[ticking] >> this company has blood on its hands. >> he's talking about chiquita, the banana company which paid nearly $2 million in protection money to a murderous paramilitary group that killed or massacred thousands of people in colombia. >> these were extortion payments. these were payments that had to be made to protect the lives of our employees, and so it's one of those situations where you just simply had no other choice. either you pay or your people get killed. >> and you decided to pay? >> and the company decided to pay. absolutely. [ticking] >> billions of dollars is coming from this office to help bail out the u.s. economy.

why is it so unique? because it is in beijing, headquarters of the china investment corporation. how much do you have to invest? >> we have $200 billion. >> $200 billion? >> $200 billion. >> this is the fund's president, gao xiqing. he has poured billions into investment houses on wall street, causing some concern here in the u.s. >> "we think, based on your historical behavior, china, that you're gonna do mischief in our economy." [ticking] >> hey, how you doing? >> oh, i'm doing well. how are you doing, sir? >> how you doing, scott? >> good to see you. >> is davos the most important meeting on earth? >> well, the top of the alps is a long way to come for the rich and powerful, but you'll run into billionaire george soros; eric schmidt, the guy who runs google; nobel prize winners; captains of industry; kings; and even a queen. >> lot of the work is done just sitting in the cafeteria in the congress hall and just seeing people pass by and discussing

things. >> the queen hangs out in the cafeteria? >> i enjoy hanging out in the cafeteria. i'm gonna do it this afternoon, actually. it's fun. >> welcome to 60 minutes on cnbc. i'm steve kroft. in this episode, we'll look at the yin and yang of international investment. first, a 2008 report on an american company in serious trouble in colombia, a country that was just beginning to emerge from the throes of civil war and narcoterrorism. chiquita brands international, of cincinnati, ohio, made millions growing bananas there, only to emerge with its reputation splattered in blood after acknowledging that it had paid nearly $2 million in protection money to a murderous paramilitary group that has killed or massacred thousands of people. when we first reported this story, it became clear that that admission cost the company dearly. from the air, the plains of the uraba region are carpeted with the lush foliage of banana

plantations, which have long provided a livelihood for the people of northern colombia. and for the better part of a century, its best known product has been the chiquita banana. >> ♪ i'm chiquita banana ♪ won't you come with me? ♪ to the bank of bananas ♪ nature's treasury >> but since the 1980s, the business of bananas has much less festive and punctuated with gunfire. first, the area was taken over by marxist guerillas called the f.a.r.c., whose ruthlessness at killing and kidnapping was exceeded only by the private paramilitary army that rose up to fight them. chiquita found itself trying to grow bananas in the middle of a war in which the colombian government and its army was of no help. >> these were lands where there was no law. it was impossible for the government to protect employees. >> fernando aguirre, who became chiquita's ceo long after all this happened, says the company was forced to

pay taxes to the guerillas when they controlled the territory in the late '80s and early '90s, and when the paramilitaries, known as the a.u.c., moved in in 1997 they demanded the same thing. >> it was a dilemma about having literally a gun pointed to your head, where you have someone who says, "either you pay me, or i'm going to kill you," or, "i'm going to kill your employees." >> did the paramilitaries state, specifically to you, that if you didn't make the payments, your people would be killed? >> there was a very, very strong signal that if the company would not make payments, things would happen. and since they had already killed at least 50 people, the employees of the company, it was clear to everyone there that these guys meant business. >> chiquita only had a couple of options, and none of them were particularly good. it could refuse to pay the paramilitaries and run the risk that its employees could be killed or kidnapped, it could pack up and leave the country all together and abandon its most profitable enterprise, or

