In the royal-wedding afterglow, Buckingham Palace still has a major P.R. problem: how to handle Prince Andrew, Britain’s trade ambassador and fourth in line to the throne. The prince’s dissolute lifestyle, links to unsavory foreign potentates, and friendship with the American registered sex offender Jeffrey Epstein are undercutting the Queen’s efforts to rehabilitate the monarchy. And while many blame Andrew’s problems on his perennially broke ex-wife, Sarah Ferguson, EDWARD KLEIN discovers some insiders pointing to another woman—his mother herself

On a snowy Friday afternoon last February, Ed Perkins received an urgent phone call in his ground-floor office at Buckingham Palace. Perkins has the thankless task of serving as press secretary to the Queen’s wayward second son, His Royal Highness Prince Andrew, Duke of York. The female voice on the other end of the phone line belonged to Sian James, an assistant editor at The Mail on Sunday, a tabloid that’s been unsparing in its coverage of Andrew’s dissolute private life and dodgy friends.



M.P. CHRIS BRYANT DECLARED, “IT’S JUST UNSUSTAINABLE THAT PRINCE ANDREW SHOULD REMAIN AS THE PUBLIC FACE OF BRITISH INDUSTRY ABROAD.”

“We’re planning to publish a story about the Duke of York,” James told Perkins, “and we’d like a comment from the Palace.”

Perkins listened in stunned silence as James unfolded a shocking tale. Her newspaper had obtained an interview with a young woman named Virginia Roberts, who claimed that the billionaire American money manager Jeffrey Epstein had trained her as an under-age prostitute and flown her to London in 2001, when she was just 17 years old, for the express purpose of spending time with Prince Andrew. Virginia, now a mother of three living in Australia, had waited a decade to break her silence, but the newspaper had evidence to support her story—flight logs from Epstein’s Boeing 727 and Gulfstream jet, and a photo showing Prince Andrew with his arm around Virginia’s bare midriff. Standing off to one side in the photo was Ghislaine Maxwell, 49, the stylish and well-connected daughter of the late, disgraced British newspaper tycoon Robert Maxwell. According to Virginia, Ghislaine recruited her as Epstein’s “sex slave” when she was 15 years old and arranged for her to see Andrew three times, in London and New York and on Epstein’s private Caribbean island, Little Saint James. She said she’d been “sexually exploited by Epstein’s adult male peers, including royalty.” (Prince Andrew denied that he had had sexual contact with Roberts or any other of Epstein’s girls. Ghislaine Maxwell also denies the allegations and says that she plans to take legal action against a number of British newspapers.)

“Would you put all that in an e-mail, please?” said the unflappable Perkins. “It might take a few hours to get back to you.”

After he hung up the phone, Perkins assembled a crisis team consisting of senior Palace officials and lawyers. Many of these were old hands at dealing with Andrew’s indiscretions. Only the week before, another damaging photo had surfaced in a different British tabloid, the News of the World, showing the 51-year-old Duke of York, fourth in line of succession to the throne, strolling in New York’s Central Park with Epstein, 58, a registered sex offender.

The two photos capped months of negative press coverage of Andrew, which began when an undercover reporter, posing as a businessman, secretly videotaped an interview with Andrew’s ex-wife, Sarah Ferguson, 51, who divorced the prince 15 years ago but still shares a home with him. The hapless Fergie was caught on tape demanding $821,000 in return for business access to her ex-husband, who is Britain’s special representative for international trade and investment. “If you want to meet him in your business, look after me, and he’ll look after you,” Fergie was heard saying on the video. “You’ll get it back tenfold. . . . That opens up everything you would ever wish for. And I can open any door you want. And I will for you.”

Under a torrent of criticism, Sarah Ferguson offered an abject public apology, returned the $40,000 down payment she had received, and offered to move out of Andrew’s home. However, her claim on the video that Andrew had advance knowledge of her attempted shakedown—an accusation categorically denied by Buckingham Palace—focused renewed attention on the long charge sheet against the prince.

