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THE SITUATION ROOM

Vice President Biden Visits Iraq; Gulf Coast Tourism Devastated

Aired July 5, 2010 - 18:00   ET

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


SUZANNE MALVEAUX, CNN ANCHOR: You're in THE SITUATION ROOM.

Happening now: a holiday weekend devastated by the oil disaster. Tourism plummets, leaving communities up and down the Gulf Coast reeling.

Also, a family's grief and outrage at BP over a tragic on-the-job death thousands of miles from the Gulf.

And Vice President Biden's surprise visit to Iraq, behind the scenes, critical meetings with Iraqi leaders, as the U.S. begins to pack up and head home.

Welcome to our viewers in the United States and around the world. Wolf Blitzer is off. I'm Suzanne Malveaux, and you are in THE SITUATION ROOM.

Well, this holiday weekend is unlike any the U.S. Gulf Coast has ever experienced. And the oil just continues to gush. No one could have imagined scenes like this as the country marked its 234th birthday. This video is just coming into us from our affiliate WKRG. And this is what it looks like right now at Fort Morgan, Alabama. The Fourth of July brought little to celebrate, from New Orleans where tar balls are now washing up in Lake Pontchartrain to Pensacola, where crude is staining white sand beaches.

Our CNN's John Zarrella is there for us.

John, it must be -- people must have a heavy heart when they see this, they experience the holiday. What are you getting a sense from those who are there?

JOHN ZARRELLA, CNN MIAMI BUREAU CHIEF: Well, Suzanne, if things were not bad enough here, it rained most of the day, keeping the people who were in town for the most part away the beach.

That just added insult to injury to a Fourth of July weekend that was for the most part a washout.

(BEGIN VIDEOTAPE)

ZARRELLA (voice-over): Fireworks lit up the sky over Gulf Shores, Alabama. Unlike some oil-raked communities that decided not to light up the night sky, Gulf Shores used it as a drawing card. GRANT BROWN, RECREATION DIRECTOR, GULF SHORES, ALABAMA: We are anything that we can to encourage people to continue to come and enjoy the coast.

ZARRELLA: Some came, but most didn't. On a typical Fourth of July, you would see more bodies and blankets than the sand itself. Not this year. Unlike the fireworks, the beach crowd, well, a dud.

UNIDENTIFIED MALE: You can't come down here and go swimming in the ocean. Can't go fishing. You know, it's just not even worth coming down really.

UNIDENTIFIED FEMALE: Last year, we came, we stayed in a condo with the family, the in-laws, there, and we had a wonderful time, the beach, staying at the condo, the pool. It was fun.

ZARRELLA (on camera): This year is a little different, isn't it?

UNIDENTIFIED FEMALE: This year is a little different. We didn't make reservations for the condo. We stayed at the in-laws in Mobile.

ZARRELLA (voice-over): The sentiment is reflected in the numbers. Hotel and condo bookings for the holiday weekend were down about 50 percent here.

(on camera): About an hour east here in Pensacola, more of the same, maybe worse when the final numbers are tallied. Look around, nobody here. One local popular restaurant did about $20,000 in business last July 4. This July 4, $6,000.

(voice-over): Twenty percent of Pensacola's annual tourism revenue comes during a 10-day stretch beginning with the Fourth of July.

DENIS MCKINNON, ESCAMBIA COUNTY TOURISM DEVELOP COUNCIL: From an income standpoint, it really is a devastating blow to these people to skip 20 percent of their income. Most of them don't have money put aside to try to make it through rough patches like this.

ZARRELLA: Now both Gulf Shores and Pensacola are looking forward, hoping, no, praying, they can recoup some of the losses next weekend. They have got a shot with, quite literally, sound and fury.

The sound, Jimmy Buffett performing a benefit concert in Gulf Shores next Sunday. All 35,000 tickets went in six minutes. The fury, the Blue Angels air show next Saturday in Pensacola. It usually draws a quarter of a million people. Both communities say their summer tourism seasons are hanging by a thread. If next weekend isn't a big winner, the summer of 2010 will be lost.

(END VIDEOTAPE)

ZARRELLA: And if the numbers aren't bad enough here in Pensacola, they may even get worse. The tourism authority is saying the month of July booking could be down as much as 75 percent. And over in Dauphin Island, Alabama, rentals of condominiums and the hotels there down 80 percent to 85 percent, Suzanne. It does not look good -- Suzanne.

MALVEAUX: All right, John Zarrella -- thank you so much, John.

