Skip to main content

tv   Bloomberg Business Week  Bloomberg  November 27, 2016 8:00am-9:01am EST

8:00 am
carol: welcome to "bloomberg business week." i'm carol massar. >> i am oliver renick. carol: how vulnerable is america's energy infrastructure? is building more pipelines the answer? oliver: paul manafort is back. the controversial first campaign for donald trump away, though.nt carol: how the military is inspiring ibm's cyber security training. carol: jim, i want to start in
8:01 am
the global economics section. europe is getting this super election cycle underway. we're watching a referendum in italy. >> people are looking at italy because it's a good barometer of way that the voters across europe think about how happy they are with their government. so right now, even though the referendum is about something that seems fairly arcane, changing the way the parliament is set up in italy, cutting down the number of senators there. one of the things about italian politics is we always seem to have lots of governments turning over. one reason is they have over 300 senators. they are cutting it down by about two-thirds. it is supposedly going to streamline government but allows lots of things within government to change. that shows you whether people are angry enough that they want big changes in government. if that happens, you will see it across the continent in places
8:02 am
like france, that also have important elections later this year. oliver: you guys treat it as sort of a petri dish. that will be important for this sort of globalization coming to a halt. or whether or not populism continues to extend across europe. >> that is one of the problems. populism has gotten a big boost because there have been employment problems, people worried about immigration. also, security is an issue. we have to figure out how angry people are and how much change they truly want. oliver: let's move it to a slightly less serious topic. a great story about zara and clothing. >> it is a fascinating story because zara has gone from a single store in northern spain to being the biggest fashion retailer in the world. typically in a fashion empire, you think there is a style. somebody is out there saying this is what people wear. they've put that upside down and they have 350 designers in spain and they try to figure out what
8:03 am
is hot. they use data. they use information they get from countries around the world. every night, they are getting information from websites about what is selling, what's hot, what people are clicking on, and they are getting information from consumers in big, major markets like moscow, new york, tokyo. what they have done is they have moved a lot of the production capacity to spain. that doesn't sound smart because happensain but what is you are sourcing east, it takes months to sell it. they can do it much quicker, so
8:04 am
about a turn fashion in week. a couple of weeks. what happens is, people think it is new. i've got to buy it. that is very different. there is no more of those four seasons it year. no, this is 24/7 fashion. oliver: there is the cover story like pipeline explosion. tell us about this narrative. >> this one pipeline basically carries gasoline for 50 million people. it is really dependent upon it, but pipeline safety has become an issue. carol: christopher leonard actually visited the pipeline and we caught up with him. >> the pipeline was built in 1962. at the time it was built, it was the largest private-sector infrastructure project in u.s. history. it is a 5500 mile pipeline that serves a really vital role in the u.s. energy infrastructure. the pipeline begins in texas and louisiana, where there is a large concentration of oil refineries, and it takes a product like
8:05 am
diesel fuel and gasoline all the way across the southeast, up the eastern seaboard from atlanta to new york and ends in new jersey. amazingly, about half of the fuel used along the east coast is transported through this single pipeline. about 50 million people a day depend on it for fuel. carol: right, you said something like 1.4 million gallons of gasoline every day go into the pipeline? >> that's right. that is just the line that carries gasoline fuel. there is another one that carries an equivalent amount of diesel fuel and other fuel products as well. carol: if you didn't know about the colonial pipeline, this halloween, you probably learned about it because it is a big story. there was a big explosion. >> what happened on halloween was it was sort of a follow-on effect for the large accident that happened in september. back in late september, this
8:06 am
pipeline sprang a leak, essentially, in the state of alabama, and about 330,000 gallons of gasoline went spilling out into the surrounding woodlands. that accident in september really underscored the importance of this pipeline. they had to shut off the gasoline flow essentially when that leak was discovered, and when that happened, gasoline reserves on the east coast of the united states plunged at their fastest level in u.s. history. stocks fell all across the eastern seaboard as gasoline stations realized that they weren't getting supplies to come. colonial tried to fix this leaky section of pipe that sprang a leak in september. they hired a crew in october to start doing permanent fixes on this aging section of pipe. and what happened on halloween was really tragic. we don't have all the details yet, but we know a crew of nine
