‘It seems that Otto had got into her room and eaten the pearl earrings. He was sitting on the end of her bed looking very pleased with himself and licking his paws.’ With much embarrassment she explained to Prince William what had happened, he burst out laughing and told her she would have to wait for them to come out the other end! ‘She was walking him a couple of times a day and when the earrings finally emerged, she realised that there was no rescuing them, they were so badly damaged and chewed up', said the source. 'She had to call William and tell him the news'. Otto was a Christmas present from Kate's parents and takes him everywhere, including Sandringham and Balmoral on weekends. The Middleton's have now called the incident ''The dog with the pearl earrings'' and everyone is just happy and relieved that Otto is ok.