trying different things. And let's see what people actually like using.
FOSTER: So in terms of the development here, would you say not a great development, but at least it's sort of moving in the right direction?
JENKINS: Yes, well, Samsung's kind of known for stuffing all its products full of new features. And these are just three. But we know there are many, many more in this phone. And it appeals to a certain kind of person that really just likes his phones with loads and loads of things. If you want something a bit more straightforward and simple, well, maybe an iPhone's for you.
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FOSTER: Well, Jenny Harrison's at the Weather Center. And all this technology is ahead of you, Jenny, just sort of waving around and maps will be flying in and out of the screen.
JENNY HARRISON, CNN METEOROLOGIST: Yes, you're probably right, Max.
Yes, my goodness.
Yes. Yes. I'm just going to move on from that, tell you about the weather this weekend, because there's a lot going on.
We've been talking about the storms all week across western and central Europe. Now it's the turn of the southeast and in particular one storm system with its area of low pressure went through Bulgaria, quite a (inaudible), just look at the wind speed that was reported, 130 kph. That means winds stronger than hurricane force.
But this is what it did, some huge damage to this one particular (inaudible) and in particular one woman out; she lost her life on Thursday. Some scaffolding came down, collapsed from around a building and there was a lot of damage that actually led dozens of injuries as well to the town itself is declared a state of emergency here. Obviously, no power.
Friday those stores were still closed as well. And then from there what we saw mostly, rain with these thunderstorms and strong winds into southern Poland at the front of the line here. This is the snowplow trying to get out of this very, very deep snow.
Remember all week again, we've been saying the snow very heavy, wet snow with all the moisture it's been picking up from the south from the Med. And then turning to snow in this very, very cold air. So this is what everybody there is dealing with.
Again, this is one of the main routes actually through Poland from Krakow to Zuckerport (ph) and it's actually a ski resort up there, too, but as you can see, having a major knock-on effect. Now there are more warnings in place as we go through the next 48-24 -- 24-48 hours really across the southeast.
As the storm moves through, we could see more in the way of heavy rains and strong winds, even some tornadoes too. But all that snow now heading towards in particular Belarus and western areas of Russia.
Look at the amount of snow that's forecast in the next 48 hours. Twenty-seven centimeters from Minsk and then heading towards Moscow. So you are going to see a lot of snow. We'll just have to see exactly how much the closer the system gets, the cold air being squeezed to the east, much milder in the southwest.
And I mentioned that snow coming down in Minsk, well, right now, it feels like -17, the wind chill. Things are a little bit quieter across western Europe, some snow and some rain but the next system coming in, some very brisk winds here as well. So be prepared for some fairly widespread travel delays again this weekend, Max.
FOSTER: Jenny, thank you very much indeed.
That is QUEST MEANS BUSINESS. Thank you so much for watching. I'm Max Foster in London. MARKETPLACE AFRICA continues here on CNN.
ROBYN CURNOW, CNN HOST: This week we're in Lesotho. I'm Robyn Curnow and you're watching MARKETPLACE AFRICA.
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CURNOW (voice-over): A lot of South Africans wouldn't think twice about throwing burgers on their barbeque, but as consumers concerned about the origins of food, some are rethinking their appetite.
Researchers recently found traces of donkey, goat and water buffalo in the majority of beef products they tested. Local meat producers and vendors are now working hard to regain consumer trust and keep the industry from sizzling out.
UNIDENTIFIED MALE: This is the place to be. The meat, everything is going crazy. It's going crazy.
UNIDENTIFIED FEMALE: It's (inaudible). It's fun. (Inaudible). It's lovely (ph).
UNIDENTIFIED MALE: It's a good vibe, definitely a good vibe.
CURNOW (voice-over): This is Tusunyama (ph), a local Zulu term which literally means "burn the meat." It translates as barbeque or, as locals call it, bry (ph).
UNIDENTIFIED MALE: You choose your meat. We grill it for you and we've got a table to sit, we serve you.
CURNOW (voice-over): There's one thing all South Africans have in common, it's their love of meat.
UNIDENTIFIED MALE: It's a Rainbow Nation. And how do we manage to bring the Rainbow Nation together into one spot where white, black, colored, everybody gets together over a piece of meat?
CURNOW (voice-over): Meat is big business in South Africa, so much so that when the nation celebrates its heritage on September the 24th, locals have unofficially renamed it Bryday (ph). The smell of meat on an open fire fills the air. And on average, a South African citizen eats about 41 kilograms of meat a year.
MATTHEW CURRAN (PH), DIRECTOR, CURRAN (PH) BEEF: The general South African loves his meat, be it whatever protein, be it beef, which is obviously what we would like everyone to eat more of, or be it chicken, be it lamb, you know. South Africans do enjoy consuming protein.
CURNOW (voice-over): Matthew Curran (ph) is the director of Curran (ph) Beef, a beef production organization just outside Johannesburg. This is Africa's largest feed lot. It accommodates a fifth of the nearly 2 million cattle that are slaughtered in South Africa's formal sector every year.
CURRAN (PH): If you were to compare the South African product to the overseas product, we believe -- and I really do believe that we have a superior beef product in South Africa. Our cattle are young, which gives you a very lean and tender product.
If you compare it to, let's say, U.S.A. beef, our beef would have more than half of the fat content that U.S.A. beef would have. So our product's leaner, it's healthier, it's more tender. So, you know, we truly, truly believe that the -- that the South African consumer, when they consume A grade beef, is eating the best beef in the world.
CURNOW (voice-over): And restaurant owner Steven Marrage (ph) agreed. He says his career path was set after he ate a tender South African steak.