Among other things, Andrew has been accused of hosting a lunch at Buckingham Palace for Mohamed Sakher El Materi, the billionaire son-in-law of the now deposed Tunisian strongman Zine El Abidine Ben Ali, and of accepting a gift of a $30,000 gold necklace for his daughter Beatrice from a convicted Libyan gun smuggler. (A spokesman for the Palace says it doesn’t comment on private gifts to members of the royal family.) Andrew earned the nickname “Air-Miles Andy” after he was criticized by the National Audit Office for taking a helicopter just 50 miles to a lunch with Arab dignitaries, at a cost of almost $5,000. Then there was the story of a secret trip Andrew had made in 2008 to Libya, where he met Muammar Qaddafi and reportedly discussed the release from a Scottish prison of Lockerbie bomber Abdelbaset al-Megrahi (who was, in fact, released the following year). In addition, it was reported that Andrew had flown to Sharm el Sheikh with David “Spotty” Rowland, a controversial British businessman who provided $66,000 to help pay Sarah Ferguson’s staggering debts. While in Egypt, Andrew dined with Nursultan Nazarbayev, the corrupt president of Kazakhstan, whose son-in-law subsequently bought Andrew’s white-elephant mansion, Sunninghill Park, for $25 million, $4.9 million more than the asking price. (Buckingham Palace denied that there was any impropriety involved in the sale.)

Later, Andrew moved into Royal Lodge, the late Queen Mother’s residence in Windsor Great Park, where he continued to live with his former wife and their daughters, Princess Beatrice, 22, and Princess Eugenie, 21. However, this has not put a crimp into Andrew’s sybaritic style. He’s been rumored to be romantically linked to more than a dozen women, including the American actress Angie Everhart and Amanda Staveley, a successful private-equity specialist to whom he proposed marriage.

The sordid connection to Jeffrey Epstein inflicted by far the greatest damage on the prince’s reputation. According to a sworn deposition by Juan Alessi, a former employee at Epstein’s Palm Beach estate, Andrew attended naked pool parties and was treated to massages by a harem of adolescent girls. At least three of the girls were questioned under oath about whether Andrew had had sexual contact with any of the masseuses. One of them, Sarah Kellen, refused to answer, citing her Fifth Amendment right to remain silent. Another, Adriana Ross, was asked, “Has Prince Andrew ever been involved with underage minor females to your knowledge?” She reportedly replied, “I refuse to answer.” (Prince Andrew says he neither attended nor was aware of any naked pool parties.)

Inside the Firm

The plight of Prince Andrew, a once strikingly handsome man who has let himself go a bit to seed, made far less of an impression on audiences around the world than the royal wedding of the picture-perfect William and Kate, the future King and Queen of the United Kingdom. And yet, the story of how Andrew has managed to get away with such cringe-worthy behavior—and survive in his high-profile role as Britain’s trade ambassador-said more about the inner workings of the British monarchy than the estimated $40 million wedding extravaganza.

The story goes back to 1992, which Queen Elizabeth II called the annus horribilis, the year the marriages of Charles and Andrew broke down, Windsor Castle caught fire, and Fergie was photographed having her toes sucked. Ever since, the Queen has been at pains to ensure the survival of the monarchy in its current form. With that in mind, the then lord chamberlain, Lord Airlie, established a secretive discussion procedure called the Way Ahead Group, which is chaired by the Queen and consists of senior courtiers and senior working royals. (The working royals reportedly include the Queen and Prince Philip, Prince Charles, Princess Anne, Prince Andrew, Prince Edward, Prince William, and Prince Harry.) The Way Ahead Group convenes twice a year, doesn’t keep minutes of its meetings, and deals only with such paramount issues as primogeniture, the feudal rule by which the Crown passes to the eldest male heir.

After its initial meeting in 1992, the group made several precedent-shattering decisions. The Queen and Prince Charles volunteered to pay taxes on the private income from their vast estates. The Queen agreed to reimburse the government for its annual Civil List grants—totaling almost $2.5 million—to five of her closest living relatives at the time: the Princess Royal (Anne), the Duke of York (Andrew), the Earl of Wessex (Edward), Princess Margaret, and Princess Alice, the Queen’s last surviving aunt. (Currently only the Queen and Prince Philip receive money from the Civil List.) Buckingham Palace was opened to visitors in order to raise money for $65.6 million in repairs to Windsor Castle. And the royal yacht Britannia, with its 19 officers and crew of 217, was later decommissioned and turned into a tourist attraction.

