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THE TWOSOME AT THE CORNER table at Paris's famed Lucas Carton restaurant on July 25 were, like many other couples there, smiling and looking relaxed as they lingered over their three-star feast. She was blonde, glamorous and instantly recognizable; he, dark-haired, handsome and harder to place. "They certainly seemed to be enjoying themselves," says Eventhia Senderens, the wife of Lucas Carton's chef Alain Senderens. "When famous people come, you're not constantly bothering them to see if everything's all right. Other customers must have recognized her, but there was no fuss. They were left alone."

Not for long. Some two weeks after Princess Di and her mystery date dined à deux, London's Sunday Mirror published a series of photographs taken off the coast of Sardinia. Though fuzzy, the pictures broadcast a message as clear as the island's blue waters: A year after her messy divorce from Prince Charles, the world's most eligible princess has a new man. Snapped by an Italian paparazzo, the shots show Di, 36, and Dodi Al Fayed, the 42-year-old son of Harrods owner Mohamed Al Fayed, cuddling aboard Dad's $32 million yacht on Aug. 4. ("You only have to look at the sensual body language," read The Sunday Mirror's characteristically overheated prose, "to know that they have found physical and spiritual fulfillment in each other.")

It was the first time since the divorce that she had gone off with a man alone, and for once the ever-coy Di was denying nothing. "She's not reacting in the way she has in the past, by getting upset [at the reports]," says Daily Mail royal correspondent and sometime Di confidant Richard Kay, "and that tells me something. Dodi has obviously said to her, 'Look, I don't care about the publicity,' so she can relax. And why shouldn't she? She's single, he's single. They like each other."

Though the couple first met in 1986—when the Al Fayed polo team, for which Dodi played, beat Charles's team in a match at Windsor Great Park—the sizzle didn't start until mid-July 1997. That month the elder Al Fayed, 64, a native of Egypt and old acquaintance of the royal family, invited Di and her two sons to vacation with his family at his Saint-Tropez villa. Paparazzi followed on land and sea, and Di, at one point, raced a speedboat up to members of the press, appealed for privacy, then declared, "You are going to get a big surprise with the next thing I do." She later denied making the comment, but, boy, has she ever delivered on the surprise. The weekend after the Saint-Tropez idyll, she jetted solo to Paris to join Dodi at the Hotel Ritz (which Dodi's financier father, conveniently, owns), then, conveniently, boarded the Harrods helicopter on Aug. 1 on her way to the now-notorious five-day Mediterranean cruise.

If the latest tabloid telephotos gave her cause for regret, she certainly wasn't showing it. Back in London on Aug. 7, clad in a curve-hugging blue dress and beaming, she stepped out of a limo and entered Dodi's lavish Park Lane apartment (one of some 11 Al Fayed family residences at his disposal). Dinner was served on silver trays, and Di stayed until 1 a.m. The next day, after arriving in Bosnia to campaign against land mines—her cause du jour—she declined to discuss Dodi with reporters but looked more cheerful than she had in months. On the plane home she reportedly devoured her own tabloid press with the enthusiasm of a schoolgirl. "Diana," confirms one longtime royal watcher, "is besotted."

Whoa, there!—we are talking about a woman who has, through the years, become the poster girl for Smart Princess, Dumb Choices. (Remember lover James Hewitt, who revealed all in a kiss-and-tell book?) The man on whose French-cuffed arm Diana now hangs may be charming, but he is no prince, and his father—though he may be as rich as Croesus—no king. A longtime friend of Di's own late father, Earl Spencer, Dodi's tycoon dad brought the pair together. A self-made billionaire who, in addition to Harrods, has a leasehold on the Duke and Duchess of Windsor's Paris home (he is auctioning off the contents in September at Sotheby's), Mohamed Al Fayed sponsors the Royal Windsor Horse Show, where he shares the Queen's box.

Yet he has been denied British citizenship following questions about his financing of the Harrods purchase and has admitted paying Tory members of Parliament for political favors between 1987 and 1989, a move often credited with speeding the demise of John Major's government. Many believe that Al Fayed stoked his son's romantic flames as a way to strike back at a British establishment that has consistently rebuffed him. For such a man, says Brian Hoey, author of 13 books on the Windsors, "it would be the ultimate revenge to have the mother of the future king of England in the family."

The dashing Dodi, though far less influential than his father, must seem only slightly less raffish to the royal family. Al Fayed's only son by his late first wife, Samira Khashoggi (sister of arms dealer Adnan Khashoggi), Dodi was raised a Muslim in a world of jet-set privilege, dividing time between family homes on the French Riviera and in Alexandria, Egypt. He attended the exclusive Le Rosey school in Switzerland and the British military academy Sandhurst before becoming a fixture on the London nightclub scene in the late '70s. A lover of fast cars (he is said to own five Ferraris) and beautiful women, he has developed a reputation, deserved or not, as a tomcat. Entries in his little black book at one time or another have included Brooke Shields, Tawny Kitaen, Tina Sinatra and Joanne Whalley. "He likes trophy women—anyone that rich is going to," says a longtime acquaintance. "I don't think I've ever seen him go out with anyone just for their brains."

