>> the ecb maintains its low. draghi promises to publish minutes for the first time. jpmorgan is said to unwittingly help bnp paribas violate u.s. sanctions. and soccer scandal. speaksr of faith -- fifa out about corporate culture. >> you find a number of members

of the executive committee with allegations of corruption or being involved in inappropriate behavior. >> beans that are processed through a cap. and, find out how the u.k. is beefing up its naval power. first, we begin with a bloomberg exclusive. jpmorgan may have unwittingly helped bnp paribas violate u.s. sanctions according to a person familiar. billionch bank paid $9 for processing dollar transactions for countries such as sudan. jpmorgan has not been accused of any wrongdoing. here with more is caroline hyde. good morning. walk us through the details. >> the saga continues. bnp paribas has admitted guilt.

9 billion euros in terms of what they had to be fined. they were using jpmorgan as well. unwittingly, jpmorgan was involved in this, helping hide billions of dollars of deals related to banks in sudan, cuba and the like. it was in 2004. paribasutives in bnp came up with a plan to use jpmorgan. they had already caught the eye of u.s. regulators. they promised that they would abide. how did they make compliance better? instead of using bnp paribas new york, they used jpmorgan instead. they use a network of u.s. banks. helpused arab banks to disguise the dollar transactions. banks wouldtellite pass this payment onto jpmorgan without any revelation that it

is related to sudan. suddenly jpmorgan had this payment that it passed on without knowledge that it was related to sudan. thisaribas thought that was the way that it could avoid any sort of legal repercussions. >> so that was the whole tactic, to deliberately get around, or they were just trying to skirt the sanctions? >> this is all according to legal documents. initially they got advice from lawyers. they got a memo from the lawyers saying, if you use a u.s. bank you could protect your self from sanctions. later, the lawyers said, this is a legal. bnp paribas was warned that this would be illegal, if they were trying to hide these payments by routing them through jpmorgan. you cannot avoid punishment by

going through a u.s. bank. just because you are not going directly, doesn't mean that you are not getting sanctions. jpmorgan, and also the legal firm, are not accused of any wrongdoing. of course, this all comes from the back of bnp paribas leading guilty to almost $9 billion. they were using jpmorgan. was --, jpmorgan itself to the tune of $8 million. they too had been involved in sanctions transactions but they hadn't done it on purpose. it had been recklessly failing to exercise a minimal degree of caution all caps to get but it wasn't intentional.

they were inadvertently helping move sandra asked -- move transactions. >> when you hear about these tactics, it does help put perspective on why the fine was $9 billion. caroline, thank you. it is time now for another bloomberg exclusive. as the world cup enters its quarterfinals, corruption allegations continue to follow fifa. it is fighting claims that qatar bribed officials to host the 2022 world cup. i spoke to peter goldsmith, a member of the governance committee about the scandal. >> how would you describe the culture? >> the culture was one of -- they saw themselves as a family. families don't like other people interfering in what they do. they think they know best. at a time when fifa didn't have such a sway in the world as it has today -- it now produces an

income over $1 billion from a single product. they are faded as world leaders wherever they go. the consequence of that is that their culture was not modern, not transparent. >> quite simply, the allegations are that fifa is mired in corruption. we have seen scandal after scandal. having worked with them, what do you think? it is ann't deny, extraordinary state of affairs when you find a number of members have to leave office because of allegations of corruption or being involved in inappropriate behavior. it did have to change. the question is, have they done it? the president said he was setting out to reform fifa. he said he wanted to leave a legacy of a clean fifa behind him. there is still a long way to go. not least because they haven't demonstrated that they have the

cultural willingness to embrace this change. >> do you think stepladder blatter can cleanup feidafa or does he need to step down? >> something he said a week ago really shocked me. when the allegations were through ant was english newspaper about what had been happening in qatar. his response to that was to say that it was a racist allegation because it was directed against leaders of the african associations. that really isn't taking this seriously at all. on theto dismiss this basis that it is racist doesn't demonstrate the commitment that you expect from the top man in an important organization. it has to demonstrate it is clean, transparent and ethical.

>> lord goldsmith telling me needs to make a major commitment to transparency. later on, we will keep the focus on football. we will be joined by brazil's ambassador to the u.k. as his prepares to take on columbia. this weekend, angela merkel heads east for an official visit to china. it is merkel's seventh trip to china while in office. the focus will be on economic cooperation and trade. let's bring in david tweed. great to see you. merkel will begin her trip in western china. why is that? du.she is going to cheng it is interesting that she is going there. it is a favorite of xi jinping, the president. he is trying to encourage investment anywhere in the

western part of china, also in the interior. most of the investment that you see in china does take lace on the coastal areas. that is where you have the fast economic growth. you have this massive migration of people to the coastal areas. even though chengdu is a 14 million peopled city, a massively big city, it is still considered to be second ranked. she is going to visit the vw plant because there is indeed german business and factories in chengdu. she will go there. she has the ceo of volkswagen with her along with a whole host of other ceos. they might be thinking this is perhaps the place to have their next investment. >> david, i also heard you telling anna that this is a region known for spicy food. apparently angela merkel likes

chiles. >> apparently so. who would have known? szechuan cuisine is like with i's and theed chil special peppers that you put on your lips. you get sort of a numbing sensation. there is a chinese word for that which i don't know. she is going to go and learn how to make a very typical dish called gong-bao chicken. she is going to learn that and cook the dish. i wonder whether she is going to get rated on that dish by the chefs. if she does, i am thinking she might get 10 out of 10. >> it will be interesting to see. also hillary clinton well known for liking peppers. big changes at the european central bank. the ecb announcing it will start publishing minutes of policy meetings. or catching up