Here are some of the latest numbers in the oil disaster from BP. More than 7,000 vessels are taking part in the response, including barges, skimmers and other boats, as well as 113 aircraft. About 550 miles of boom have been deployed, along with almost 1.7 million gallons of dispersants.

More than 45,000 personnel are working the disaster, and the cost to date has now topped $3 billion.

Well, one family's anger at BP has nothing to do with the Gulf oil disaster. Instead, they are outraged at the way the company handled the death of their husband and father, a BP employee was killed on the job.

Our CNN senior correspondent, Allan Chernoff, has their story -- Allan.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Suzanne, this is the story of Michael Phelan, who was killed while working at BP's operations in Alaska. His family says he never should have died. They say BP has been uncaring, even insulting, by blaming Mr. Phelan for his own death.

Oil worker Michael Phelan, father of three, was killed last November at BP's Prudhoe Bay Alaskan oil operations when his pickup truck pinned him against the pipeline he was inspecting.

"This was a tragic accident," BP told CNN. 'Our hearts and thoughts at the time, and since, are with Mike Phelan's family and friends.

By Dianne Phelan says she hasn't felt any compassion from BP.

DIANNE PHELAN, WIDOW OF BP SUBCONTRACTOR: I would say they have been callus and lacking in their safety. To me it even seems they don't have confident help.

CHERNOFF: Phelan was an employee of a BP subcontractor which allowed employees to work under BP's control in Prudhoe Bay. His family says Michael was very safety conscious, as illustrated in this video he sent home from the BP work site.

DIANNE PHELAN: It didn't make sense as to what they were telling us happened. My husband has been in the oil refinery business for over 35 years. He's received numerous safety rewards.

CHERNOFF: The truck that killed Phelan was found in drive, and BP's investigate report laid the blame for the accident squarely on Phelan. "An inadvertent decision error or memory error allowed the running vehicle to be left in drive. Exiting the running vehicle was done without conscious thought." The Phelan family was stunned.

MICHAEL C. PHELAN, SON OF BP SUBCONTRACTOR: When you turn around and disgrace him like that, it is hurting, it angers people, I'm just at a loss of words for it, actually. That's how angry I am.

CHERNOFF: How can a man be hit by his own truck after he stopped it and had gotten out? A sudden unintended acceleration would have been most likely in high four-wheel drive mode, but a BP investigator found the vehicle in four-wheel dry low position.

The BP report concluded Mr. Phelan was probably operating his vehicle in four-wheel drive high after investigators made the assumption that first responders entering the vehicle may have brushed the four-wheel drive shifter to move it from high into low.

And Phelan's family says there are other disturbing things in the report. The emergency kit first responders used had no oxygen mask. A bag valve mask was not available in the medical oxygen response kit, says the report, though there's no evidence that would have saved Phelan's life.

MICHAEL C. PHELAN: Not having a gas mask, an ox general mask, for somebody if they went down, that just -- I just can't even explain it.

JOHN PHELAN, SON OF BP SUBCONTRACTOR: It seems that they do whatever they can to cut corners and make the most of their money and they don't care about the employees that are working for them.

CHERNOFF: A group flew John and Michael to Alaska to retrieve their dad's body. They say the company only allowed them 15 minutes to speak to their dad's coworkers who were on the scene before they were flown out. MICHAEL C. PHELAN: We had to be really quick with it.

DIANNE PHELAN: Still to this day, we have had no contact from BP whatsoever. They have never even called and said anything to the family.

CHERNOFF: BP tells CNN its investigation was thorough and it cooperated fully with Alaska's Occupational Safety and Health Office. Mistras Group says "Michael Phelan's death was a tragic accident and our condolences go out to the Phelan family."

(on camera): To magnify her pain, private attorneys have told Mrs. Phelan she's limited to a claim under Alaska's workman's compensation law. And, under that law, she's receiving $528 a week, a fraction of what her husband had been earning.

Both BP and Mistras Group declined CNN's request for an interview -- Suzanne.

(END VIDEOTAPE)

MALVEAUX: The most recent U.S. government statistics show that 5,214 American workers suffered fatal injuries in the job in 2008, 120 of them in the oil and gas extraction industry. Of those, transportation incidents accounted for 49 of the deaths. Thirty were the result of contact with objects and equipment -- 18 involved fire and explosions, and the remaining 23 deaths resulted from other causes.

A former federal investigator is blasting BP. Is the company trying to eliminate its own internal watchdog?

Also, Vice President Biden spends July 4 in Iraq, where the stakes are getting higher as the U.S. prepares to leave.

And a woman sentenced to be stoned to death, now her children are appealing to the world for help.

