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QUEST MEANS BUSINESS

ISIS Threat Looms Over Libya's Oil; Major Airlines Quit Venezuela; Stocks Inch Higher in Europe; Former Zurich Insurance CEO Commits Suicide; Cameron, Khan Unite to Oppose Brexit; Zhu: Structural Reform is Crucial in China; Bitcoin at Two-Year High Above $500; Israeli Company Masters Smartphone Hacking; Inside the World of Esports; Goenka: India Won't Face Issues with U.S. Trade. Aired 4-5p ET

Aired May 30, 2016 - 16:00   ET

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


[16:00:00] RICHARD QUEST, CNN ANCHOR: Tonight, ISIS fights for land and oil. Iraq and Libya push back against the terror group's war machines.

Flights to Caracas are canceled as airlines are now pulling out of Venezuela. And there is couch potatoes, they are tomorrow's sporting

legends. The a-game with Esports. No trading in New York. No trading in London. But not to fret. I'm Richard Quest live with you from the U.K.

where, of course, I mean business.

Good evening, the program comes to you tonight from London. And progress in the war on ISIS is threatening to cut off one of its main sources of

funding from oil sales. Forces combatting ISIS are making gains in Libya and in Iraq. It could be a crucial week for two countries both with rich

oil resources.

In Iraq first, where the offensive to retake Fallujah from ISIS, is in full operational swing. Troops taken control of towns outside the city and

closing in on Fallujah itself. And if you look at Libya, there you see a force loyal to the government says it's capturing territory from ISIS after

clashes near some of the country's most important oil facilities hoping to recapture some key towns from the terrorists.

On Thursday in Vienna, to show you how this all comes together. It's the next meeting of oil exporters cartel, OPEC, but even before that meeting

Iraq says it is ready to raise oil exports. That will pour an extra 5 million barrels potentially of oil on to the market from next month. You're

getting an idea. All this, of course, as the price of oil finally seems to be firming up. Anywhere between $45 and $50 a barrel. Which is a great

benefit and boon to those OPEC oil exporting countries. CNN's Nick Paton Walsh now on the importance of oil in ISIS' strategy as it relates to

Libya.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: A distant speck from up here but this is Libya's shimmering prize, oil. Worth billions but

part paralyzed by government infighting and now most troublingly in ISIS' crosshairs. This is the Mellitah refinery which pumps gas direct along the

Mediterranean seabed to Italy. It's upped its defenses, but one plant worker points out what he says is a militant stronghold in a hotel just

down the coast. The seas, pretty much open here. On this jetty, the graffiti says that God is great, but you don't want do just rely on him.

WALSH (on camera): NATO have expressed concerns that ISIS is trying to get its hands on boats to perhaps fashion some sort of crude pirate navy and in

a place like this, so vital to Europe's energy, you can see how worrying that must be when you have this much shoreline to try to defend.

MOHAMMED ARAB, SPC SECURITY: We have too many faces here. You know? Sometimes threat from the sea. Otherwise maybe it comes from the land. You

don't know how's it?

WALSH (voice-over): ISIS have already hit some facilities in the east. But damage in oil fires caused visible from space. In these NASA images. Their

own propaganda, shows a wider scope of ambition. This attack on an installation in the eastern town of Ra's Lanuf. They want to control the

industry and its potential billions. Yet have so far mostly disrupted production and shown little panic in the U.S. presidential race.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESUMPTIVE REPUBLICAN PRESIDENTIAL NOMINEE: ISIS is making millions and millions of dollars a week selling Libya oil. And you

know what? We don't blockade. We don't bomb. We don't do anything about it.

(END VIDEO CLIP)

WALSH: Trump is wrong. ISIS haven't made much money yet and don't control any oil fields. But their attacks are costly to what's left of the

crumbling Libyan state bringing close to the day ISIS could seize control of refineries and sell fuel on the black market.

WALSH (on camera): What is already a thriving black market trade in Libya's oil, these boats evidence of that. Tankers used to try and ship Libya's

black gold. An infrastructure here that ISIS could so easily use were they to get their hands on key refineries. Europe, watching this slow collapse.

Just across the water. Nick Paton Walsh, CNN, Mellitah, Libya.

(END VIDEOTAPE)

[16:05:00] QUEST: Let's put this into perspective. Joining me now from Beirut is Fawaz Gerges, the professor of international relations at the

London School of Economics, and always helps us understand the significance of this. In the early days of ISIS, we heard, you know, talk about two,

three, $4 million a day at least worth of oil that was leaking out through ISIS. What do you believe now is the ISIS oil industry for want of a better

word?