with its peers? let's ask manus cranny who has been covering the conference. which is it? >> i think it is a little bit of both. i think it is draghi trying to say that it is time to change how often we get together. expectation, expectation, expectation. he wants to change what he calls the self-fulfilling prophecy. every time they meet, every time we get an announcement. policy is not based on short term-ism. that is what the message is. the minutes are about delivering clarity. there was a lovely line in the bloomberg story. it would be absurd. there is enough clarity in the world. is it going to be everybody on the committee? delivery,t

transparency. it is about disrupting. who would have thought? thatitially, the fear was revealing all that information would provoke too much debate, and less negotiation, and it would open up officials to criticism. a big step forward for transparency. we also wanted to get more details on mario draghi's efforts to get lending going into the economy. it sounds terribly complicated. walk us through the details. >> it is. two types of banks in the eurozone, those who are lending and those who are deleveraging. two clear pools. people who are maintaining, increasing lending, borrow some money. you will be able to keep the money for four years. i am calling this the new draghi put.

given what is embedded, the program is attractive to bonds with a dynamic performance. this is the advice for all banks. >> that is for the strong. he is basically saying the banks that are deleveraging, reducing lending, stop. hit the pause button. if you slow down on your deleveraging and stabilize into 2015, you too can have money for four years. i think too that end, it is about addressing both of those. the people who are deleveraging, that is who he wants to stop lending. >> manus cranny, thanks so much. still to come, adm goes wild with what could be its biggest ever acquisition. more on that potential deal coming up later on "the pulse."

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above dow has closed 17,000 for the first time ever. what a way for wall street to celebrate july 4. the u.s. added more jobs than economists had forecast. i am joined by the director of economic research at the national australian bank. thanks for coming on. what do you make of this jobs

number? well above consensus estimates. what is your reaction? are you revising your growth forecast? >> we will. q2 will see a massive bounceback. we could see a 5% annualized growth rate. numbers would suggest the economy is doing far better than anybody predicted. nowthe fed, the issue we have is they think the unemployment rate would be between 6% and 6.1% by the end of the year. we are there already. the risk is, markets are going to start pulling for fed tightening. they would expect the fed to act like the bank of england. >> the headline numbers are great. the participation rate came up a little bit. it had been following the past couple months. tix .1% is where unemployment is down to. 6.1 percent is where

unemployment is down to. what is your thinking? >> we were expecting soft wage growth because wages were strong last year. you had a very strong 2013 number. 2014 was always going to be weaker. i expect that from now on, positive base fx will come through. we will expect accelerating wage growth. we could be at the fed's estimate given the current rate of unemployment declined by september. >> what does yellen do with this? >> i think they need to start making the markets more two-way. recently, yellen has been very dovish. we initially thought when mark carney talk about the prospect of a rate rise, that this was central banks telling markets volatility is too low. yellen so far has been dovish and more so than we had thought given the fundamentals. maybe we will have to see some other fed governors talk about

the need to tighten. >> sounds like we are beginning to hear mark carney do that. do you think yellen is behind the curve? >> that is a risk that they will be. you can understand why. >> turning now to europe, what is your take on what we heard yesterday? a little more clarity. every six weeks, we are going to get minutes. >> i think the move is interesting. you can see draghi saying, we believe the markets are expecting us to do far too much on a monthly basis. we don't know when they are going to meet but if we assume they would like to take august didas historically the ecb until they were made to come was anasically august off month. they will have a cycle which is fairly similar to the fed. what they are now saying is when we start to tighten rates, we

are not going to do much. they have only got six chances now to increase interest rates. it is another way of telling markets we are not going to tighten policy. back in june we were told there were 400 billion available. now it is a trillion. it just comes out in comments. they are trying to say there is a vast amount of money to use. >> is it going to the affected now that it is one trillion euros? >> it depends whether you think it is supply or demand side. if it is supply-driven, banks don't have available funds, then it is going to work. if you think it is because there is no demand, then it is not going to work. if no one wants to borrow, it is not going to work. if it doesn't work, we go down the road of full qe. the ecb can only act with unconventional policy measures

within its mandate. that mandate does not involve qe. it seems to involve tightening policy sooner. >> the european central bank has already extended what they can and should do. they are still talking about asset purchases. do you think that is the way europe should be moving, to move the risk from the bank's balance sheet to the capital market? >> about a year ago, there was a discussion about using the european investment bank balance me's. to lend to ske' it would either by loans from the banks or it would loan directly itself. nothing has really happened there. yesterday, draghi was talking about the abs market being around 1.5 trillion euros. that is bigger than most other estimates. they are getting on with the bank of england to kickstart that market. if you tell banks you can fund

at 25 basis points and we will buy it back from you, then maybe you might be telling banks there is free money to be had. >> finally, your growth forecast for the u.s. we could grow at 5% for the second half. what is your outlook for europe? >> europe seems to be limited to around 1%. euro zone growth will accelerate in the second quarter. germany is going to slow. i would not be surprised if france went into recession. overall, europe still lags behind. >> thanks so much. up, apparently it tastes good. would you pay 300 pounds for a cup of coffee that has passed through a cat? that is right. that is what i said. that is coming up next on "the pulse." ♪

>> welcome back to "the pulse." let's take a look at how the markets are trading. manus cranny has your asset check. >> there was a song once called "fade to gray." european equity fund guitar fading just a little bit. we had a three-day rally. this is trading at the highest valuations since 2009. will profits translate into valuations in the united kingdom? germany, factory orders down

over 1.1%. the dow closing above 17,000. but, look at this. it is coming off a five-year high. dollar-sterling. we had five straight weeks of advances, the longest winning streak on sterling since 2012. for those of you who are boggled by technical levels, they are important. 1.71, where do i pluck these from? highs on dollar-sterling. there is one story in town and it is about the bank. what does it mean for the rest of hungary and romania? that is where the problems are. a whole new discussion in terms of what is going on in eastern europe. >> thanks so much, manus. it is time for today's pulse number. .2 billion pounds.