it could stay and pay protection, and in the process, help finance the atrocities that were being committed all across the countryside. >> these were extortion payments. either you pay or your people get killed. >> and you decided to pay. >> and the company decided to pay, absolutely. >> so you--there was no doubt in your mind that these were very bad people. >> absolutely. absolutely. no doubt. >> just how bad was already becoming evident. the paramilitaries, who were funded initially by large landowners, and later by the cocaine trade, not only drove the marxist guerillas from the area, they tried to eliminate anyone who might have leftist sympathies, from labor leaders to school teachers. sometimes entire villages were wiped out in the most grisly fashion. gloria cuartes was the mayor of apartado, and witnessed much of it with her own eyes. >> [speaking spanish] >> i was a mayor whose job was just to gather the dead. >> in 1996 she went to this

school to talk to the children about the violence that surrounded them, and while she was there, the paramilitaries arrived and murdered a 12-year-old boy, whose only crime had been to announce their presence. >> they cut off his head and threw the head at us. i went into a state of panic. they were there for four hours, with their weapons, firing shots toward the ceiling. one hundred girls and boys were with me. the children did not scream. they were in shock. >> did they said anything to you? >> no. their language was death. their message was that if they could do this to children, they could do it to me. >> as the atrocities piled up all across the country, chiquita continued to make the payments to the paramilitaries, viewing itself as a victim of the violence, not a facilitator. but all of that changed in 2001 when the u.s. government

designated the paramilitaries a terrorist organization, making any kind of financial assistance to the group, coerced or otherwise, a felony. yet chiquita continued to make the payments for another two years, claiming it missed the government's announcement. it was in the newspapers. it was in the cincinnati enquirer, which is where your company headquarters is. it was in the new york times. i mean, this is a big part of your business, doing business in colombia. how did you miss it? >> well, again, i can't-- i don't know what i-- what happened during that time frame, frankly. what i know is all the data shows that the company, the moment it learned that these payments were illegal in the united states, that's when they decided to self-disclose to the department of justice. >> by self-disclose, he means chiquita, on the advice of its attorneys, turned itself in to the justice department, and one of the first things aguirre did when he became ceo was to stop the payments and sell the company's colombian

subsidiary. the company pled guilty to a felony and agreed to pay a $25 million fine, but that wasn't the end of its legal problems. [ticking] chiquita faces angry victims and their lawyers. and you believe that chiquita knew that this money that they were paying was being used to go in the villages and massacre people? >> if they didn't, they would be the only ones in the whole country of colombia who didn't think that. >> when 60 minutes on cnbc continues. [ticking] hey! did you know that honey nut cheerios

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>> attorney terry collingsworth has filed one of five lawsuits that have been brought against chiquita brands international, seeking money for the families of colombians killed by the paramilitaries. he says the money chiquita paid to the guerillas for seven years may have kept its employees safe, but it also helped buy weapons and ammunition that were

killing other people. >> this company has blood on its hands. >> are you saying that chiquita was complicit in these massacres that took place down there? >> absolutely. if you provide knowing substantial assistance to someone who then goes out and kills someone or terrorizes or tortures someone, you're also guilty. >> and you believe that chiquita knew that this money that they were paying was being used to go into the villages and massacre people? >> if they didn't, they would be the only ones in the whole country of colombia who didn't think that. >> you're not saying that chiquita wanted these people to be killed? >> no. they were indifferent to it. instead of wanting those people dead, they were willing to accept that those people would be dead in order to keep their banana operation running profitably and making all the-- all the money that they did in colombia. >> you think they should have just picked up and left? >> yes. >> it's easy for a lawyer to give that type of advice after the fact. when you have more than 3,500

workers, their lives depend on you. when you've been making payments to save their lives, you just can't pick up and go. >> what did the company think this money was gonna be used for? >> well, clearly, to save lives. >> the lives of your employees? >> absolutely. >> it was also being used to kill other people. >> these groups were funded with hundreds of millions of dollars. they had the guns, they had the bullets, so i don't know who in their right mind would say, "well, if chiquita would have stopped, these killers would have stopped." i just don't see that happening. >> do you feel that the company has any responsibility to compensate the victims of the paramilitaries in colombia? >> the responsibility of any murders are the responsibility of the people that made the killings, of the people who pulled the trigger. >> the justice department decided not to prosecute any corporate officers at chiquita, which included prominent businessmen like former ceo cyrus freidheim jr., who later led the sun-times media group, and board member