FAWAZ GERGES, PROFESSOR, LONDON SCHOOL OF ECONOMICS: Well, you know, Richard, ISIS has lost about 70 percent of its oil income from Syria and

Iraq. As you know, the Americans have been following the trail of money, the Americans have been strategically bombing the oil assets of ISIS, in

particular in Syria. ISIS controlled about 85 percent of the oil resources in Syria. But in the past half years or so, I think ISIS' ability to

exploit the oil resources in Syria has declined by 50 percent. Just for your own viewers, Richard, ISIS, I mean, out of the budget of 100 percent,

70 percent of ISIS budget comes from taxation and extortion and 30 percent of oil. And this is a very important number to keep in mind.

QUEST: So, the loss of that 30 percent, while significant, is not disastrous in that sense? As long as ISIS has these other 30 dreadful forms

of raising money, which includes blackmail, extortion and every other bit of criminality they can get their hands on?

GERGES: You're absolutely correct. ISIS has a diverse criminal economy. It controls the lives of 6 million people. In Syria and Iraq. It's been trying

to expand to Libya. It does control any resources in Libya. But more importantly than the oil resources, the Americans also, the coalition led

by the Americans, has been bombing the financial warehouses of ISIS. I mean, in the past six months or so, ISIS is starving financially. It has

cut the salaries of its fighters by 60 percent. And this tells you about the financial crisis that's been suffering by ISIS.

QUEST: Now, on this question of oil, though, I mean, you know, even recognizing sort of the severity of the ISIS issue, you do still have

within OPEC, you do have these major tensions, not least between Iran and Saudi Arabia, you've got the possibility of Iran wanting to pump

considerably more oil. You've got Syria oil as you're talking about in relation to ISIS. Is it your feeling that OPEC still is a power, if you

like? A power to be reckoned with in that sense?

GERGES: You know, you're going to be surprised, Richard, by what I'm going to say. I think we might be witnessing a post-OPEC moment. I think we might

be seeing the beginning of the end of OPEC. For a variety of reasons. Because of alternative sources of energies. Because the world economy no

longer depends on OPEC. Because, also, you have -- I mean, much more supply than demand. You have major resources and alternative energies.

Just in 2015, Richard, $400 billion almost were in invested in alternative energy. And what you're seeing now, not just Iraq, Iraq, Libya and Iran are

trying to basically produce millions of barrels of oil. The world basically consumes about 93 million barrels of oil a day. The world basically

produces 96 million barrels a day. You're talking about 3 million barrels a day being stored every day. And this tells you that really a changing world

economy and we might be witnessing the beginning of the OPEC moment in the political economy of the international system.

QUEST: Fawaz, it's always good to have your interpretation, especially on this important story. Thank you, sir, for joining us tonight front Beirut.

Venezuela is one of the countries which is being dramatically affected by the serious fall of oil prices with the largest known proven reserves, the

country remains in deep economic problems. And now, two major international airlines are halting flights to and from Venezuela. Blaming the economic

crisis getting deeper.

[16:10:00] LATAM, which is the largest airline in Latin America, said it will indefinitely suspend flights to Caracas from Chile, Brazil and Peru.

That's the old tam line. A day earlier, Lufthansa, a German airline, said it was axing the service of three times a week between Frankfurt and

Caracas, with the weak economy and lack of demand by business travelers behind this decision. I spoke to Andreas Bartels from Lufthansa. He told me

the airline kept the route going as long as it possibly could.

(BEGIN VIDEOTAPE)

ANDREAS BARTELS, HEAD OF COMMUNICATIONS, LUFTHANSA GROUP (via telephone): We tried to fly to Caracas as long as possible. But now, we've seen in the

recent month that the demand dropped and we have seen decline in demand already in the recent years but now the demand dropped again. We decided to

suspend the flights until further notice.

QUEST: So you're saying this is as much a demand-led decision as also the fact that you can't get the money that you've already got in Venezuela out?

BARTELS: Well, in fact, it's both. Both are drivers for our decision to suspend the service. On the one hand, yes, we have challenges in

repatriating the money, the revenues out of Venezuela. But on the other hand it's the demand, particularly of business travelers, which is a

problem for the service.

QUEST: Are you able to tell me how much money you believe you believe you've currently got locked up in Venezuela?

BARTELS: Well, no. The only thing I can say is that we have already written off roughly 130 million euros over the last 2 years and that's it.

QUEST: The decision to suspend a route is never taken lightly. I'm guessing this is a suspension with the hope that you can return as soon as possible.

BARTELS: Absolutely, yes. We would love to come back. But the conditions have to be right.

QUEST: And by that, you mean demand being able to get the plane in and out, being able to get the money out?

BARTELS: Exactly.

QUEST: But you don't have any hope of that any time soon?

BARTELS: Well, we have hope, but at the moment, we cannot see any indication that this will happen very soon. So that's why we have decided

to suspend the route. But again, if we see better conditions, we will be back.