8:07 am
men was excavating earth around the pipeline and somehow, the earthmoving track-hoe machine struck a pipeline. it exploded. a column of flame shot more than 50 feet in the air. one worker was killed immediately on the side. four other construction workers were terribly burned and taken to the nearby town of birmingham to be treated. once again, we saw that the flow of gasoline was immediately stopped. carol: unfortunately, i hate to say this but you are going to accidents in any industry, but what is worrisome is that there has been an increase in the number of accidents or explosions that we are seeing at the colonial pipeline in just the last 12 months alone. >> that's right. as you can see, we are dealing with an aging piece of
8:08 am
infrastructure. it is about 50 years old. in alabama in particular, something seems to be going on with the colonial pipeline company. they have had six incidents. six leaks this year alone. that's as many as they had an alabama for the previous five years altogether. so there has been a sharp increase in incidents just in alabama. the company would not comment to me at all as to what is driving that increase. we don't know what going wrong in alabama at this point that is causing all these leaks. if you go back and look at the pipeline structure as a whole, we are also seeing an increase in accidents year-over-year. and maybe even more concerning, we are seeing the accidents are getting more and more expensive and doing more and more property damage. now, colonial federal regulators, the national transportation safety board are all investigating at this time. they wouldn't tell me what is driving this increase in accidents.
8:09 am
carol: turning the colonial pipeline explosion into a cover image was the job of the creative director rob vargas. >> this obviously references the explosion that happened in october with the colonial pipeline. it was hard to get an image of that because it happened very quickly. they set up a very wide perimeter around the area, and so we wanted a photo, so we turned to photoshop. as we usually do. and so we created this warning sign. warning, exploding pipeline. it may result in hellish blaze and may damage the supply. stating pretty plainly. then we emphasize the fire on the background. yes, right. it is not often you just kind of take an image and blowout the cover. it is just everywhere. >> from the images we did see,
8:10 am
which were from afar, it did look like a small nuclear explosion. it seemed like a very massive, intense blast. we wanted it that without showing the news photo from afar. oliver: what is good is that the company itself is also exploding as a result. >> exactly. i mean, you know, this company, they have had a few incidents, and so we wanted to make sure their aseir name on well. carol: up next, john paulson bet on donald trump when most of wall street said, no, thanks. now he's reaping the rewards. oliver: and why some of hillary clinton's supporters on wall street are changing their attitude about a trump white house. ♪
8:11 am
8:12 am
♪ carol: welcome back to "bloomberg businessweek." i am carol massar. oliver: i am oliver renick. in the markets and finance section, john paulson seeing a
8:13 am
huge a off to his bet that donald trump could whitney election. -- win the election. carol: i spoke to reporter joe light. >> he is famous for a big short he made before the financial crisis. subprime mortgage bonds made him famous and made his fund billions of dollars, and now he is moving on to other issues. carol: fannie mae and freddie mac. he's also had some interest in for a good reason. joe: that's right. so, fannie mae and freddie mac are at the center of the u.s. mortgage market. there are a couple companies that were taken over by the government in 2008, and eventually received $188 billion in taxpayer bailout money. now a curiosity about this , bailout is that even though the government took over the companies, they left a lot of fannie and freddie, and preferred shares outstanding. at the time, they seemed worthless.
8:14 am
the government has been taking all of fannie and freddie's profits since the crisis, but as the mortgage market started to turn and as the real estate market started to turn, certain investors, paulson among them, although we don't know when he bought his shares, started to see some value there and started to scoop the shares back up. carol: he is making money on it? correct? >> that is right. or at least the share prices have risen a great deal since the trough of the crisis. forof the difficulties paulson and other investors is that the current terms of fannie and freddie's bailout requires them to send all of their profits to the u.s. government. so one of the things they have been loading pretty heavily around is to try to change the policy of all the efforts so some of the rapid start to flow to shareholders again.
