WEBVTT - Bloomberg Businessweek Weekend - January 17th, 2020 0:00:02.520 --> 0:00:06.240 This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm 0:00:06.280 --> 0:00:08.559 Jason Kelley and I'm Carol Masser. Welcome to the weekend 0:00:08.680 --> 0:00:11.960 edition of Bloomberg Business Week. Another very busy week on 0:00:12.000 --> 0:00:14.239 the corporate front, and certainly when it came to news 0:00:14.280 --> 0:00:17.680 out of Washington. Jason, absolutely, we had trade, we had impeachment. 0:00:17.760 --> 0:00:21.279 We had more details about how you might need to 0:00:21.360 --> 0:00:26.120 hire mercenaries to smuggle yourself out in a box if you, 0:00:26.120 --> 0:00:27.640 you know, don't think you're gonna have a fair trial 0:00:27.680 --> 0:00:29.600 in Japan. I gotta say that's one of my favorite stories. 0:00:29.640 --> 0:00:32.000 We really get into the details of how Carlos going 0:00:32.120 --> 0:00:35.400 his great escape from Tokyo, and we also get into 0:00:35.479 --> 0:00:37.560 because I feel like this story has gotten hidden, about 0:00:37.560 --> 0:00:41.080 the legal implications and the legal issues still facing Mr. Gone. 0:00:41.200 --> 0:00:45.120 Plus you mentioned trade and impeachment and politics. We caught 0:00:45.200 --> 0:00:49.199 up with both black Stones, Steve Schwartzman, he was in 0:00:49.240 --> 0:00:51.159 the room when the trade deal was signed, and you 0:00:51.240 --> 0:00:54.320 caught up with New Jersey Governor Phil Murphy about the 0:00:54.360 --> 0:00:57.080 state of the state and the state of politics. We did, indeed, 0:00:57.360 --> 0:01:01.080 Plus Apollos greed it is this week's cover's story. It's 0:01:01.120 --> 0:01:03.680 a story that really hasn't been told, but our team 0:01:03.840 --> 0:01:06.240 they got the interview with Leon Black first to the 0:01:06.240 --> 0:01:10.000 big story of the week. So, China has made substantial 0:01:10.160 --> 0:01:16.320 and enforceable commitments regarding the protection of American ideas, trade secrets, patents, 0:01:16.360 --> 0:01:20.959 and trademarks. China has also pledged firm action to confront 0:01:21.240 --> 0:01:24.200 pirated and counterfeit goods, which is a big problem for 0:01:24.280 --> 0:01:26.280 many of the people in the room. And that was 0:01:26.360 --> 0:01:29.400 President Trump after the US and China signed that phase 0:01:29.520 --> 0:01:31.520 one of the trade deal, a lot of pump and 0:01:31.560 --> 0:01:35.520 circumstance down in Washington, a full room, the President name 0:01:35.640 --> 0:01:38.319 checking a lot of his friends there in the audience. 0:01:38.640 --> 0:01:41.080 Let's get more on the economics of the trade deal. 0:01:41.160 --> 0:01:43.400 Let's bring in Shawn Donna in DC with his story. 0:01:43.400 --> 0:01:46.399 And how now comes the hard part? After the handshake. 0:01:46.480 --> 0:01:49.520 We've seen the photo ops. This is the tough part. 0:01:49.840 --> 0:01:52.920 Why is it so hard? Sean? President Trump is not 0:01:53.040 --> 0:01:56.400 the first president to make a deal with China. In fact, 0:01:56.520 --> 0:01:58.560 he referenced that when he was signing this, saying that 0:01:58.640 --> 0:02:01.520 he was righting the wrongs of the past, writing the 0:02:01.600 --> 0:02:04.720 issues that his predecessors had not addressed in terms of 0:02:04.760 --> 0:02:07.960 dealing with China. President Clinton, of course, brought China into 0:02:08.040 --> 0:02:10.839 the w t O. George W. Bush had his own 0:02:10.880 --> 0:02:14.240 dealings with China. So did Barack Obama, who not only 0:02:14.360 --> 0:02:18.080 had a constant economic dialogue with China but also was 0:02:18.160 --> 0:02:20.360 looking for his own trade deals to try and deal 0:02:20.440 --> 0:02:23.520 with the threat of China. That was the Transpacific Partnership. 0:02:23.680 --> 0:02:26.679 The common thread through all of this has been that 0:02:26.880 --> 0:02:30.440 the consensus here in Washington certainly is that China just 0:02:30.480 --> 0:02:33.160 hasn't lived up to its promises in these past deals. 0:02:33.240 --> 0:02:35.880 And that's where the China moment is for Donald Trump. 