(END VIDEOTAPE)

QUEST: Stocks in major European markets finished mostly higher on Monday. Markets closed in the United Kingdom as investors consider Janet Yellen's

comments of last Friday. Where she said in the next few months it will be appropriate in the coming months for a Fed rate rise.

Sad news to bring you this evening. Martin Senn, former chief executive of Zurich Insurance Group has taken his own life. Senn was a longtime employee

of Zurich Insurance and he was the chief executive for six years before stepping down last December. It is the second suicide among top executives

at Zurich. Less than three years ago the chief financial officer, Pierre Wauthier, killed himself. Martin Senn, who was a friend of QUEST MEANS

BUSINESS, joined me on this program back in 2013 and offered this advice about managing risk in business.

(BEGIN VIDEO CLIP)

MARTIN SEEN, FORMER CHIEF EXECUTIVE, ZURICH INSURANCE GROUP: It's not necessary and not a good thing and trying the find out where the wind comes

from and where the wind is going. You might get it right once or twice but not sustainable in the long run.

(END VIDEO CLIP)

QUEST: Martin Senn was a delightful man who I've met many times. But in difficult years, leading his company he did so with a steady hand. Martin

never forgot that what matters in any company, whether it's manufacturing, financial services or a giant insurance company, what's always behind it is

not the money. It's the people. Martin Senn was 59.

(COMMERCIAL BREAK)

[16:16:31] QUEST: Now one of them is the Prime Minister and leader of the British Conservative Party. The other is the rising star of the Labour

Party. Who this month became the first Muslin Mayor of London. The two had been at each other's political throats over many months, certainly during

the mayoral elections. Well, today, David Cameron and Sadiq Khan formed a political odd couple. They both are urging the British voters to stay in

the European Union.

(BEGIN VIDEO CLIP)

SADIQ KHAN, LONDON MAYOR: I think there is a positive case for us to remain in the European Union. If you vote -- but, you know the economic case is

crystal clear. The evidence is compelling from the treasury, from the IMF, from the Bank of England and from many others. Here in London I see more

than half a million jobs directly dependent on the European Union. Some of the world's leading companies have a European headquarters here in London.

Half of our exports go to the European Union. But the positive case is huge. A vote for remain means jobs and opportunities.

(END VIDEO CLIP)

QUEST: The U.K.'s top economic minds have weighed in on whether the U.K. should leave the EU. There's a broad agreement, it would appear, Brexit in

their view, would hurt the British economy. In a poll of more than 600 economists, 72 percent forecast a negative impact on GDP over the next 10

to 20 years. Only 11 percent said the impact would be positive and 5 percent said they didn't know one way or the other. Joining me here in

London, Bernard Jenkins, conservative member of Parliament, and part of the Vote "Leave" Campaign.

BERNARD JENKIN, MEMBER OF UK PARLIAMENT, VOTE "LEAVE" CAMPAIGNER: How do you do?

QUEST: You have to admit when you hear those sort of numbers, you are asking the British people to take a risk. Because if you're going purely on

evidence, fact-based evidence, of reports and analysis, there's going to be a deleterious effect on the economy.

JENKIN: A forecast is not fact. And 9 out of 10 economists might be a consensus. But a very often the consensus of economists is wrong. Take, for

example, there was no consensus that there was going to be a banking crisis. There was no consensus that, for example, that we should come out

of the exchange rate mechanism as we did. In fact, I remember the 364 economists who wrote to the "Times" in the early 1980s saying that Margaret

Thatcher's economic policy's all wrong and she was breaking the consensus and this is -- this is -- she proved to be right, by the way.

QUEST: OK.

JENKIN: And this is about breaking a consensus.

QUEST: If we look, though, at the -- for the purposes of this discussion, let's assume there's a vote to leave on the 23rd.

JENKIN: Yup.

QUEST: There's going to be a price to be paid.

JENKIN: No.

QUEST: Let me finish. There's going to be a price to be paid for access -- for a negotiated access to the single market. Norway pays the price.

Switzerland pays the price. You will have to accept some form of the key communique in some shape or form. You won't get free access.

JENKIN: Well, do you know our biggest trading partner is?

QUEST: This is the argument no --

JENKIN: Let me just answer the question. The answer is it's the United States. We don't have a trade agreement with the United States.

[16:20:03] Ask yourself, we have free access to the single markets now. There are no tariff barriers between United Kingdom and the rest of the EU.

Who's calling for tariffs?

QUEST: But, if you had a situation where British companies were operating under a different set of rules, possibly more competitive set of rules than

European or EU countries then the EU countries say, no, we require the U.K. to follow the same set of principles. That's what happens with Norway.