(COMMERCIAL BREAK)

(NEWS BREAK)

MALVEAUX: The children of an Iranian woman sentenced to death by stoning are pleading for people worldwide to take up their cause and help spare their mother's life.

CNN's Mohammed Jamjoom has the story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: We strongly condemn the Islamic republic for its barbaric implementation of stoning, execution and torture.

MOHAMMED JAMJOOM, CNN CORRESPONDENT (voice-over): From the U.S. to Germany and through Internet postings worldwide, outcries against the imminent execution of Sakineh Mohammadi Ashtiani, a 43-year-old mother of two convicted in 2006 of committing adultery in Iran.

Already sentenced and lashed 99 times, a judge's panel re- examined Ashtiani's case and decided she should be stoned to death for her alleged crime.

Human rights activist Mina Ahadi, herself forced to flee a death sentence in Iran almost 30 years ago, has taken up Ashtiani's cause. She says there is still hope that Ashtiani's sentence could be overturned, but that it will require the dedication and commitment of activists worldwide.

MINA AHADI, HUMAN RIGHTS ACTIVIST (through translator): Legally, it's all over, we have no chance. It's a done deal.

She could be stoned at any minute, but we have experienced again and again that when we organized events worldwide, when we protest worldwide, and in particular when we contact the European governments, and these governments put pressure on the Islamic regime in Iran, sometimes we have a chance.

JAMJOOM: There's no government comment on the case. Her family says Sakineh Mohammadi Ashtiani has now been in prison for five years, even though she retracted her confession. A confession her family says she was forced to make.

In an open letter to the international community, Ashtiani's children, Fasride and Sajjad Mohamamadi Ashtiani, plead for their mother's life to be spared.

"Today, we stretch out our hands to the people of the whole world. It is now five years that we have lived in fear and in horror, deprived of motherly love. Is the world so cruel that it can watch this catastrophe and do nothing about it? We resort to the people of the world, no matter who you are and where in the world you live, help to prevent this nightmare from becoming reality. Save our mother. We are unable to explain the anguish of every moment, every second of our lives. Words are unable to articulate our fear."

That fear that their mother will be stoned to death before they are able to clear her name.

Mohammed Jamjoom, CNN, Atlanta.

(END VIDEOTAPE)

MALVEAUX: Vice President Joe Biden makes a surprise Fourth of July visit to the troops in Iraq. While he was inside the Green Zone, however, it came under mortar fire. Barbara Starr is standing by.

Also, when it comes to the latest political ads, some candidates seem to be taking the approach that, the more shocking they are, the better.

(COMMERCIAL BREAK)

MALVEAUX: Vice President Joe Biden spent the Fourth of July with American troops during a surprise visit to Iraq.

Our CNN Pentagon correspondent Barbara Starr is joining.

And, Barbara, tell us, how did the vice president's trip go?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Suzanne, U.S. troops are rapidly shifting gears in Iraq, moving towards a training and advisory role for Iraqi forces, and the vice president wanted to make sure nothing goes wrong with that idea.

(BEGIN VIDEO CLIP)

STARR (voice-over): Just as Vice President Joe Biden was leaving Iraq, a mechanical problem forced him off his plane, a reminder, sometimes, it's hard to get out of the war zone.

But getting out of Iraq is what U.S. troops are doing, 30,000 scheduled to come home by the end of August. All U.S. combat forces will be out of Iraq by the end of next year, the vice president ensuring progress does not get derailed.

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: Our commitment to you will not disappear on August 31. It will grow stronger.

STARR: Biden is the White House point man on the Iraq war. His message? Iraq needs to finish forming a new government after elections several months ago.

Biden met with former Prime Minister Ayad Allawi and Prime Minister Nouri al-Maliki, who are vying for that job in Iraq's post- election government. But while the vice president was at the U.S. Embassy, a reminder of the threat.

MAN: Please remain under cover. There is still a threat of indirect fire.

STARR: Mortar rounds fell near the embassy, this time, no reports of casualties. Still, the vice president says he sees optimism on Baghdad streets, streets he saw from a helicopter.

BIDEN: There was a traffic jam. Every road around Baghdad and coming into Baghdad was backed up bumper to bumper with automobiles. Welcome to peace and democracy. But it is the most significant sign that life and commerce and celebration has returned.

(END VIDEOTAPE)

STARR: But many people will tell you, those traffic jams in Baghdad are largely due to the dozens of checkpoints and walled-off areas throughout the city, Baghdad and Iraq still a place where security is very precarious, despite public appearances -- Suzanne.

MALVEAUX: All right, thank you so much, Barbara.

