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ANDERSON COOPER 360 DEGREES

Pres. Obama Takes World Stage; Securing the Summit; Madonna's Adoption Controversy; The Obamas' Royal Debut

Aired March 31, 2009 - 23:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(COMMERCIAL BREAK)

ANDERSON COOPER, CNN ANCHOR: Tonight, President Obama in London. The President and first lady arrived just hours ago; there is their arrival. Right now, they are bunking down at Winfield House, which is the American ambassador's home in London.

Tomorrow, a round of big-name visits, including an audience with the queen, and then Thursday's summit with nothing less than the global economy at stake. Leaders of the top global economies gathering, all of them hurting, but the problem is, each has a different prescription for stopping the pain.

Mr. Obama's mission, to listen, says spokesman Robert Gibbs but also he adds, to lead.

Here's Ed Henry with the "Raw Politics."

(BEGIN VIDEOTAPE)

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): With tension building on the eve of the G-20 Summit, a low-key arrival in Europe for President Obama. A sharp contrast from the rock-star treatment he received last summer as a candidate when he made bold promises about turning the page on the Bush years and building a new U.S.-European alliance.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Partnership and cooperation among nations is not a choice. It is the only way, the one way to protect our common security and advance our common humanity.

HENRY: But now that he's president, Mr. Obama's having trouble winning over leaders like French President Nicolas Sarkozy, who's threatening to literally walk out of the summit if leaders fail to crack down on Wall Street and create a global financial regulatory system.

Mr. Obama will also have to bring along British Prime Minister Gordon Brown, who's taking aim at unchecked American capitalism as a key factor in the crisis.

GORDON BROWN, BRITISH PRIME MINISTER: Instead of banks being as they should be, stewards of peoples' money, too many of them became speculators with peoples' futures. And I say to you this plainly: This old world of the old Washington consensus is over, and what comes in its place is up to us.

HENRY: White House officials say Treasury Secretary Timothy Geithner already unveiled tough new regulations, so the president is prepared to tell other world leaders the U.S. is leading by example.

Another sore point is the president's push for other nations to pony up more stimulus cash to prop-up the world economy which has met strong resistance of German Chancellor Angela Merkel. She and other European leaders have already passed recovery plans and are blunt about not wanting to follow Mr. Obama's deficit spending.

MIREK TOPOLANEK, CZECH PRIME MINISTER (through translator): All of these steps, their combination and their permanency is a way to hell.

HENRY: Aboard Air Force One on the way to London, White House spokesman Robert Gibbs tried to smooth the tension.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: If you total up what the G-20 nations have pledged to address the economic downturn, it represents 1.8 percent of GDP for the G-20 nations. That is a significant commitment to addressing the downturn in GDP around the world.

HENRY: In private, though, U.S. officials say while these European leaders are flexing their muscles now, they may back off at the actual summit given Mr. Obama's clout around the world.

As one U.S. official told CNN, quote, "He is more popular in some of their home countries than they are."

(END VIDEOTAPE)

COOPER: So Ed, tomorrow the president meets with leaders of countries that have tense relationships with the U.S. to say the least. What do we expect?

HENRY: That's right. He's going to have separate meetings, his first face-to-face meeting with President Hu of China, but also President Medvedev of Russia. And that's significant because there was a lot of saber-rattling under former President Putin, now the prime minister of Russia.

President Medvedev wrote an op-ed in "The Washington Post" today that was very conciliatory. It seemed like he was reaching out the United States. And I can tell you senior U.S. officials are teasing that tomorrow's meeting with the Russian president could be some breakthroughs. They are very hopeful that there maybe something that they can take away from there that would suggest that maybe there's a new day in U.S./Russian relations.

And I think that's the meeting to watch tomorrow, Anderson.

COOPER: Ed, stick around. We're going to talk to you in our panel. The president leaves at the end of a crazy month for the economy and markets. Bank plans, bonuses, bailouts, the Fed pumping a $1 trillion into the system and just yesterday President Obama's drastic action on GM and Chrysler.

Not all of it ringing a bell with Wall Street and your 401(k), but enough to give investors a boost today; the DOW up 87, a major bump this month.

Talking, of course, about "Your Money, Your Future." Ali Velshi joins us now. Ali, the markets had a good day but an even better month.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, it's actually a good day for President Obama to be out there because so many people say the U.S. is being the heart of these problems. But guess what, we're starting to see some improvement.

We probably hit the recent low in this market on March 9th, and you can see that was the Dow. This is the Nasdaq. They all sort of indicate the same thing. Look at that ride up that we've had. This is a 10.9 percent gain on the Nasdaq.

The Dow and the Nasdaq are both smaller indicators. The S&P 500 is 500 stocks; it most resembles the mutual funds that many people hold in their 401(k)s, their S&Ps or IRAs. Take a look again.

March 9th, we probably hit a low there. And then this has been up eight and a half, eight and a half percent in one month. That would make that the single best monthly percentage gain on the S&P 500 since March of 2000; the single best monthly gain in nine years.

On the Dow and the Nasdaq, it's the best monthly gain since October of 2002, so these are real gains. Now, that doesn't mean that it doesn't go back down again, Anderson, but you know, we always talk about the fact of there are three pillars on which you can build your wealth.

One is the value of your house increasing, the value of your wage increasing and we know those two are still having problems. The third one is the value of your retirement savings increasing and that's the stock market. So there's something there that seems to be happening.