that is the cost of the royal navy's biggest ever ship. aroundster vessel weighs 65,000 tons, carries 40 aircraft. to christen going it with whiskey, not champagne. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. i am olivia sterns. here are the bloomberg top headlines. president and angela merkel have agreed to coordinate steps against russia. going to an e-mail statement from the white house, if russia doesn't reduce tensions in ukraine, the powers may pledge more potential costs for russia. jpmorgan may have unwittingly helped bnp paribas hide transactions. france's biggest bank agreed to

a $9 billion settlement for violating u.s. sanctions. the french bank hid billions of dollars in transactions. some of the money was transferred to jpmorgan. jpmorgan has not been accused of any wrongdoing. our church and midland is said accordinging a deal to people familiar with the matter. the takeover would help adm diverse off i and gain a bigger foothold overseas. companyvors is a swiss that manufactures natural flavors. here with more is caroline hyde. tell us about the reasoning behind this deal. is this about the demand for more natural products? >> we are trying to feel that we are putting better things inside our bodies. this is what wild flavors sales itself on. it says all ingredients are natural. whether you are drinking a decorate, a flavored beer, all

the flavorings might be coming from wild flavors which is based in switzerland. they are technically all-natural. they also provide them for tea -infused cold drinks or vitamin waters. this is what the company really does. even though it is 83 euros old, we are getting -- 83 years old, we are getting very novel. it is interesting, the price tag, 3.5 billion euros. 66% more than it was valued at at the beginning of the year. we knew the owners of wild flavors were thinking about their tactics. at that point it was valued at about 1.5 billion euros. this bidding war ensued between adm and a japanese company.

flavoring that isn't quite so natural. they were looking to get into natural food products as well. >> so it is on trend with everybody interested in natural products. certainly on trend with all the m&a we have seen. who wins from this deal? >> it is interesting because it is a privately held company. the bulk of it is held by a certain han peter wild. -- this company is affiliated with capri sun. that became the market leader in europe and america for jews strengths in those little foils. they even had mohammed ali for adverts in the 1970's saying, i am the greatest. boxing, capri sun will be the greatest. the 526parently wealthiest person in the world.

he has $3 billion to his name. also, another big winner, kkr holds 35% of wild flavors. >> another big sale for private equity. thanks so much, caroline. now, the biggest loser this morning on the stoxx 600, the austrian bank says it will have a record loss in both hungary and romania. for more, our bloomberg news reporter joins us from vienna. good morning. tell us what you know about these provisions. why is the loss so much wider than they had initially predicted? >> two things at play here. hungaryhe losses in which were expected. parliament is going to sign a law that would force banks to refund some fees that are deemed unfair to clients. that part of the loss is about

300 million. more or less expected. what was not expected were the losses in romania. romania is one of the countries in eastern europe which has the highest nonperforming loan ratios, about 20% or more of outstanding loans are nonperforming in this country. erste owns the biggest bank there. it is going to be harder hit than anybody by that. the centraling that bank and romania is pushing the banks to clean up the balance sheets and flush out these bad loans at a faster rate than before. that is basically accelerating the losses and bringing them forward. billion euros2.4 in losses that they have to write down. give us a sense of how painful that is going to the four erste bank. is this going to break the bank? , aboutt of the losses

half of the losses are going to the goodwill and other intangible write-downs. they are not part of regulatory capital for banks anyway. that is not going out of the regulatory capital. they say the capital ratio is fine. they will also survive the assetan central bank's quality test and they won't have to raise new capital. that is what they are saying. >> shares down about 14% now, trading just above 20. our thanks to boris joining us from vienna. now, once upon a time, britain ruled the waves with a navy that had global dominance. while those days are gone, the u.k. is set to reestablish naval power with a new special aircraft carrier. tom gibson reports. tons, hms queen

elizabeth is the u.k.'s largest warship. the flight deck has an area equal to 60 tennis courts, big enough for four jumbo jets. the planes lining up on these decks will have considerably more firepower. -35 is one of the world's leading jets, capable of supersonic speed and vertical landing. the system that can fire 3000 rounds per minute at aircraft and missiles. a long range radar can track up to 1000 contacts in the air or on the sea. made by a consortium of defense companies, the ship is the most complex ever made in the u.k. it has taken 28 million hours to design and build. along with a sister carrier still in construction, the total project is costing over $10

billion. the ship is so massive that those on board each have gps devices to help them navigate it. one more break from tradition, the queen will christen the ship with a bottle of whiskey rather than champagne in a nod to the ship's birth in scotland. tom gibson, bloomberg. queen is goinghe to christen the ship with whiskey, not champagne because the ship was made in scotland. how appropriate. it is time for today's hotshots. it is not just the world cup that has football fans gripped. locals in india were delighted with football tricks as a pro got in some practice before the final of the red bull street style skills competition. muddy creek lived up to its name during the national motocross competition. bike racers jumped and skidded

around the course with germany cruising to victory. looks set to be a stormy fourth of july in the u.s. from outer space. check out this dramatic aerial view captured from the international space station which shows hurricane arthur rolling up the east coast. that would be the first hurricane of the season. still to come, another bloomberg exclusive. as brazil heads to the , are the police ready to handle it? we will put those questions to brazil's ambassador to the u.k. he is going to be on "the pulse ." that is up next. ♪

>> welcome back to "the pulse." in today's new energy, luxury coffee from a surprising sustainable source. the coffee is processed through the digestive tract of cats. this will set you back 1000 pounds per kilo. >> we are purveyors of the world's finest most exclusive coffee and the only ultra luxury coffee brand. i am the chairman and cofounder of bespoke beverages. we do two coffees. one is ruby which is 10,000

pounds a kilo. we do one which is diamond which is $50,000 a kilo. people do seek us out because we are exclusive. russia is very big for us. europe is very big for us. because we are such a small family business, a lot of our clients are people we have known for a long time and friends or colleagues of those people. at any point, you can ask us to fly out wherever you are and we will make your copy for you. our coffee has been processed by cats. people say it is gross. it is like anything in life. we know we have got something quirky. special,ething very just like the finest for raw, champagne, troubles -- foie gras champagne, truffles.

