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tv   Bloombergs Studio 1.0  Bloomberg  March 2, 2019 5:30am-6:00am EST

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♪ david: he's the son and grandson of rabbis. after thinking about a career as a journalist he ended up at prestigiousw in a law firm. michael chertoff felt the need to serve a larger purpose. he went to become a federal prosecutor, putting mob parses behind bars. -- mob bosses behind bars. his defining moment came on the morning of 9/11, as head of the criminal division at main justice, he rushed to fbi headquarters to handle the crisis with fbi's bob mueller, who reported to him. national security became his calling.
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he went on to serve as the leader of the newly formed homeland security. he's now back in the private sector after a long career in government, working with major corporations on personal and cybersecurity. but his focus remains where it has been for nearly 20 years, keeping america, its people, and its institutions safe. on today's "big decisions," michael chertoff. welcome to "big decisions." michael: good to be on. david: you have a career in public service and in particular law-enforcement. what brought you to that? michael: i went to law school, graduated, clerked for several years for a supreme court justice and went to a law firm. as i tried to understand what was attractive in the law, doing something that was more than just shuffling assets back and forth or trying to deal with one company's business problems, something more was required as far as i was concerned. to me, issues of criminal justice, freedom, liberty, started to be really appealing.
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when i thought about, how can i get involved in that line of work, what can i do that would inject me into dealing with those issues, it seemed that becoming part of the department of justice would be the most obvious way to do it. after a couple of years in practice, i applied to a few u.s. attorneys offices. i also had done a little bit of trial work in practice, and i enjoyed trying cases, and this was an opportunity to do more trial work. that is what launched me on public service. david: apart from clerking, your first job in public service was assisting the united states district attorney of the southern district of new york. what makes that office so special? michael: it has a history of high-profile cases and high profile district attorneys. in new york, from the standpoint of business crimes, they are the most sophisticated schemes to be encountered anywhere. if you're dealing with organized
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crime, which is what i did, the center is in new york, where the five families of the coso no stress were headquartered -- kos ra werera -- cosa nost headquartered. if you are dealing with corruption, new york has more than it share of corruption cases. david: did you choose the mafia or did the mafia choose you? michael: i came in and the u.s. district attorney tried some small crimes, and my unit chief came to me and said rudy giuliani an idea for doing a big case against the board of directors of the mafia. he got this idea reading memoirs that talked about that commission. he said, he would like you to work with him on putting the case together and he will try it and you will be his second chair. i wound up working on that case for about a year, year and a half, put it together. we indicted bosses of four of the five families.
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one was sick and one got killed, andever made it to trial, some other senior mob officials. my colleagues came to me and said, we'll is that this was can happen, but rudy is going to try a different case, and this is the same time as the commission case, so you will be first chair. it was a little like that famous play "all about eve" where the understudy steps up. that threw me into trying that case. david: that is a huge battlefield promotion. were you ready? michael: one thing about the culture of the office -- and i had two other colleagues on the team with me -- you learn to work hard and never let up, but you learn that if you work hard and you are thoughtful and strategic, you can stand up in court against anybody. it was a great lesson under fire to see how that played out.
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the good news was everybody got , convicted of every crime, so it was a total victory, that i -- but i would say it taught me a lot about dealing with high-pressure situations with a lot of public visibility, where you cannot afford to lose. david: you must have been up against fairly experienced criminal defense lawyers. did the more senior lawyers try to intimidate you? they must have known you were a junior. michael: i would say it's part of the culture of the u.s. attorneys office, the defense attorneys were always respectful of the intelligence and hard work of the assistants. and to be honest, we had good evidence against most of the defendants. we had tapes, photographs, cooperaters, some high-level mob people. i think by representing himself, persico did not help himself.
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there was a very dramatic period of time when the main witness against him, his cousin by marriage, who had harbored him when he was a fugitive and testified against him, when persico cross-examined him, as you listened to the cross examination and the thuggery, i thought to myself, if you want an exhibit of what a mob boss looks like, this is exhibit a. david: this is not the last time you were young for your job. when you became u.s. attorney in one of the you were youngest, i think in history. michael: i was in my 30's. after i did the commission case and did some more crimes, i got a call one day, in 1987, that the new u.s. attorney in new jersey was looking for a first assistant. he was a very experienced appellate lawyer but he wanted someone with trial experience. his name was samuel alito. now justice alito.