And investor sentiment might be turning around.

COOPER: Well, is it that the Obama administration has been throwing basically the kitchen sink at this thing? I mean, are we starting to see the results of that or...

VELSHI: You wouldn't see the technical results of much of it. You mentioned the Fed putting about a $1 trillion into the system. We saw that reduce mortgage rates to below five percent for a 30 year fix, so that was a very specific response but the rest of it might just be the sense from some investors that there is something going on in these government. And they really are trying to get it going.

The other side of it might just be that stocks had come to a point where people thought they were bargains to get into them. So a little early to tell...

COOPER: Right.

VELSHI: ... but the fact is there's something positive happening.

COOPER: Hard to use the stock market as a barometer.

VELSHI: It is. But it tends to be -- tends to lead the other ones. If we're looking at jobs and we're looking at housing and we're looking at the market the stock market will be ahead of the rest of them.

COOPER: All right, Ali Velshi thanks. So stay -- actually stay right there. We're going to talk to you again.

"Digging Deeper" now on the president's trip, a very popular president compared to the last guy in the job in Europe, certainly. CNN/Opinion Research polling suggests that 72 percent of Americans think foreign leaders respect President Obama compared to a 49 percent figure for President Bush early in his presidency.

Back now, Ed Henry, Ali Velshi along with CNN senior political analyst David Gergen. So Ed, should the world expect actually anything concrete to come from this summit? I mean, nothing really came out of the last summit in November.

HENRY: That's right. It's good point. Five months ago, world leaders came together. They did a lot of talking about how they were going the try to stop this crisis. Five months later, situation is much worse. It shows you that talk can only take you so far. You need action.

And maybe that poll suggests that President Obama has more clout on the international stage than former President Bush. That could help him.

And we'll see over the next couple of days.

COOPER: But David, you know, there are a number of world leaders -- leaders of Germany, of Spain, France who are opposed to using government money to bail out the economies. The Czech Prime Minister called President Obama's economic policies the road to hell.

How badly does President Obama need global support to turn the economy around in this country?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, it's very striking, Anderson, for most Americans. This summit is not a very meaningful exercise. People are focused here at home.

But in much of Europe, this summit is taken quite seriously. Some of the newspapers in Europe have called it the most important economic summit since World War II. But unfortunately, even with his popularity, I don't think that the President's going to get very much out of this.

The difference is the United States have been pushing hard to get Germany and France and others to put more money in to stimulate, he has a struck out on that. You just saw Robert Gibbs, the Press Secretary of the White House, you know, downplaying it, papering over the differences.

And at the same time, the French especially, but also other Europeans, would like the United States to embrace a system of not just national regulatory changes, but super national. They'd like international bodies to regulate our financial mechanisms in the United States. And saying no to that and there's even a hint from the French as Ed Henry reported that the French might walk away.

So the appearance is right now is that there's not going to be much coming out of the summit and that could be very important in the long run.

COOPER: France's president seems to walk out of a lot of things. I have seen him walk out of interviews. I don't know.

We're going to talk to Ali in a moment about what kind of impact the global economy has on the United States' economy.

We're going to be doing a 360 from London live tomorrow night starting tomorrow night. We'll be there Wednesday, Thursday night and Friday night.

Join the live chat happening now at AC360.com. Also, Erica Hill's live web cast check that out during our breaks tonight.

Coming up later a look at perhaps the most extensive security ever seen in one place; concerns over terrors, big demonstrations, as well. All the manpower and the hardware needed to protect President Obama, Presidents of Russia, France, China's leader, the list goes on.

Also tonight, the people who are supposed to be protecting us all from dangerous medical testing, are they failing the job? We're "Keeping them Honest" and as you'll see what we uncovered could put lives in jeopardy.

Plus, Oprah Winfrey's South African school is back in the headlines. I saw a headline today saying sex scandal. This has got to be the most over-hyped story of the day. We'll tell you the facts, and not the tabloid hype.

And we'll take up the question what President and Michelle Obama should bring the queen after the President's earlier gift to British Prime Minister kind of fell flat. He gave him DVDs.

That and more tonight on 360.

(COMMERCIAL BREAK)

COOPER: Talking about President Obama's first overseas trip arriving at Stansted Airport, north of London, for the G-20 summit on Thursday. Then meetings marking NATO's 60th birthday and in Kehl, Germany and Strasbourg, France followed by the gathering of the European Union in Prague. We are back with our panel: "Digging Deeper" with Ed Henry, Ali Velshi and David Gergen. So Ali, how important is the global economy to the U.S. economy?

VELSHI: You know, I was just showing you the increase in the S&P 500 in March; this big increase that we've seen in one month. The S&P 500 are 500 of the most influential big companies.

In 2008, more than half the revenues of all of those companies came from overseas, came from non-U.S. companies. U.S. companies making money in other countries so we depend on the health of these other countries in order for our own companies to be profitable. And by the way those are companies that are held in the stocks and the mutual funds of our viewers and their IRAs and mutual funds.

The other thing is let's look at the auto industry, even without this crisis, we were downsizing in our auto industry because we're a mature economy. But in Brazil, in China, in India, and places like that, people are still going for their first car.

So we want to be able to cater to the consuming needs of the rest of the world. We may be at the end of the hyper consumption here in the United States. It's crucial to us that people in the other countries earn well and are able to buy the products that we make and invest in the companies that we have here in the United States.