8:15 am
it is very much an outstanding question whether the administration or congress will allow that to happen and court cases, whether the courts will start to change that policy. carol: this is where the story gets interesting. first of all -- freddie mac, fannie mae, i think everybody has been trying to get their head around them for years, even before the crisis. are they government agencies, quasi-agencies? and yet there are investors, they were not publicly held entities. here is something kind of interesting. john paulson made a bet on donald trump. he was out there early, backing donald trump. so it is curious to see what kind of leverage he will have in making donald trump or his administration more favorable about freddie mac and fannie mae and whether those profits will ultimately go back to shareholders. in the meantime, john paulson has been spending money lobbying or supporting donald trump and his affiliated campaigns, if you will. joe: that's right. so, paulson became involved in the trump campaign early on when it seemed like trump didn't have
8:16 am
a chance of winning the presidency. he helped to host, or he has given more than $300,000 to not only trump, but also to the republican national committee and different republican organizations, but even before becoming involved in the trump campaign, paulson and company have been spending hundreds of thousands of dollars on lobbyists, basically trying to get in the halls of congress, get in the ear of lawmakers who have influence on proposed reforms to freddie mac and fannie mae, and to try to convince some of those guys to change the policy. in congress, it doesn't fall along the partisan lines that many issues do. there are democrats who want to save fannie and freddie, democrats who want to eliminate them, and the same on the republican side, so they have been trying to convince some
8:17 am
lawmakers to go to bat for what paulson would say are the rights of shareholders in these companies and their rights to a share of these companies future profits. carol: why some clinton supporters are coming around to the idea of president trump. >> the reason they are turning around isn't that they suddenly dislike hillary clinton and love donald trump. the reason they are turning around it is they think they will have things go well for their wallets. they are expecting tax cuts, they are expecting wall street to be deregulated, interest rates to go up. you know, they might've had their feelings hurt during the campaign when trump was making fun of them, but now i think they know where to look, and it is at their wallets. it is out of self-interest they are doing that. we had one person say to us, look, i'm really upset about the things donald trump says about muslims, about women, the things
8:18 am
donald trump says about immigrants, but to get greedy, i look at what will happen to me and my family, and i know these are going to be good times. and it was amazing to hear someone say that to me in an interview. you know, but at least he was being honest. at least he was saying what i think a lot of people are feeling, which is that if you havefor a big bank, you come through this era where bankers had to deal with a lot of regulation. the dodd frank act was put in place to prevent a global financial crisis, and it meant some of the rules of the road were going to change and i think people will expect now that those rules are going to change again and it will make life for the big banks a lot easier. oliver: it doesn't take a genius to look at trump, think about what he talks about and think about whether or not it's going to be good for financial markets and banks in terms of
8:19 am
regulations. so why then does sudden understanding that this guy is going to be great for us -- they had to know that along the way? was it the toxicity of supporting trump in a major urban area? why this sudden change of heart? >> i think a lot of people just didn't think he was going to win. they were preparing for a clinton presidency. there is also a third dynamic that hints to what you're talking about. trump is inconsistent. so for example, he talks about rolling back dodd-frank. which is what i'm referring to here when i say bankers expect life to get better for them. he talks about rolling back dodd-frank and on the other hand and of course, doing things like putting in a moratorium on new regulation. on the other hand, the republican platform for 2016 has in it that there will be a new glass-steagall, which would be really disruptive to wall street. just to remind people, glass-steagall put up a wall in the wake of the 1929 stock crash when the great depression started. they put up a wall between
8:20 am
commercial and investment banking. new glass-steagall would be pretty annoying for citigroup, which was basically put together with travelers. the only reason citigroup exists is when citigroup was created, in the late 1990's, they were not really doing it illegally -- they were doing it with the expectation that the wall was going to come down and it did. that is what we still have citibank. if it comes back, these banks are in trouble. so to be able to square the circle, you can say the bankers really believe when trump says he's going to lower their taxes and deregulate their industry. and i think they do not believe him when he sort of says this populist sort of rant against wall street and the republicans suggest a new glass-steagall. that is my understanding after speaking to these people. carol: up next, do autocrats know how to lead a democracy? we will take a look at what is happening around the world. oliver: plus, paul manafort reemerges as a player at trump tower. ♪
8:21 am
8:22 am
8:23 am
♪ carol: welcome back to "bloomberg businessweek." i am carol massar. oliver: i am oliver renick. you can also listen to us on the radio. 1200 in boston. 99.1 fm in washington, d.c. a.m. 960 in the bay area. carroll: and in london. and in asia on the bloomberg radio plus app. in the features section, a controversial figure in trump land reemerges in trump tower. oliver: paul manafort is next. it turns out that he never left. we spoke to reporter bob coulter. >> paul before steve bannon was supposed to be the big mastermind who was going to bring trump of victory. paul manafort resigned in paul manafort resigned in august. it seemed like that was going to be it.