0:02:35.960 --> 0:02:38.280 Right now, He's got his deal. Now will China live 0:02:38.360 --> 0:02:41.760 up to it? And so what does enforcement look like, Sean, 0:02:41.800 --> 0:02:43.720 What does it look like on the ground and where 0:02:43.720 --> 0:02:45.880 does the rubber meet the road here? Right So, the 0:02:45.919 --> 0:02:48.760 thing that the administration says is very different about this deal, 0:02:48.800 --> 0:02:50.280 and the reason they think they can get China to 0:02:50.320 --> 0:02:52.919 live up to its commitments is this enforcement mechanism that's 0:02:52.960 --> 0:02:56.800 in there. Essentially, it sets the stage for if the 0:02:56.919 --> 0:02:59.520 U S has any complaints or any inkling that China 0:02:59.600 --> 0:03:01.640 isn't living up to the deal. There's this kind of 0:03:01.760 --> 0:03:04.680 ninety day process of consultations at the end of which 0:03:04.760 --> 0:03:07.440 you can whack the Chinese with tariffs if you choose to. 0:03:08.160 --> 0:03:12.279 That's uh, that's good. That seems to be a mechanism 0:03:12.320 --> 0:03:16.040 that could work. But it's also an unwinding of the 0:03:16.120 --> 0:03:18.520 kind of global system that was set up in the 0:03:18.600 --> 0:03:21.880 nineteen nineties, and that's essentially the World Trade Organization, which 0:03:21.960 --> 0:03:24.800 was set up to be a neutral arbiter in disputes 0:03:24.880 --> 0:03:28.680 like this, and the Trump administration is just going around that. 0:03:28.760 --> 0:03:32.080 And that has big consequences for everyone else in the 0:03:32.080 --> 0:03:34.720 world because it means that that's going to reduce the 0:03:34.720 --> 0:03:38.440 credibility of the w t O and its ability to 0:03:38.520 --> 0:03:41.480 keep the peace and global trade at a time when 0:03:41.480 --> 0:03:46.360 the Trump administration is already undermining it by by failing 0:03:46.400 --> 0:03:49.560 to a point or blocking the appointment of of new judges. 0:03:49.600 --> 0:03:52.240 So there's big consequences for not just the US and 0:03:52.400 --> 0:03:55.480 China in terms of trying to get China to live 0:03:55.600 --> 0:03:57.120 up to this deal, but also for the rest of 0:03:57.160 --> 0:04:00.080 the world and global trade. You know, I mean the 0:04:00.760 --> 0:04:03.720 whole idea of the w t OS to avoid trade wars. 0:04:03.760 --> 0:04:06.880 Donald Trump has gone down the path of trade wars. Uh, 0:04:06.920 --> 0:04:09.760 and now he's promising more trade wars to try and 0:04:09.880 --> 0:04:13.640 enforce deals essentially, if that's if that becomes the issue. 0:04:13.680 --> 0:04:16.640 And that's Sean Donn and senior trade reporter for Bloomberg Carroll. 0:04:16.880 --> 0:04:21.400 Let's turn now from trade to the twenty twenty presidential campaign. 0:04:21.800 --> 0:04:24.120 Here's Josh Green with the story on the Terminal and 0:04:24.160 --> 0:04:27.160 online how Bernie Sanders is poised for an upset. You know, Josh, 0:04:27.240 --> 0:04:29.880 it does seem Bernie is out there to win this one. 0:04:30.200 --> 0:04:33.640 What's different about the team presidential race and his run 0:04:33.680 --> 0:04:37.719 to get the nomination versus today and Kenny Win. Bernie Sanders, 0:04:37.800 --> 0:04:41.200 who was all but forgotten about three months after he 0:04:40.720 --> 0:04:43.919 suffered a heart attack, is in first place in the 0:04:44.000 --> 0:04:46.960 race in Iowa. And yet I still think there's a 0:04:46.960 --> 0:04:49.400 sense in Washington and on Wall Street that there's no 0:04:49.480 --> 0:04:52.280 way Bernie can possibly win. So what I do in 0:04:52.320 --> 0:04:54.799 the magazine this week is do a deep dive into 0:04:54.839 --> 0:04:57.200 Sanders and look at what is different about his race 0:04:57.320 --> 0:05:00.679 this time around. Uh, the main thing is he's running 0:05:00.720 --> 0:05:03.359 to win. Last time around, when he was running against 0:05:03.400 --> 0:05:05.320 Hillary Clinton, he was in the race. I think more 0:05:05.360 --> 0:05:08.159 to make a point, but the key takeaway here is 0:05:08.160 --> 