COOPER: Ed, David Gergen alluded to it, but I mean, does the popularity of President Obama overseas matter much in the coming days?

HENRY: It probably matters more, yes, how he's perceived overseas here as opposed to that poll you cited in the United States because that hits home for people like Chancellor Merkel, Prime Minister Brown as well as President Sarkozy.

Each one of them have political problems back home and that's why I can tell you in private senior U.S. officials believe that there's sort of almost a little bit of bluster from these European leaders trying to, you know, throw out some fireworks here pre-summit. And they think that once they get down to business that face to face with President Obama they may have a harder time opposing him because in their home countries President Obama seems to be a pretty popular figure.

If you think back to last summer, he did have those rock star- style crowds. It's been a few months, but if anything you could argue that since he's been elected his brand is even bigger here in Europe. So they're going to be thinking about that as they negotiate with him, Anderson.

COOPER: David, you think about the way President Obama is going to interact with these world leaders in these private meetings. What do you think we've learned about his leadership style in the last, you know, two, two and a half months?

GERGEN: Extraordinarily cool, of course. Extraordinarily self confident, extremely ambitious and what we don't know yet is whether he's tough enough in private, whether he can stand up to -- you know, when people push back or whether he sort of goes along.

And what we don't know on this European trip, Anderson, he's the most popular political figure in the world today. And the question -- the leadership question for him I think by which a lot of the press at least will be judging him if that matters is whether you can translate that popularity into action.

Can he actually lead people to do things they may not want to do very much? And we won't know that until we see the results of these trips. This is a very big, important trip for him. A lot of judgments will be made about his leadership based on this trip.

COOPER: Ali, what do you think is the most important thing he can do on the world stage to improve the economy here at home?

VELSHI: Save globalization. In this global recession, you've got people in every country around the world including the United States who want to lock down. They want to impose protectionist tendencies, they want to block out trade with other countries. They want to protect the stimulus money for whatever happens in their own countries.

If the United States does enough of that, other countries will retaliate. I think he's got to get out there and put the message out that we've got to get out of this soup together and that means maintaining good trade relationships with each other, propping each other up as we get out of this over the course of the next year or so.

COOPER: Interesting stuff. We'll be there tomorrow night. Ali, David, Ed thanks.

Up next, a rare look inside the amazing security surrounding the summit, especially this Presidents; nobody is underestimating the threats.

On the other hand, are people overestimating this story? Expulsions at Oprah Winfrey's school in South Africa. We've got the facts. You can judge for yourself.

And then the newest question dogging Madonna's desire to adopt another child from Africa with all the unwanted American kids waiting for homes. Is she setting the wrong example going overseas? The answers, as Randy Cohen joins us.

And later, meeting the queen. President and Mrs. Obama got lessons on what to do and say, and there's a question of a gift; always tricky when you're dealing with the queen. What do you get a woman who's got a kingdom?

All that and more, tonight on 360.

(COMMERCIAL BREAK)

COOPER: Just hours ago the Obamas touched down outside of London, the first stop in their first international trip as First Couple. President Obama has his work cut out for him at the G20 Summit. He's not the only one with strong ideas about how the revive the global economy.

And for the secret service and the London police, the next two days are a security Mt. Everest with the city bracing for major protests and 20 world leaders in town.

Tom Foreman joins me now with a look at the security challenges -- Tom.

TOM FOREMAN, CNN CORRESPONDENT: Anderson, you are really right. What you have is the leadership of the industrialized world all in one place and President Obama's where we're going to start off with. He has about 200 security agents with him according to the BBC, he's traveling around in that heavily armored Presidential limo that we've heard so much about called "The Beast." It's capable of fending off chemical, biological and rocket attacks.

Of course, he has his own helicopters with him in case he needs to go anywhere. Marine One is there, and at any given moment, if he has to, he can get on board Air Force One which of course turns into a flying White House at the drop of a hat and he moves on from there.

Most of the time that he is meeting here he is going to be meeting over in this area right here. And I want to make this a little bit bigger and mark it so you can't miss it. This is the area where he is going to be, this section and that is really going to be surrounded by hundreds and hundreds of other security forces.

There will be road closures, even boats will be out here with scuba forces on them to keep track of anything that might come up out of the river right in here because as you may remember in Mumbai, India, the attackers came from the water. So they want to make sure there's no threat to any of these world leaders who'll be gathered over here in this area.

However, London authorities have much more turf to worry about. They're also increasing patrols over in this area in the financial district where protests are expected against targets like, say, the banks that are in that area. The Bank of England, for example, these are protests from other places around the world but many protesters are converging on this area.

Bankers are being cautioned to dress down, not to wearing ID badges or anything that might make them a target. And security will also be up over here around Buckingham Palace, Parliament, areas like that, Westminster Abbey.

Overall, London police expect to spend about $10 million and use thousands of officers in part because all of them remember what happened back in 2005. You remember that attack on their transit system when the meeting of leaders from some of these same countries was coming up in Scotland -- Anderson.

COOPER: Tom, I guess the concern is twofold, both terrorism and these demonstrations.

FOREMAN: Yes absolutely, Anderson. They have to be worried about both of them.

And I want the show you one of the concerns they have about that. One of the worries they have in this whole process is that they could have -- let me move this map aside -- they're a little bit worried that what they could have is that protesters in one area could get out of hand and that could easily be a diversion that a terrorist group could use to slip in to position to strike.