>> our cameraman tells me he had a cup of it. it was very smooth, had a very strong kick. this is not something you want to add milk or sugar two. bloomberg, anon exclusive interview we have been telling you about all morning. as brazil heads to the quarterfinals, will write a corrupt if the country loses? is the police force ready if that happens? we put those questions to brazil's ambassador. can brazil take columbia? can france be to germany? ♪

"> welcome back to "the pulse live on bloomberg tv and radio, also streaming on your tablet, phone and number.com. it is time for today's world cup news. the 2014 tournament has seen more goals than the entire 2010 cup. adidas'he factors is new ball. the ball is more aerodynamic and travels faster. speeds of up to 25 meters per second. goalsear's has seen 154 1998's just short of record.

broadeningolice are an investigation into world cup ticket scalping. this includes the possible involvement of a fifa member. everbia plays its first world cup quarterfinal tonight against the host nation, brazil. bloomberg sports gives columbia a 29% chance of reaching the semifinals. germany plays france in the other quarterfinal game. it is going to be a big night. let'sa brazil's face-off, bring in a brazilian ambassador to the u.k. roberto jaguaribe, thank you for coming back. thank you for this jersey. i am excited about the match. bloomberg sports says you have a 70% chance of winning tonight. the pressure is high. how intense is this game going to be? >> very intense. columbia has been playing the most you know. all of the world cup -- the most

beautiful football of the world cup. beautifulg to be a spectacle. before that, we have germany against france. >> there is a lot of criticism of the way brazil has been playing. even one of the former greats has said they haven't been pulling their weight. they just scraped by versus chile. >> i think brazil is never measured against other teams. brazil is always measured against visiting teams. that is the highest measure you can have. the press usually doesn't treat brazil very well. they are always considering whether brazil is playing up to its standards. brazil's standards are the highest. >> during the penalty kicks, it looked like the goalie was crying. the pressure is really building.

the coach is said to have brought in a psychologist. do you think the pressure is beginning to show on the team? >> the pressure has always been there. i don't think the goalie was crying. he was crying afterwards because of relief. we only got to penalties because of a goal allowed by the referee. i think penalties are always a very complicated situation. it is a little lottery. it is not really the best team who wins. we were looking to scrape by the penalties. the pressure has always been there and the psychologist has always been there as well. only now -- >> in response to all that, the coach yesterday told the media basically to go to hell. he said we already have one hand on the trophy. do you think they are being overly confident? >> as i said, football is beautiful because any team can

win. you saw how beautiful the other teams were with lesser-known teams playing very well. they made it very difficult for the better established teams to pass to the quarterfinals. it is a complicated affair. we cannot be sure of anything. anything can happen at any time. which team has the highest probability of winning at all? i have no idea. >> do you think the team is reliant on the way argentina -- >> when you have very good players, he tends to take control of things. his ability,use of but because of his personality. he is very young and he has not shied away from the responsibility. it is natural that we rely upon him. we can also do many other things. >> what are your thoughts on the colombian team? islooks like james rodriguez

kind of the star in columbia. how big a threat is he? >> he is a phenomenal player. he has scored the most beautiful goal of all in my perception. columbia has many star players. they are making up for his absence very well. obviously, it is not just flare. they have -- at 38 years old doing a wonderful job. it is going to be a wonderful game. there are many styles of play. two major differences. one group would have argentina, chile and paraguay. the other would have brazil, peru and guatemala. we play a more like football. not so physical. in my view, a little more joyful to watch. i think this is going to be a beautiful game. , ifhat happens, god forbid

the host country loses? are there going to the riots? >> we lost before. in fact, this is the 19th world cup. we have won only five. we have lost many times before. we are going to get over it if it happens. of course i am confident about this game. >> do you think we will see anger in the streets? violence? >> as i said before, it was a oncept to try to play football in a bad element. football is a major asset for brazil. of course there is discontent. it is a political year. many things may happen. but the spontaneity of the riots or the movements last year are not present this year. will beu think there

any political consequences of a win or loss for brazil? all dilma rousseff have better chance of being elected if brazil wins the world cup? >> i don't think it affects the elections. what has an effect is how brazil is hosting the world cup. that has a possible effect. not the result of the games or the world cup itself. >> there was this tragic bridge collapsed last night. there are protesters at the site who are angry, saying this is a sign of how the money has been spent and this was a shoddy job. what are you hearing about the tragedy? is this an example of infrastructure not being ready for the cup? >> i don't think so. this is a tragedy. it is a problem that occurs in many places. it has occurred to brazil before. it requires improved supervision in these elements. this is a tragedy that has to be

looked into closely. i don't have the elements to pass assessment at this stage. >> let's talk about fifa. i spoke to lord peter goldsmith who was on the independent investigative committee. he spoke to me about how he thinks they are this culture of familyinking they are a that doesn't want other people interfering. what is your perception of the culture at fifa? >> i think not fifa but governors of global sports require perhaps some reflection and consideration on how it can be carried out. in the case of football, there is one thing -- i think it is easy to solve or can be solved -- but there is a conflict between big money, big business and the popular aspect of the game. it is the popular aspect of the game that makes it attractive for big business. if you don't maintain the