That's what happens with Switzerland.

JENKIN: It is not what happens with the United States. The trades with the EU. It's not happening with other countries that trade with the EU. You

don't have to be with the EU to trade with the EU. You don't have to accept their rules. You don't have to pay that money --

QUEST: With respect to get access, you're talking about getting access to the single market.

JENKIN: The point is here --

QUEST: I agree with you. If you just take the WTO basis of trade with the EU, you are right. You can do it the same way at the United States. But if

you want access to the single market --

JENKIN: You're telling me the United States doesn't have access to the single market when it's the biggest trading partners? The point is of

course you have access. The real question is whether we want to run our own affairs and make our own laws. And do our own thing like most other

countries. Most other countries aren't in the EU and they're fine. Many countries outside the EU trade with the EU and they trade very profitably

with the EU. We actually have rather a bad deal with the EU. They sell us twice as much as we sell them, and we have to pay a net 10 billion

subscription for that privilege. It is not a very good deal.

QUEST: What it really comes down to is what you just said then, it's really we compare arguments and economic --

JENKIN: As you do.

QUEST: -- backwards and forwards. But really, it's about this what you said. The feeling of who's in control. A question of sovereignty.

JENKIN: Yes, it is. With one very important point. The government has produced forecasts, for example, what the economy will be like by 2030,

whether we're in or out of the EU. What all the forecasts show the CBI showed the same, they commissioned a report from PWC is the British economy

is growing and it's going to carry on growing in or out of the EU, we're going to generate millions of new jobs. And some people pretending they

know we'll be better off or little bit worse off in or out of the EU. These are just forecasts. They're based on assumptions. The fact is this country

can choose whether it wants to be a self-governing democracy or to be absorbed into this super state. And I think the British people will choose

the path of freedom and democracy.

QUEST: Finally, do you worry that the arguments that have been put forward by the other side, which are predicated largely on fear and worry, will

sway that undecided vote, you know, I better not take the risk?

JENKIN: Yes. Because only 5 percent of what they're saying, people only need to believe that and it sews doubt in people's minds. So the government

has been pursuing an absolutely shameless campaign of exaggeration and hyperbole, which bears absolutely no relation. I remember a meeting a

Danish no campaigner recently. She was on "News Night", on BBC's "News Night", last Monday, and said, "Oh, don't worry. We had the scare stories

when we had our referendum. We didn't join the EU. The investment carried on. We're the richest country in Europe. Doesn't matter. Don't believe all

the scare stories." And we had the scare stories thinking about joining the euro and didn't join the city of London would collapse, the investment

would fly away. Well we didn't join the euro and it was fine.

QUEST: Hopefully you'll talk more as we get closer.

JENKIN: Thank you. Bye-bye.

QUEST: Thank you.

As we continue now talking about free trade and the issues of doing business, China's yuan currency is trading at the weakest level against the

dollar in some five years. The currency is fixing rate which is set to trade within a very narrow range by the central bank, the People's Bank of

China, has now got it down to about .4 of a percent. It's the lowest level since February of 2011.

The dollar lifted by Chair Yellen's speech last week when she said it would be appropriate to hike rates in the coming months. China's deputy finance

minister says the Chinese government knows the importance of sustainable development as in Beijing last week when I spoke to him and asked if he was

worried about sustaining rapid growth in the currency turmoil times.

(BEGIN VIDEOTAPE)

ZHU GUANGYAO, CHINESE VICE MINISTER OF FINANCE: We are not denying the challenge we face and including you see issue under other issue, however,

we strongly believe only way to keep Chinese economy a sustainable development is through reform. And now president Xi so emphasized we got

the reform in supply side and we are certainly will continue to do more appropriately creates domestic demand. However, that's more hard efforts

made by supply side structural reform.

[16:25:06] QUEST: Property is another area where debt, growth, too fast growth, moral hazard. The property boom that has really gone right the way

down -- and the stock market boom -- has got right the way down for people in this country. Now that's also a challenge for you, isn't it?

ZHU: That's why we so emphasize structural reform in supply side. That's the only overcapacity issue and also with that challenge over stock.

Including real estate. So that's we must reform procedure to solve those problem.

QUEST: The regulators and the government learned a lot last year when they tried to prop up the stock market and it didn't work.

ZHU: Yes.

QUEST: Would you agree?

ZHU: That's -- we see that's now -- I must -- my point very clear. Largest risk of financial systematic risk, market play the fundamental law. I think

that's not only China. That's other country in the world. Including U.S., U.K. Take same policy.

QUEST: So China --

ZHU: That's the challenge.

QUEST: So China now accepts what Margaret Thatcher said years ago. You can't buck the market. If the market is going that way, China now says,

that's where it will go.

