national security leaks that have shaken washington. we're joined by alex gibney whose new film on wikileaks is called "we steal secrets "and siobhan gorman who has been reporting on the n.s.a. for the "wall street journal." >> snowden learned from what manning did and made a distinction. while he admired manning he felt he was going to do things differently. he didn't want to leak to an anonymous drop box. he wanted to leak to a journalist he knew and trusted and he would only leak documents that he knew -- that he saw himself and scrutinized to make sure that nobody would be hurt. nevertheless, i think they both

acted out of convict because they felt it was a lot going on that the government was doing that was dead wrong and needed to be exposed. >> rose: we continue with an assessment of u.s. china relationship following conversations over the weekend in california between president xi jinping and president obama. joining me, hank paulson, a former secretary of the treasury and c.e.o. of goldman sachs who knows china well. >> so when i look at things we need to do to build trust between our two countries, i see a need to get tangible things done that the publics in both countries can see. and understand. and so continue chemical weaponsly i look at areas like, you know economics and i see that this is the best time i've seen since 2001 at the time when the w.t.o. agreement was negotiated to get some positive economic agreements that the people in both countries can

understand and see a real opportunity to do things together to meet the climate challenge and the need for clean energy and new environmental technologies. >> rose: we conclude with jim turley, the retiring chairman and c.e.o. of the accounting firm ernst & young. >> the profession wasn't as focused on the delivery of quality as we needed to be back in the '90s lead up to the enron era. so what happened after was really important ernst & young, all of our peers did everything they could to scrub every process that could touch quality in the marketplace. how we hire people, how we train them, how we assign them to jobs. the methodologies we use, the technology wes use, how we review technical material, our compensation systems. how we promote people. so you name it, the clients we accept, which ones do we want to work for and which ones don't we want to work for? all of these things got scrubbed

in ways that i think, you know, was overdue and hadn't been scrubed in enough time. >> rose: that's the lesson of enron. >> that's the lesson. >> rose: siobhan gorman, alex gibney, hank paulson and jim turley when we continue.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin this evening with a look at the leaks that have shed light onen the government surveillance programs. "the guardian" and the "washington post" announced that the national security agency had been collected phone records and u.s. data on u.s. officials. edward snowden came forward on sunday as a source behind the leaks. meanwhile, bradley manning faces trial for giving classified documents to wikileaks. the two incidents are among the biggest security breaches in u.s. history. joining me from washington, siobhan gorman, she has been reporting on the n.s.a. for the "wall street journal." here in new york, alex gibney, an oscar-wining film make we are a new documentary called "we still secrets."

the movie takes a look at bradley manning, wikileaks founder julian assange and secrecy in the information age. i'm pleased to have them on this program. siobhan, let me go first to you. is there anything new about the story of edward snowden and what he has come forward to say about what he did and why he did it and --. >> well, there haven't been any developments today. yesterday there was this rather extraordinary interview the guardian published on its web site where he came forward to explain that he decided that he needed to release this information to the public to create an opportunity for public discourse on the matter and he laid out a rather detailed case for why he thought that the public needed to know this information. i don't think that we've -- we haven't seen a lot in the way of specific developments today beyond the fact that obviously there is an investigation under way and folks on the intelligence and law enforcement

side in the u.s. are certainly gathering all the information they can about how this came about. >> rose: tell me about a bit more about who he is, what he did and the consequences of it. >> sure, well mr. snowden is currently, i suppose, an employee of booz allen hamilton, which is a major contractor with the intelligence agencies in this area. he is working right now i guess at an n.s.a. facility in hawaii, or hat least stationed there. and he -- he's only worked there for three months. he was with dell computers as a consultant for them for some period of time. prior to that he worked for the central intelligence agent any geneva and other places for about four years. it's a little bit mysterious in terms of a career trajectory because he doesn't have a high school diploma. he obtained his g.e.d. and

managed to swing a job at c.i.a. shortly thereafter, after just a brief stint as a security officer with the national security agency. so one of the things that we peer sort of trying to put together right now is how somebody with that sort of background ends up in such a sensitive position, both, you know, with his c.i.a. employment as well as obviously being in a position to view and review a number of very sensitive documents at a national security agency facility. >> rose: he said it was important, he thought, to say who he was and why he did it. he's in hong kong now, somewhere in hong kong. i guess worried about his future. >> yes. it sounds like he is said to have checked out of a hotel, a rather luxurious hotel, in hong kong today. i'm not sure about his specific whereabouts but he has had some discussion about perhaps retreating to iceland which he thinks is rather friendly to the