popular aspect, you lose on both ends. i think some of the protests in brazil have cleared some people's mind in what has to be done. another dimension in football which has to be looked into is that coverage by tv with high definition with slow-motion, playback, makes very evident the mistakes by the referees. this is a problem for the game. people get very upset in an important game like mexico which was thrown away by a big mistake by the referee. this is something that has to be corrected. >> that is corruption on the field. we will talk more after the break about corruption off the field. roberto jaguaribe thank you again for this jersey. i want to show everybody what we have here. you even got my name on it. we will be cheering for brazil. who do you think will win between france and germany? >> we have a history of problems

with france. not so much with germany. i think it is going to be a difficult game. i think germany is going to win. >> thanks so much. we are back in two with more. ♪

>> 17,000. the dow clozzes above that level for the first time ever as the u.s. adds more jobs and the e.c.b. maintains a low pledge. caught in the cross hairs, j.p. organ unwittingly helped paribas violate sanctions. and speaking to me about the group's corporate kul chir. >> it's an extraordinary -- when you find a number of members of their own committee have to be officed because of their corruption or for being involved in inappropriate

ehavior. >> good morning to our viewers in europe and good evening to those in asia and a happy fourth of july for those perhaps just waking up in the united states. i'm lovelya sterns. coming up barclays employees go back to school. and we're going to be live with the head of compliance this hour with an exclusive interview. d top banks say banks should shun current currency until rules are in place. manus? >> that's the headlines and bit coin that topped out at 1,100.

they are saying shun it. why? because they are concerned. they are concerned about the virtue currency scheme and its key components. this is a message from the banking regulator. the european banking authority near europe saying the banks should sthun virtual currencies such as bit coin until a system of rules are nut place to prevent any kind of of abuse going on. and you may recall olivia, back in the start of this year we had the exchange in gentleman an went bust, and $850,000 bit coins were lost. i mean, you talk about what are bit coins? can re a currency that buy anything from gummy bears to luxury houses.

it's a legitimate tender here in europe and in the united states of america. over $8 billion. if you were going to try to buy all the bit coins in the world, $8 billion is what it would cost you. in the united states of america as well, in the u.s. a bit coin and other digital currencies are going to come under more specter of investigation. the consumer protection bureau which is part of the congress watchdog. so it's coming under a lot more scrutiny. what is it? how do you use it? what protections are out there for you in the event of a markoff? >> as a reminder to our viewers, you can now get a live bit coin price quote on bloomberg. now, it's time for another

loom berg exclusive. paying a record fine -- $9 billion to pay for doing business with countries such as sudan and others. they have not been found to have done wrong but -- >> the stock continues. back in 2004 executives of b.h.p. paribas came up with this plan that instead of doing these businesses on behalf of the sudanese and where they live, instead of using b.h.p. using -- instead of b.n.p. paribas, they would put this other plan into place.

originally, it was perhaps deviced by legal advice that they thought was above audit. that would stop them from being against these sanctions. they used a network. a next of non-u.s. banks. arab banks used then you disguise the transaction to get this arab bank to pass on the money to j.p. morgan without showing it was linked then j.p. morgan would route that on the whoever was deserving of the particular payment. j.p. morgan then you say unwhitingly helped billions of dollars often payments come from areas sanctioned against u.s. policy that are not meant to be making transactions on what. of these countries.

j.p. morgan is not being thought to have done anything here. so, too, neither are the lawyers. j.p. sense of if or why morgan might be on the hook and have to pay more settlement money? >> no. because this is thought there's nothing that they have done wrong. but of course in 2011 they had to pay up $88 million in a failed suit but they to exercise a reasonable degree of caution or care when doing they transactions but forgot to wipe the slate clean. every now and then a transaction would pop up that originated from cuba. b.n.p. paribas would go back and scoff it out and send it back again.

what's really interesting is down to court documents and people familiar telling us this story that it was initially on the advice of lawyers that b.n.p. paribas did this. nibblely they said a u.s. bank can protect you from violating these sanctions when you route it correctly. but a few years later the lawyer came back and said yes, this is illegal. they said it is illegal if you do go via j.p. morgan so it seems j.p. morgan and the lawyers have been accused of no wrong doing whatsoever. >> so sounds like they were acting on legal advice but when you hear about how they were wiping off the illegal source codes, seems they were not doing all right.

now corruption allegations continue to follow the governing body fifa. it is said they bribed fifa in order host the world cup and i spoke to the govepble committee about the scabbedal. >> how would you describe the current culture there? >> they saw themselves as a family and families sort of don't like other people interfering in what they do. they think they know best, and at a time when fifa didn't really have such a sway in the world as it does today. it now produces an income of over $1 billion from this single product they have. they are fated as world leaders wherever they go and the consequence of that is that their culture was that they were not transparent and there were not the standard of ethics that they need.