STEVEN MARRAGE (PH), RESTAURANT OWNER: I came across the most incredible steak I'd ever had before. And I knew that this was (inaudible) defining moment where I knew what kind of restaurant that I actually wanted to have, around the meat that I'd just tasted.
So meat then got me hooked.
CURNOW (voice-over): And many others are hooked as well, specifically on red meat. In this small neighborhood, you'll find a steak house on just about every corner. They hardly stand out in a crowded marketplace. A local grill restaurant does so by offering a unique beef experience.
MARRAGE (PH): We take great pride in being able to share our passion, which is the kitchen tours. It's information that we pass on to our customers, which (inaudible) the aging process, the dry and the wet aging.
We've got a demonstration test kitchen where we take people through into the kitchen. We show them how they cook on Himalayan salt. We cook on wood stoves. We also offer beef appreciation classes.
CURNOW (voice-over): Still, beef in South Africa is considered a luxury item.
CURRAN (PH): The current economic pressure, you know, the monetary pressure on, you know, average South Africans is making beef an expensive protein. So you know, there's not too much growth currently. But you know, as people's economic situations improve, so the consumption of beef definitely does go up.
CURNOW (voice-over): And even though growth seems slow, there's enough demand to keep companies from exporting South African beef.
CURRAN (PH): We only export about 5 percent of our production. Ninety-five percent of our products will stay with inside Africa. And that's a strategic decision that we took.
We will always look after our home market first. We don't want to be a company that exports to the detriment of the local market.
CURNOW (voice-over): And this local market is becoming even more sustenance savvy, asking the question, what in our meat, given a university study last year that showed traces of donkey, goat and water buffalo, labeled as beef?
CURRAN (PH): No one can stop you from eating other proteins. But on the labeling, label correctly. Let the consumer know what they're buying and let them make the decision whether they want to consume those proteins. So what's currently happening is the mislabeling and it's illegal.
CURNOW (voice-over): The local grill restaurant knows transparency is good for its business, too.
MARRAGE (PH): Our client base knows that we age our meat on the premises. So we do the kitchen tours. We do beef courses. We also interact with our farmers that supply (inaudible) process is in place. And that means that anyone who eats at our restaurants has confidence in what they're eating.
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CURNOW: And coming up after the break --
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CURNOW (voice-over): Can Ghana avoid the oil curse that's plagued other African countries? Our "Face Time" guest says yes. But now without one key goal in mind.
CURNOW: Welcome back to MARKETPLACE AFRICA. We're in Lesotho. Join me now for this week's "Face Time" interview.
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CURNOW (voice-over): The discovery of oil off Ghana's coast has raised questions about whether the West African country can escape the so- called resource curse. This week's "Face Time" says the country can reap the benefits of its oil all the while being transparent.
Emanuel Kioli (ph) is the African regional coordinator for the Revenue Watch Institute and I sat down with him to discuss corporate and government accountability when it comes to doing business in Africa's natural resource industry.
CURNOW: Ghana, a whole lot of oil just came online in the last few years. How does it impact the country and how do you measure the transparency with that oil revenue?
EMANUEL KIOLI (PH), AFRICAN REGIONAL COORDINATOR, REVENUE WATCH INSTITUTE: There is some attempt to introduce complementary accountability mechanisms. And in this particular place in Ghana, the oil revenue money meant law requires the setup of an independent citizens' monitoring group.
And it's called the Public Interest and Accountability Committee, which is purely a civil society groups. They (inaudible). And this group is required under the law to periodically report independently of the Minister of Finance and the Bank of Ghana to the president, to parliament and to the general public.
CURNOW: Because that's always the key point, isn't it? There's this sort of windfall when it comes to natural resources, often doesn't make it through to the ordinary person.
KIOLI (PH): That's always the case. There is one major battle that has to be won, and that's ensuring economic rights desitisms (ph). We can only do that if you can monitor how public expenditure is made, how government collects money and how it spends the money.
That's the next big challenge for Ghana, making sure that the oil -- not just the oil but also money from mining, money from other sectors of the economy, that the money is spent on most important projects and in the construction or delivery of those projects that's valued for money.
And I'm talking here about dealing with corruption (ph) and leakages in the system.
CURNOW: Corruption is still such a worry, it's such a concern, such a drag on growth, isn't it?
KIOLI (PH): Yes, it is. If you look at how much, you know, countries in -- especially resource rich countries in Africa and what they are supposed to end from the natural resource sector, you know, it's four times and the total aid that, you know, come to this -- to these -- to this countries.
And so going forward, you know, if the second, the structive (ph) sector is managed well, you know, Africa has opportunity to be able to address issues of poverty and deprivation that we see all over the place.
CURNOW: And we understand that corruption, in a way, keeps people poor. But still, how do you fight it? How do -- how does this, an organization like yours really make a dent in the wall of sort of massive, systematic (inaudible)?
KIOLI (PH): There are -- there are -- there are -- (inaudible) I wish, you know, we had the answer. We would solve all this problem, you know, you know, that we making contributions to it.
KIOLI (PH): Yes, definitely.
CURNOW: Case by case.
KIOLI (PH): Case by case. But one of the -- one of the important contribution we have found from our work is, first of all, being able to ensure transparency across the entire chain. So transparency about how the mining oil and gas deals are made, how the licenses, who gets the license, you know, the --
CURNOW: So right from the beginning?
KIOLI (PH): Right from the beginning, across (inaudible) leading to the award of licenses, have to be very transparent. Then once the licenses are given, you know, the process of regulation, you know, will have on the government side, will also have to be very transparent.
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CURNOW: Well, you can watch that "Face Time" interview and many more on our website, which is CNN.com/MarketplaceAfrica.
I'm Robyn Curnow in Lesotho. Thanks so much for watching. Please do join us again when we explore another African marketplace next week.