Midterm congressional campaigns are starting to heat up, and candidates are coming up with some pretty eye-catching new ideas to grab voters' attention.

Here's CNN's Jim Acosta to tell us about some of them.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN CORRESPONDENT: Suzanne, members of Congress are on break this week, but that doesn't mean Americans are getting a vacation from their politicians. With the midterms fast approaching, candidates are finding all sorts of new ways to target voters.

(BEGIN VIDEO CLIP, AD)

NARRATOR: Meet Pamela Gorman.

(END VIDEO CLIP)

ACOSTA (voice-over): If the campaign season is starting to feel like open season, it's because the ads are already locked -- and loaded.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Rated 100 percent by the NRA, conservative Pamela Gorman is always right on target.

(END VIDEO CLIP)

ACOSTA: Republican Pamela Gorman has racked up more than 100,000 views on YouTube with this spot showing the Arizona congressional candidate and her son taking target practice in the desert. That's Gorman sporting an old Tommy gun.

PAMELA GORMAN (R), ARIZONA CONGRESSIONAL CANDIDATE: We'd never imagined in a million years that it would go as far as it did.

ACOSTA: We caught up with Gorman between fund-raisers in California. She thanks left-leaning bloggers and talk show hosts for helping her ad go viral.

GORMAN: I think most of it is getting passed on by people that probably wouldn't agree with my conservative politics. And if they really stop and thought about how much they're helping me by doing so, they might stop.

ACOSTA (on camera): Are you packing heat right now?

GORMAN: I'm in California. I don't think anybody but criminals have guns in California.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You gentlemen revolted over a tea tax. A tea tax.

(END VIDEO CLIP)

ACOSTA (voice-over): Tea party-backed Republican Rick Barber calls for revolution with this ad featuring actors playing the founding fathers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Gather your armies.

(END VIDEO CLIP)

LARRY SABATO, UVA CENTER FOR POLITICS: I know Thomas Jefferson. He's a friend of mine and the guy in his ad is no Thomas Jefferson.

ACOSTA: Laugh all you want, Barber may be on to something. SABATO: It's the year of the Tea Party. It's actually a good visual way to connect with the kind of people who may very well vote in a Republican runoff. That's what he's in.

REP. TOM PERRIELLO (D), VIRGINIA: I know times have been tough for Virginia families.

ACOSTA: Even incumbents like Democrat Tom Perriello are trying to go viral with this ad showing the congressman getting more than just his hands dirty. PERRIELLO: I fought that new job to dairy farms, to protect jobs here in law enforcement.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED MALE: Warning. The following is a paid advertisement from J.D. Hayworth.

J.D. HAYWORTH (R), ARIZONA SENATORIAL CANDIDATE: Buyer, beware.

(END VIDEO CLIP)

ACOSTA: In this ad, John McCain accuses his challenger, J. D. Hayworth, a former congressman who went on to host a late-night infomercial, of selling fringe ideas.

(BEGIN VIDEO CLIP, AD)

NARRATOR: Or a Kenyan safari to find Obama's lost birth certificate.

HAYWORTH: It would be great if people can confirm who they say they are.

(END VIDEO CLIP)

ACOSTA: Duck and cover. Election year is only just beginning.

(BEGIN VIDEO CLIP, AD)

PAMELA GORMAN (R), ARIZONA CONGRESSIONAL CANDIDATE: I'm Pamela Gorman, and I approve this message.

(END VIDEO CLIP)

ACOSTA (on camera): And the ads will keep on coming. That's because candidates are expected to spend more money than ever before on the upcoming midterms, after the Supreme Court opened the floodgates on political contributions from corporations and special interest groups, right up until Election Day -- Suzanne.

MALVEAUX: Thanks, Jim.

She calls BP a serial environmental criminal. A former federal prosecutor is now free to speak her mind to our Special Investigations Unit.

And drug smugglers take their trade underwater -- why submarines are gaining favor.

(COMMERCIAL BREAK)

MALVEAUX: For the past four years, BP has paid for an internal watchdog unit created under congressional pressure. The so-called ombudsman unit is supposed to investigate worker complaints about safety. But CNN has learned that BP is actively trying to eliminate the unit, even though the company has promised in writing it will exist for at least another year.

Here's CNN's Drew Griffin of CNN's Special Investigations Unit.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN SPECIAL INVESTIGATION UNIT: For 26 years, Jeanne Pascal was a lawyer for the Environmental Protection Agency, investigating and helping to prosecute some of the worst environmental polluters in the northwest, including oil companies in Alaska. And the worst of the worst, she says, is British Petroleum.

(on camera): You describe BP as a serial environmental criminal.