0:05:11.000 that Bernie is playing to win, and he is actually 0:05:11.080 --> 0:05:13.599 in position to be able to do so, and Josh 0:05:13.600 --> 0:05:16.840 tell us about that Warren v. Sanders battle that is 0:05:16.880 --> 0:05:20.080 shaping up. While I was out there in Iowa, Politico 0:05:20.240 --> 0:05:26.000 reported that Bernie's campaign had been giving it surrogate's talking points, 0:05:26.640 --> 0:05:30.080 telling them to tell voters to attack Elizabeth Warren as 0:05:30.440 --> 0:05:33.080 an elitist and somebody who couldn't unify the party and 0:05:33.120 --> 0:05:37.080 beat Donald Trump. Uh. That is a harsh attack from 0:05:37.080 --> 0:05:40.120 someone supposed to be an ally. The story went public, 0:05:40.160 --> 0:05:44.240 and it looks like in retaliation, Warren's camp leaked that 0:05:44.320 --> 0:05:47.280 in a in a private meeting between the two of them, 0:05:47.360 --> 0:05:50.719 at the beginning of this cycle, Sanders had said to Warren, 0:05:51.160 --> 0:05:53.279 I don't think a woman can win this race. Now, 0:05:53.520 --> 0:05:55.800 none of this was ever spoken of. It only came 0:05:55.839 --> 0:05:59.239 to light a few days before this past weekend's debate, 0:05:59.800 --> 0:06:02.039 and it's set off a firestorm, as you might expect, 0:06:02.080 --> 0:06:05.120 with the political press out there putting pressure on Warren 0:06:05.200 --> 0:06:08.200 to say, you know, is this true. Well, after about 0:06:08.200 --> 0:06:10.960 a day of being quiet, Warren put out a public statement. 0:06:11.000 --> 0:06:13.680 It was like pouring gasoline on a fire. Josh, thanks 0:06:13.720 --> 0:06:16.440 so much. That's Bloomberg's Josh Green. He's been following the 0:06:16.440 --> 0:06:20.160 comings and goings of the presidential hopeful, certainly the Democrats. 0:06:20.560 --> 0:06:22.719 And I think this one's an interesting he focused Remember 0:06:22.800 --> 0:06:26.440 last year, Josh focused on Elizabeth Warren, that great story. 0:06:26.760 --> 0:06:29.120 But it's interesting to see how there's a lot of 0:06:29.120 --> 0:06:32.400 attention and for good reason, being paid to Bernie Sanders 0:06:32.400 --> 0:06:35.280 well in the clash between Bernie Sanders and Elizabeth Warren 0:06:35.400 --> 0:06:37.680 seems to be one of the most compelling storylines out 0:06:37.680 --> 0:06:46.960 there right now. You know, I feel like this Carlos 0:06:47.000 --> 0:06:49.960 Gohnes story, Carol, every time we think, wow, that's the 0:06:50.000 --> 0:06:52.920 most interesting thing I've heard, or what a twist or 0:06:53.040 --> 0:06:56.480 what a great details, it is not uh, And thanks 0:06:56.520 --> 0:07:00.800 to some stellar reporting from Matt Campbell, there's just a 0:07:00.880 --> 0:07:04.560 constant stream of new information. He led a team that 0:07:04.600 --> 0:07:07.599 put together a really nice pieces then this week's magazine, 0:07:07.640 --> 0:07:10.160 on the Blueberg Terminal and on Blueberg dot Com. Today, 0:07:10.440 --> 0:07:14.080 Matt joins us on the phone from Bay Route. He's 0:07:14.120 --> 0:07:16.640 still on the ground on the Gun story until Webber, 0:07:16.640 --> 0:07:19.280 the editor Bloomberg Business Week, is here with us in 0:07:19.280 --> 0:07:23.480 our Bloomberg Interactor Broker Studios. So Matt, I gotta ask you, 0:07:24.080 --> 0:07:27.440 especially since you have the perspective of really being in 0:07:27.440 --> 0:07:31.120 this story. What's the thing in this story about the 0:07:31.320 --> 0:07:36.880 escape itself that you really just zero in on as 0:07:37.080 --> 0:07:42.560 the as Carol Master would say, whoa moment. Well, I 0:07:43.080 --> 0:07:47.280 think there's there's quite a lot to say wow about 0:07:47.280 --> 0:07:50.840 in the story. I'm interested in in all the scenarios 0:07:50.840 --> 0:07:53.680 that were examined to get Carlos gone out of out 0:07:53.680 --> 0:07:57.920 of Japan. There's some discussion about and was published notably 0:07:58.280 --> 0:08:00.880 term of sun discussion of actually buying a cargo ship 0:08:01.680 --> 0:08:04.560 and sneaking him onto it, so that was rejected as 