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i went over and i interviewed and became his first assistant, and did some trial work there. we have some very interesting cases, including the mayor of jersey city, who was convicted of bank fraud, and some other cases. when he went up to the court of appeals in 1990, as a first assistant, i succeeded him. that made me about 36, 37 years old. david: what would the current michael chertoff tell the young michael chertoff who became a young u.s. attorney in his 30's? michael: i would say enjoy this because it's probably the best job you will ever have. it was really a great job. i did continue to go to court i , did not give that up, but it was the first job i had where there was a significant public dimension, where you announced cases, sometimes you had some controversies. we had the infamous kidnapping of the exxon executive who was
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killed, when one of his security people kidnapped him and locked him in a storage shed. may be the most controversial was the chief judge of the state of new york, who was convicted of threatening his girlfriend in order to basically try to manipulate her into reinvigorating their relationship. he ended up ultimately pleading guilty. that was a very visible case. the judges in new york were shocked and not happy that we were prosecuting him. but i had a very clear rule, we are going to treat everybody equally. if we go after some poor schmuck in a new york, were going to do the same for the rich and powerful. i believe that equal justice as a fundamental tenet of the rule of law. david: between being a judge and running homeland security, it
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must have been entirely different. which do you prefer? michael: more of the constant churn. ♪
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♪ david: being u.s. attorney in new jersey may have been the most enjoyable of your jobs. which was the one where you feel like you made the most difference? michael: probably being head of homeland security's most significant in terms of reach. in terms of a single episode, i would say september 11, 2001. i was newly sworn in as head of the criminal division. there was no homeland security in those days. any domestic terrorist event was handled by the department of justice, the fbi and criminal division. i have been on the job maybe three months. i was going to work, i had a clunky car phone. i was talking to my deputy.
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he said, i have the tv on, a plane hit the world trade center. probably like a lot of people, i thought this is a private pilot who got turned around. as we talked, he said another plane hit the world trade center, and we immediately realized this is not an accident, it is an attack. a few minutes later when i arrived, we went over to the fbi operations center. i went in there and met with my old friend bob mueller, a familiar name these days, who was in the job of fbi director. what we had to do was figure out how do we stop the next thing? over, we heard about the plane hitting the pentagon. then there was the fourth plane that we were tracking and the passengers took down in shanksville. we did not know how many attacks there were going to be. that day and the next day and the next day, it was about doing
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everything we could to follow every thread to make sure there would not be another attack. that is -- to have the president basically say to the attorney general, don't let this happen again. to know you have thousands of lives in your hands, that is a very sobering experience. and i have to say, no one else got killed that day after those four planes went down, and we managed quite successfully to seriously cut back on the terrorist threat, but not without a lot of work and a lot of re-architecture of the legal system. david: you described the build up to 9/11, we were prepared for the wrong war. we had radar systems that we did not anticipate, primitive hijacking. what are the risks today that we are doing the same thing? michael: that's a great point. even from the standpoint of terrorism we did focus a long , time on the issue of wmd, chemical, biological weapons, and built some capabilities to deal with that. one of the reasons it was knock al qaeda out
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of afghanistan and attack isis where it has territory is because when you have territory and you are a terrorist group, you can start to experiment with real lethal weapons of mass destruction. attacks, there was a sense that the cold war is over and we are dealing with a new threat. i remember famously mitt romney was asked, who was our biggest rivalry, and he said russia, and barack obama made fun of him. it turns out russia is back. we need to go back and look at all of the national security plays we had back in the 1980's and see how those translated into where we are now. ,an and age of computers artificial intelligence, and when we are dealing with great power rivalry. david: china might be a bigger rival in some respects than russia. let's talk about 5g and huawei. there is an indictment in the
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eastern district of new york. how big is the threat from china on cyber? michael: china is probably our more serious rival in terms of cyber. i want to step back. the russians in my view have a -- russians in my view do not have a long game. they are in decline. oil prices buoy them but people are not clamoring to buy russian technology for their telephones. china basically has a growing, strong economy, a large population, and they are advancing in innovation and producing tech products that are widely sought-after in other parts of the world. the challenge is, they use these tools as weapons and -- in geopolitical conflicts in order to position themselves to become dominant in the region and maybe globally, economically, and in terms of their force potential.
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i think we need to view them as a serious competitor. it does not mean they are an enemy and it does not mean we cannot work together, but it means we need to be wary of putting ourselves in a position where we are relying on their technology and goodwill for critical infrastructure or critical national needs. david: the integration between commerce and security is much closer today than it was back in the cold war days. if you are really going to go after things like cybersecurity, can you do that without affecting, for example, trade relations and supply chains? michael: that's exactly right. because the doctrine of conflict now, as you see articulated by chinese thinkers and russian thinkers, is information control is a critical weapon in geopolitical struggles. the chinese also don't necessarily regard the distinction between commerce and government, or commerce and security as we do, two separate spheres.
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they view commerce as an element, again, of a toolbox you can use to achieve parity and maybe even dominance. that should not surprise us, if you go back historically hundreds of years, the west used commerce as a geopolitical tool in order to advance itself. what has really happened is we discovered we were playing checkers, the chinese were playing go, and we have to change our game if we are going to match them in terms of global position. david: do you use email, are you on social media? michael: i don't do social media. david: at all? michael: at all. ♪
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♪ david: you went from being a judge to running a department with over 200,000 people. what were the management challenges? what prepared you to manage over 200,000 people? michael: i learned something interesting. my training as a trial lawyer stood me in good stead. what i learned as a lawyer, what i put into practice was the ability to understand issues and facts quickly and efficiently. i also learned to listen to both sides and maybe most important, i learned to make a decision. something people come to afterward is even when they didn't get what they wanted, to be able to walk out of the meeting and we are done and it is decided, people feel relief.