8:24 am
his big fall from grace and we would never hear from him again. in fact, what i reported out and is the idea that he never went away, that he stayed close to donald trump all the way through, and it was he who articulated the strategy that brought donald trump the victory. that steve bannon was making noise with fringe groups. but in order to get the real center of america to go on trumps side, that was all paul manafort. it just speaks to his power as an unseen force in politics for decades. so i take a look at the scope of his career and evaluate what might be in store for him in the future. carol: that is what is interesting i find. paul manafort, i mean the trump administration, we believe he will be anti-establishment, but it doesn't seem like it will ultimately work out that way. paul manafort seems to be the ultimate washington insider and establishment. >> that's right. insider is the perfect word for him. this is someone who came up in the 1970's in young republican circles and helped with the gerald ford campaign and ronald reagan campaign, then switched over to the lobbying side and invented the culture of lobbying donald trump seems to make a lot of noise about not liking.
8:25 am
but, it was manafort who brought all of these controversy over foreign figures access to the reagan and bush white house is. people like ferdinand marcos. who worked manafort on the dole campaign in 1996, and trump turned to him because he couldn't find anyone else to help him when his primaries looked like the end of him last spring. oliver: he sort of unintentionally may be popularized the phrase "influence peddling," a synonym for lobbying. >> right. i mean, the irony of this is most of the time, he likes to be below the radar and invisible. he is not a flashy and well-dressed guy. like lee atwater or roger stone. he's not a public guy. he's not flamboyant. when he was brought into this hud scandal in the late 1980's, he played a part in the directing of federal funds.
8:26 am
for a project in new jersey, he actually said flat out to the public, some call it lobbying and some call it influence peddling. it depends upon how you define it. and that was sort of a glib statement that defined his career. carol: he made a lot of money doing this. you profile him. he's a nice dresser. he has lovely places. he is a low-key guy, but he is involved, from one we are hearing, still, in the trump administration. and in the farming of what is to come. >> in the final days of the campaign, he was in touch directly with trump on how to handle the jim comey revelations that the fbi was going to look, again at hillary clinton's he mails. he was one of those saying you have to go back to michigan to do you can win michigan, and sure enough, trump did win michigan. oliver: tell us about the background and how they got to know each other. trump and manafort. >> they first met personally in
8:27 am
the 1970's through roy cohn of all people. it is like ragtime are one of those works of fiction where all the famous people meet each other. or cross paths. used paul manafort's firm for lobbying purposes to defend his casinos against indian casinos that were going to come up. so he knew manafort that way. trump came and visited him and took a look at campaign operations. the trailer. he said he was very impressed. he started to get a feel for the sort of thing manafort did. manafort has a home and trump tower. at least two friends of his say you got to get paul manafort's help with the campaign. he called them and pick them up and the rest is history. carol: why trump conflicts of interest may become the new normal.
8:28 am
oliver: plus, the fear gripping 700,000 immigrants currently shielded from deportation in the u.s. ♪ seeing is believing, and that's why
8:29 am
we're opening more xfinity stores closer to you. visit us today and learn how to get the most out of all your services, like xfinity x1. we'll put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. there's more in store than you imagine.