idea of freedom of expression and the values that he says that he's trying to put forward with his leaking these documents and so many more public discussion about government surveillance. so it sounds like he is either -- he's kind of awaiting his fate whether or not he will be allowed to remain in hong kong or go to iceland or whether he will ultimately be extradited to the united states. >> rose: has the united states government in any -- either in any branch said what they will do? >> no, they've been very, very quiet today. when you call over to the various agencies, they all seem to mysteriousbly in meetings. (laughs) so perhaps we will see some sort of late-night statement again like we have on a number of days. but so far they've been very quiet today. >> rose: all right. i want you to stand by. i'm going to introduce to you film t film which is called "we

steal secrets" the story of wikileaks which is in theaters now and whether that story and this story have a connection because one is about surveillance and the other is about letting u.s. secrets reach a worldwide audience. we begin with the trailer for the film. here it is. >> disclosure like these tear at the fabric of responsible government. >> we're lookinging at all the things we can do to stem the flow of this information. >> this was the biggest leak in the history of this particular planet. >> my name is julian assange. i'm the editor of wikileaks. >> we help you get the truth out. >> if you get this material, give it to us, no questions asked and you will help change history. >> governments get more information than ever but they it will citizens do the same. is >> this was kid who reached out in confidence and said "i'm leaking secrets."

>> the consequences of the release of these documents are potentially severe and dangerous >> the army has detained a u.s. soldier in connection with the leak of this classified video. >> two of the men killed worked for the reuters news agency. >> journalists' cameras were mistaken for weapons. >> the prime suspect is 22-year-old bradley manning. >> we promise that we would publish everything. by 1:00 in the morning i had 390,000 u.s. military records. >> it was material which could get people hurt. julian said if an afghan civilian helps afghan forces -- american forces he deserves to die. >> how are we going to stop it and how far has it gone already? >> he was a rock star. >> wearing bulletproof vests.

>> he'd been trained in evasive techniques. >> this idealist became something else. >> i'm untouchable now. >> sweden issued a warrant for the arrest of julian assange. >> suspicion of molestation, rape. >> i didn't want this to be in the papers. >> i have never said not or it is. >> everyone has secrets. >> i'm not going to talk about that. >> but it does affect wikileaks. >> let me be very candid: the nation states need to be secret in order to be successful. we steal secrets. >> it's not about wikileaks, it's about transparency, who gets to control information. >> rose: based on what you know about edward snowden and bradley manning, did they have the same motive? >> i think so. i think their motives in general were to bring misdeeds and criminal alty to the attention of the american public. i think that was predominantly their motive. i think manning may have been a

bit more naive about the way in which his documents might have been used. and i think snowden actually learned from what manning did and made a distinction. he said that while he admired manning he also felt that he was going to do things differently. he didn't want to leak to an anonymous drop box. he wanted to leak to a journalist he knew and trusted and he would only leak documents that he knew -- that he saw himself and scrutinized to make sure that nobody would be hurt. nevertheless, i think they both acted out of conviction because they felt it was a lot going on that the government was doing that was dead wrong and needed to be exposed. >> rose: do you see any similarities here, siobhan? >> oh, yeah. i mean, i think that in speaking with people, particularly today, that is the parallel that many people draw. although the volume of information that each gentleman has produced is quite different. it does seem like the motives are somewhat similar and it does seem like there is a little bit of a learning curve.

mr. snowden was quite polished in his production both of the documents which he was obviously carefully giving to selected reporters and then sitting down for a very sort of well-produced interview piece that lasted 12 minutes. i think that it -- his packaging was obviously a lot cleaner. >> rose: back to julian assange. he would not be interviewed. you did not have access to interview him. >> no, i spoke to him a bunch. i went to his 40th birthday party. but at the end of the day he declined to be interviewed. he wanted money. >> rose: more than a million dollars. >> he said the market rate for an interview with me is a million dollars. i assume that was a negotiating gambit. i said i wouldn't pay him no matter what the price was. he said "how about if you get intel on all your other interview subjects." i.e., spy on your other interview subjects. >> rose: let him know what they said before he was interviewed by you? >> presumably.