However, the Queen’s plans to rehabilitate the monarchy were upended by a series of events. The royal family was mortified when Major James Hewitt, a prominent polo player, spilled the beans about his long-running affair with Princess Diana. Even worse, Charles was heard in an intercepted cell-phone call telling his mistress, Camilla Parker Bowles, that he’d like to “live inside your trousers.” The Queen herself bungled things when she was slow to acknowledge the public grief over Princess Diana’s death—an attitude she reversed in order to appear as a more caring, in-touch monarch. As for Prince Andrew, his procession of girlfriends, starting with Koo Stark, who had appeared as an actress in a soft-porn film, further stained the family’s image. Only recently, one of his former girlfriends reportedly claimed that when she was alone with Andrew in the bedroom he liked to model her underwear as a joke.

As for the Queen’s irascible consort, Prince Philip, who turned 90 in June, he hasn’t done much to help his wife clear the way ahead. Philip’s almost irrational loathing of Sarah Ferguson led the Queen, who normally shows shrewder judgment, to cast Fergie out of the royal orbit without a penny after her divorce from Andrew, which guaranteed that Fergie would turn into a high-profile beggar and an embarrassment to the throne. What’s more, Philip tried to bully Andrew into kicking Fergie out of her residence at Royal Lodge—a demand that placed Andrew in the awkward position of having to choose between his overbearing father and his over-the-top ex-wife. He chose her. (Buckingham Palace would not comment on Prince Philip’s relationship with Andrew or his ex-wife.)

Fergie, who was not invited to the royal wedding, fled to Thailand, where, she later told Oprah, “the jungle embraced me.” She added, “I wanted to be there with my girls—to be getting them dressed and to go as a family.” She and Andrew were the last royals to have been married at Westminster Abbey, and Fergie kept in touch by telephone with her ex-husband during the ceremonies for William and Kate. “When Andrew went with the girls,” she recalled, “we were talking all morning, and he was saying, ‘It’s O.K. Just remember, we had such a good day. Our wedding was so perfect.’ ... Because we’re such a unit together, he made me feel very part of the day on April the 29th.”

With a profligate former wife and two coming-of-age daughters to support, according to an insider, Andrew has complained that it’s hard to make do on a yearly stipend of $408,000. He also receives hundreds of thousands of dollars a year for travel expenses related to his job. His portrayal of himself as a poor relative helps explain why he and Fergie always seem to be grubbing for money, and why Fergie— with Andrew’s knowledge—recently sold her story to Oprah for a six-part reality series in which Beatrice and Eugenie join their mother in a teary airing of their woes.

“My understanding is that Prince Charles was less than happy that Andrew was given the role of trade envoy back in 2001 after he left the navy,” Robert Jobson, author of William & Kate: The Love Story and a royal commentator for NBC News, told me. “When Charles ascends the throne—which he will do despite all the talk to the contrary—he’d like the royal family to be streamlined; he wants a smaller, more cost-effective monarchy. Andrew has made a tremendous effort to keep Beatrice and Eugenie close to the Queen in order to assure their future as fully paid-up members of the Firm, as the royal family is called. In addition to their status as royal highnesses, Andrew has always wanted them to have around-the-clock security and the rank of working royals. But if Charles has his way, the girls will be thrown off the royal payroll and have to fend for themselves. Many of Andrew’s inexcusable actions—consorting with rich oligarchs in North Africa, the Mideast, and the former Soviet Union, and begging friends to bail out Fergie—have been done with his daughters’ welfare in mind.” (A Palace spokesman wouldn’t comment on Charles’s intentions with respect to the princesses.)

Should He Keep His Job?

'The phone call from Sian James of The Mail on Sunday created a 36-hour maelstrom at Buckingham Palace,” a royal source told me. “At some point during those 36 hours, the Queen summoned the Duke of York to a meeting.”

According to several well-informed individuals, the Queen was not amused. She recognized that the Virginia Roberts story had the potential to overshadow the positive media lavished on the forthcoming wedding of William and Kate. The Queen asked Prince Andrew why he had consorted with someone like Jeffrey Epstein, whom the F.B.I. had reportedly linked to about 40 young women, most of them under-age. More to the point, the Queen demanded to know if her son had any more surprises up his sleeve.

