Charles lands in a bind...

Hushed-up allegations of homosexual rape. Unseemly sales of expensive gifts. For Prince Charles, it's just another day at the palace. After years of scandals, the man who would be King took the latest round of humiliations—contained in a long-awaited internal report—on the chin. The report, which found "serious failings" in the running of his London residence, St. James's Palace, "does not make comfortable reading in some parts," Charles noted.

Particularly uncomfortable are the 43 pages that deal with the mishandling of a staff member's claim he was raped. According to the 104-page document—which Charles commissioned himself after the October trial of Princess Diana's former butler Paul Burrell raised questions about corruption and cover-ups—George Smith, a troubled royal valet, told another staffer that he had been raped by a trusted member of Charles's staff in 1989. In '95 Diana got wind of the allegation and a year later passed it on to Charles, with whom she was still feuding. Believing the allegation to be baseless, Charles declared that "George must go," according to his lawyer Fiona Shackleton, who arranged for Smith to leave the prince's employ with a $59,000 payout, the report reveals.

While Shackleton continues to advise Charles, he has had to accept the resignation of his closest aide, Michael Fawcett, the man who once drew his baths each night and woke him every morning. Fawcett, 40, was found to have sold or exchanged gifts on behalf of Prince Charles—including a watch and pen valued at $16,000, from a member of a foreign royal family, and a $15,000 rug. But he was cleared of any wrongdoing in the report. Though the policies regarding disposal of gifts were "deficient," the report concluded, "this was not, we believe, intentional." Said Charles, who has vowed to improve things: "I accept full responsibility."

Diana still speaks...

With uncanny timing, Britain's Sunday Mirror revealed what it says are excerpts from videotapes Princess Diana is believed to have recorded in the early '90s that are now in Scotland Yard's safekeeping. Diana "had the opportunity to keep a diary in a different way," says her ex-butler Paul Burrell, who guarded the tapes after her death but has not viewed them. What she reportedly says:

Charles is "too close" to aide Michael Fawcett. "What can one do when one's husband is in an unhealthy relationship with his butler?"

On her loneliness: "I feel completely isolated. Charles confides more in Fawcett than he does with me."

The Queen deems her "dim"; the royal family is "trapped in the Dark Ages"; as for the royal staff, "Even they look down their noses at me."

On the alleged rape of George Smith: "It must have been awful for him."

On William and Harry: "I want them to meet ordinary people. I want them in the real world,"

More From This Article

Charles's Report Card
Was there an improper cover-up of a rape allegation? Finding: No, but he could have handled the issue better.

Did the prince or his staff attempt to interfere with the trial of ex-butler Paul Burrell? Finding: No. The trial collapsed after the Queen recalled that he had kept some of Di's possessions for safekeeping.

Have official royal gifts been sold?

Finding: No. Well, sort of—but it was an accident. (Charles mistakenly sold a watch and pen thinking they were private, not official, gifts.)

Have staffers received kickbacks from royal suppliers? Finding: No, but better guidelines are required.

...and Sad News for Fergie
Friends called him die General, but to his daughter, Duchess of York Sarah Ferguson, he was just Dads. On March 16, Maj. Ronald Ferguson—a no-nonsense character who served as Prince Charles's polo manager—died at age 71 from a heart attack. Ferguson spent part of his last day with the duchess, 43, taking in the blue skies outside a clinic in southern England. "She is very grateful," says her spokeswoman, "for the time she had with him to say goodbye."