So authorities are recalling -- are relying on what is called the so-called "Ring of Steel" which is down here in London and what this is really, is a very elaborate system of cameras which can record virtually all cars coming in or out, all traffic in or out. And these are actual live pictures right now from some of those cameras.

There are thousands of them keeping track and trying to provide security for what they calling an unprecedented event -- Anderson.

COOPER: No doubt about that. Tom, thanks very much.

Coming up in the program, actually, in case you haven't heard, as unlikely as that is, Madonna wants to become an adoptive mom again. That's right. Her quest has ignited a backlash. We're going to have the latest on that just ahead.

But first, Erica Hill joins us with a "360 News and Business Bulletin" -- Erica.

ERICA HILL, CNN CORRESPONDENT: And Anderson, we begin with a new threat to Washington. Counter terrorism officials saying a Taliban chief in Pakistan has now threatened to attack Washington and the White House.

But they're quick to add it is unlikely he could actually make good on that vow. Baitullah Mehsud made the threat after claiming responsibility for Monday's deadly shootout at a police academy in Pakistan.

The body of a 19-year-old North Carolina man found in Tijuana, Mexico. Shane Pennington has been living and working in California. He was last heard from more than a week ago. Authorities say he was stabbed to death.

A new report by Standard & Poor's shows housing prices in 20 major cities fell at record monthly and annual levels in January. That index is considered one of the most accurate gauges of the housing market.

And a lot of talk about another scandal at Oprah Winfrey's private school for girls in South Africa including some very over the top headlines and here's what actually happened. The school has confirmed it recently expelled seven students for, quote, "inappropriate behavior."

Now according to some reports, the girls allegedly sexually harassed some of their school mates. No adults were involved. In a statement today, Oprah Winfrey had this to say, quote, "Indiscretions resulting in disciplinary action are common in schools all over the world. Unfortunately, because of my name these common infractions place the Academy in the media spotlight. We will not tolerate a violation of school policy and dishonesty."

COOPER: It is ridiculous. I mean, I saw those headline when I woke up this morning like another sex scandal.

HILL: Yes.

COOPER: And when you read it, OK, some kids that misbehaved or whatever.

HILL: They were a little overinflated.

COOPER: And got expelled. It happens all the time. I don't understand -- I mean, obviously I know why it's a big deal.

HILL: I was going to say, Well I believe I have an idea.

COOPER: Yes.

HILL: It begins with an "O."

COOPER: Yes. It's what happens, I guess.

All right, next on 360, Madonna's mission. New details about her adoption plans in Africa. She's still there waiting for a court case later this week. Also, how she reunited her adoptive son with his biological father. And the debate, is the child better off in Malawi or with Madonna?

Also ahead tonight, a disturbing report about the watchdogs paid to make sure that clinical drug trials are safe for the people who sign up for them. Are there holes in the safety net? That's what we're going to look at tonight. Congress says, yes, as big as a house. We're "Keeping them Honest."

And Michelle Obama and Queen Elizabeth talking over tea and sharing gifts. See what the First Lady has in store for the Royal visit in a few hours.

(COMMERCIAL BREAK)

COOPER: Well, out of the thousands of international adoptions to the U.S. this year, just one is generating worldwide attention and controversy. You can guess who's at the center of it, of course. Madonna. She is in the African country of Malawi right now hoping to adopt a 3-year-old girl.

Now, the toddler is from the same orphanage where the singer adopted her son David. Yesterday, David was reunited with his father. Madonna spokeswoman said that, quote, "Madonna and her son David met with Yohanne Banda, which is David's biological father, and reintroduced them for the first time since the adoption. Madonna is committed to maintaining an ongoing relationship with David's Malawian roots." Now, as we told you last night, Madonna has come under fire for her plan to adopt this little girl from people in Malawi who believe that she is getting special treatment to those who feel it's in the girl's best interest if she is not raised by the superstar, if she stays in her own country.

Joining us is Randy Cohen and he's the ethicist in "The New York Times" magazine and from the Evan B. Donaldson Adoption Institute, executive director Adam Pertman.

Adam, you deal with adoption issues, both domestically and internationally day in and day out. What do you think about Madonna's second adoption?

ADAM PERTMAN, EVAN B. DONALDSON ADOPTION INSTITUTE: Well, I think that unless we find out she is doing something unethical or illegal; she is doing what tens of thousands of people do. And she gets a lot of attention sort of like the Oprah story before.

The cameras are on her, so we are scrutinizing her every move and we really, really don't know yet whether what she's done is absolutely legitimate.

COOPER: And if they're stretching the rules a little bit for her because she's a celebrity, and not that most people who adopt there have to live in the country for a certain amount of time, and I think they've only had a handful of adoptions over the last number of years.

PERTMAN: Well, I'm not a big fan of stretching rules. I think that rules are made in this realm for a reason.

We're not talking about the interstate transfer of snow tires. We are talking about children's lives and we ought to be very -- we ought to be scrupulous and ethical about how we proceed.

But again, I just simply don't have -- none of us have enough information yet.

COOPER: Right.

PERTMAN: If this is a kid who genuinely needs a home and it's legal and it's ethical, I think that we ought to move out of the way.

COOPER: Randy, in your column in "The New York Times" magazine, you answer ethical questions that readers write in. You receive some on international adoption. What is your take?