8:30 am
visit an xfinity store today and see for yourself. xfinity, the future of awesome. ♪ carol: welcome back to "bloomberg businessweek." i am carol massar. oliver: i am oliver renick. still ahead, clues on how donald trump might run his presidency by looking at autocrats around the world. carol: and what it would take to remove conflicts of interest. oliver: and the tool that businesses have to fight sexual harassment. carol: it is all ahead on "bloomberg businessweek." ♪ oliver: we're here with jim ellis. there are so many must reads this week as always. one that is particularly interesting is what is happening in london and in particular, chinese investment in london. it seems like a strange time to be doing that. >> it is a strange time given
8:31 am
post-brexit. so many are worried that london's time as a financial center is at risk. they are talking about not investing in london, or reducing staff. and so rent is going down. and no one wants to put money into new buildings. so, enter the chinese, have decided that a bunch of banks are putting money behind huge financial services development in london that would basically be the home for lots of chinese businesses in london. they continue to believe that london will remain a financial market. and they are also playing on the fact that they can make a lot of money as well. it is sort of counterprogramming. if it works, it works big. carol: two words, canary wharf. >> we won't go there. they are hoping that won't
8:32 am
happen. they really do think that because they have so many of their own companies, it gives them a floor. carol: the technology section, and an uber wannabe. who said they raised a lot of money but they had not. it is a serious story, but there are some fun elements to it. carhoo.alking about >> it is a fun story because we hear so many people that want to get into the ride hailing start up business. this company had a lot of press. it is based in london. it was supposed to have raised $250 million. it turns out when all is said and done that they only raised $40 million. carol: big difference. >> but they spent as if they had raised $1 billion. they spent big on offices on multiple continents. they had parties. the ceo had a party in las vegas that had everything from free-flowing champagne to exotic dancers. all of this on the company dime. as well, there were cars, all the things that gave the impression that the big money
8:33 am
was here. it turns out it did not work. at the same time, the app that this was all supposed to go for didn't work as well. so this is a true story of investors and markets getting ahead of themselves. oliver: all right, let's talk about something in the opening remarks section which looks at how we might be able to ascertain what donald trump is going to do as president, you guys look to a particular type of leader, these autocrats already in place around the world. >> right. i mean, what was interesting about that, everybody keeps saying that donald trump, we've never seen anything like him. so we do not know how to react to him. well, it turns out that this whole notion of an elected autocrats has actually been done a number of times across europe, everybody from mussolini on. we have seen it there, we've seen it in italy. we have seen it in russia with
8:34 am
putin, and people who come in with a very strong, right wing,n with a very strong, right wing, authoritarian leaders, but who got elected as opposed to seizing power. and, we try to take a look at the common themes there, and that sort of gives you a hint of whether we can see trump follow the same thing. carol: we're talking about donald trump, in politics and policy, you take a dive into why kind of unwinding donald trump from all his business interests is not going to necessarily be so easy. >> it will be almost impossible. one of the problems is that trump is his business. i mean basically what donald trump is is a giant licensing machine that trades on with him and his persona. that makes it difficult to think about how you can take trump off of all these buildings that are there trying to get people to pay more for rent or office space because it has trump's name on it. in a lot of those, they might contractually need to have him involved. the other thing, he does not want to separate his business. that is a big problem. he wants to maintain the
8:35 am
structure and keep his children running them. i won't even say the word conflict of interest, but we never had anything quite like this before. what has happened in the past is the presidents typically take their assets and put them into blind trusts. oliver: a lot of questions. we spoke to our reporter. carol: you kick off your story saying that if donald trump kind of sold all of his business interests, it would get rid of the conflict of interest problem. kind of walk us through that a little bit. >> right, right now what everybody seems to be talking about, his political opponents, the media, he has these business partners coming to visit him as he's making these transition decisions. and more importantly, going forward he is going to have all these business ties with these guys and others, and all these lenders. everybody is really concerned about how that will affect how trump governs, what his
8:36 am
stagecraft looks like. all of that is up in the air. so what we are trying to figure out is what if anything he can do to distance himself from the businesses that could pose a lot of problems and a minimally keep everybody questioning why he is doing what he's doing as he engages in countries where he has these business ties. carol: selling his businesses are not so easy, right? >> no, no, trump's businesses are incredibly unique. so like, you have trump golf courses. and you have his licensing deals with these international partners where he's giving his name to owner developers, and they put his name on the building in the hopes of getting higher prices for condos or hotel rooms. it is hard to separate trump the man specifically from that business, right?