if i would report back to him what they were saying then he would consider giving me an interview. i found that a rather odd request for someone who's so interested in source protection. >> rose: did you change your impression of him over the course of this him? >> i think so. look, i'm tremendously impressed with what he did in creating this web site which i think served a terribly important purpose and, frankly, i think the publication of the wikileaks documents so-called, they all came from bradley manning, but these documents, the publication of them actually did a lot of good. and they continue to inform our understanding of the way government works. but i think other time he began to take on the coloration of the very people he was attacking. >> rose: so what's the next turn in the case of edward snowden, siobhan? >> oh, well, i think that -- i mean, we'll have to see both where he turns up next and what the united states decides to do. i mean, there's obviously an aggressive leak investigation going on and the justice

department lawyers are trying too figure out the best way to proceed. they're going to have to make a decision about extradition requests which is ultimately a political one. i mean, the fact that he is in hong kong presents some political sensitivitys in dealing with china. i mean, the president just met with mr. xi of china over the wreak end and obviously the message out of that meeting was that the u.s. and china were going to try to seek new ways to work together. i don't know they were that they were looking for this to be the first test case of that reset of that relationship. >> rose: what's intriguing about this and the bradley manning case for me is the access that has edward snowden had and would what he could have done if he had no restraints in terms of what his purpose was do you agree, siobhan? >> yeah. i -- one of the things that's been fascinating and that we haven't sorted through yet is how somebody in his position gained access to something as sensitive as a document of the

national security court known as the foreign intelligence surveillance court. that is among the most sensitive documents that exist in the u.s. government so people have suggested that he in effect played a role almost of a technical assistance administrator for the network in the office that he was working in in hawaii that he actually had very unusual levels of access to a system because he was there to make sure that it was able to run on a continuous basis. what we haven't sorted out yet is how it was that he used that system to gain these -- gain access to these documents. whether he had to break into elements of the system or whether he just had free access throughout. >> rose: and manning? >> well, manning -- i think -- >> rose: he was a respected analyst. >> he was. he was a respected analyst working in iraq. he was a private but as a result of policies put in place after 9/11 where we moved from a need

to know to a need to share he had access to a fantastic amount of information. i think it also really lays out the fact that, frankly, we have way too many secrets. i mean, there are four million people who have access to classified information. that's a lot of people. a lot of secrets. way too many secrets and that's one of the messages coming out of this. >> rose: all of what? the discussion about snoweden? >> and the discussion about manning. manning is on trial now for leaking these secrets but this is the tip of the iceberg in a way. and i think -- people have been talking about what the n.s.a. was doing. a man named james bamford wrote a number of great books about the n.s.a. and we all suspected what was going on. to see these documents confirm what we suspected. that we were being spied upon on a regular basis. >> rose: also there is this fact. since technology has risen to play such a prominent part, people have so much information about us and about everybody in the phone surveillance people are saying well, what does the government know about you?

what do all the internet sites know about you is another question? >> i think it's this intersection between private and government that's also terrifying. so to some extent when you turn on your computer and you're searching for things already your choices are being curtailed by private enterprises which have -- like the film "minority report" have looked up your past preferences and are now pushing you towards certain decisions rather than letting you roam freely on your own. >> likes, like, and lakes. you say it's a contradiction of the internet, a tool of liberation, a spy magazine that brings us closer together and farther apart, it acts to expose hard truth and hides soft lies. >> i think that's true. i think it's a tremendous device for misinformation as well as getting information. and i think we have to be careful with that. we have to approach it that way. we see it as this kind of neutral mechanism that keeps our privacy as we navigate, but that's not what's happening. i mean, it's actually a data

mining device, as the snowden leaks now prove. but it's also proved to be the way that citizens-- or people who object to what the government is doing-- can now use the very weapons of that the government has against government. so it's created an opportunity for a sort of asmes rick battle over what should and should not secret. >> rose: what's your view of julian assange today? >> i think julian assange was an important figure for a certain moment of history. he played a key role in terms of building a site that allowed us to see the possibilities for leaking important information that the public needed to know. that having been said, i think we've moved past wikileaks now and that people are beginning to learn how to do it better. what's important is not that wikileaks stays front and center stage but that we learn to do this kind of thing better. >> rose: so both of you, in the end of this, who decides what secrets should be throughout? i mean, even if you want to expose some secrets, who makes

the decision as to what is okay and is simply something that's more important than the national interest for the public to know or something that on the other hand could lead to loss of life or damage the national security interests of the country? who makes those decisions? >> well, that's what we're all fighting about now and the united states government says we must always make those decisions but the fact is that leaks over time have been an accepted kind of pressure valve in a democracy. they're not supposed to happen, the government says "we'll stop them from happening." but we know that they happen. the government actually, you know, is responsible for a lot of leaks to people like bob woodward and others and they accept the idea that journalists will try to get leaks from the government. now the obama administration is trying very hard to clamp down on leaks but i think that the context that's being missed is we're seeing more leaks because people are more and more upset that the government seems to be improperly keeping too much secret. >> rose: one final note: n.s.a.