0:08:04.600 --> 0:08:07.200 too complicated, and in the end they did get to 0:08:07.280 --> 0:08:10.760 this very dramatic private jet escape that we now know 0:08:10.800 --> 0:08:13.440 a little bit more about, which you know. This to me, 0:08:13.800 --> 0:08:15.760 Um and the wonder of this story, it's like we 0:08:16.000 --> 0:08:18.320 all these little dribs and drabs that have come out 0:08:18.320 --> 0:08:20.800 over the last week and change. Actually ever since the 0:08:20.840 --> 0:08:24.040 story really broke at the beginning of the year, you know, 0:08:24.320 --> 0:08:27.240 we've all been captivated by part of what made this 0:08:27.480 --> 0:08:31.880 be Um. I think this epic part three of this 0:08:32.000 --> 0:08:36.720 story that Matt's been kind of shepherding, is this inside 0:08:36.760 --> 0:08:39.800 the plan of of how to get how to get 0:08:39.800 --> 0:08:42.800 somebody out of the country, how to extract someone and 0:08:42.920 --> 0:08:45.520 you know, it's a very movie esque, but you know 0:08:45.600 --> 0:08:47.360 the reason it can be movie esque is because of 0:08:47.480 --> 0:08:50.800 like real reporting and and Matt, can you kind of 0:08:50.840 --> 0:08:54.199 walk us through how the story opens. Well, so the 0:08:54.240 --> 0:08:58.680 story opens with a security contract or an Asia, uh, 0:08:58.720 --> 0:09:00.719 someone who does this kind of saying s quoting v 0:09:00.840 --> 0:09:03.960 I P s as protecting cargoes. He gets a call 0:09:04.040 --> 0:09:07.720 a few months ago from someone he knows who's looking 0:09:07.720 --> 0:09:10.920 to hire for a job in Japan, looking particularly to 0:09:11.240 --> 0:09:14.520 escort someone out of the country and looking for operatives 0:09:14.880 --> 0:09:19.000 with Asian East Asian faces particularly, and and the security 0:09:19.000 --> 0:09:22.200 contractor was sort of noncommittal, and no one really came 0:09:22.240 --> 0:09:24.040 to mind, and he never really thought of it again. 0:09:24.160 --> 0:09:26.600 So of course he saw the news along with the 0:09:26.600 --> 0:09:29.679 rest of the world on New Year's Eve, and that's 0:09:29.679 --> 0:09:33.040 when you connect the dots and and uh what you know, 0:09:33.360 --> 0:09:35.160 one of the things that I've been kind of captivated 0:09:35.200 --> 0:09:38.200 by and this is like, obviously Carlos going had the 0:09:38.360 --> 0:09:41.440 means to actually, you know, fund something like this, but 0:09:41.760 --> 0:09:44.000 what what kind of what would it go down for? 0:09:44.200 --> 0:09:48.559 Like what what is the service actually cost someone? Well, 0:09:49.280 --> 0:09:53.920 that's that's a very good question. One estimate that I've heard, uh, 0:09:54.160 --> 0:09:57.840 was fifteen million dollars, which when I first heard it 0:09:57.920 --> 0:10:03.760 sounded insanely high. But the person who was proplaying an 0:10:03.840 --> 0:10:05.760 estimate to be that then took me through the mass. 0:10:05.800 --> 0:10:08.640 And and one thing that you have to add at 0:10:08.640 --> 0:10:11.840 every point in that calculation is, for lack of a 0:10:11.880 --> 0:10:16.760 better term, a risk premium. This is flagrantly illegal. Everyone 0:10:16.840 --> 0:10:20.560 involved could be exposed to arrest obviously, uh. And people 0:10:20.559 --> 0:10:23.000 need to be compensated for that kind of risk taking. Yeah. 0:10:23.040 --> 0:10:25.079 And when you say everyone, we've actually got some names. 0:10:25.120 --> 0:10:27.440 You've got a Michael Taylor and then you've got a 0:10:27.480 --> 0:10:29.640 buddy of Michael Taylor. I mean, we've got names on 0:10:29.679 --> 0:10:32.800 the individuals who are believed to have helped Carlos Gone 0:10:33.320 --> 0:10:37.360 get out of Japan. That's right, so far, just two names, 0:10:37.920 --> 0:10:41.240 Michael Taylor being the leader of the group. Very interesting 0:10:41.280 --> 0:10:45.360 guy with a somewhat checkered history. Uh. Former Green Beret, 0:10:46.440 --> 0:10:50.800 very experienced Special Forces operator, ended up in the private 0:10:50.840 --> 0:10:54.360 security business, but actually ended up