8:37 am
like, do i want to own the rights to put trump's name on things when i am not trump and don't get to control what he does or what he does as president? there are other things were he's a minority partner. a couple buildings. he would need to get their permission to sell that, a whole bunch of quibbles trying to sell the businesses. carol: also in the politics section, the fear gripping immigrants working in the u.s. legally. we spoke to our reporter. you begin your story talking about an individual, who is he and why is he nervous? >> he is in his 30's. he is an engineer at a silicon valley company. and, he doesn't know if he's going to lose his permit to work and his protection from deportation within the next couple of months. he is someone that can be a poster child for president obama's program, childhood arrivals program, who was brought here as a seven-year-old
8:38 am
on a visa that he and his family stayed past the expiration of. he's spent almost his whole life in the united states. he wasn't able to work legally until 2012. when he was covered under this program and initiated through executive authority by president obama, which so far has shielded over 700,000 people who have been here for a long time and came here early in their lives from being threatened with deportation and has provided them work permits. so he actually hesitated about applying in 2012, because he worried about what would happen if mitt romney got elected. now he is in this position of reckoning with what this unexpected victory of donald trump is going to mean for him. oliver: his information, his address and everything, the government now has, correct? >> yes, he like thousands of
8:39 am
-- hundreds of thousands of others, provided information to the government, which people involved in the program have confirmed now will be information that's available to president trump and to his government, which he is committed to take a more aggressive approach when it comes to forcing people to leave the country. oliver: so what exactly has trump said about this specific program? what has he said about repealing it, addressing it. how specific has he been? >> he says he is going to end it. he says he is going to end it and other executive moves by president obama on day one. what remains to be seen is how literally and how specifically he chooses to keep that pledge. and of course, if he does, if somehow he can be swayed by others, including people in the business community to change his view. among the questions is whether he would revoke immediately,
8:40 am
instantaneously all of the work authorizations, meaning someone who is legally employable one day would be unemployable the next day or if he would allow them to run out. and also, how much of a deportation risk there will be for people who previously were protected, and as you have said, provided information to make it easier to track them down. carol: up next, why elon musk is a target of fake writers on the internet. oliver: and how ibm preparing for cyber warfare. ♪
8:41 am
8:42 am
♪ carol: welcome back to "bloomberg businessweek." i am carol massar. oliver: i am oliver renick. in the technology section, the trolls elon musk thinks are behind many internet complaints and mysterious attacks online.
8:43 am
carol: here is reporter paul baird. let's begin by talking about shepard stewart. who is he? >> he is a fake op-ed writer. his byline appears on websites, particularly politically conservative websites. and whoever is behind the shepard stewart identity is intent on criticizing elon musk, the very well-known tech entrepreneur and mogul who is affiliated with companies like tesla and spacex. he has some enemies out there in the world who want to attack him, but don't want to do it in a straightforward way. oliver: specifically, you delved into one corner of the internet, specifically opposition he faced from an industry-specific standpoint, people whose best interests may not be aligned with elon musk. tell me where these people are from. >> my strong suspicion is that
8:44 am
his commercial competitors, perhaps at a couple of levels of remove have hired firms who have hired firms, putting up websites, hiring fake op-ed writers and so forth. but i was not able to connect all the dots that i can tell you that it was the coal industry that is behind this type of thing. in some instances, you can identify what group is behind a website. there is a website for example which is called stop elon musk from failing again, which is a relentlessly negative website that portrays him as someone who sucks up federal subsidies and does nothing in return for it. that website is affiliated with a conservative group, and that group is a 501(c)4 group.