is -- how would you characterize n.s.a., siobhan? >> well, they certainly have more information than any other institution in the world. one of the things the n.s.a. has had real challenges with over time is making sense of the information it has. increasingly it's had better tools to make sense of more and more of the information it collects, but historically it's had a very difficult time managing it. it doesn't know what it knows in many ways. >> rose: what's going to happen to julian assange? he faces some serious legal questions in sweden. >> that's the question. i mean, julian assange is now -- he has sought and received asylum from the country of ecuador. he's in the ecuadorian embassy in london because he's trying to prevent being extradited to sweeten where he believes he will be promptly extradited to the united states but actually that i believe simply the swedes want them to face allegations over sex charges in sweden. >> rose: did you believe the sex charges? >> well, i believe that the sex charges -- >> rose: in the beginning there were some people around that i mean raised questions they can't

be true, that it's efforts of the c.i.a. or somebody. near the end you brought up credible people who seemed to say no, this was real. >> i at first thought it was a kind of conspiracy. the timing was so incredible it must have been a put-up job that the c.i.a. was somehow responsible. i found no evidence of that. i found that there was evidence of personal misbehavior, that the swedish prosecutor decided that there may have been a crime and they wanted him to come to sweden to be arrested and charged and face the consequences for that crime. but i think what julian did is he tried to take those charges which were personal and to conflate them with the transparency agenda to say, no, no, no, these are not about me, these are about people trying to prevent my freedom of speech. and i think that's wrong. >> rose: and the people within wikileaks thought he was wrong, too. >> indeed. they felt very strongly -- they all advised him to take care of this matter in person. instead he decided no, not to

separate the two but make it part of wikileaks. >> rose: thank you. the film is called "we still secrets, the story of wikileaks." siobhan gorman from the "wall street journal," thank you. no one knows it better so thank you for coming. >> thank you. >> rose: we'll be right back. stay with us. >> rose: president obama and president xi jinping met face to face in california on friday and saturday of this past weekend. the summit was notable for its length and informality. there was agreement north korea would accept -- they placed concrete steps to tackle cyber change but on cyber security a wide gulf remains. joining me from chicago, hank paulson, the former c.e.o. of goldman sachs and secretary of the treasury. he's also the founder of the paulson institute. it promotes cooperation between the united states and china on many levels and he is well known for the chinese leadership and has spent a considerable time there and is viewed by the

chinese as someone that may often seek out to talk to about the relationship between the two countries. so let me begin, hank paul son, with the idea of how you evaluate the summit took place. what was gained. thee things say deliverables but there was, it seems, some success and that two leaders got to know each other and you can build on that. >> charlie, you're right and as a matter of fact i think the biggest deliverable was that the summit took place. this was an extraordinary event so you have a new president of china at the beginning of what have is most likely to be a tenured term. he's a strong leader, a reformer meeting with the president of the united states at the beginning of his second term. doing it outside of d.c. getting together for eight hours

including an hour spent alone. so to me that says both leaders are committed at resetting this relationship. they're committed to building a stronger relationship which in today's world isn't easy. it's going to take a lot of work and you're not going to be able to keep doing things the way we've done them the past in terms of working each other. if we're going to meet the challenges of 2013, we're not going to be able to rely on the same approaches we've relied onen in the past. and as you and i have discussed before and you try to meet the challenges that we have in today's world, whether they're environmental, whether they're diplomatic, whether they're economic, they're always going to be easier to meet if our two countries are working together and if we're working at cross purposes they're going to be more difficult to meet. >> rose: okay but just for a moment let me go back to where you think the relationship was before this meeting. a lot of questions each country had about the other.