roderick hills, a former chairman of the securities and exchange commission. the decision created a furor in colombia. the country's prosecutor general said he would begin his own investigation, and has threatened to extradite some of chiquita's executives to stand trial in colombia. >> this hearing will come to order. >> there was also a congressional investigation, led by representative william delahunt of massachusetts, who chaired a house foreign affairs subcommittee in 2008. you've been quoted as saying that chiquita is the tip of the iceberg. >> right. >> what do you mean by that? >> well, i think that there are other american companies that have conducted themselves the same way that chiquita has, except they haven't been caught. >> how many companies? >> well, there are several. >> you want to share that with us?

>> no. >> because? >> because i want to give those companies an opportunity to come before the committee. >> we did find one person who was willing to name names inside this maximum security prison outside medellin. salvatore mancuso was once the leader of the paramilitaries. chiquita says the reason they paid the money was because your people would kill them if they didn't. is that true? >> [speaking spanish] >> no, it is not true. they paid taxes because we were like a state in the area and because we were providing them with protection which enabled them to continue making investments and a financial profit. >> what would have happened if the companies had not paid? >> the truth is, we never thought about what would happen because they did so willingly. >> did they have a choice? >> yes, they had a choice. they could go to the local police or army for protection from the guerillas, but the army and police at that time were barely able to protect

themselves. >> mancuso helped negotiate a deal with the colombian government that allowed more than 30,000 paramilitaries to give up their arms and demobilize in return for reduced prison sentences. as part of the deal, the paramilitaries must truthfully confess to all crimes, or face much harsher penalties. >> was chiquita the only american company that paid you? >> all companies in the banana region paid. for instance, there was dole and del monte, which i believe are u.s. companies. >> both the dole food company and fresh del monte produce, which is not affiliated with del monte foods, have issued statements strongly denying that they made payments to the paramilitaries. fresh del monte produce says its colombian operation is limited to a sales office which purchases bananas from independent growers. dole and del monte say they never paid you any money. >> chiquita has been honest by acknowledging the reality of the conflict and the payments

that it made. the others also made payments, not only international companies, but also the national companies in the region. >> so you're saying dole and del monte are lying? >> i'm saying they all paid. >> mancuso has been indicted in the u.s. for smuggling 17 tons of cocaine into the country. he said he was more than willing to tell u.s. prosecutors anything they wanted to know. has anyone come down here from the united states, from the u.s. justice department, to talk to you about dole or to talk to you about del monte or any other companies. >> no one has come from the department of justice of the united states to talk to us. i am taking this opportunity to invite the department of state and the department of justice, so that they can come, and so i can tell them all that they want to know. >> and you would name names? >> certainly, i would do so. >> so far, the only company that's been charged with paying money to terrorists in colombia is the one that turned itself in.

do you think if you hadn't gone to the justice department and disclosed the situation that anything would've happened to you? >> well, mr. kroft, if we hadn't gone to the justice department, we probably would not be here talking about this whole issue. no one would know about this. >> after our story first aired in 2008, salvatore mancuso was extradited to the u.s. to face drug charges. the civil suits against chiquita were combined into a federal class action lawsuit while a similar lawsuit against dole was thrown out of court. chiquita also had to fight a suit brought by its own stockholders, which the company settled for $4 million. [ticking] up next: americans worry about a chinese investment fund, even as it helps prop up the u.s. economy. >> china has so much money that they can spend buying u.s. companies that the danger is that they can strip these companies. they can strip the companies of jobs, research and development,