8:45 am
so it doesn't have to disclose its donors, so you don't really know who is providing the money. carol: are they making up stuff? oliver: for the most part, they are aggregating stories with bad news about elon musk's companies, and the companies have had a rocky up-and-down history. and in addition to that, you get the sort of mock editorials. so are they making stuff up? it is just very negative opinions about everything he does. i mean, his companies have received certain types of incentives from government at different levels. that is a fact. is that a terrible thing or is that smart policy, for example, to encourage solar energy through his company solar city? and of course he's not the only person in the solar industry receiving those incentives. that is a matter of opinion, except on the sites with these writers, the opinion is always negative. carol: also, mike riley takes a tour of ibm's home for cyber wargames. oliver: help us understand the not so easy to understand world of preventing cyber attacks, hacking, and what you looked at
8:46 am
to prevent this type of stuff. >> there is an increasing awareness among corporation and major companies that have had a large breach. target, sony, basically picked your big hack the last few years. it can be a huge brand damaging event, but it is not one that the c suites and the parts of the teams and corporations that don't normally do security are really prepared for. so, if you take for example target. that was a breach that happened around christmas time. turns out that the company itself had overlooked some warnings that could've prevented the whole thing. by the time it all leaked out, there was a couple of months of coverage from it, the ceo ended up resigning. so i think what is going on in cambridge is that ibm has taken the initiative to try and create
8:47 am
a simulator. athink the analog is like pilot simulator, where you can put in the characters involved in a big breach. it could be the ceo or the general counsel or security team itself, put them into a room and run them through a very complicated scenario that sort of illustrates what a company deals with when it deals with a massive breach and you see what happens. carroll: well, what is interesting is and you write about what ibm is doing. they have set up a cyber security training center. it's not just about the technology, but crisis management after there is a hack. you went and visited, so tell us what you saw. >> it is really impressive. they spent a lot of money creating an environment that can realistically create not just the conditions of an actual breach, but then all the things that happen afterwards. so, they have this amazing technology that can create all this sort of traffic that goes along with a corporate network. so they basically can simulate
8:48 am
all the traffic of a major corporate network, and so you can have the security team in that room trying to figure out what happens after a phishing email is opened or trying to track down a hacker in real-time. but then they have all of these other things that allow them to put the rest of the management team through the paces. so they will have this beautiful room that has a huge screen on the front of it, this technology that comes from hollywood. and they have a studio where they can do mock interviews upstairs. basically, they will start throwing things into the mix, like a leak to the press and an ftc investigation or a.m. fbi investigation, and to see how the team handles it. carol: up next, the psychology on why more women don't come forward to report sexual harassment. ♪
8:49 am
8:50 am
8:51 am
♪ oliver: welcome back to "bloomberg businessweek." i am oliver renick. carol: i am carol massar. you can listen to us on the radio on sirius xm channel 119, and also on a.m. 1130 in new york, and a.m. 960. oliver: and in london and in asia on the bloomberg radio plus app. carol: a three-part look at sexual harassment and how companies try to fight it. oliver: why more victims don't come forward. carol: and how victims describe the harassment in their own words. here is our reporter. >> sexual-harassment is something we have talked about a lot has a country recently. the first thing that really hit the news, roger ailes from fox news. recently megyn kelly, her book alleges that he made advances against her 10 years ago and she never said anything until carlson sued. and then on top of that, president-elect trump has been
8:52 am
accused of also harassing or groping women. he has been caught on video actually saying that himself. so i sort of wanted to look at the state of harassment in the workplace specifically and why, despite decades of laws and lawsuits, high-profile scandals, people's careers have been ruined over this, why it is still so common. i was actually very surprised by what i found. carol: how did you find all these women? some are connected to cases in sort of the media, but some are not. >> yes, some of them have sued their employers or past employers i suppose, and so i found them looking through old news articles. and then i put a call out for this. and i had friends of friends, you know, complete strangers contact me online. it actually ends up being much easier to find people than you would expect. i received an absolute flood of
8:53 am