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i think what people don't like, let's constantly put it off. i learned, very few decisions get better with age. make them, and you make mistakes sometimes, they don't turn out like you expect and you have to recover and adjust. i would say from a management standpoint, the ability to make decisions quickly and confidently was probably the single most important facet. david: between being a judge and running homeland security, the template must've been entirely different. relatively few people around you, to the constant churn demand for your attention. , which do you prefer? michael: probably a constant churn. i was head of the criminal division, i was used to a lot of things happening very quickly. as soon as i became a judge, we got a call from the clerk's office, i was an appellate judge, not even doing trials, i was doing appeals. they asked my assistant, could the judge, able to handle an
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emergency? i said, i can stay as late as i need to today. they said, not today, in the next few weeks, can you get around to doing this? i said to myself, wow, you are not in kansas anymore. i think probably temperamentally, fast-moving things are a little more my style. david: and now, you are a businessman. you have created a business, chertoff group. explain what that experience is like because that is something you've never done before. michael: i have never done it before, but i will say that i had in mind the following principles -- i wanted to be successful economically, but in addition to doing well, i and my partners wanted to do good. we wanted to feel what we were doing was meaningful. so the idea was to use that set of skills and set of intentions and find clients and customers that would see value in having that security. always making sure we are ethical, that we are operating in the interest of the united states, and that we can really add value.
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it has been rewarding to do that. david: an important part of what you do is advise ceos, senior business leaders, about risk. what is the biggest blind spot you think ceos have today? michael: the biggest challenge, and i am also on boards and see from that standpoint, some of the problems seem so complex that there is a tendency to throw your hands up and go, it is too much to deal with and i hope i am lucky. part of that is a misunderstanding of what is a reasonable expectation when it comes to managing risk. i found both in dhs and in money private activities, this may be the biggest misnomer. many people think, i have to eliminate risk and the security threat. you can't. even if you stay in bed all day, there is a risk the ceiling will fall down on you. you have to manage the risk. that means you need to understand what is a tolerable level of risk and consequence? and on the other side of the
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balance, what are you prepared to spend to lower that? where those two lines cross is where you want to manage risk. david: investors often think in terms of sectors. as you have experience across different sectors, are there some sectors that inherently have a higher level of risk than others? michael: i think the financial sector, obviously, because so is engaging in is online transaction. trust is enormous. i know they are very focused on the issue of security. critical infrastructure, things like power grids, again, very focused on security. there could be loss of life or serious damage to property. and then, the health care industry is now getting more focused because they realized with hippa and other regulations, if their data gets stolen, it could be a corporation threatening event. that strikes me as three sectors
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where there is increased sensitivity to risk. deal: let us know how you with these issues. do you use email, are you on social media? how do you protect yourself and your company? michael: i personally don't do social media. david: at all? michael: at all. we do some social media but , we are very careful. it is about risk management. i don't think we will get somebody trying to hack or do something, steal credentials, but that we build backup systems in place. we monitor. we train people about phishing so that when you get an email and people want you to click, you know to not do that without getting a confirmation. we call our security folks, and nine times out of 10, it is something bogus. david: when you go to a foreign country, do you not take your
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cell phone or take the sim card out? michael: when i go to the u.k. or europe, i take my devices, if i go to china or russia, i bring a separate device. david: i think it is fair to say you are an authority on risk. what is the riskiest thing you have ever done? michael: wow. i am sure some of it, when i went to the u.s. attorney's office some people said why did you do that? why did you leave a good law firm job? i like to think it was a calculated risk. i weighted the positives against the negatives. there was not much downside risk. i'm sure i've traveled places that were risky but i try to be prudent about it. david: you said you made a conscious decision to go from the law firm to the u.s. attorney's office. how many of these extraordinary moves you made in your career have been because you said, i want to do that, and how many because somebody came to you and said, this is maybe something you haven't even thought about?
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michael: i've always been open to the latter, that someone might come along that i didn't envision. although i've had a plan. if it seems like it makes sense and was something i wanted to do, i would deviate from the plan. i remember in the mid-or late 1990's, i was in practice and asked to be the council to a new el to a new jersey senate committee to investigate racial profiling. it is not something i normally would have done. i accepted it and it was a really rewarding experience. it was a great bipartisan effort by republicans and democrats to get to the bottom of why there was racial profiling on the highway. it produced some really positive results. i did not look for being a judge, although it was an obvious thing to do at a point in my career, and i certainly did not look for the homeland security department, but when that came, because of my experience on 9/11, i was
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committed to seeing i can do anything to protect the country. david: michael chertoff, thank you very much. ♪ so with xfinity mobile
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yousef: you are watching the "best of bloomberg: middle east." here are the stories driving. this week. >> oil takes a tumble. the cartels urged to relax and take it easy. yousef: the dubai benchmark breaks above its 100-day moving average. is the bounce back sustainable? manus: and president trump extends the china tariff deadline, boosting markets. yousef:

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