>> the thought is fifa overall is mired in scandal after scandal. after working with them, what do you say to that? >> you can't deny it's an extraordinary state of affairs when you find members of their committee have to leave office because of corruption or inappropriate bavert. inappropriate behavior. the question is have they done it? the president said he wanted to leave the legacy of a clean fifa behind him. but there's still a long way to go not the least because they have not demonstrated they have the cultural willingness to embrace this change. >> do you think the president is willing to take the changes to clean fifa or that he needs to step zpoun >> i have always avoided until now commenting on that. but there's something he said a

week ago that shocked me. when the allegations were reported in its english newspaper about what had been happening in qatar, his public response was to say it was a racist allegation because it was directed against leaders of the african association. that's really not taking this seriously at all. and i have nothing to do with the material but to try dismiss it and say it's racist is not what you expect from the top man. it's not clean or transparent or ethical. >> i also asked him again afterwards if he thinks the president needs to step down. he wouldn't be drown out specifically on that but said he is very surprised he is running for re-election for a fifth time because he promised the committee that he would not be doing that.

now, here's what sells coming up on our radar. is fourth, earth day bank up and said it will have a record loss with write-downs in hungry and row may it pleaseya. the loan loss will rise. most of its banking is done in eastern europe. >> and the country's lenders are able to sell potential capital. they spoke to us in an exclusive interview. >> we do not expect that on average, major short fall of capital will emerge from the quality. >> and barclays is opening a compliance academy as part of the attempt by the c.e.o. to overall this bank's culture. the academy will work to provide technical and behavioral training to

employees. we will bring you an interview with barclays' head. here on "the pulse." still to come on "the pulse." business in china. what can we expect from the german chancellor's visit? that's coming up on "the pulse." you can follow me on twitter. ♪

>> welcome back to "the pulse." let's take a quick check on the currency market. the dollar versus the euro. the dollar is strengthening versus the euro. correcting a little bit today. coming out of the u.s. the n-farm payrolls coming in at $288,000 so the dollar now headed for its first weekly gain versus the euro in nearly five weeks. now german chancellor angela merkel begins her three-week visit, her seventh visit to the country. as chancellor. paying a visit to germany earlier this march. the director of china resources, john, thank you for joining us. tell us what do you think merkel hopes to achieve on this strip >> well, germany is so dominant europe. german exports were about $73

billion compared to $19 billion from france and psych where the big exporter in europe is. and from automobiles to chemical advanced plants to factory machinery. i was in china and big steel works and all the machinery was german there. plus, of course china is going to have to at some point start cleaning up their pollution and they have got some pretty advanced zpween energy and green companies which they will be exporting. so there will be a lot of trade. >> i.p. theft. a big issue. what do you think those discussions are going to sound like? >> well, the german have strong measures by the chinese. the problem with i.t. in china

is the regulations are tough but not regulated. so it's a question of getting the authorities to make sure that the police and judicial authorities actually implement those regulational rules. and that's a long-term. ina is so decentralized it's interesting for beijing to just press a button and go. >> this week we did have some very positive manufacturing numbers showing expansion again. do you think the worst of the slow douven in china is over? >> i think in china at the moment where we are is that the government and party leader, who of course merkel will be meeting is using a drip-feed stimulus at the moment. they know the economy is slowing down. they want to control the slowdown. they want toe manage everything. they want to manage defaults of private wealth products.

they want to manage getting rid f excess capacity and so and so on. >> what you're looking at is the market slump between diversity and it brings up the question of the market slump. how concerned should we be about a credit bubble in china? the latest is $700 dollars. >> and about 140% of g.d.p. is about where the market is. i would say don't look at the shanghai index. the chinese public in general has turned off stocks and fairs. they would rather put their money into property. so if the report with ji general ping does take place in five-10 years time, chinese stocks will be the most undervalued things to buy in

the world. >> but there are bigger threats you mentioned housing. the crice sis is brewing ecause of nires china -- buyers in china are able to put no money down. how big a threat is the housing bubble? >> there is a housing bubble. but the government has still got enough weapons to prevent it from becoming a bust. i was in eastern china last month and there housing prices have fallen 15% and they have two years stock unsold housing and so yes, there is a problem. but the government can weigh in by cutting down payment requirements, subsidizing mortgages and those that are not necessarily healthy long-term. there's some people that have predicted this. four or five years ago we were

told china is on the treadmill to a crash but the government still has enough control. that's one of the problems in china is that therefore you get artificial economy being manipulated to a lesser or greater extent. >> and just a final question i suppose on how china sees its role in the world. a lot of people look at violence in iraq or past violence and there are things china benefits from. at what point do you think china going see its role or see to sort of step up as a global role? >> china certainly taking a bigger world roll. the man who started all this growth in china more so was high drove brilliance to bide your time. now they have had enough of biding their time. she is going out. they were in europe and the

commission in the e.u. a few months ago he is now seeing merkelthere. he is projecting chinese demsh you statia which is slightly dangerous because there cube slight flisk japan. but the china dream which means china plays a bigger role in the world which means china plays a bigger responsibility which china doesn't want to assume that role at the moment. >> and now let's get some company news. the u.s. military has grounded its entire fleet of f-3 fighter jets after a fire on a lockheed plane prompted an abort to the flight. volkswagen will update the pa shot with technology inspired by fighter jets navigating

instructions on a retractable screen to keep drivers focused on the road. he pa shot is the v.w.'s best-selling is a dan. >> and amazon tax affairs according to the financial times which sites people familiar with the matter. amazon's main operating base, the e.u. has already investigated the tax structure of apple, fiat and starbucks and americans will be paying a pretty penny for their cookouts. according to the barbecue index tracking foods most commonly used in cookouts. bread, cheese, ice cream. it's up 5.1% in may alone for the month after reaching a record high in april. so it's going to be an expensive independence day in

the states. stay with "the pulse." back with more in two. ♪

>> welcome back to "the pulse." it's time for today's new energy top headlines. brazil has banned the sale of ight bulbs that don't meet the requirements for energy saving.

out all to set phase incandescent bulbs by 2016. >> a $205 million to help climate elp with change has been provided in a loan and will hope to grow clean technology in the country. and australia is set to announce a number of large solar deals to invest in everything from mining to manufacturing. the $.4 billion clean energy bank as invested in more than 50 products this year. and coming up next another bloomberg exclusive as barclays launches things and the man behind the move.

how will it affect the bank? we will be talking to michael roemer. tweet me and tell me who you think is going win tonight. ♪