going to jail in 0:10:55.600 --> 0:11:01.920 the Mids over federal charges to do with allegedly bribing 0:11:02.000 --> 0:11:05.959 his way as to a contract in Afghanistan. So really, 0:11:06.000 --> 0:11:10.040 someone has operated in some gray areas and they pulled 0:11:10.040 --> 0:11:12.920 off this amazing coup on behalf of Carlos Bone. So 0:11:13.559 --> 0:11:15.720 I mentioned earlier that this is sort of the part 0:11:15.880 --> 0:11:19.760 three in the Magazine of Carlos Gone trilogy that you've 0:11:20.600 --> 0:11:24.280 basically been steering from the moment. Uh. You know that 0:11:25.320 --> 0:11:29.480 Japanese officials basically arrested him on a tarmac year and 0:11:29.600 --> 0:11:32.679 change ago. Um, so, what what have you learned? And 0:11:33.000 --> 0:11:36.000 what is what is this escape? What you know? Put 0:11:36.080 --> 0:11:38.240 put it all in context? What what does it mean 0:11:38.679 --> 0:11:44.160 for uh, for people to know? Well, I think the 0:11:44.160 --> 0:11:46.480 big scene here is that he has now turned the tables. 0:11:46.679 --> 0:11:51.360 Over the last year. He seemed pretty helpless, this real 0:11:51.480 --> 0:11:57.000 Titan business is very respected corporate figure, was suddenly just 0:11:57.080 --> 0:12:00.120 completely at the mercy of the Japanese justice system. And 0:12:00.120 --> 0:12:03.520 and none of all these none of the advantages he had, money, connections, 0:12:03.640 --> 0:12:06.440 access to media or whatever. It didn't see the count 0:12:06.440 --> 0:12:09.560 for anything. And it was, you know, really a tale 0:12:09.559 --> 0:12:12.439 of a guy kind of alone, kind of abandoned and 0:12:13.320 --> 0:12:18.160 facing a pretty grim fate that's now completely changed. He 0:12:18.200 --> 0:12:20.679 has gotten out of the threat of being sent to 0:12:20.679 --> 0:12:22.719 a Japanese prison, though he's certainly not out of the 0:12:22.760 --> 0:12:25.640 woods yet. As as we discussed in the story what right, 0:12:25.720 --> 0:12:27.959 and and I want to end on that note that 0:12:28.160 --> 0:12:30.040 if we can, I mean, not out of the woods, 0:12:30.120 --> 0:12:34.640 because he's essentially, without overstating it, sort of a different 0:12:34.679 --> 0:12:37.600 type of prisoner at this point. By by some accounts, 0:12:37.880 --> 0:12:42.600 he's not free to go in any sense. Right, Well, 0:12:42.679 --> 0:12:46.880 he is, Jason certainly free to live here in Lebanon, 0:12:47.880 --> 0:12:50.079 at least as far as we know there. There is 0:12:50.080 --> 0:12:52.960 a judicial proceeding that is going to run its course here, 0:12:53.320 --> 0:12:55.760 but it's very unlikely to be extracited. So he is, 0:12:55.840 --> 0:12:59.800 he's fine to be here for now. Uh. He certainly 0:12:59.800 --> 0:13:03.840 can travel anywhere, except perhaps to France, where he's also 0:13:03.880 --> 0:13:06.200 a citizen. Uh. And the other thing is, you know, 0:13:06.240 --> 0:13:09.840 his reputation has not yet been rehabilitated, and I think 0:13:09.880 --> 0:13:12.760 if he entertained thoughts of a comeback, which which he 0:13:12.920 --> 0:13:15.240 very well might, there's a long way to go to that. 0:13:15.440 --> 0:13:18.520 And I'm just gonna say, as you so rightfully, including 0:13:18.559 --> 0:13:20.560 your story, it's another case of the winner take all 0:13:20.600 --> 0:13:23.120 in the game of twenty one century capitalism. If you've 0:13:23.160 --> 0:13:26.320 got money and means, you can get yourself out, Matt 0:13:26.520 --> 0:13:30.480 just quickly. Indeed, Yeah, well it's it turns out that, 0:13:31.080 --> 0:13:32.839 you know, we were very surprised and you have that 0:13:32.920 --> 0:13:35.240 he couldn't beat the system, but he was able to 0:13:35.280 --> 0:13:37.880 exit the system, which is not something that's the most criminal. 