JEANNE PASCAL, FORMER ENVIRONMENTAL PROTECTION AGENCY ATTORNEY: I have.

GRIFFIN: Do you believe that?

PASCAL: I do.

GRIFFIN (voice-over): BP has pled guilty to illegally discharging oil in Alaska and also faces a criminal complaint, alleging it violated clean air and water laws. Pascal retired earlier this year, so she is now free to speak out about a company she says reportedly violates environmental laws.

PASCAL: From my perspective, BP has, for a long time, been a company that is interested in profits first and foremost. Safety and health and environment are subjugated to profit making. And I do not think that has changed.

GRIFFIN: In congressional hearings after the fatal explosion of BP's Texas refinery in 2005, law makers asked BP's then CEO, did workers warn about safety issues at the plant? He said they had not.

There were then questions about whether they feared retaliation for speaking up.

(On camera): Bottom line, after pressure from lawmakers, BP opened an independent ombudsman's office to manage and hear the safety concerns of its workers. It's run by a former federal judge. Just not here in Alaska.

It's a very small office tucked away inside this office building here in Washington, D.C., but British Petroleum has been running this employee complaints program for several years.

(Voice-over): The independent former judge who runs the unit refused to comment to CNN. Michigan Congressman Bart Stupak was one of those who pressured BP.

(On camera): The entire reason that office came to fruition was because safety -- REP. BART STUPAK (D), MICHIGAN: Well, because of safety, yes. And safety concerns continue yet today.

GRIFFIN (voice-over): Since the ombudsman office opened, 112 BP workers have come forward to file reports, 35 of them deal with, quote, "system integrity or safety issues." And the ombudsman's office says they are extremely serious.

But keeping them honest, sources close to the ombudsman's office tells CNN, BP doesn't like it and its independent investigators, and that it doesn't like employees reporting safety problems outside the company.

A union representative says some BP workers who complained have faced retaliation. Jeanne Pascal agrees.

PASCAL: Many of the employees who have actually reported safety, health, environmental safety issues, particularly in Alaska, have been retaliated against. They've been demoted, they've been terminated, and they've also been blackballed.

GRIFFIN: A BP spokesman tells CNN the company has, quote, "a zero tolerance" policy regarding retaliation. The company, he says, is unaware of any unresolved cases that violate the policy.

And there's this. Not only after he took over as chairman of BP America, Lamar McKay met Congressman Stupak.

STUPAK: One of the first things Mr. McKay said was, I'm going to replace the ombudsman. I'm going to shut it down. And -- what do you mean? And he wasn't even on the job but a few weeks and -- maybe a month or two in, start wanting to shut down the ombudsman. And we encouraged him not to do so.

GRIFFIN (on camera): Doesn't it stun you that he would make that remark?

STUPAK: Yes, it did. We were shocked that they would even bring it up in, like, the first meeting and then the second meeting we had with him. The logic was, we'll make things better. Well, we don't see --

GRIFFIN: Their logic was trust us?

STUPAK: Trust us.

GRIFFIN: You don't?

STUPAK: No.

GRIFFIN (voice-over): BP has said it can do a good job investigating complaints through an established internal system without the ombudsman's office.

PASCAL: I think at some point a reasonable person has to come to the conclusion that this is a company that has no intention of changing its mode of operation, that the dollar is going to be paramount, and that the health, safety and safety of American workers and the American environment are a secondary or tertiary concern.

GRIFFIN: Before the Deepwater Horizon disaster, BP promised Stupak in writing that its watchdog unit would be in place for at least another year. But a source inside the ombudsman's office tells CNN, frankly, I'm surprised we're still here.

Drew Griffin, CNN, Seattle.

(END VIDEOTAPE)

SUZANNE MALVEAUX, CNN ANCHOR: Stocks have been taking a beating over the past few months. So why isn't it time to panic? Our Mary Snow gets some expert advice just ahead.

And smugglers are increasingly using primitive submarines to transport drugs. We'll show you one of those makeshift vessels being intercepted on the high seas and show you what they look like on the inside.

Stay with us. You're in THE SITUATION ROOM.

(COMMERCIAL BREAK)

MALVEAUX: U.S. financial markets observed Independence Day today, and were closed. That's giving investors an extra day to mull over what's been a pretty dismal few months. But what else should they be doing?

Our CNN's Mary Snow got some expert advice.

And, Mary, tell us, what do people need to know?

MARY SNOW, CNN CORRESPONDENT: Well, Suzanne, just about the only thing that experts agree on right now is that there's a lot of uncertainty. Stocks hit their lowest levels of the year on Friday. And with talks surfacing of a potential double-dip recession, investors are looking for guidance.