responses. carol: that is what i wanted to ask you. how many people, when you put that out, do you know anybody, you got a lot of responses? >> i had friends that are not at all in the story, but tell me things i didn't even know and we had been friends for years. i had been a reporter for over 10 years now and i had never gotten the response that i have from this article. oliver: you mentioned the surprise that was inherent in putting the story together. tell us about that and what you saw as sort of the biggest takeaways that took you by surprise? >> i will back up a little bit. to understand sexual harassment, it is such a broad term. essentially it was coined in the 1970's and it was meant to mean all the ways that women were made to feel uncomfortable at work from leering to groping and actual propositions for sex. you know, women that were told that if they didn't submit to this sort of stuff, they would
8:54 am
lose their jobs. but from a legal perspective, that is very broad, right? what i was sort of surprised at was that essentially over the years, the courts have had it down to a couple of things. one of them is quid pro quo. which is a essentially, you do this or you lose your job or you don't get a promotion. i thought that that was sort of the mad men era thing that did not happen very much anymore, but that is what gretchen carlson accused roger ailes of. they settled out of court. so he has never admitted to it, but it is done now. and then i thought, maybe it was just an unusual situation. and i talked to to attorneys and women, and it turns out that that still happens. it is usually women or anyone, it could be men too, about 16% of harassment claims are made by men, who don't have power in their job that maybe you or i have, so are a lot of service workers, farmworkers, and that
8:55 am
sort of thing. and obviously it can happen at major establishments as well. i was surprised by that. then there is also something that we call hostile work environment, which is nothing, you are not going to lose a paycheck or anything monetarily, but this is just the general sort of atmosphere you have to work in, and that's what most women complain about. most of the complaints today are hostile work environment. carol: it is interesting, i think most big companies have policies. and a lot of companies in general have policies, and yet the way the employers deal with it, i felt through your example, some can be very supportive of the women who are making the claim, and some are not. >> yeah, well, if you pick any company off the top of your head, anything, you can find a policy that says they have no tolerance for harassment. some of them stick to that policy.
8:56 am
some of them don't. and the way that i have sort of thought about it and described it to people, when somebody asks you what it like where you were, you don't say according to our employee manual, we have this and this. you talk about the people that you work with, the thing your do recently that you did in like, all that sort of stuff. the weird person in the mailroom. and that is what really makes the company culture, and so that is what women think about when they decide whether or not they're going to come forward and it is the real policy of companies. oliver: what is it about these sort of loopholes that have emerged, where even though these policies are stated and on paper, they do not quite good -- get an active. >> because companies don't take this seriously at all. i talked to women knew had very egregious violations happen to them and nothing really happened. but i think to give companies the benefit of the doubt, i think most of them know this is a problem culturally and do want
8:57 am
to do something about it. but when it is brought to their attention, most of the time it is unfortunately a he said, she said situation. so they are faced with potentially firing someone over the fact -- something that they don't have proof about. oliver: "bloomberg businessweek" is available on newsstands. carol: and also online. favorite story? opening remarks, i liked the story that looked at autocrats. trying to figure out what type of president donald trump will be. there is no kind of background. he has not governed before. we look to some of the developing markets where there have been autocrats elected. and these are people, who like donald trump, have one the races on their personality and charisma. oliver: not so much political background. carol: no, and have kind of controlled the media. and so it breaks that down and that was fascinating. how about you? oliver: i think i will go with ibm because it is kind of a nice relief from the politics stuff, looking at how companies can prepare for cyber attacks. this is obviously going to be a
8:58 am
huge part of the market. ibm buying up these companies. this little warfare center. it would almost be a fun place to visit. carol: exactly. fascinating. >> more bloomberg television starts right now. ♪
8:59 am
9:00 am
emily: i'm emily chang and this is "best of bloomberg technology," where we bring you all our top interviews from the week in tech. the controversy surrounding facebook and twitter rages on in the aftermath of donald trump's election. how the companies are changing their tune. trump doubles down on his promise to scrap a major trade deal. what that means for tech companies in china. the silver industry scrambles to figure out what the new administration means for renewables. the debate rages on, did fake news on facebook help sway the pr


info Stream Only

Uploaded by TV Archive on