RANDY COHEN, "THE ETHICIST": They come regularly, and I'm impressed with the sincerity and the concern for children that these folks have. And often they wonder the amount of money involved can be very, very high and sometimes just the adoption fees, let alone the cost of raising a middle class American children are astonishingly high. And if that money they asked, what if I instead should I put that money to helping the child directly, couldn't I do more good?

COOPER: To improving the situation the child is living in, the orphanage or the foster system?

COHEN: Sure. And you could help more children and many children and perhaps there will be no need for adoption but I think it's a -- the wrong way to put it.

That we all have an obligation to help these -- children living in poverty but it is not a particular obligation of would-be parents that we should all be helping children in need. But you might just as well ask someone who spent $25,000 to buy a new car, an unnecessary car; shouldn't that money go for children?

COOPER: Adam, there are some who say, look, a child -- I mean, those who say this child should stay in Malawi say a child is better off with the, you know, extended relatives or in the culture that they were born into. Do you buy that?

PERTMAN: Oh, I agree. I think in this country kids are better off within their biological families, within their cultures. In other countries, the same is true.

When that's not possible, adoption becomes a good option. Because children grow up better in families than in any other circumstance. There is no research that indicates that kids grow up better in institutions or temporary care.

So if we're focused on that kid, and we should be, then we have to decide what's better for her. If, in fact, there are relatives there who want to and can take care of her; that should be a first option. Again, I simply don't know.

COOPER: It's interesting, though, I mean, there are a lot of -- I think what is it? There is over half a million kids in the U.S. foster care and a lot of celebrities tend to gravitate very publicly and get a lot of attention, they're adopting kids overseas. There are people who are wrestling with the ethical implications of international adoption versus domestic adoption. What do you advice them?

COHEN: Domestic adoption is not so easy as you might think and many families find that it takes an enormous amount of time and they might end up without a child. People would prefer to do it the quickest, easiest way to start a family and help a child.

I don't think people go into international adoption lightly. They do it only when domestic adoption proves impossible for them.

COOPER: It is a fascinating topic. Randy, appreciate you being on, again. Adam, as well; Adam Pertman with the Evan B. Donaldson Adoption Institute, appreciate it Adam. Thank you.

Coming up next on 360, busted. The government sting that found key watchdogs not doing their jobs. They're supposed to be keeping people who volunteer for medical research safe. That really seems like a good idea. Wait until you see them at work. We're "Keeping Them Honest." Also tonight, tea with the queen. The president and Michelle Obama's historic meeting; from the gifts to the proper greeting. An inside look at the royal introduction.

And the bar stool scooter. Try saying that one fast. I haven't seen this one, actually. A drunk and a strange driving machine and the 911 call after his bizarre crash; and yes we have the tape and the story when 360 continues.

(COMMERCIAL BREAK)

COOPER: Companies that make drugs and medical devices stand to make billions from their products but first they need approval from the FDA. And to get approval, they spend billions each year on clinical trials. We all stand to benefit from these trials. Obviously they're incredibly important. It's how new treatments are developed.

But there are growing concerns that the people who actually enroll in these studies may not be getting the protection they're required by law to get. And now there's proof. There's reason to worry.

You won't believe what a sting operation commissioned by Congress has found. Joe Johns tonight is "Keeping Them Honest" -- Joe.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN CORRESPONDENT: Anderson, a clinical trial with real people is the final test before a company can get a new drug or device approved by the FDA. Millions of people volunteer to participate. To protect them from medical scams, we have a system of independent watchdogs called Institutional Review Boards. Many get paid to monitor the trials so patients are protected.

(voice-over): These review boards known as IRBs must register with the government but what if a review board itself was a scam, simply taking the fees but faking the reviews?

The Government Accountability Office, the GAO, did two undercover stings to test for this. The results -- shocking.

First, GAO registered two fake review boards with the Department of Health and Human Services.

UNIDENTIFIED MALE: There's no real patients; the whole thing was bogus. There were no people signed up.

JOHNS: An online application for one review board company listed the CEO as Trooper Dog. Trooper by the way is the name of a three- legged mutt who belonged to a GAO employee. And the company is named after a truck stop, but nobody checked.

They also applied online to register a company called E-Z Reviews at 1234 Phulovit Lane in Chetesville, Arizona. And yet, no one at HHS caught it. E-Z Reviews was registered to safeguard trials with humans who truly could have been human guinea pigs; which got Congress asking questions.

UNIDENTIFIED MALE: Do we have nothing in place that would have caught a fake IRB?

JERRY MENIKOFF, DEPT. OF HEALTH AND HUMAN SERVICES: Congressman, the system currently is designed in a way that you gave a registration with some cute names that, again, had spelling errors and other things. And unless somebody sat there and tried to pronounce the names and the addresses, they would not pick up the things that seem incredibly obvious right now.

JOHNS: Seems obvious enough. In GAO's second undercover sting, investigators set up another bogus outfit and this time approached established review boards. The fake company told IRBs it wanted to apply a bogus gel called Adhesiabloc to women's abdominal cavities to help healing following surgery.

Investigators purposely failed to list 97 percent of the ingredients in the gel. Two review boards rejected the proposal outright calling it "awful" and "a piece of junk;" "the riskiest thing I have ever seen." But one company Coast, IRB from Colorado took the bait. Its board voted unanimously to approve the proposal noting, quote, the gel is probably very safe.

Eventually Coast executives found themselves trying to convince Congress the bogus gel would be really safe.