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regimes saving wall street or invading it? one fund was of special concern. it was new, highly secretive, and the fifth-largest in the world. >> welcome to the beijing headquarters of the china investment corporation, where 180 employees are looking for companies to invest in in the west. how much do you have to invest? >> we have $200 billion. >> $200 billion? >> $200 billion. >> this is the fund's president gao xiqing-- yes, it rhymes with ka-ching. he decided to pour some of those billions into investment houses on wall street. was there any thinking in china that, given the subprime crisis in the united states, that china would come to the rescue? >> some people will try to put it that way. but, you know, at least-- it's not my thinking. >> now, some people consider what you're doing a huge threat. your real intention is to gobble us up, you know?

they see you as vultures, really. i mean, i've seen that word. >> or some people say locust. >> locusts? >> the europeans call it locusts. the americans call it vultures. >> "vultures we are not," he says. "we're like a typical investor. our only aim: to make money." mr. gao bridles at the mistrust. >> immediately after we announced our existence, then the u.s. government, some european governments, all came out and said, "okay, we think of this as-- this is a dangerous, and we think we should do something about it. they probably want to control us. they probably want to do something bad about us." >> the reason mr. gao agreed to this interview, his first as fund president, is because he wants to dispel any fears that china intends to gobble up u.s. companies. >> it's our policy not to control anything. >> so you'll put a lot of money in a foreign company and not even get on the board? >> you're right. >> why? >> simply because we don't want

to go in and say, "ok, i think you should change this person," or i think you should change this product line. that's not our business. >> mr. gao, you know that's very reasonable, but i know that there are people in the united states who would listen to that and be very suspicious, and they would say, "it's just a tactic." that's what they're saying now, "so our guard will go down and eventually they're going to come in and force these companies to make decisions that will help china politically." >> that's typically the thinking of people who do not understand the actual functioning of the capital market. >> but people who do understand the capital markets, like economist peter navarro, say there is reason to be wary. what do you say to the chinese when they complain that sovereign wealth funds have been around for decades, and there hasn't been a peep of protest or concern until the chinese developed a sovereign wealth fund? >> i think that the chinese can say, "well, you're singling us out." and we say, "yeah, we're singling you out.

we think, based on your historical behavior, china, that you're going to do mischief in our economy." >> he says the problem is that china has over $1.5 trillion in reserves, the world's largest currency surplus, and it's growing by $1 billion a day. >> china has so much money that they can spend buying u.s. companies that the danger is that they can strip these companies. they can strip the companies of jobs, research and development, technology. >> now, do we have any evidence, any reason to believe that they're really going to do that? >> it's not a clear and present danger. it's a clear and future danger. >> as he told a congressional panel, his fears grow out of china's pattern of behavior: its unfair trade practices, currency manipulation, technology espionage, and a refusal to crack down on counterfeiting. mr. gao's response has been to avoid sensitive industries,

limiting his u.s. investments to our financial sector. >> theoretically, we are allowed to invest in anything. but we look around. if someone comes to us, proposing to us to sell some share of a military factory or something, we say, "okay, forget it." we don't want to touch it. >> why, "we don't want to touch the military?" >> because we already getting too much, almost unfair amount of attention. you know, the chinese culture is such that--is to be self-effacing. you should try to hide yourself. don't stick your head out for people to knock off. >> mr. gao was raised in china during the cultural revolution, forced to work in an arms factory and on the railroad. but then he did well in school and was sent to study law at duke university in north carolina. in 1986 he became the first chinese national admitted to the new york state bar. and then, you went to work for richard nixon's law firm, basically working on wall street issues.

is that correct? >> yes. >> so you understand the american banking system from the legal-- >> a little bit. >> a little bit? he took that little bit back home to china and helped reform its economy and create its stock exchange. now, at 54, he's become one of the most sought-after investors in the world, but one with an unimpressive record in the u.s. thus far. the timing couldn't be worse. >> you said it. >> in 2008, he was even in his $5 billion investment in morgan stanley, but the fund also had $3 billion in blackstone, the private equity firm, and its stock lost nearly half its value. but mr. gao said he was not selling. are you under any political pressure from the political people in the chinese government on what kinds of companies to invest in? >> so far, none. >> what if our two governments had a serious dispute? >> over taiwan?