In L.A., where he dabbles in movies (he has coproduced or cofinanced Chariots of Fire, Hook and The Scarlet Letter), he is known for more than womanizing. "He has a reputation for not paying his bills or meeting his commitments," says a producer who has worked with him. Indeed, papers filed in various Los Angeles courts show that Dodi has been sued at least 10 times—by landlords claiming they didn't get their rent, employees stiffed on wages, and once by a film-distribution company that paid him $260,000 for the European distribution rights to two films he didn't own. (Dodi's lawyer says most of the suits have now been resolved.) Says one Beverly Hills landlord who took Dodi to court after he failed to pay his $23,000-a-month rent: "It was like pulling teeth to get him to pay. And he destroyed the place. He said he didn't have dogs, and then he had giant dogs digging up the lawn. It took me a long time to get the house back into habitable condition."

That said, many who know Dodi understand the attraction. "I've known him for 20 years, and I like him a lot," says Conspiracy Theory producer and director Richard Donner, who has plans for an upcoming film with Dodi. "He's a good-looking, bright, young kid who comes from a lot of money, and people are jealous. We just spoke on the phone a couple of hours ago, and he confirmed that he's seeing Di. If this thing is serious, she couldn't be a luckier lady, because he's a special guy." Suzanne Gregard, a former model whose eight-month marriage to Dodi ended amicably in 1987, agrees: "He was so romantic and thoughtful. And he didn't take things too seriously. Once, during a candlelit dinner he had arranged, the table we were sitting at collapsed, and the whole turkey fell to the floor. We laughed so hard. That was what I loved about him."

Now 37 and married to an L.A. surgeon, Gregard says she and Dodi split in part because they came from different worlds. "We were always surrounded by bodyguards," she says. "One day when I was sick, I asked him to get me some medicine and food. He came back with a big grin on his face. He was [excited because he was] 31 years old and it was the first time he had been to a grocery."

For Di, of course, the mundane real world is no less exotic. Her annual clothing bills have run as high as $136,500, so Dodi's resources (he reportedly gets $100,000 a month from his father) are not to be sneezed at. He has the use of homes in London, Manhattan, Gstaad, Switzerland, and on the French Riviera, and, of course, the 190-foot yacht Jonikal. "He's got the facilities to take her away in the way that only the superrich can," says the Daily Mail's Richard Kay. "He has bodyguards, private planes. I think Di understands why Jackie Kennedy married Onassis—there was this extraordinary circus around her, and he offered her the opportunity to get away from it."

Also, like Jackie, Di might not be averse to giving her former in-laws a goad. Though Buckingham Palace has declined comment on the romance, "As far as Dodi as potential stepfather to William and Harry," says author Hoey, "I think there would be a certain reservation." But, points out romance novelist Dame Barbara Cartland, Diana's step-grandmother, "Yes, Dodi ought to be an Englishman, but we know perfectly well that she's been with an Englishman and it was terrible. They've ignored Diana. I don't think it should be any of their business." Charles—well aware that a contented Diana takes the heat off his relationship with Camilla—might even feel relieved. His official reaction, as reported by several London tabloids, was, "I'm happy if she's happy."

Still, for all the press (not to mention unfounded rumors of an engagement ring), the Di-Dodi romance is just beginning to blossom. While Dodi's dad, says a royal watcher, "will do everything within his power to try and get this marriage," and the son "knows he's caught a big fish," as one Hollywood acquaintance puts it, Dodi might well revert to type and throw back his prize catch. As for Di, she "likes to be in control of everything and everybody," says another royals observer. "And when she gets bored, she drops them."

Certainly she'll carefully gauge her sons' reactions to this latest leading man. In Saint-Tropez last month, William, 15, and Harry, 12, were reportedly quite taken with the fun-loving Dodi, who rented out a disco on two separate evenings for the vacation party (the group also included Al Fayed's second wife, Heini, and their four children). "The boys thoroughly enjoyed him on holiday. He was being like Father Christmas, providing them with everything," says one reporter. "It's a different thing if he's a stepfather. The boys want her to calm down, and if this guy does it for her, then yes. If they don't like him, the relationship won't go anywhere."

Mom, meanwhile, has other issues at hand. Though the scuttlebutt about her new beau's character flaws seems not to have fazed her so far, "if it turns out there's evidence that he's got a serious financial problem," says a friend, "she'll wake up to it. She'll be sensible." Then too, should she ultimately wed again, she would lose the title Princess of Wales. At this point no one is predicting whether this is fling or fate. Or almost no one. Last week, Dodi and Di flew by Harrods helicopter about 150 miles from London to the Derbyshire home of Rita Rogers, a psychic whom Di has consulted before. The couple spent some 90 minutes with Rogers before whirring back to London. The elder Al Fayed counseled caution. "They are two independent, single people," he told The Mirror, "and we must see what happens." But Cartland—like so many other Di watchers—couldn't help but be swept up. "It can just hit you, and you suddenly realize you are desperately in love," she told PEOPLE. "I only hope she has found someone who will look after her—and see how wonderful she is."

KIM HUBBARD
NINA BIDDLE, SIMON PERRY and LYDIA DENWORTH in London, JULIE JORDAN, DANELLE MORTON, JEFFREY WELLS and ULRICA WIHLBORG in Los Angeles and CATHY NOLAN in Paris

  • Contributors:
  • Nina Biddle,
  • Simon Perry,
  • Lydia Denworth,
  • Julie Jordan,
  • Danelle Morton,
  • Jeffrey Wells,
  • Ulrica Wihlborg,
  • Cathy Nolan.