DAN DUEBER, CEO COAST: Well, this product wouldn't kill people and we know that. Our procedures are...

UNIDENTIFIED MALE: Tell me, when's in this bottle? How do you know this won't kill anybody?

DUEBER: I'm not a scientist. I can't answer.

UNIDENTIFIED MALE: You keep saying this product wouldn't kill anybody. Our Adhesiabloc wouldn't kill anybody. You don't even know what's in it.

JOHNS: By the way, the gel never existed. That bottle is just a prop the committee made up.

"Keeping them Honest," we asked Coast CEO Daniel Dueber how his company could approve the experiment.

DUEBER: Unfortunately, you know, we got hoodwinked by a very, very sophisticated fraud. We didn't do anything wrong. We didn't break any laws. We followed all the rules of the FDA that -- what they require of IRBs.

JOHNS: But the day after the interview, the company sent CNN a statement admitting its system was vulnerable and listing 12 reforms to its procedures.

(END VIDEOTAPE) JOHNS: The government says there are other systems to catch cheaters in the human experimentation business which begs the question, are existing rules good enough -- Anderson.

COOPER: Joe thanks so much.

Still ahead tonight, the first lady meets her majesty. When Michelle Obama has tea with Queen Elizabeth tomorrow, what exactly does that involve? What would be the perfect gift to bring? Will the Corgis be there?

We'll dig deeper on all of these important questions. Plus, we'll talk to a royal expert about the dos and don'ts of meeting the queen in the 21st century.

Plus serious stuff; President Obama riding a wave of popularity in Europe, he'll need every drop of it. The challenges that await him at the G20 summit, ahead.

We'll be right back.

(COMMERCIAL BREAK)

COOPER: In just a few hours, the president and Michelle Obama will be escorted into one of the 775 rooms of Buckingham Palace and they're going to have tea with Queen Elizabeth. Her majesty turns 83 next month; she has reigned over the British monarchy for more than 50 years.

For the president and Michelle Obama, the meeting will be formal but the question is how formal? Do they bow? Does she curtsey? Exactly what are the rules of etiquette? We're going to find that out in just a moment.

But first, the gifts. The Obamas land in the U.K. armed with goodies for the people they'll see including the queen. But how does the new administration figure out what to give the woman that has everything?

"Up Close" tonight, here's Erica Hill.

(BEGIN VIDEOTAPE)

HILL (voice-over): Just before 3:00 p.m. Eastern time, the moment Europe has been waiting for. President and Mrs. Obama have arrived. While her yellow dress is likely already sparking a fashion debate, it's not the only choice people will be watching.

One of the first tests of protocol for the Obamas, gifts.

LETITIA BALDRIGE, FORMER WHITE HOUSE SOCIAL SECRETARY: What the Kennedys always used to bring and which always scored beautifully was something historic. They would buy an historic letter; they had one from Lafayette to George Washington, which they gave to General De Gaulle.

HILL: Letitia Baldrige was Jacqueline Kennedy's White House social secretary.

The goal for gifts to a head of state? Be thoughtful. And hopefully avoid the outrage surrounding the 25 DVDs President Obama offered to British Prime Minister Gordon Brown when he visited Washington in early March. The classic American films were met with a penholder carved from the sister ship of the vessel whose wood was used to make the desk in the Oval Office.

The British press railed. Lesson learned.

But what about the other lessons like whether or not to curtsey when meeting the queen?

DEBORAH STROBER, CO-AUTHOR, "THE MONARCHY": I hope they have been told not to grab her hands and shake them vigorously. Not to touch the queen in any way and to allow her to speak first and raise each topic of conversation.

HILL: That test comes Wednesday afternoon when the president and Mrs. Obama join Queen Elizabeth for tea. As for the curtsey, royal watcher Strober says it is no longer required.

One of the most important things the Obamas can do, be themselves. And don't be afraid to make a mistake.

BALDRIGE: If you also make a terrible boo-boo, which I myself have done many times, you know how to apologize. You apologize effusively. Make everyone laugh, make everyone laugh because they're all feeling such pain for you.

HILL: Two Obamas who won't be feeling any pain, first daughters Malia and Sasha. Just because they didn't make the trip doesn't mean they're missing out.

The beauty of this gift protocol, the kids get them, too.

(END VIDEOTAPE)

HILL: In fact, according to Letitia Baldrige, she said she remembers Caroline and John used to get -- in her words -- truckloads of fascinating toys and things because people loved to buy things for the presidential and royal children.

COOPER: So how many -- who gives gifts to whom? I mean, it seems endless.

HILL: According to Letitia, everybody, it seems. You know, there are generations of people that you need to buy for in the family itself. And then she said pretty much everybody involved at least the way it was when she was a part of these administrations gets something. Even if it's a commemorative key chain for secret service members to remind them of this experience that they had.

But the curtseying, just to say quickly, it is a skill. And while Mrs. Obama may not need to worry about it, just in case, some of our intrepid crew members did put together a little -- I believe, a little primer as they say.

COOPER: A primer.

HILL: There we have it; a fine showing. Bob, I knew he would bring it. Adrianna, representing the ladies.

COOPER: Look at that.

HILL: You know, Adrianna was a debutante, which explains why she has such a nice curtsey. I learned that tonight.

COOPER: Very nicely done. Erica, thanks.

Next on the program -- let's do the "Beat 360" right now, shall we?