and they needed to put the relationship on a better footing so they could communicate better. fair enough? >> yup. the well, i would say that where the relationship was before the meeting is -- we've had basically the same approach through multiple relations -- multiple presidencies and it's been a fairly solid relationship. the cornerstone of that relationship is the economic relationship. and our economies are quite interdependent. we have $500 billion of two-way trade. they're the biggest investors in our fresh treasuries but interdependence alone is not enough to assure trust. and we need to build more trust. we have a lot of areas where we have shared interest and we have strong common interests but we need to translate those into new approaches and common approaches

or policies that are going to be effective. so what i believe is our relationship was in okay shape but it was politically fraught and we were near a tipping point where i felt that we were either going to start building a stronger relationship or we are in danger of having it deteriorate into unhealthy counterproductive competition which neither country nor the world can afford. this is the most important bilateral relationship in the world. >> rose: what did the premier tell you? >> well, you know, i had a good meeting with the premier and what i was talking to him about was not just the u.s./china relationship but about reform in china. because the -- you know, reform had stalled for the last ten years in china and they very much need a new economic model. their current model is running

out of steam and the premier had made a -- i thought a very good speech on may 13, which was published in the people's daily which really spoke to the issue that i thought was very important, and that is that that economy is so big and some so complex it is no longer effective to be relying on this combination of top-down administrative measures and markets. and that they need to speed up the reforms and place more emphasis on the private sector and on markets. and, you know, i was complimenting the premier on his speech and the number of early steps they'd taken. and, again, my view is that the chinese-- beginning with xi jinping-- understand the need for reform. so i think the debate is going to be the scope, the scale, the timing and the fact that there are strong vested interests that

will oppose reform. so when i look at things we need to do to build trust between our two countries i see a need to get tangible things done that the publics in both countries can see. and understand. and so consequence consequently i look at areas like, you know, economics, and i see the -- this is the best time i've seen since 2001 at the time when the w.t.o. agreement was negotiated to get some positive economic agreements that the people in both countries can understand and see a real opportunity do things together to meet the climate challenge and the need for clean energy and new environmental technologies. >> rose: but let me just stay with the economic model and the state capitalism, because the premier suggested they knew they had to reform state capitalism, they had to create more of a

level playing field because of the predominance of government-owned enterprises it was not in the end good for the chinese economy. correct? >> yup. yup. he said that and that's easier said than done. so he said it, they're committed to doing it, to putting the state-owned enterprises on a level playing field because they recognize that the jobs are going to need to come from the private sector. it's the private sector that's creating the jobs. the private sector in china is where the innovation is going to come from. they need to get a lift from the private sector and i was making the case and i believe they understand that opening up opportunities for foreign business and the competition that will come from getting foreign companies, letting them compete on a level playing field will also help drive reform in areas like capital markets and in other parts of the economy. >> rose: the big issues about the economic models is that the

chinese have had a saving economy and an exporting economy and the united states has had a consumer-demand economy and less of an exporting economy. >> you're very right. and their model has been really dependent not only on exports but heavy government investment into areas like infrastructure. so they need much less reliance on that, more on domestics led growth, they need to open up their capital markets to competition because they need to develop world-class capital markets if they're going to get where they want to get where they want to get to be investors and not just savers and capital to the private sector. and they really are going to need to take a different approach to urbanization because there's another 300 million people that are going to be moving from the countryside to the cities. and how they handle that is

going to be a huge driver of economic and environmental outcomes over the next 25 years. so they've got a lot of changes on their plate. >> rose: they clearly have a developing middle-class in china. they've taken more people out of poverty than any other civilization in the history of civilization. some 300 million people have come out of poverty into the middle-class. is that enough to drive a consumer-demand economy so that it will provide opportunity not only for the private sector in china but also from companies who want to pierce the chinese market? stfrjts well, consumption has been growing fastener china than any other economy around the world but they need to do more to change it on a relative basis. so i really believe their current model needs to change.

and it's easier said than done. they understand the problem. so their diagnosis is terrific. and their prescriptions, i think are very good. what people don't understand from the outside is how big the challenge is. they've got very strong leadership right now but that's the good news. the bad news is they're going to need strong leadership because it's not easy to change an economic model. and to deal with the multiple challenges they have at home. and their ability to fix those problems is not only going to be important to the chinese people but to the u.s. and the rest of the world because all of our economic challenges are going to be more difficult to meet if china has problems. and so that is why i thought it was such a terrific time to get some new economic agreements between our two countries. because look at our problems. we have -- our biggest challenge