>> welcome back to "the pulse" live. i'm olivia stern. here are bloomberg's top headlines. a warning to russia. president obama and angela merkel have agreed to steps. if russia does not reduce tension in the ukraine they may pledge war costs for russia. and this week b.n.p. paribas agreed to pay a $ million

settlement for violating banking rules. some of the money was transfered to j.p. morgan without any mention of the country's source. j.p. morgan has not been accused of? i wrong doing. and the e.u.'s banking regulator says currencies such as bit coin should be shunned until rules are produced to prevent abuse. crimes that have been associated with the currency have been listed. >> and three major things to consider. the reality of what it does to your order cycle. factory orders drop. and we like the i.m.f.

they come up with great ideas and give fantastic advice. just ask mario draghi. % this year and you will see -- a lot of very long, lang window, liquid lunches. like alit sflation i do. -- the alliteration? i do. and basically off their big ideas list. going to be hard for b.n.p. paribas to make their levels based on the fine they are facing. you don't get a fine like that and not have to re-adjust or recalibrate. they have three straight days of gain. just need a little bit of a pause on the equity markets. some of the german data tied in with the confidence data is a

little bit lower. and as we go into the close of the week. i have my ban started approximately at 2% on the tornadoing day. but here's the currency of choice with some wonderful levels to talk about. you have got sterling on a five-year high. the question is will that momentum continue? 171.68 absolutely adore resistance and it's the height of 1996. the question is will momentum go to the dollar in terms of dollar rallying on the back of -- who goes first? that's the only debate in time over the next quarter. fed or -- olivia? >> thank you manus.

barclays is sending its group back to school. we're joined now by barclays' -- of compliance mike michael roemer. starting with the news that j.p. morgan unwittingly helped b.n.p. paribas hide money from u.s. regulators. how is it possible, as an expert in compliance, that j.p. morgan could have done it unwittingly? >> well. it shows how come flex clearning house is and without knowing the fact s of the case b.n.p. paribas can be one or two or three times removed from j.p. morgan so it's quite understandable based on how dollar clearing happens around the globe that if you're a part of that chain. you don't necessarily know who all along the chain you're dealing with. so it's not quite as surprising

to us as it is to the general public. >> especially if a bank is getting rid of the source code. >> some people perhaps who are watching this may say barclays after the gold-fixing scandal and selling insurance to people who didn't need it, why is barclays in a position to be advising people on compliance? >> that's an honest and usual response. we've gotten in partnership with the cambridge business school and an important component for setting a standard we think barclays should be living up to on a daily basis and it goes with the entire program of changing our kul occur and value system to align it with customers and clients and decision making in that space. so not a big surprise it's another component of our program to push that program

across the entire organization. >> how does the program actually work? are we talking about a course here? i know you are working with cambridge. >> yes. it has three levels of training. level one in a two-year program with eight different knowledge yules and starts with prework. e-learning. there are discussions, lectures. case studies, so it's a very interactive programming and level two will cover some of the same aspects. and then three is for a leadership component of compliance. 12k3w4r0 this isn't just for internal barclays employees but for anybody who is potentially targeted? and how much would it cost for a two-year course? >> the course, we're investing quite a bit of money. barclays spends approximately $300 pounds a year on its function and we're talking tins

of millions of pounds in this space to support that and work with cambridge. the fact of the matter is it will be open eventually for everyone and we're opening the center of compliance and trust for cambridge and it's part of their research facility. and we will be working with them hopefully over time the program will become accredited. cambridge is already getting feedback from other firms interested in the program and again barclays is really focused on being a leader in this space, quopping our team, making it very much like you would have correlated to the legal and accounting and auditing profession to have an acreditation that focuses on compliance and professional and financial services. >> are you doing it because you don't believe there's -- >> no. we believe the league tori environment is changing.

the bar is being raised and we think there's two aspects of compliance. one is a check and challenge an historical kind of view where we provide a consultation on -- big part of what it's focused on is what our chairman refers to as mentoring the -- the whole component of what we are doing is designed to provide skills that historically compliance officers didn't think they needed and our job is with the program wand came sbridge to enhance their tool kit to allow them to embed conduct and behavioral positives throughout whole organization and come appliance going to be a big part of how the company makes sure that happens on a consistent basis for every -- >> but isn't the problem with the way they incentivize? >> that's a big part of it.

how we incent our colleagues globally has historically been one of the levers that's probably led to behavioral issues in the industry and barclays as well. we change the way we incent our colleagues locally and in the retail world a large component of any sales incentive as it relates to compensation. we've put in a process that allows us to review these things and to understand what kind of behavior will or will not be incented so we think the part of the program we put together on culture and values helps us in that space and helps reduce risk associated with that. >> so you said the bank is spending $300 million -- >> 300 million pounds a year on compliance. >> so how many employees do you

have today and two years ago? we have approximately 2,100 compleegs in the program and have gone up slightly over the past year but not extensively. we're spending our money investing in technology and professional development. i like when i talk to the compliance colleagues around the globe i say we're not buying arms and legs. we're investing in your brain. we think that will make a big difference, because behavior is the future of compliance, and it has to be invested in and focused on. >> are you confident that there are no more scandals lurking at barclays? >> i'm not confident of that at all generally speaking in the industry. what i am confident in is that it's a journey. it's a long journey for barclays as it relates to its culture and part of our go-to

bank strategy. there will be butches in the road and accidents and we're much more aggressively looking for these things throughout the company so from time to time we're going find those things. those things don't mean it's not working. it just means it's taking a long time, and we're going to keep at it, because we think it's the right thing to do and will be the differential for who want and those to trust us. >> thank you. now quickly breaking news we have coming out of the u.k. andy coulson has been sentenced to 18 months in prison accused of conspiring to hack the phones of celebrities. also a former aide to british -- more on that