ZHU: Our policy is we must let market play the decisive role. However, government should play the vital role, too. That's -- decisive role played

by market. However, same time, government plays the right role.

QUEST: What is the right role?

ZHU: Right role is to create the good environment for entrepreneur's development. That's Including ownership issue and government emphasize the

environment, protecting issue. Moreover, we must develop this middle class and the same times we make extreme efforts on poverty reduction.

(END VIDEOTAPE)

QUEST: The vice economics minister of China in Beijing last week.

As the yuan declines against the dollar, the digital currency bitcoin continues to soar. That's current as a result of a flurry of trading of all

places in we'll be right back in a moment with QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[16:30:09] QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.

When Chinese investors may be responsible for bitcoin's unexpected renaissance. And physical fitness is no longer required to be a sports

star. It's all about Esports which you can do from the comfort of your couch. For all of that, this is CNN. And on this network, the news always

comes first.

QUEST: Heavy gun tire is reported on the outskirts of Fallujah as the Iraqi army closes in. Soldiers and allied militia men are fighting to capture the

city from ISIS. Tens of thousands of civilians are still in the city. There are fears growing that they could be used by ISIS as human shields.

At least 65 people are known to have died in the past week after boats carrying migrants sank in the Mediterranean Sea. Hundreds of people are

missing. And officials say the death toll from the last few days could be more than 700. Three boats capsized as they were heading for Europe from

the North African Coast.

President Obama paid tribute to fallen American soldiers as the United States marked Memorial Day. The President laid a wreath at Arlington

National Cemetery. It's the last time, of course, he'll preside over the Memorial Day commemoration. He said Americans have a responsibility to look

after the families of those who gave and paid the ultimate price.

(BEGIN VIDEO CLIP)

OBAMA, U.S. PRESIDENT: For us, the living, those of us who still have a voice, it is our responsibility, our obligation to fill that silence with

our love and our support and our gratitude and not just with words but with our actions. Truly remembering and truly honoring these fallen Americans

means being there for their parents and spouses and children. Like the boys and girls here today wearing red shirts and bearing photos of the fallen.

Your moms and dads would be so proud of you. And we are, too.

(END VIDEO CLIP)

QUEST: Mexican footballer Alan Pulido has been rescued after he was kidnapped in a city known for drug violence. Pulido who plays for

Olympiacos in Greece was taken on Saturday night. He spoke to reporters on Monday, he had a bandage on the hand. Local attorney general said Pulido

was found after he managed to make a phone call to the emergency services.

(BEGIN VIDEO CLIP)

MEXICAN ATTORNEY GENERAL (through translator): After midnight last night, there was a phone call to 066 from soccer player Alan Pulido, and in a

moment of carelessness by his captors in the place where he was, he was able to make a phone call asking for help. And giving the location of where

he was.

(END VIDEO CLIP)

QUEST: The zoo in Cincinnati is defending its decision to shoot dead a rare gorilla after a 3-year-old child fell into the enclosure over the weekend.

Animal rights groups criticized zoo for killing the 17-year-old gorilla. However, the zoo's director said the child's life was in danger.

QUEST: Bitcoin prices are surging as interest in the virtual currency is enjoying a resurgence especially in China. The price of a bitcoin jumped

over 20 percent over the week at more than $500 for the first time in nearly two-years. Samuel Burke is in New York. This sharp rise, 21 percent,

suggests an unruly market. $533 is what they're trading at give or take. But it does suggest unruly markets. What is driving it?

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Richard, I think the huge surge, more than a billion dollars in market cap added over the weekend says a lot

more about when's happening in China than necessarily does about bitcoin. Basically what we are seeing is that Chinese dumping tons of money into it

just as we have seen with bonds and equities, the market can go way up with those, they went down afterward and maybe we'll see the same with bitcoin.

Time will tell but basically what we see is the Chinese wanting to put their yuan somewhere and bitcoin is the place to do it.

QUEST: Why? Why, though? You know, you're talking about you want to hide the money, I see why you might use bitcoin. And I can certainly see there's

an argument that says the dollar could be a little bit weaker. But bitcoin can fall out of bed.

[16:35:06] SAMUEL BURKE: The simple answer is because it's so easy and there are more and more restrictions we have seen with yuan and moving

money outside of China except when it comes to bitcoin. So the Chinese much like other people and even sometimes some criminals use this because it's

an easy way to avoid or evade authorities and so in this case it's just the simple way to do it. If you look at when's happening with bitcoin, it is

driving it way up and haven't seen it this high in about two years. But of course if we have the chart and see, remember, 2014. It was up around

nearly $1,200 for 1 bitcoin and you better be careful because it's still a volatile currency.