subpoena economic challenges we need growth. we need growth. we're not growing quickly enough to put people back to work at the speed at which we need to. the chinese need a new economic model and so the sorts of things that i've been emphasizing is wouldn't it be great to have more chinese investment in the u.s. that creates jobs? the american people will be able to understand that a lot more than they'll be able to understand the advantages of having sort of invisible chinese investments -- portfolio investments in our treasuries. so if we could do some things that led to investment in the u.s. and so a bilateral investment treaty would promote that and that would also be a terrific platform to advance negotiations on market access and openings in china and this level xetive playing field that you were talking about when you were making the point that we needed to put the state-owned enterprises on a level playing

field. >> rose: okay, but there's a real problem between the two countries, as tom donelan laid out when he's talking about cyber espionage. he said "resolving this issue is really key to the future of u.s./china economic relations." >> i agree with him. i agree with him. i tell you, when foreign governments and foreign companies steal intellectual property or trade secrets from u.s. companies that's a huge issue. that's different than governments collecting information about other governments. and as a matter of fact this whole cyber crime global -- globally is very complex and very important. and it runs the gamut from war to anarchy to terrorism to just individual hackers and

technology has moved so fast that national laws, international laws, protocols, enforcement mechanism haven't kept up with it. and so more broadly this is very important that we find common ground and turn it into action and then of course the area that we're focused on right now-- which really is essential to building and restoring economic trust-- is cyber theft from u.s. companies. and i think it's essential to build trust that we find common ground and that we make some real progress here. and if we do, i think that's going to increase the opportunity for chinese companies in the u.s. and if we don't, i think this is a real threat to the stability of the global economic system. how does a global economic system function over time if we can't agree on rules in terms of what is acceptable and what constitutes crime and theft from

-- as it related to corporations? so this is very important and this is very important to the economic relationship. now, i was focused on, in my earlier comments, on getting some very positive things done because the key to really building trust are -- is not just talking but getting tangible results. i think this is essential. we need to -- it's going to be complicated, it can't be resolved overnight but what i explain to people in the u.s., to government leaders in the u.s. and to china that in my experience and being key to setting up the strategic economic dialogue to china when i was treasury secretary and working to make that work and all my dealings with china over the years that you need to focus on big, long-term issues. the most important issues.

and you -- even if they're difficult, you need to make progress along the way and have tangible results that the publics in both countries can see and then build on those results to take the relationship to the next step. >> rose: so you would hope, for example, that if there's some cooperation on climate change it can lead to other issues having to do with global health and a lot of other things. you would hope that there's cooperation with respect to north korea. that that also might lead to some cooperation having to do with other geopolitical issues like iran. >> absolutely. and claimant is -- you know, why do i spend time with the paulson institute in china working on sustainable urbanization? the reason i do is because if we don't solve -- if our count two countries, the two biggest economies, the two biggest users of oil, the two biggest emitters of carbon don't develop

innovative processes, policies, financing mechanisms to roll out new sources of clean energy and technologies and environmental technologies, we're not going to solve the problem. and here we are -- we have complementary strengths. no one innovates like the united states of america. we have world-class research institutions, national laboratories, our innovateors are second to none. we have the financing and the legal infrastructure around innovation and no one knows how to move better into large-scale production on a cost-effective basis quickly than the chinese. and they've got by far the fastest-growing and largest energy market. to what a great place to test new technology. well, this is a major issue where we need to work together. and guess what? for good or for bad in today's world there are going to be more

and more serious challenges that we're going to be -- each be confronted by and the whole world will benefit if we can find common approaches. and to me getting a -- some economic agreements in a time when both oaf our countries need them is something that we should -- we have to get done. because the economic relationship is a cornerstone of the u.s./china relationship. >> rose: okay, i have to leave it there. hank paulson, thank you so much. >> thank you, charlie. >> rose: hank paulson, former treasury secretary, head of the paulson institute, former c.e.o. goldman sachs. we'll be right back. stay with us. >> rose: tim turlly is here, he's chairman and c.e.o. of ernst & young. the firm is a global leader in tax and advisory services with 170,000 employees worldwide. under his watch, it's more than doubled revenue. he has steered the company through trying times within the profession, including the enron

era, corporate scandals and the financial crisis. after 35 years at ernst & young, he retire on june 30. i'm pleased to have him here at this table for the first time. welcome. >> great to be here. >> rose: so how many years in the accounting business? >> well, for me it's been 36 plus years at ernst & young, fall the same firm. it's been just wonderful. >> rose: how has it changed other than the clear impact of technology? >> oh, my gosh. i'd say probably the biggest shifts have been around the capital shift that we're all seeing in the world, and so the business is much more global than it's ever been before. the demographic shift that we our all seeing so dramatically. the talent coming into the profession is much more diverse around gender and ethnicity, sexual orientation, national taety, you name it. the regulatory shift is just as profound. obviously during my time we went through the enron crisis, went from being self-regulateed to