story coming up on "the pulse." back in two. ♪

>> welcome back to "the pulse." let's quickly recap some breaking news. former editor of news core and "news of the world" andy coulson has been sentenced to 18 months in prison for

conspiring to hack the phones of celebrities and the royal family and a former aide of former british prime minister cameron -- david cameron should their bulk of the blame for intercepting and brook and her husband and former p.a. were all cleared on former charges. now let's turn to company news. nearing a deal to buy wild flavors for 2.5 billion euros. here with more is business correspondent caroline hyde. this seems to be once again all about demand for natural products >> all about going natural and we all want to know we're not putting chemicals in our body and where our meat is coming from and the providence of what we eat and drink so going natural has become in vogue so when you're drinking a flavored

beer or having a daiquiri or other drink, these are things some might be quite often find have flavoring from wild flavors and vitamin waters and infusions. a lot of these drinks and food types are being provided by natural ingredients by world flavors. they have become hot properties. that's why we are seeing those. there was a bit of a bidding war going for wild flavors coming from the japanese. owners said what are we going to do with these companies? price tag, 1.5 billion euros. now 2.5 billion euros because there were so many that wanted in. they have japan's iing them up

sodium gluke mate which isn't quite natural. >> i never thought capri sun which is a wild flavors backer. always thought that was an all-natural flavoring. but it's a private company. who is going to gain from the sale of wild flavors? a man 73 years old. its history is all linked to capri sun and muhammad ali's greatest coup was to say i'm if t greatest but the day i stop boxing capri sun will be the greatest but it's quite only in little foil of orange squash so this man currently 526th

wealthiest person in the world. he will cash in if and when it does sell out to a.d.m. but also going to be about k.k.r. the private company also bought a chunk back in 2010 so they will be cashing in too. >> another big win for k.k.r. thank you caroline. >> coming up a bad day for bit coin. banks are being urged to shun the currency. here's a fact on the fourth of july. americans are swallowing higher food prices for their cookouts but which foods are to blame? have a look. turns out ground beef pricesrupp higher than a year earlier. a lot of it has to do with a drought we're seeing out west. hot dogs more expensive along with chicken and veggies. even but irprices are up nearly 7%.

hopefully the price of your food won't stop americans from heating up the grill for the three-day weekend. stay tuned to "the pulse." more coming up after the break. ♪

>> welcome back to "the pulse" live on bloomberg television and streaming on the ipad and bloomberg.com. breaking news out of the u.k. former editor of news corps

"news of the world" andy coulson has been sentenced to 18 months in prison for conspiring to hack the phones of celebrities and the royals and was a former aide to british prime minister david cameron and should take the major blame of voicemail interceptions tat now defunct tabloid. two men were given suspended sentences. this is the eighthen month or end of the eight-month trial in which others were acquitted on charges. the sentences comes three years to the day after they found thesmses at the center of what was a global scandal triggered by revelations journalists listened to messages of murdered school girl. the other men going to prison had pleaded guilty.

a stay in the u.k. once upon a time britain ruled the waves with a navy that had global dominance. those days are now long gone. the u.k. is set to re-establish naval power with a special aircraft carrier. our tom gibson reports. > at 7,000 on thes. h.m.s. queen elizabeth is the u.k.'s largest-ever warship. it's flight deck has an area equal to 60 tennis courts big enough for four jumbo jets but those planes lining up on theels decks will have considerable more firepower. one of the leading jets capable of super sonic speed and vertical landing. also the weapons system that can fire 3,000 rounds per minute at incoming enemy aircraft and missiles.

and a long-range radar can track 3,000 contacts in a 250-mile radius. the ship is the most complex ever made in the u.k. it's taken 28 million hours to design and build the queen elizabeth along with its sister carrier still in construction, the total project is costing over $10 billion. the ship is so massive that those onboard each have hand held edevice to help them navigate it. the queen will chris at any ship with a bottle of whisky rather than sham neighbor a nod to the ship's birth. >> it's always incredible to me those thing can actually is rofmente so the ship scottish so the queen will christen it with whisky rather

than champagne. >> you can see the euro weaker is than the dollar as the jobs report out of the u.k. 288,000 jobs added to the non- farm payroll boosting expectations the u.s. fed may have to raise interest rates sooner ratko mladicer than later after mario dragic held rates following a press conference yesterday. ifer more let's bring in m&a -- manus cranny. you're not watching draghi for a change. you're watching bit coin. >> yes. they are saying be careful and that institutions should shun them until regulation are in place on how to use them and prevent losses on them. this currency traded up over $1,000 over christmas. i love the decision of the e.b.a. some 70 risks linked to

the currency including the vulnerability of crime. and they are of the view that a regulatory approach would require a substantial body of regulation. so keep an eye on that. i'm going to add on tothat. they are going to have a meltdown but it's fourth of july. mark carney? a great bloomberg story. mark karn i didn't has decided cricket would no longer serve as -- go into literally anaphylactic shock. cricket is no longer going to be the central piece of the central bank's annual summer party. it's too exclusive. instead employees would have a chance to play other games. rounders or football. >> you have to give them a choice. apparently hockey is not going to be one of them. all right. thank you so much manus cranny. >> thank you. >> so that does it for "the

pulse." but before we go it's independence day in the u.s. so here's a final fact americans will enjoy 150 million hot dogs today enough to stretch from washington, d.c. to los angeles over five times in case you wanted to know. ♪

>> it is the only game the whole world cares about. >> it is the simplest of games, the most democratic. >> two companies care about it very much -- adidas and nike. >> we are in the football business 365 days a year. >> there are 2 basic ways to