QUEST: Right. But I'm trying to remember the name of the bitcoin trading. It went bankrupt. Is there a feeling, because every time I look at bitcoin

and I always sort of head in the opposite direction and I don't really understand how the whole thing operates? Is there a feeling that there is

an element of stability about it?

SAMUEL BURKE: Well, I think right now, and don't worry. It is hard enough to understand the currency as it is, a currency around for a long time like

the dollar much less a new one without a central bank. But I think experts are now -- when I talk to them what they tell me is China is the one that

has control over bitcoin and so what happens in China dictate the future at least in the near term future for bitcoin.

Fascinating number, I saw today, Richard, 92 percent of the bitcoins that are traded are through two bitcoin markets in China and essentially China's

moving the vast, vast majority of bitcoins. And what happened with the Chinese in bitcoins is really what is going to dictate the future of this

virtual currency.

QUEST: Samuel Burke, thank you for that. Samuel's in New York.

Israel's is trying to entice young tech experts to move to a so-called cyber city in the desert. An Israeli tech company is already making an

international reputation. One of them believed to be responsible for breaking into the iPhone used by the San Bernardino gunmen. Oren Liebermann

visited another company where they make phone hacking look easy.

(BEGIN VIDEOTAPE)

OREN LIEBERMANN, CNN CORRESPONDENT: I've come to the headquarters of Check Point, one of the world's leading cyber security firms to learn about

mobile security and if my cell phone hasn't been hacked already, it's about to be.

MICHAEL SCHAULOV, HEAD OF MOBILITY PRODUCT MANAGEMENT, CHECK POINT: You just sent me this text message, new carrier settings update is available.

Click to install. That's it. You only click on this link.

LIEBERMANN (voice-over): Cyber expert. Michael Schaulov leads me through a series of mobile hacks. The first is a common fishing attack. I get a text

message from a number with my area code, I click the link.

SCHAULOV: And that's it. It's installed.

LIEBERMANN: Now they see everything on my phone.

SCHAULOV: I'm just going to go to CNN's website. I see that I've just typed in CNN.

LIEBERMANN: They have access to what I'm typing, my e-mails, my cloud storage.

SCHAULOV: That's it. It immediately picks up that I have typed in e-mail address and the fake pass word I typed in.

LIEBERMANN: But who's careless enough to type on a link in a random message? Next hack is one Check Point discovered and reported to Apple. It

targets work networks on Apple's operating system. The message looks professional and looks like it's coming from the employer.

SCHAULOV: So on the device from this point on, you don't see anything. From this point on, we have a pretty much full control of the device.

LIEBERMANN: Schaulov pulls the contact list and calendar from the phone, he gets an email with all the information. Hackers can use the vulnerability

for corporate espionage. The final hack we go through is called stage fright.

SCHAULOV: It's a vulnerability that affects nearly 90 percent of the Android devices.

LIEBERMANN (on camera): Ninety percent of Android devices.

LIEBERMANN (voice-over): I get a message with a link to a Prince video. One click. That's it. My phone is infected. And now they have more access than

before.

SCHAULOV: We can actually take a photo of you.

LIEBERMANN (on camera): So he can take a picture of me right now. He just did take a picture of me right now. It's not the most flattering angle.

SCHAULOV: And it's locked, right?

LIEBERMANN: And it's locked. This a different phone infected with the same malware and you can see the phone isn't doing anything. I am not doing

anything with it. But they are recording me right now on this phone. They can do it using the front camera or back camera. Complete control over this

phone.

LIEBERMANN (voice-over): Most cyber-attacks still target desktops, but Schaulov says there's a dramatic shift happening as hackers figure out how

to monetize attacks on mobile. Orin Lieberman, CNN, Tel Aviv.

(END VIDEOTAPE)

QUEST: Fascinating. Worrying. Deeply disturbing. All that. And yet I think about number of sort of weird things one gets sent to the phone.

Computer games have changed since the days of Pacman, which only just about managed to play with any degree of proficiency. Now the real professional

players are treated like rock stars and attracting millions of spectators. We'll talk about this after the break.

[16:40:00] (COMMERCIAL BREAK)

QUEST: It's a long weekend. It's a bank holiday in the United States. And indeed in the United Kingdom and other countries, as well. So a question to

think about. What did you watch on television over the weekend? What did you tune in for? Just imagine 36 million viewers tuning in to watch people

play computer games, 36 million.

And now compare that to the 10.7 million who watched "Game of Thrones" series 6 premiere which is the HBO smash hit fantasy drama. HBO of course,

part of Time Warner, parent company of this network. But only 11 million people watched it. Now "Coronation Street" here since I'm in U.K., I love

it, it's been going since the 1960s. And but only 6 million people watched "Coronation Street," which is the much loved soap opera.

And yet, the old style television of these two, well, what's the future? Electronic sports or Esports. Professional gamers playing online.