0:13:38.720 --> 0:13:42.320 The other option, if you can't beat the system, just 0:13:42.800 --> 0:13:47.280 change the system altogether, exactly. You got to get in 0:13:47.320 --> 0:13:50.439 the box. That's Bloomberg reporter Matthew Campbell and Business Week 0:13:50.559 --> 0:13:53.559 editor in chief Joe Webber. Jason, this story just gets 0:13:53.559 --> 0:13:56.560 more and more interesting, and I've got to take my 0:13:56.640 --> 0:13:59.120 hat off to our team here at Bloomberg who has 0:13:59.120 --> 0:14:01.960 done great investor gate of journalism and is really getting 0:14:02.000 --> 0:14:05.600 to the details the names of the individuals behind that 0:14:05.640 --> 0:14:08.080 great escape of Carlos Gone and how it all came down. 0:14:08.840 --> 0:14:11.120 It is now approximately three weeks since Carlos go in 0:14:11.160 --> 0:14:13.520 the ousted head of Nissan and Renault escape from Japan. 0:14:13.559 --> 0:14:16.520 And while we're all obsessed Jason easily with the Hollywood 0:14:16.559 --> 0:14:20.120 like feel of this story, real story, there are still 0:14:20.280 --> 0:14:22.520 something we can't forget and that's the legal side of 0:14:22.520 --> 0:14:25.520 this story. A lot of questions still, absolutely and we've 0:14:25.520 --> 0:14:28.560 talked a lot about, as you say, the escape, the 0:14:28.680 --> 0:14:31.800 dramatic you know, sort of in the box literally like 0:14:31.920 --> 0:14:34.800 getting to Lebanon. But what happens from here from a 0:14:34.880 --> 0:14:37.720 legal perspective, that's what we really want to dig into. Now. 0:14:37.720 --> 0:14:40.680 Greg Farrell is here with this. He has unpacked this 0:14:40.800 --> 0:14:43.160 in a way that few have and is here to 0:14:43.200 --> 0:14:46.960 provide some historical perspective as you look at this, what 0:14:47.080 --> 0:14:50.280 are the key legal issues here? The case against gone 0:14:50.760 --> 0:14:53.440 is not like a lot of cases brought against CEOs 0:14:53.480 --> 0:14:55.360 in the United States, where it's a clear case of 0:14:55.400 --> 0:14:59.080 either inside or trading or accounting fraud in order to 0:14:59.120 --> 0:15:01.280 goose up or an so that you can get your bonus, 0:15:01.320 --> 0:15:03.960 the end ron stuff that we all remember from fifteen 0:15:04.000 --> 0:15:08.000 twenty years ago. The case against Gone h is unusual 0:15:08.040 --> 0:15:11.600 in so far as it's a he's been accused of 0:15:12.080 --> 0:15:15.480 helping himself to more money than he deserved or somehow 0:15:15.600 --> 0:15:19.000 finagling away to get the board to approve or unbeknownst 0:15:19.000 --> 0:15:22.440 to the board and even bigger pay packages than he 0:15:22.480 --> 0:15:27.640 was entitled to, which is uncommon. It's seen rarely here. Basically, 0:15:27.640 --> 0:15:29.840 to my mind, it brought back the case against former 0:15:29.880 --> 0:15:34.000 Tycho CEO Dennis Kozlowski and his CFO, brought not by 0:15:34.000 --> 0:15:37.000 the federal government but by the Manhattan District attorney Bob 0:15:37.040 --> 0:15:40.240 morgan Thou back in the oh four oh five era, 0:15:40.640 --> 0:15:42.800 and that was kind of a messy case. It was 0:15:42.840 --> 0:15:47.479 not clear they went after him on books and records issues, etcetera. 0:15:47.560 --> 0:15:49.640 But we did not have that clear resonance that an 0:15:49.640 --> 0:15:54.160 accounting fraud securities fraud case has. Tycho shareholders were not 0:15:54.240 --> 0:15:57.720 really burned by this, Yes, Becauselowski helped himself to more 0:15:57.800 --> 0:16:00.760 money than you know, the board had a proved But 0:16:00.960 --> 0:16:03.840 unlike Endron, unlike Health South, unlike some of these other 0:16:04.040 --> 0:16:07.040 world calm, Tycho was a real profitable company and his 0:16:07.080 --> 0:16:11.240 shareholders were doing well. So this falls into that category. 0:16:11.560 --> 0:16:13.800 Going was accused of helping himself to more than he 0:16:13.880 --> 0:16:19.200 deserved and basically parleying his position to enrich himself. Another 0:16:19.240 --> 0:16:22.400 thing that was missing from you know, morgan Thou's case 0:16:22.440 --> 0:16:26.520 against Tycho, but clearly present here is the plan and 0:16:26.600 --> 0:16:29.240 Carlos Going referred to this in his press conference last week, 0:16:29.440 --> 0:16:34.760 to basically fold Nissan into a wider global automotive group 0:16:35.040 --> 0:16:39.360 that would basically, you know, uh, remove the essential Japanese 0:16:39.440 --> 0:16:41.400 element from it or make it less of a Japanese 0:16:41.480 --> 0:16:44.680 champion brand that had been and you know, I think 0:16:44.680 --> 0:16:46.480 He's actually got a point there that this is something 0:16:46.520 --> 0:16:48.520 that didn't go over well. But it was in the works. 