>> yeah. now could your government come in and say to you, "pull your money out now?" >> it could be. but i seriously doubt that would happen. >> it would hurt you too. >> definitely. it would hurt me, hurt the company, hurt china. [ticking] >> up next: china's fund worries some prominent americans. >> well, they certainly want to be reassuring. >> i think that is something we should encourage. but, you know, as ronald reagan said, "trust, but verify." i think this is an issue that our government does need to pay close attention to. >> when 60 minutes on cnbc continues. [ticking] mom, dad told me that cheerios is good for your heart,

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>> in 2008, leslie stahl spoke with gao xiqing, the head of china's new sovereign wealth fund, which was investing heavily in the u.s. market and making some observers very nervous in the process. >> here's another fear that americans have, and that is that you'll gain a foothold in a company like blackstone, then have blackstone go out and buy a company for you, go buy a technically-sensitive company. >> maybe they love china so much that they just want to steal all your technology for us? >> no, but they'd be afraid if-- if they don't do what you want, that you'll pull the money out, and then they'll collapse. >> if you think things along that line, then there'd be no stopping because... >> chinese businesses come under severe criticism for their secrecy. so one way mr. gao could deal with the suspicion would be to make the fund transparent like norway's sovereign wealth fund, which is considered the gold standard.

it has a detailed mission statement, earnings reports, and an exhaustive web site listing all its assets. china's fund has a web site too: just one page, which is basically a link to a job application. mr. gao made an unexpected commitment, as he gave us a tour of his offices. look at this wall. what do you think? it's very transparent. >> it is. this is what we meant to be. >> is it a metaphor? >> yes, i think so. >> well, you don't have any transparency. i mean, you--you--you're-- >> yes, we do. >> no, you don't. you don't produce any annual reports. >> we are only five months old. we haven't gotten to the point of producing our annual report. we are going to produce our annual report. >> you are? >> we are. yes, we are. we're going to do things, just the--most of these--what americans will believe as good sovereign wealth funds like norwegian sovereign wealth fund.

>> you are? >> yeah. >> but you know this is a huge issue. are you going to be as open as the norwegians? >> first, simple answer is yes. but secondly-- >> but? >> yeah, secondly, as far as it is commercially viable. because with that much money on hand, if you tell people what you're going to do next, immediately, you know, everything you buy becomes very expensive. everything you want to sell becomes very cheap. >> but you're, right now, pledging, telling the american people you're going to be as open as the norwegian sovereign wealth fund is? >> mm-hmm. yes. >> former treasury secretary lawrence summers has been raising concerns about sovereign wealth funds, so we asked him about mr. gao's surprise pledge. >> i think there's a question as a degree of specificity. but in a way, their willingness to be interviewed and go on your show is probably not

something they would do if they thought of themselves as having some nefarious purpose. >> well, they certainly want to be reassuring. >> and i think that is something we should encourage. but, you know, as ronald reagan said, 'trust, but verify.' i think this is an issue that our government does need to pay close attention to. >> summers is pushing for an official code of conduct for sovereign wealth funds. the international monetary fund is working on writing some rules, but nr. gao thinks that's unnecessary. >> why do you need a law like that? that law will only hurt feelings. it's not economic. it doesn't make sense. politically, it's stupid. >> stupid and unfair, he says, since american hedge funds and private equity firms don't have such a code. >> if you make it some kind of, you know, someone singled out as a bad boy, then that becomes a problem emotionally. >> there was never a call for a code of conduct till china set up a wealth fund. >> right. right. right.