HILL: Why not?

COOPER: Our daily challenge to viewers to come up with a caption better than the one that we came up with for a photo that we put on the blog every day. So tonight's picture: President Obama and first lady Michelle Obama stepping off Air Force One outside London today arriving for the G-20 summit.

Our staff winner, Joey...

HILL: A shock, it's Joey.

COOPER: He is on a streak.

His caption: "And remember, please don't fist-bump the queen."

HILL: Looks like Joey wins.

COOPER: That's true.

Our viewer winner is Jon from an undisclosed location. His caption: "I'm going to break the ice by saying, 'You're way better looking than Helen Mirren,' then you give her the 'Yes, We Can' T- shirt. And if she looks like she's going to ask to borrow money, we'll tell her we've got jet lag."

HILL: I got you, Jon.

COOPER: I messed up the reading of it. I apologize, Jon. Your "Beat 360" T-shirt, though, is on the way.

COOPER: So, when the president and first lady do meet the queen, how do they treat her like a queen? From curtseys to conversation, we'll talk to an etiquette expert to give all the rules of royal treatment, coming up.

Also take a look at this contraption, it's a motorized bar stool. Now imagine driving it drunk. One guy did, crashed. No surprise there. His friend called for help. The story coming up. Listen to this. (BEGIN AUDIO CLIP)

911 OPERATOR: 911

UNIDENTIFIED MALE: I've got a friend here that wrecked a bar stool. Hit the pavement with his head.

911 OPERATOR: Ok. But he fell just from the bar stool?

UNIDENTIFIED MALE: No, he was riding a bar stool.

(END AUDIO CLIP)

(COMMERCIAL BREAK)

COOPER: Even before they meet President Obama and Queen Elizabeth are standing side by side. In wax, that is.

Leave it to the folks at Madame Tussauds in London to get the P.R. machine working with this timely new attraction. The figures are impressive. The president's smiling. We can't tell if the queen is amused or annoyed.

You can find them near the Albert Einstein and Amy Winehouse collection apparently. Maybe that's what she's annoyed about.

When the president and Michelle Obama are introduced to the queen, what exactly is the proper greeting? From the correct formal address to a curtsey or bow, is there a tradition code of behavior to follow? We heard a little bit about it in Erica's piece.

Let's talk now with a royal expert, Jacqueline Whitmore is an image and etiquette consultant and joins us from Palm Beach. Jacqueline thanks for being with us.

Michelle Obama, does she have to curtsey? What is the president expected to do?

JACQUELINE WHITMORE, IMAGE AND ETIQUETTE CONSULTANT: Hello, Anderson.

Absolutely not. Michelle Obama is not required to curtsey or bow. In fact, bowing is not required of U.S. citizens. And please don't kiss her hand.

COOPER: No kissing of the hand. Unless she reaches her hand out first, and then you shake her hand? Is that how it works?

WHITMORE: That is exactly right. She should extend her hand first. And then if she extends her hand, the Obamas should extend their hand.

COOPER: Now, a lot has been made of Michelle Obama's sleeveless dresses. Would it be a mistake for her to wear a sleeveless dress while having tea with the queen? WHITMORE: I would advise Ms. Obama not to wear a sleeveless dress. Number one, it's going to be chilly over there. Number two, I think it's going to be a more conservative environment. I picture her wearing something with sleeves, to be quite honest with you.

COOPER: What happens during a tea reception with the queen? What are they served? Obviously tea. Do they eat?

WHITMORE: Well, it depends on the time of day. And I'm assuming it will be sometime in the afternoon. And yes, food will be served. However, you stop eating when the queen does. I would personally take a few sips of tea. I would take a cookie and not touch it because she's going to ask a question.

COOPER: I'm guessing she's not serving sloppy Joes. It's got to be little finger sandwiches, or little -- not so tasty cookies?

WHITMORE: Right. Some petit fours, maybe some scones with clotted cream.

COOPER: Clotted cream? What's clotted cream?

WHITMORE: Devonshire cream, something really, really decadent and scrumptious.

COOPER: Is that like Cool Whip?

WHITMORE: You would love it. It is like Cool Whip. Yes, it is.

COOPER: I like the Cool Whip.

WHITMORE: Like frosting on a cake.

And you would also address her as Your Majesty. Not Liz, not Elizabeth. Her mother probably is the only person who calls her that.

COOPER: Why is it that you're not allowed to talk to her until she talks to you?

WHITMORE: Well, it's not that.

COOPER: Which is actually the rule for anchors around here as well just in case you were wondering.

WHITMORE: Well, I was wondering that actually. But no, that's not the case. She's -- they're there for social purposes, to build the relationship. So I do recommend that the Obamas talk about subjects that are near and dear to the queen's heart. Like her dogs. Like her horses.

In fact, since the Obamas are looking for a dog, they may want to talk about that.

COOPER: Oh, my God, that's the perfect conversation starter.

WHITMORE: Wouldn't that be great? COOPER: Totally. I hadn't thought of that. You're brilliant. Yes. They can talk about the dog and she can talk about how great Corgis are.

WHITMORE: That's it. So, that would be my suggestion, sure.

COOPER: I've never seen the Corgis myself, but I like dogs.

WHITMORE: You know, you never turn your back to the queen. And when...

COOPER: Really?

WHITMORE: That's right.

COOPER: So when they leave, they have to like walk out backwards?