independent regulated all around the globe. >> rose: is that good? >> it's been very good for us. i think it's caused all of us to sharpen our focus and really commit to extraordinary quality in all of our businesses. and having an independent regulator really does focus the mind. and so i think it has been positive. added stress, but it's been positive. >> rose: your firm under your leadership is consistently recognized as one of the best companies to work for. i mean, that's high prize. the best companies to work for. how do you create that? what's the necessity to make that be what you are known for? >> we realized a long time ago that, you know, we're a business -- everyone talks about talent. we have no assets at ernst & young that doesn't go home every night and we need to be the kind of place they want to come back to the next day. so we really dedicated ourselves to doing everything we can to make this a place that welcomes people of all backgrounds and

really includes their thoughts and includes their engagement in everything we do. we think about our people first in all the business decisions we make. and so it's not that every decision comes down on the side of what's going to be good for them, but it is active thinking around what do we need to do to be the place that teams best, both cross borders and cross cultural. that really builds trust and respect. so it's something we spend a lot of time with. >> rose: what are those things that you do that create that? >> well, we do things like training our people in unconscious bias. >> rose: unconscious bias? >> oy, my gosh. it's startling when you really get behind how you and i and all the men and women of the world have unconscious bias. we use a professor from harvard who helps us, trains our new manages by the thousands to help them understand that, you know, all of brains are built in ways

that sort of have these biases. once you realize you're not an evil person for having them then you can compensate. then you realize how to reach out to people and get the best of everyone. >> rose: what are the lessons of enron and how did it happen? >> well, look, i think at the end of the day the profession wasn't as focused on the delivery of quality as we needed to be back in the '90s leading up to the enron era. so what happened after was really important. ernst & young, all of our peers did everything they could to scrub every process that could touch quality in the marketplace: how we hire people, how we train them, how we assign them to jobs, the metologys we use, the technology wes use, how we review technical material, our compensation systems, how we promote people. so you name it. you know, if t client wes accept. which ones do we want to work for and which ones don't we want to work for?

all of these things got scrubed in ways that i think was overdue and hadn't been scrubed in enough time. >> rose: that's the lesson of enron? >> that's the lesson. >> rose: because of the abuses? >> well, i think it's the lesson so complacency. i think we had probably fallen come play tent? the '90s. remember there was the go-go doth com time and my guess is that's what happened and one of the beauties and benefits of having a regulator is you can't get complacent because you're being inspected regularly, you're being poked and prodded and we think we would never get complacent ourselves again but we have regulators not just here in the united states, around the globe, who help make sure we don't. >> rose: i assume there's also a demand for more transparency now? >> very much so and i think that's a positive thing. >> rose: if you say to most people "tell me about accounting. would you like to be an accountant?" and when i say "accountant" what comes to mind?

>> they would say probably testimony idea of green eye shades, numbers of filling and forms being able to look at very complicated data and make sense of it. when i say accountant to you, what does it mean? >> to me it means somebody who is through their professional service helping investors and the stakeholders have more confidence in financial markets and financial results. so it's very much about a service through the investing public into stakeholders. and it's probably different than the green eye shade you talk about. it's much more externally focused around the useers of the national are our audit clients produce and making sure we keep their interest at the center of our thinking. >> rose: people need to have some ability to determine whether this worked or didn't work. >> right.

>> rose: was good or bad. in a letter to his foundation said "the most important thing we have to do today" his whole theme is the idea of measurement. >> the other thing you asked about the enron era, i was worried when enron happened that the brand of our profession has been so damaged that young students would not want to go into accounting and auditing fields. in fact, the opposite happened. because sometimes the relevance of what you do is shown when things aren't going perfectly and people realize, hey, this is really important. when things don't go well i'm going to fix it. so we saw more great students going into accounting fields and it was rewarding. >> so what's the challenge for

the accounting profession as it goes into the future >> as you look forward i think it's interesting. you asked about the last crisis contrasting it to the last one, the last one was contrast after enron by hundreds of thousands of companies restating their financials. the recent financial crisis didn't have that. so at one level the profession feels like, hey, a lot of things have been improved but we'll still had as a society the deepest financial crisis in generations. so the question being asked now is how relevant is the information that companies are putting out and how should that change to provide more insights to investors and stakeholders, to provide insights either on a company level or a systemic sector level and so there's a broad sort of multifaceted discussion taking place now to