Spectators all watching streaming on platforms like Twitch. So bear this in mind. You have got 10 million for "Thrones." 6 for "Coronation Street." But

36 million watched last year's world championship "League of Legends." Esports is redefining gaming. Very likely to do the same to broadcast

sports. Don Riddell with me now from the CNN center. I heard of Twitch or when I finally heard of Twitch, and I hear the numbers and they say

something like tens of millions are watching, this is a phenomenon, Don.

DON RIDDELL, CNN WORLD SPORT: It is a phenomenon. It's a digital revolution. I think going to change the entire media landscape, to be quite

honest. You say you heard of Twitch you probably heard about it when Amazon bought it for nearly a billion of dollars a couple of years ago. This is an

absolutely fascinating world to be part of. I've spent quite a long time talking to people within the Esports industry. The passion and excitement

is real, it is really going places and just take a look. If you don't know anything about it, it's all here.

(BEGIN VIDEOTAPE)

RIDDELL (voice-over): It's a scene you'd expect at any major sports event. Fans lined up for hours outside. Merchandise stands doing a roaring trade.

Broadcast cameras ready for action. And fever pitch excitement. During the game. Except this is a little bit different.

This is Esports. The sport for the digital generation. The Intel extreme masters in Poland, some of the best teams are going head to head in games

like "League of Legends" and "Counterstrike" and it is already worth an absolute fortune.

[16:45:03] RALF RECHERT, MANAGING DIRECTOR ELECTRONIC SPORTS LEAGUE: The most simple way to put Esports that's 200 million fans worldwide who watch

it. It is bigger than the NHL.

DON RIDDELL: Last year's League of Legends world championship attracted 36 million viewers an audience that sports like the NBA only dream of. These

are dynamic games in which lightning quick reflexes and communication are critical for success. And the players are vetted like rock stars.

OLOF KAJBER, GAME PLAYER: When you are playing you are so focused on playing the games, you block everything out. But when you win, and see

everyone, like, the arena full, it is unreal.

CRAIG LEVINE CHIEF EXECUTIVE OFFICER, ELECTRONIC SPORTS LEAGUE AMERICA: Players like Faker and League of Legends are international icons. Call of

Duty players like Nadeshot have over a million twitter followers. So there's stardom and celebrity element to it.

RIDDELL: Once maligned as a pastime for lethargic kids in the basement, Esports is now highly lucrative. The Pakistan-born Syed Sumail Hassan has

amassed career prize money of almost $2 million. He's just 17 years old.

RIDDELL (on camera): As you can see in this aptly named bar called Joystick, there's still a niche market for retro video games, but things

have changed so much since Kong was king. Over last 15 years, the advent of internet technology has enabled Esports to explode into a highly

sophisticated and global gaming community. A creation of Twitch which Amazon paid almost a billion dollars in 2014 helped turn it into a

spectator sport.

MARCUS GRAHAM, DIRECTOR OF PROGRAMMING, TWITCH: Twitch is a game changer not only because of what it represents, that it represents basically like

the first global cable channel for Esports.

KEVIN LIN, CHIEF OPERATING OFFICER, TWITCH: As much as I might like Stephen Curry, I probably can never see the guy anywhere. He probably will never

respond to my tweet of mine. It is very different in Esports. And that all is happening on Twitch where my favorite League of Legends player

realistically might respond to my question. I mean, I might even get to play a game with this guy.

RIDDELL (voice-over): That is why sponsors are paying very close attention to the growth of Esports. It might be the only way to reach an elusive

young demographic. Games like StarCraft 2 aren't just meant to be played they were specifically designed with broadcasting in mind. And that's now

an industry standard. And it is impossible to cap the potential of Esports in the future.

ANNOUNCER, ESPORTS EVENT: GG Po Secures his championship title 4-2!

RECHERT: Esports is a global sport. It has a huge advantage around any other sport and these teams usually are usually focused on regional

championships and then have some international competition. Esports is in its own definition global. You can play against someone in any game any

time in the world. And therefore, we're seeing it's from that perspective actually much more global than any other sport can ever be.

CARLOS RODRIGUEZ, TEAM OWNER, G2 ESPORTS: Be safe to say that Esports will be very, very close if not on par with traditional sports we see today like

football, basketball and whatnot. For traditional sports and traditional media so to say, I would be a bit scared. You know?

(END VIDEOTAPE)

QUEST: Don, what's fascinating there is in your report you've got the tens of thousands of people in an arena, which is a community spirit, if you

like, coming together to watch something collectively. But what you're saying it's the streaming that's the future where you get the really big

numbers.