We sat down with one financial adviser here in New York to find out what he's telling clients.

(BEGIN VIDEOTAPE)

SNOW (voice-over): Similar to advice you'd be given about coping with a heat wave, staying cool in the financial markets is key right now, say some advisers as the market lurches lower.

GREG OLSEN, LENOX ADVISORS: If there's one bit of advice, it's take the emotion out of investing. If you have a long-term time horizon, stick to that time horizon. And if you read the "New York Times" on a Sunday, and it said, go into the mountains with your guns and your cans of soup, that's not something to panic about.

So it's one person's opinion. You want to make sure if you have a long-term view, you stick with that long-term view.

SNOW: Greg Olsen is a partner with Lenox Advisors who've been fielding calls from investors as doubts mount about the economy's recovery, pummeling stock prices.

The S&P 500, the index that mirrors many investors' mutual funds, is down 16 percent since April. And the outlook is murky as worries mount over Europe's debt crisis and the job market in the U.S. is sluggish and housing market is weak.

(On camera): What's the biggest mistake somebody could make right now?

OLSEN: Selling at the wrong time. Take your money out of the market when the market is doing well, not after it pulls back by 15 percent. And if you're pulling money out of the market now, only do that if you needed the money and it shouldn't have been in the market in the first place.

SNOW (voice-over): Where to put that money for your kids' college or retirement also now puts 50 percent of investments in stocks, 30 percent in bonds, and the rest in alternatives like precious metals that include gold.

OLSEN: Gold is a great inflation hedge. And you have to think that one of the only ways that governments -- not only ours but in Europe -- are going to get out of the banking crisis is by printing money. And gold is the only currency that you can't print.

(END VIDEOTAPE)

SNOW: And with so much uncertainty, Greg Olsen does expect the market to move another 10 to 15 percent, but he doesn't know in which direction.

Now he is just one financial adviser. Most would agree, though, that the closer you are to retirement age, the less risk you likely want to take with your money -- Suzanne.

MALVEAUX: A lot of folks being careful. Thank you, Mary.

A smuggle route increasingly popular with drug traffickers is under water. A look at narco submarines.

And a royal business trip to New York City. What's bringing back Britain's Queen Elizabeth after more than 30 years?

(COMMERCIAL BREAK)

MALVEAUX: Ecuadorian authorities are reporting the seizure of a makeshift submarines designed for transporting large amounts of cocaine. U.S. Drug Enforcement agents say it's the first time a fully operational drug-smuggling sub has been seized.

But the practice is not entirely new. Smugglers have increasingly been using the subs to avoid detection on the high seas. Our CNN's Karl Penhaul has been following the story and he files this report.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN CORRESPONDENT (voice-over): Spotter planes track something plowing through the choppy seas. The Colombian Navy and U.S. Coast Guards are on the tail of a hand-built submarine.

The cargo, eight tons of pure cocaine according to Colombian authorities. That's almost $500 million worth on the streets of Europe or America.

UNIDENTIFIED MALE: It's right along port side. Hands are in the air.

PENHAUL: The crew surrenders without a fight, but the bust goes bad.

UNIDENTIFIED MALE: It's going down.

PENHAUL: The traffickers scuttle the sub, sending the cargo to the bottom of the Pacific. The Coast Guard says it's a tactic to destroy evidence of the crime.

Watch this group bail out during a different chase. Minutes later, another six tons of cocaine sink.

Pursuits on the high seas like this are rare. That's because the subs are almost impossible to detect even though fewer designed to dive fully under water.

MARIO RODRIGUEZ, COLOMBIAN NAVY (Through Translator): The semisubmersible is more difficult to detect because it has a low profile in the sea. Criminals paint them a certain color to camouflage that and avoid detection from the air.

PENHAUL: The Navy believes the cartels may now be smuggling out almost half their cocaine in fleets of narco subs using Colombia's Caribbean and Pacific coasts.

RODRIGUEZ (Through Translator): Narco traffickers are looking for new ways to commit their crimes and authorities are trying to prevent that. It's like a chess game.

PENHAUL: At a Pacific Coast base, Second Mate (INAUDIBLE) shows me around some of the subs that have been confiscated. Fiberglass on a wooden frame, twin diesel engines. The price tag, around $1 million. Most of that is not for materials, but to buy the silence of the boat builders.

UNIDENTIFIED MALE (Through Translator): Maybe they're not crazy, but just ignoring the danger.

PENHAUL: Under the hatch, it feels like a floating coffin. (On camera): It's hot down here now. And once this is in the open waters with the sun beating down on it, the temperature could soar. And there are only a few breathing tubes throughout here.