see what can be done. >> rose: with more and more corporations engaged in global activity around the world do we face increasing demand for international standards? >> i think very much so i've been an early and long proponent for international standards. i personally can't see a long-term future where the u.s. capital markets stay the deepest and most robust in the world if the rest of the sglob paying by a different set of rules. i think we all have to have a single set of high-quality standards that are in use everywhere, i thinkf we could find a path to get there the investors will benefit. >> rose: where have you steered this firm and when you look back at the tenure you have had 10, 11 years as c.e.o.. >> rose: more, 12 years. and you look at where you've steered it, everybody has thought over the last number of, say, five or six years about emerging nations. >> right. >> rose: where they had explosive growth rates, people entering middle-class. >> where we have steerd is

primarily around a few things. one is the globalization, the shifts of capital, the emerging economies. we have over the last dozen years become by far the most globally integrated of the service firms in our mind-sets, our behavior, our structures and how we operate. we view ourselves that way, our competitors do. the the regulators do. and so i think that's a real positive. part of that has been including big multihns of millions probably now billion and a half dollars of investment in the emerging economies. such that in the emerging economies of china, india, russia, africa, brazil, we have very, very strong practices, leaders in most of those. and so that is sort of one area we've steered the firm. the second is the people culture. you asked about the beginning. it's really important to us that we have a culture that attracts

and retains talent and very much engages them ways that create for a really, really high performing teams. and i'd say the third area is making clear to us and to the outside world that we're not just in business to serve the biggest most powerful names that you read about and hear about everyday. but instead also think bting about the entrepreneurs. because entrepreneurs are driving job growth and building families and family lives all around the globe. not just in this country. and so we really commit ourselves to being leaders of the entrepreneurial space as well. >> rose: how do you do that? i know that entrepreneurs is a principle belief of yours, so what do you do to make that a part of your own agenda >> we're standing on the shoulders of our predecessors at ernst & young who developed some 26, 27 years ago a celebratory

program identifying the best men and women entrepreneurs of the world. started off in one city, one country here many milwaukee, wisconsin, and ended now recognizing those companies having an impact in their communities. so we celebrate their success and advise the fleps the very real way and it's something that is a critical part of who we are if you think about the most successful entrepreneurs names, take the text sector here in the united states. many of these names we were with at the start. google we were with at the start. all of these companies we just invest our time. we don't invest money in them. we invest our time in them at early stages and it's paid great dividends not just in terms of the great relationships we have but in the relation p learnings

we have. >> rose: russia. tell me what that interest is. >> well, just a fascinating marketplace and it's one that because of our practice there i've been co-chiring with the prime minister of russia over a series of prime ministers of foreign investment advisory council that is advising the russian government on how to get more attractive to foreign investment so if you go back to the prime ministers and prime minister putin was -- really amped it up when he was prime minister so it's been a really interesting process to work with great businesses from around the globe to give advice to a country that is obviously in transformation. not easy but, you know, sort of an untold story that most of the big company xwhas who are invested in russia really love it. >> rose: you have serious conversations with them about

the rule of law and justice and individual rights? >> all of that. we tend to not get into what the more politicized of the issues. we end to stay away from human rights issues and other things but we talk very granularly about the rule of law, about customs and duties and tax policies and an array of different things that the companies care about as they're setting up operations there. so it's something we've seen great progress in but obviously more could be done. >> rose: the other area is boy scouts. >> yeah. >> rose: boy scouts are going through some changes. >> they are. >> rose: where are you on that? >> well, you know, a year ago i came out very early and said that i love the boy scouts it's the best leadership development program and adventure program and service-focused program that i know about but that their

membership policy is not one that i would personally support. i had been privately telling the board-- i'm an officer of the boy scouts for some time-- that's the way i felt. but what was happening was because ernst & young's brand on inclusion is so positive my involvement, the internet and others started to say what does jim turley think. and what does randall stevenson at at&t thing? because both of us have perfect scores in the human rights council index. so randall and i felt that it was important to protect our own individual brand of our firms to make public that -- the fact that we thought the policy soul change. >> rose: and it did >> and it did. so we feel positive about that. >> rose: thank you for coming. if much success. >> thank you very much, charlie. >> rose: thank you for joining us. see you next time.

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