RIDDELL: Yes, huge numbers in the streaming. But I mean, the numbers are huge wherever you look, Richard. The prize money is creeping up and up and

up. The numbers of people that can be watching online, really this is probably going to become the new television when you think of the way that

the fans are interacting with the sport and the athletes, the teams and just a whole medium in general. It really, really is quite astonishing.

And when you look at traditional sports, how they're played and how you get into them, of course, you've got physical ability, which is God given. It's

not necessarily something you can do anything about. Sports aren't necessarily that accessible depending on where you live in various parts of

the world. This is very accessible. It's very, very democratic. If you play this game and you are good at it, you will be noticed and you will be

picked up and you will end up on the biggest teams with the chance to compete for the biggest prizes.

And the money you can make doesn't just come from prize money. It comes from streaming. I mean, I've spoken to some players saying they're

competing for big sums of money is almost to the detriment of the amount of money they can make just by performing on Twitch. Well, you could half a

million dollars a year, it is just incredible.

And at the same time tomorrow, Richard, --

QUEST: Fascinating.

DON RIDDELL: -- we are going to be continuing this series. We are going to introduce you to the best League of Legends player in the world, he's from

South Korea. He's called Faker and he's a huge celebrity.

QUEST: I'm looking forward to it. Fascinating. Thank you, Don. This is all the sort of stuff we love to have on QUEST MEANS BUSINESS. Thank you so

much, indeed.

[16:50:00] From a very new industry to a remarkably old one. We're going to be talking to the man that sells roughly 1 in 6 of every towel that's sold

in the United States. In fact, he sells so many towels he's the Welspun's chief executive joins me after "WE MAKE, CREATE, INNOVATE."

(COMMERCIAL BREAK)

QUEST: Microsoft Chief Executive, Satya Nadella, is on a tour of India. On Monday, he met the government ministers and he spoke to entrepreneurs in

Delhi. Nadella's visit follows, of course, Tim Cook's Apple the chief exec who was there just a week or so ago. One home grown success story in India

is the company called Welspun, the company that supplies towels for events like Wimbledon and the Rugby World Cup.

It's a dominant player in the U.S. market selling by the hundreds of millions. BK Goenka is the chairman. He joins me now from New York. Sir,

I'd hoped to be in New York to be putting your towels to the test but I'm in London tonight. So, I just need to know. I mean, from your point of

view, what is the secret of success in selling into a market like the United States?

BK GOENKA, CHAIRMAN, WELSPUN GROUP: I think the most important thing is the dedication, the commitment to the customer. The customer centricity is most

important pillar Welspun has and that has created a differentiation between us and the others.

QUEST: Right. But you've got to break into a market to start with. And I know you did that via Walmart. I'm wondering, how worried are you by the

rising trade rhetoric, particularly that of Donald Trump, as the U.S. goes into its general election?

GOENKA: I mean, I'm not the expert on the politics, but definitely, textile is already coming from -- most of the textile in U.S. is coming from

outside U.S. and I think India is one of the dominant player and I don't think that it will be having a major issue with the sifting of the industry

in the U.S. in particular in textile what we feel.

QUEST: But, you're right when you talk about textiles. Over many years, different -- here in the United Kingdom which used to have a thriving

textile industry. What -- you know, it's been moved to those countries with a lower cost base. But is it just about cost?

GOENKA: No. I think cost is one factor. Richard, when I started the towel 20 years back, I was in Manchester, and the first towel we want to sell

from India was a biggest issue was whether an Indian company can sell towels or make towels of this quality. They thought it's basically they

changed the label.

[16:55:00] So that made in India credibility was so low in those years, those times, that is over time it has changed. But not only basically the

low cost, today we are talking of completely technologically driven company. We are not only talking of basically buying and selling with the

customer. Today we are having customer partnership literally. Whether it's Walmart or JC Penny or Kohl's or Sears or Bed, Bath and Beyond in the U.S.,

all the ten retailers in this country, we're having a partnership.

QUEST: So, briefly, with that idea, you don't see a backlash then against a textile industry, say, for example, in India?

GOENKA: I'm firmly a believer of that. I see there is backlash on particularly in textile.

QUEST: Good to talk to you, sir. Thank you very much. Next time I'll be in there

in New York and we can your towels to the test. Good to see you, sir.

GOENKA: Thank you very much.

QUEST: We'll have a Profitable Moment after the break. This is QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment. Since I arrived in the U.K. it is a good opportunity to actually get the temperature of the whole Brexit

debate. You heard us talk about it on the program tonight. We'll be talking a lot more about it before the referendum on June 23rd.

The one thing without taking sides, obviously, without coming to any conclusions is the depth of seriousness with which people are looking at

this, from those in favor to those against and those undecided. Everybody realizes this is a decision that will dramatically change the United

Kingdom.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll be

in London tomorrow.

END