0:16:48.640 --> 0:16:50.280 It was in the works. It was in the works. 0:16:50.440 --> 0:16:53.000 It's more than a coincidence. I think that this very 0:16:53.040 --> 0:16:56.880 aggressive regulatory legal action and prosecution of Going took place 0:16:57.080 --> 0:16:59.760 at a time when Nissan was, in fact, you know, 0:17:00.120 --> 0:17:03.800 drifting towards becoming an international brand, unless of a Japanese brand. 0:17:04.080 --> 0:17:05.560 What's interesting, I want to go back to what you 0:17:05.640 --> 0:17:09.480 said of you know, perhaps Carlos Gone helping himself to 0:17:09.600 --> 0:17:12.760 more than he was allowed. Is that a simple legal 0:17:12.800 --> 0:17:14.720 case to figure out? In other words, do you just 0:17:14.760 --> 0:17:17.480 go back to the employment contracts and here's what they say, 0:17:17.640 --> 0:17:19.760 you weren't allowed to have this house or so and 0:17:19.800 --> 0:17:21.920 so forth, or when it comes to this kind of thing, 0:17:21.960 --> 0:17:25.040 because I could certainly see with a board that's really 0:17:25.040 --> 0:17:28.440 happy with its CEO, and Carlos Gone was lauded as 0:17:28.440 --> 0:17:32.600 this incredible auto executive in the industry and really globally 0:17:32.800 --> 0:17:34.960 as an executive. And I do wonder whether it's like, oh, yeah, 0:17:34.960 --> 0:17:36.280 we like him, Yeah you can have that, or you 0:17:36.320 --> 0:17:38.480 can do this, Like how do you go about legally 0:17:38.600 --> 0:17:41.640 proving it what's required? There are a lot of wiggle room. 0:17:41.760 --> 0:17:44.240 How You've made a very good point here, and that 0:17:44.400 --> 0:17:47.200 is he was a superstar CEO by the time this 0:17:47.320 --> 0:17:50.359 all unfolded a little more than a year ago. And 0:17:50.480 --> 0:17:53.640 as you pointed out in his press conference last week, UH, 0:17:54.040 --> 0:17:56.560 somewhere near twenty books have been written for case studies 0:17:56.560 --> 0:17:59.000 in business schools about his phenomenon. We would ter you 0:17:59.080 --> 0:18:03.199 him saying, what a right, But this is at the 0:18:03.200 --> 0:18:06.080 far end of a twenty year reign. Certainly, when you 0:18:06.080 --> 0:18:09.040 have that much success over a period of time, Uh, 0:18:09.080 --> 0:18:11.280 there are certain realities that happen. We've seen it here 0:18:11.320 --> 0:18:14.520 in the US with very powerful uh you know UH 0:18:14.680 --> 0:18:17.280 CEOs who developed sort of a there's a hero worship. 0:18:17.600 --> 0:18:20.800 And after a while, technically all you know, boards of 0:18:20.840 --> 0:18:25.399 directors are independent, but over particularly twenty year period where 0:18:25.440 --> 0:18:27.960 you know, new board members come on, etcetera, after a while, 0:18:28.520 --> 0:18:31.480 the board becomes, if not a wholly owned subsidiary, far 0:18:31.600 --> 0:18:34.000 less of an independent watchdog. But then what you know, 0:18:34.040 --> 0:18:37.199 shareholder activists would would like us to have, they do 0:18:37.280 --> 0:18:41.119 become that becomes a very comfortable relationship between the board 0:18:41.400 --> 0:18:44.359 and the CEO because everybody's doing well, why rock the boat? 0:18:44.800 --> 0:18:48.399 And in that gray area is um whether or not 0:18:48.680 --> 0:18:52.600 you know, uh, Going is entitled to this h the board, 0:18:53.160 --> 0:18:55.240 you know, So there'll be different claims if this ever 0:18:55.280 --> 0:18:57.840 went to trial, that the board was not aware that 0:18:57.880 --> 0:19:00.359 he paying himself, that Going could say no, why I 0:19:00.440 --> 0:19:02.520 told them this, or they knew that, or we had 0:19:02.520 --> 0:19:04.400 a