so that's why-- i personally don't have a problem with it, really. you know? but that's why a lot of other chinese people are telling us that, "look, you know, you guys should be against it. you should stand up against." i said, "why should we bother?" >> does the i.m.f. have the power to enforce a code of conduct anyway? >> i don't think so. >> is there any chance on this earth right now that we could ever say, "look, if you don't agree to a code of conduct, even voluntary, you can't invest in our companies." it's self-defeating, right? >> we could say it, but it wouldn't serve our interests at several levels. it would mean that americans would pay more for goods. it would mean that our interest rates would be higher. >> in other words, we're all but dependent on chinese investments. beyond this new fund, china holds half a trillion dollars in u.s. treasury bonds,

so economist navarro says they have us over a barrel. if they don't like our behavior, they can dump all their investments. it's known as the financial nuclear option. >> what would that do? that would cause interest rates to spike, mortgage rates to spike. inflation to spike, the dollar to go through the floor, the stock market to go into chaos. we would be in deep, deep, deep trouble. >> the nuclear option, financial nuclear option, is china's pulling all its money out of u.s. treasuries. >> philosophically, everything's possible in this world, but that's so unlikely that, you know, if we function on that thing, we just may as well go home and not doing anything. >> mr. gao isn't going home. since this story first aired, his fund has invested in real estate in the united states and in iconic american companies like coca-cola and apple. by the end of 2010, he was managing $300 billion invested around the world and then

asked the chinese government for more. [ticking] when we return, the world's leaders come together in a very small village. >> there aren't enough tables in restaurants, there aren't enough hotel rooms. >> yeah, well, that's part of the thrill. it is the only place where these really powerful people are made to be very inconvenienced. just about the only place in the world really powerful, really rich men--mostly men, few women--can actually behave like normal people. >> up next on 60 minutes on cnbc. [ticking] mom, dad told me that cheerios is good for your heart,

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>> if you'd like to meet the people who are supposed to fix the world's economy or give a piece of your mind to the bankers who helped create the problems, there's one place to find them every january. it's a tiny town folded into the swiss alps called davos, a village where you could bump into bill clinton, bill gates, the head of google, and the queen of jordan, all waiting in line in a coffee shop. 2010 marked the 40th anniversary of what may be the most important meeting on earth: the world economic forum. and scott pelley was there to hobnob with the kings and captains of industry. >> the world economy is traveling a dark and troubled stretch, but if there's light at the end of the tunnel, you might see it first in davos.

this is the scene of the world's summit meeting: five days each january, when 2,500 capitalists, globalists, and futurists discuss the fate of earth's other 7 billion inhabitants. within minutes you'll run into billionaire financier george soros, nobel peace prize winner elie wiesel, computer tycoon michael dell, and her majesty queen rania al-abdullah of jordan. i was down in the lobby of the hotel last night, and i noticed that you were talking to president clinton, and while you two were talking, bill gates walked by. i mean it's that kind of place. >> it is, and i find that a lot of work gets done in corridors, in the lobbies of the hotels and in the elevators. you just bump into people. you know, we're all stuck together in this place, and a lot can get done when you see people from all walks of life. >> why is it important? >> because you have a high concentration of some of the best minds in business,

technology, politics, all together in one destination, far away from everything else. >> at 5,000 feet, davos is europe's highest town and arguably its best ski resort. but the 800-year-old village has only 13,000 residents, one road in and out, and no airport. it's a tight fit as skiers make way for the high security capital of capitalism. what is this, your super bowl? >> yep, yes absolutely. it's the place where everybody that i ever want to meet over a whole year is all gathered together. >> martin wolf is a columnist for the financial times of london who delights in watching the high and mighty squeezed into davos. there aren't enough tables in restaurants, there aren't enough hotel rooms. >> yeah, well, that's part of the thrill. it is the only place where these really powerful people

are made to be very inconvenienced. just about the only place in the world that really powerful, really rich men-- mostly men, few women-- can actually behave like normal people. >> we were here a few days before the forum started, and it looked like they were setting up for a rock concert. what goes into this? >> just the program. there are all the lunches and dinners and hotels, travel programs, security-- which is obviously a nightmare. i mean, they brought together everyone in the world that the terrorists would want to kill. it is an enormous organizational project. >> they suffer the indignities to attend the seminars of the world economic forum, more than 150 expert talks, on things including financial risk regulation, viruses, u.s.-china relations, and the global economic outlook, plus, rural poverty and even life on other planets. at the last minute, the forum in 2010 pushed the world's greatest disaster to the top