(Voice-over): The semisubmersibles travel three main smuggling routes according to the Navy. Direct to Mexico or Central America, takes around six days. The longest route through the Galapagos Island takes more than two weeks.

Along the northern reaches of Colombia's Pacific Coast, speedboats remain the number one enemy. They dash into Panama or Costa Rica in as little as six hours.

RODRIGUEZ (Through Translator): They choose the route depending on the cargo they want to transport and based on their analysis of our ability to detect them in the area.

PENHAUL: A joint of Coast Guard team on a speedboat they called Midnight Express. Buenaventura is Colombia's biggest seaport, handling thousands of containers every day, all potential stowaway sites for drugs.

This huge tuna fishing fleet, too. Ships captains may be tempted by easy money, but are wary of the consequences.

CAPTAIN EDWARD PICON, COLOMBIAN NAVY (Through Translator): They say they risk losing their families and they know if the drugs get lost, their families will be killed.

PENHAUL: Night falls and a Navy patrol boat hits out on a fresh mission to hunt to board rust-bucket cargo ships and hunt for cocaine. A captain radio's word, he's only transporting cattle, gasoline and good.

Lashing rain and moving boats are making this a treacherous task for Lt. Denison (ph) Ramirez and his men tonight.

Above deck, they urge passengers to report anything suspicious. There's a report of another vessel dangerously overloaded. With 70 tons of cargo aboard, in the dark, it seems almost impossible to check thoroughly for drugs.

Nothing is found. One of the cargo ship's crew seems to resent the search.

UNIDENTIFIED MALE (Through Translator): The economy is real difficult right now. There's more unemployment than jobs. That's one of the biggest things fuelling crime.

PENHAUL: For the Colombian Navy it's a war of stealth, trying to stem the tide of cocaine on, and under the waters. A war in which traffickers are using homemade technology to sink to new depths.

Karl Penhaul, CNN, Buenaventura, Colombia.

(END VIDEOTAPE) MALVEAUX: A Muslim cleric who pleaded guilty to lying to federal agents investigating a planned terror attack in New York has left the country as part of his plea deal.

The attorney for Imam Ahmad Aflzalhi says he's on his way to Saudi Arabia where he plans to live with his wife.

The attorney said his client actually tried to assist in the investigation but became, quote, "collateral damage," in the war between the NYPD and the FBI over the terrorism investigation.

Well, a New York welcome for Britain's Queen Elizabeth. We're going to tell you how the city is gearing up for the Queen's first visit in decades.

And you may think, yes, they sound like a beehive, but to some Chinese factory owners, those South African horns everyone's blowing at the World Cup represent the sound of success.

(COMMERCIAL BREAK)

MALVEAUX: It's not every day that Britain's Queen Elizabeth comes to New York. In fact, it has been decades. But she's coming tomorrow to address the United Nations.

Our CNN senior U.N. correspondent Richard Roth has more.

(BEGIN VIDEOTAPE)

RICHARD ROTH, CNN CORRESPONDENT (voice-over): It will be Queen for half-day in New York City.

MAYOR MICHAEL BLOOMBERG (I), NEW YORK CITY: Her majesty, the Queen of England, will be here, going to visit.

ROTH: Her first visit since 1976.

(On camera): She's not been to New York in 30 years.

UNIDENTIFIED MALE: Well, we're not giving it back.

ROTH: She hasn't been here since --

BILL MILLER, BRITISH GARDEN MEMORIAL TRUST: -- been here for many years, but --

ROTH: Does she not like New York?

MILLER: Oh, she'll love it. She'll love it. Why not?

ROTH (voice-over): At Tea & Sympathy in Greenwich Village, the Queen is already here, but owner and dual citizen Nicky Perry is upset she won't be here for the Queen.

NICKY PERRY, OWNER, TEA & SYMPATHY: I would love to offer her a nice piece of (INAUDIBLE) and a proper cup of tea. ROTH: I tried to prepare the former commoners.

(On camera): Can you bow for me? Not bad. What would you tell her?

UNIDENTIFIED MALE: What would I tell her? That you're beautiful.

ROTH: Don't you tell that to all the women on the street here in the summer here?

UNIDENTIFIED MALE: I do, but there's a different beauty involved here.

UNIDENTIFIED MALE: If she's around and wants to get high tea with me, just give me a call. She was very cordial last time we had it.

UNIDENTIFIED MALE: I would try and sell her a diamond watch.

ROTH: Do you think she needs jewelry?