discussion at the end of the last board meeting 0:19:04.400 --> 0:19:06.119 where I said I'd be interested in this, but the 0:19:06.119 --> 0:19:10.119 money went through and somebody yes, exactly. And there were 0:19:10.200 --> 0:19:12.800 lawyers for every board meeting, in board minutes, etcetera. So 0:19:12.840 --> 0:19:15.200 these are not like secret meetings that happen and people 0:19:15.200 --> 0:19:19.119 forget um. So you know, that is a very great area. 0:19:19.280 --> 0:19:21.640 And that's Greg Ferrell, one of the legal legals here 0:19:21.760 --> 0:19:24.800 at Bloomberg. And what I loved about his conversation was 0:19:25.000 --> 0:19:28.560 he put it in context, historical context. He's followed everything 0:19:28.640 --> 0:19:32.320 from Enron to Tycho, and those connections that he made 0:19:32.320 --> 0:19:35.440 to the Dennist Kauselowski story I thought were fascinating. I 0:19:35.480 --> 0:19:37.680 also think it was funny that in starting to talk 0:19:37.680 --> 0:19:39.359 with him, he's like, wait, I had to remember that 0:19:39.400 --> 0:19:43.080 there were charges. What were the charges specifically against Carlos 0:19:43.080 --> 0:19:45.720 Go And so he gets into the particulars. So obviously 0:19:45.760 --> 0:19:47.760 a store that continues to evolve, it isn't over. As 0:19:47.760 --> 0:19:50.480 you said, Even if you don't know Apoulo management, you 0:19:50.520 --> 0:19:52.639 probably know some of the company's targets, right Jason, We're 0:19:52.640 --> 0:19:56.240 talking about Horris Casinos, Claire's jewelry stores, Linen and things. 0:19:56.240 --> 0:19:58.359 This brings us to the cover story this week, it does, 0:19:58.440 --> 0:20:02.880 and it's really an unbe leavable story that's never been told. 0:20:03.160 --> 0:20:05.680 Leon Black, one of the key figures in the world 0:20:05.720 --> 0:20:08.320 of finance, in the world of philanthropy, and certainly in 0:20:08.359 --> 0:20:11.800 the world of private equity. Caleb Melby and Heather Pearlberg 0:20:11.880 --> 0:20:14.000 wrote the story. Caleb here with us in New York City, 0:20:15.359 --> 0:20:19.840 Leon Black, Where to begin? Where did you begin? Indeed? Yeah, 0:20:19.920 --> 0:20:23.320 Heather and I it took us months to to put 0:20:23.359 --> 0:20:27.200 this together. Um, and we approached it in the summer 0:20:27.240 --> 0:20:29.640 being like, here's this guy. He was in the news 0:20:29.760 --> 0:20:33.840 at the time because of his affiliations with Jeffrey Epstein, 0:20:33.880 --> 0:20:36.720 and like his name was in headlines everywhere, and it 0:20:36.800 --> 0:20:39.640 was suddenly of much broader interest to a much broader 0:20:39.640 --> 0:20:42.640 group of people, and we were like, do people know 0:20:42.680 --> 0:20:45.120 who he is? Like what his story is? The fact 0:20:45.119 --> 0:20:48.040 that he's been at like all the key junctures in 0:20:48.320 --> 0:20:52.240 like American financial history for like half a century. Um, 0:20:52.520 --> 0:20:55.080 So we went and you know, we started talking to 0:20:55.119 --> 0:20:57.600 people all the way back to the nineteen seventies about 0:20:57.840 --> 0:21:01.520 Leon his story, how he came to be one of 0:21:01.520 --> 0:21:04.960 the most powerful and ruthless people in American finance. And 0:21:05.000 --> 0:21:06.520 we do want to take that step back. I mean, 0:21:06.600 --> 0:21:08.920 who is he today? I mean he is when it 0:21:08.960 --> 0:21:11.720 comes to private equity and investors, I mean big deal, 0:21:11.920 --> 0:21:14.800 but someone who's been very quiet. Yes, yeah, he is. 0:21:15.320 --> 0:21:17.720 In private equity. There's there's some people who you can 0:21:17.720 --> 0:21:20.840 think of as kind of ambassadors for for that line 0:21:20.840 --> 0:21:24.000 of work, right probably Steve Schwartzman, chief chief among them. 0:21:24.080 --> 0:21:27.600 Leon Black has not shouldered that responsibility to tell the 0:21:27.640 --> 0:21:31.800 industry's story or anything like that. He's very adverse, uh 0:21:32.040 --> 0:21:34.520 to the press, and we learned about why when we 0:21:34.560 --> 0:21:37.560