of the list. >> hey, how you doing? >> oh, i'm doing well. how have you been, sir? >> how you doing, scott? >> good to see you. we ran into bill clinton, who flew 10,000 miles round-trip just to spend a day pitching his haiti relief campaign. what is your message to the forum? >> every person at this forum should ask themselves what they can do and whether they, particularly the business leaders, will they join the business leaders we've already put together in building the future, and that we're gonna try to help do it. >> it's worth coming all this way to be at this meeting? >> absolutely. well, it is if some of them come across. i think so. this is where a lot of the people are with the expertise, the capacity, the desire, and the money to make a difference there. >> good luck, mr. president. >> thank you, scott. i'm glad to see you. >> good to see you. >> bye-bye, guys. >> he's here because this is where the money is. the business of davos is business. what do billionaires talk about behind closed doors? >> i wouldn't know. i'm not a billionaire. >> maybe not a billionaire, but sir martin sorrell did

assemble the world's largest advertising agency, wpp, with 140,000 employees. why is this worth it to you? >> to be brutally frank about it, we have a large number of our clients here and a large number of people who aren't our clients, so from--to use that terrible phrase, "from a networking point of view," it is a little bit like, if i can just put it like this, shooting fish in a barrel. >> and exotic fish at that. davos is invitation-only. corporate memberships cost from $30,000 to $500,000; and then it's 18 grand each for the coveted white badges that grant entry and are worn like jewelry. you know, i've noticed that there's something that i like to call the davos glance. when you meet someone, they do not look you in the eye. they look you in the chest. >> well, no. they look you in the eye first, then they look down at your chest. the other thing they do is look over your shoulder for the next one. >> to see who else is coming into the room?

>> exactly. [ticking] >> it isn't all business at davos. what is the coolest that has happened to you in all your trips to davos? >> probably the audi challenge. >> when 60 minutes on cnbc continues. [ticking] the great outdoors... ...and a great deal. thanks to dad. nope eeeeh... oh, guys let's leave the deals to hotels.com. ooh that one! nice. got it! oh my gosh this is so cool... awesome! perfect! yep, and no angry bears.

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for 60 months. come in now for the best offers of the model year. >> the a-listers at davos included 28 heads of state, and about 1,000 ceos, all lining up to see one man, >> professor. >> how are you? >> a little-known german business professor who started the forum back in 1971. professor klaus schwab greets presidents and rock stars, but as we tried to catch up with him, schwab told us that titles don't matter at his forum. >> you have to send your ego home, and you re-find it when you come back. >> but not here. >> not here. not here. >> after 40 years, schwab is still the head of the nonprofit foundation that stages the forum. your office is behind the xerox machine and a coffee maker.

>> exactly. like we are very tight. >> his forum works like nothing else in part because it isn't formal or official. it turns out people who can't be seen together in public can meet here. in 1989, north and south korea spoke for the first time at davos. when the berlin wall fell, german unity started at davos. and in 1992, mandela and de klerk began the conversation that ended apartheid. queen rania of jordan told us that warring factions in the middle east meet here when no world power can push them together. an arab and an israeli could run into each other in the hallway in this hotel. >> absolutely. absolutely. and not feel they have to pander to, you know, media or to the-- or to be politically correct. but they can actually deal with the core issues at hand, and god knows that we need all the help we can get with the middle east peace process, because at the moment, it's still a deadly stalemate,