UNIDENTIFIED MALE: They -- everyone needs jewelry.

ROTH: What do Americans not know -- I mean we don't know what it's like to have a queen.

UNIDENTIFIED MALE: You've got plenty of queens in America.

ROTH (voice-over): A queen could have some royal fun in the big city.

JAMES BONE, TIMES OF LONDON: She makes very highly scripted visits. She isn't going to be doing what Prince Harry did the other day in New York, getting on a polo pony and falling off which made news all around.

ROTH: Some New Yorkers would rather the grandkids stayed longer.

(On camera): Would you like to have tea with her?

UNIDENTIFIED FEMALE: Yes. Or her grandsons.

UNIDENTIFIED MALE: I now respectfully request Her Majesty --

ROTH (voice-over): The Queen will first speak to the world at the United Nations as she did in 1957. The Queen was 31 years old then when she noted the UN's problems.

QUEEN ELIZABETH II, GREAT BRITAIN: Time has, in fact, made the task of the United Nations more difficult than it seemed when the terms of the charter were agreed at San Francisco 12 years ago.

ROTH: Then it's a motorcade trip downtown. Perhaps passing this musician. UNIDENTIFIED MALE: I think she would just go, you know, like this, like she does to everyone, instead of like that, which would be pretty cool.

ROTH: The Queen visits where the Twin Towers stood and a garden where the 67 British citizens who died on 9/11 are remembered.

RODNEY JOHNSON, VICE CHAIR, BRITISH GARDEN MEMORIAL TRUST: This is the place for the British. And it's also about the unity of our two nations. You know, we've been -- ever since we got over 1776, we've been shoulder to shoulder.

UNIDENTIFIED FEMALE: I'll say, God bless the Queen.

ROTH (on camera): What about God save the Queen?

UNIDENTIFIED FEMALE: God save the Queen, too.

ROTH (voice-over): Richard Roth, CNN, New York.

(END VIDEOTAPE)

MALVEAUX: Tar balls from the Gulf oil disaster are now in Congressman Ron Paul's Texas district. He's going to talk about that and much, much more at the top of the hour on "JOHN KING, USA."

Plus, the sound of opportunity in South Africa, made famous by the World Cup.

(COMMERCIAL BREAK)

MALVEAUX: Well, if you watched any of this year's World Cup, you're probably familiar with the buzzing sounds of horns. That sound represents an enormous business opportunity.

Our CNN's John Vause explains.

JOHN VAUSE, CNN CORRESPONDENT: Well, Suzanne, the small factory owners in southern China have their way, you'll be hearing this sound long after the World Cup is over.

(BEGIN VIDEOTAPE)

VAUSE (voice-over): Like it or not -- and many seem to not -- this has become the unofficial anthem of the World Cup. One very loud note, B flat, to be precise, which to many of us sounds, more like this.

Well, if you happen to be in a stadium, it probably sounds a lot like this. And all that noise comes from a lot of these -- a piece of plastic tubing called a vuvuzela, wooden versions were once used by African villages to scare off baboons, but now they're a case study in Chinese mass production.

Nine out of every 10 vuvuzelas in the world are made in China, at factories like this one run by Mrs. Woo. "I'm very proud that our vuvuzelas made it all the way to the World Cup," she told me.

(On camera): So with just a few dozen workers in this one small, hot and very sweaty factory, Mrs. Woo says they're making more than 20,000 of these each day. So far this year, she says they've made almost 1.5 million.

(Voice-over): Because it doesn't take much to actually make a vuvuzela. Roll plastic in, melted plastic out, into a mold, and done. Roll plastic in, melted plastic out, into the mold, and done.

In another room, the edges are smoothed and polished. Wholesale cost, about 40 U.S. cents and Mrs. Woo is hoping the vuvuzela will be the next must-have for sports fans around the world. At the baseball, basketball, even the football.

The next giant foam finger, perhaps.

"We've already received orders for the Asian Games, which is why we're still busy," she says.

But go beyond sports and click online, and the vuvuzela has gone viral, with a rush of YouTube postings. And most popular of all, it seems, dog versus vuvuzela. And so long after the World Cup is over, and especially if Mrs. Woo has her way, we probably haven't heard the last of this.

(END VIDEOTAPE)

VAUSE: And as Mrs. Woo said, they cost about 40 cents to make, but there is quite the markup. They're selling these for almost eight bucks outside the stadiums in South Africa -- Suzanne.

MALVEAUX: Thanks.

Wolf will be back tomorrow. I'm Suzanne Malveaux in THE SITUATION ROOM.

"JOHN KING, USA" starts right now.

Hey, Jessica.