WHITMORE: What will happen is the queen will exit the room first. And then the Obamas will exit the room. Or they'll either exit together.

COOPER: You know that as soon as they exit the room, they're going to look at each other and be like, you know, that was that. That was interesting, you know?

WHITMORE: Well, you know what, personally, I would be quite nervous meeting the queen. And I think the Obamas would probably be a little bit nervous, too, because obviously the queen is, I would think she would be a very intimidating woman, don't you?

COOPER: I think she would drink anyone under the table. And I'm sure she knows how to have a good time, better than anyone. So, I don't know.

I'm sure she's very intimidating. But I'm sure the Corgis will loosen it all up.

WHITMORE: Well, the good news is the Obamas are very sophisticated and I think they'll do a fine job.

COOPER: Well, they're more than able to handle it, yes. Unlike me, yes. Jacqueline Whitmore, appreciate it. Thanks very much.

Thanks for your expertise.

WHITMORE: Thank you.

COOPER: You can bet you won't catch the queen riding on this, although, you never know around Buckingham Palace.

A motorized bar stool -- that's right, bar stool. This contraption led to a guy's arrest. We have the 911 calls. It's our "Shot" next.

Also ahead, how will President Obama be greeted not by the queen but by the world leaders in London? We'll have the latest on that from Ed Henry. We'll be right back.

(COMMERCIAL BREAK)

COOPER: We saved the best for last. Erica, a story that's hard to believe but of course, it's happened. We're making it "The Shot."

For one Ohio guy, the bar's always open and running. This is his motorized bar stool, fashioned out of a lawn mower, or the guts of a lawn mower. A couple of weeks ago the 28-year-old owner and driver was puttering down the street, perched on his seat, plastered out of his mind of course. So much so that he crashed the crazy contraption and a friend called 911.

Here's the conversation you don't hear that often.

(BEGIN AUDIO CLIP)

911 OPERATOR: 911

UNIDENTIFIED MALE: I've got a friend here that wrecked a bar stool. Hit the pavement with his head.

911 OPERATOR: Ok. But he fell just from the bar stool?

UNIDENTIFIED MALE: No, he was riding a bar stool.

911 OPERATOR: Ok.

UNIDENTIFIED MALE: Motorized bar stool.

(END AUDIO CLIP)

COOPER: Motorized.

HILL: Of course, it was a motorized bar stool.

COOPER: It was one with the motorized bar stool. Yes.

HILL: Is that the turtle man?

COOPER: No, I think that's Charlie, our producer.

HILL: It might be Charlie.

COOPER: I think so.

HILL: The Georgia boy that he is.

You know what I noticed, though.

COOPER: By the way, he had consumed 15 beers.

HILL: And he could still -- clearly he wasn't upright for very long. But it's impressive that after 15 beers he was still upright. I would think that would kill you. COOPER: Apparently the bar machine, boozy machine, can go about 30 miles an hour. And he was charged with drunk driving. And he should have been, because he was drunk and he was driving.

I have to say, it's a good 911. It doesn't even come close to our favorite 911 call of all times, which is the police officer...

HILL: With the pot?

COOPER: ... who called 911 because he got so stoned on pot brownies he thought he was dead.

HILL: That is a good one.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: I think we're dying.

911 OPERATOR: How much did you guys have?

UNIDENTIFIED MALE: I don't know. We made brownies. And I think we're dead. I really do.

911 OPERATOR: Okay. How much did you put in the brownies?

UNIDENTIFIED MALE: I don't know.

911 OPERATOR: Was it a bag? Who made the brownies?

UNIDENTIFIED MALE: My wife and I did.

911 OPERATOR: OK.

UNIDENTIFIED MALE: She's on the living room ground right now.

911 OPERATOR: Is she breathing?

UNIDENTIFIED MALE: She's barely breathing.

911 OPERATOR: Is she awake?

UNIDENTIFIED MALE: I think so.

(END AUDIO CLIP)

COOPER: She's stoned. Just say it.

HILL: Out of her mind.

(BEGIN AUDIO CLIP)

911 OPERATOR: Can you look?

UNIDENTIFIED MALE: Pardon?

911 OPERATOR: Can you look? UNIDENTIFIED MALE: Yes, I can feel her. She's laying right down in front of me. Time is going by really, really, really slow.

(END AUDIO CLIP)

COOPER: Yes.

HILL: I hear that's how it happens.

COOPER: From what I've read, that happens.

(BEGIN AUDIO CLIP)

911 OPERATOR: How much did you buy?

UNIDENTIFIED MALE: I don't -- please send rescue.

911 OPERATOR: They're on the way but tell me, how much did you buy?

(END AUDIO CLIP)

COOPER: OK. It's good. Yes, we always have it on standby, ready just in case.

HILL: By the way, I just want to say I think it's clear that after your comments in the last segment about etiquette, you know, Cool Whip, Corgis and the whatnot, the queen drinking everybody under the table, maybe even the bar stool guy, you have a tea appointment when you go to London tomorrow, don't you?

COOPER: Yes. Not going to happen. Let's see a couple curtseys as we go to break.

HILL: Jerry, I just found out, he was kind of a debutante too. He did a bowtillion (ph) in Memphis.

COOPER: A bowtillion. Never heard of that.

HILL: Yes. Top hat, tails. Cane.

COOPER: That does it for 360. Thanks for watching.

"LARRY KING" starts right now.

I'll see you tomorrow night from London.