and people are beginning to lose hope. look at iraq. >> her majesty knows strategic territory when she sees it. she's been coming to davos for six years. you're a bit of a pro when it comes to working davos. tell me how that happens. >> lot of the work is done just sitting in the cafeteria in the congress hall and just seeing people pass by and discussing things. >> the queen hangs out in the cafeteria? >> i enjoy hanging out in the cafeteria. i'm going to do it this afternoon, actually. it's fun. >> and sure enough, that's where we found her, promoting her project to build classrooms for the 72 million kids in the world who have no school. the woman on the right is melinda gates, the richest woman on earth. imagine what that conversation is like. >> klaus schwab told us that davos is where melinda's husband, bill gates, first met the world health organization and got the idea to give away billions for immunizations. >> they became aware, probably,

of the need to act, particularly in this field. scott, i have to rush down to-- korean president. >> the korean president. busy busy. >> i have to introduce him. >> off you go. >> see you later. >> see you later. >> yeah, thank you. >> how did schwab pull this together? >> well i think he had the vision. i mean, like everything in life, you know, you have a strong vision. >> but he didn't exactly pull this together with the force of his charisma? >> i think that's a little bit unfair. >> you know what i mean. >> if he'd been a larger-than-life character or personality, which is the sort of thing you are getting at, maybe he wouldn't have been able to do this. >> it turns out there are two davoses: one you see and one you don't. after hours and behind the windows, there are hundreds of private parties where deals are done. we got a look behind the door at a dinner hosted by the executive recruiting firm heidrick & struggles. davos makes a point of inviting

new companies with bright ideas, and this table paired investors with alan barton, who has a new way to make building materials out of old tires. when you leave here, what are you going to have that you didn't have before? >> plenty more contacts. so people you can work with, people you can call, people who have been through some of the same challenges and might have solved the problems that you're trying to solve. >> one of the biggest connections that klaus schwab ever made was when he first invited a little company with a silly name. eric schmidt is chief executive of google. >> davos is the one place where all of the pieces of the tech industry assemble. all the telecommunications, all the hardware, all the software. and remember, we all need each other. we never meet anywhere else in the world. >> when google was in its infancy, was davos important to its growth? >> davos matters to companies at a certain scale. as a small company, you get your product, you have a local market, no problem.

there's a point at which you need to be able to reach globally. there's a point at which you need to be able to talk to all the other companies. at davos you can do that, and that was very helpful at the time for us. >> it's an accelerant, if you will, when you come here to the global stage. >> yeah, absolutely. >> what is the coolest thing that's happened to you in all your trips to davos? >> probably the audi challenge. [laughter] >> one of the few diversions set up for the week is a race track. it's all very serious business, but there's one thing about being in the room with some of the leading experts in the world. it can be pretty dull. so some of the ceos come out here to the audi test track to drive insanely on the ice. the audi people say the ceos can clear their minds. whoa! there goes a cone! but in 2010, no one wanted to be seen having fun, given the spin out of the world economy.

the talk in this closed-door meeting was about clamping down on the world's banks. bank regulation was a major theme that wouldn't have drawn much of a crowd a couple of years back. two years ago, there were economists here at davos who predicted the great economic crisis that we found ourselves in, but it doesn't seem like anybody was listening then. >> it's a little bit like in church. the person who gives the sermon on sunday, you cannot keep responsible for what the churchgoers do on monday. >> klaus schwab's sermon on the mount is meant to bring social conscience to the pursuit of money. his disciples come to themountar because the world is constantly changing and there may be no better place to make a deal. >> the rich and powerful still flock to davos each january, and in 2011, they lined up to hear gao xiqing, who wanted to

reassure his audience about china's sovereign wealth fund. that's this edition of 60 minutes on cnbc. i'm steve kroft. thanks for joining us. captioning by captionmax www.captionmax.com >> this is a cnbc original. >> like the cartoon bird, we never know when our day will come. so, we laugh it off. but whether by tnt or simply old age, sooner or later, we're all going to be strumming that golden harp. every year in the united states, 2 1/2 million people leave here for the hereafter. and it's not free. death isn't just a certainty. it's an industry. tonight, everything you didn't know about the business of death. the funeral director... >> everything has been itemized