“The duke assured his mother that he had no sexual relationship with Virginia Roberts or any of Jeffrey Epstein’s girls,” the source said. “The duke talked to the lawyers on the phone, and, with the approval of the duke and his office, the lawyers drew up a legal document that was meant as a shot across the bow of the press in Britain.” (Buckingham Palace wouldn’t comment on the meeting.)

British libel laws are among the most stringent in the world, so when The Mail on Sunday and other newspapers ran the story about Andrew’s rendezvous with Virginia Roberts in Ghislaine Maxwell’s London home, they carried strong disclaimers saying there was no suggestion of any sexual contact between Prince Andrew and Roberts. That, however, didn’t put an end to the furor in the press and the House of Commons, where it’s highly unusual to hear M.P.’s criticize the royal family. Chris Bryant, the Labour Party’s shadow justice minister, urged Prime Minister David Cameron to “dispense with the services” of the prince. Bryant declared, “It’s just unsustainable that he should remain as the public face of British industry abroad.”

At first, the prime minister appeared reluctant to throw Andrew a lifeline. Indeed, a government source was quoted as saying, “No one will shed any tears if he resigns.” When Andrew visited 10 Downing Street, Jon Cunliffe, the prime minister’s senior adviser on Europe and business, reportedly gave him a severe dressing-down. (A Palace spokesman denies this.)

But after Buckingham Palace weighed in, the government rallied around Andrew. A spokesman said that Cameron “fully supported” the prince in his job. Several prominent businessmen publicly praised Andrew’s role in promoting British industry. “He is of huge value,” Terry Hill, a chairman of Arup, an engineering-design firm, told me. “He’s knockout attractive to overseas clients.”

Most of Andrew’s friends knew better than to get involved in the royal mess. One who didn’t was Goga Ashkenazi, an exotic, publicity-seeking beauty from Kazakhstan, who is frequently photographed in barely-there couture outfits. Britain’s press has likened Ashkenazi to a James Bond girl, and last summer she threw a lavish party in St. Tropez called “Diamonds Are a Girl’s Best Friend.” Invitations went out on a diamond-shaped card signed “Madame Goga.” According to one partygoer, “A lot of rude Russians showed up.”

Ashkenazi, who lives in a multi-million-dollar mansion in London’s Holland Park, brokered the sale of Andrew’s Sunninghill Park home to the father of her illegitimate child. Yet, despite her controversial reputation, Goga has made an appearance in the Queen’s box at Ascot and paraded Andrew around as the guest of honor at her lavish 30th-birthday party at Tyringham Hall, the Buckinghamshire country home of real-estate heir Anton Bilton and his wife, Lisa B, a model, singer, and actress. In an interview with the London Evening Standard, Goga said that after the Jeffrey Epstein story broke Andrew sent her a BlackBerry message asking, “Have you seen the papers?” and saying that he was “very, very upset” about the way he was being portrayed, and “very, very worried” that he would lose his job as Britain’s trade envoy.

Blabbing about the private feelings of a member of the royal family is still considered bad form in Britain, and Ashkenazi’s claim to have had a BlackBerry exchange with Andrew was dismissed by Buckingham Palace. But the damage was done. When Andrew showed up at an official event, a reporter who in the past might have been deferential asked him outright if he was “an embarrassment” to the royal family.

Andrew didn’t respond, but the answer seemed obvious, especially to his handlers in Buckingham Palace, who spotted more serious trouble ahead, hollowing Virginia Roberts’s allegations that she had been flown across state lines and international borders to commit the criminal act of prostitution, the L.B.I. set the wheels in motion to reopen its investigation of Jeffrey Epstein. As a result of a controversial plea bargain that Epstein struck with prosecutors in the U.S. Attorney’s Office in southern Florida, he escaped more serious charges such as statutory rape, which could have sent him to jail for life. Instead, he served only 13 months in prison—most of that time on work furlough. If the L.B.I. decided to file new charges against Epstein, it seemed likely that Prince Andrew would be subpoenaed to testify in the United States.

With the prospect of even further humiliation to her and her son, the Queen decided to intervene by employing the most potent instrument at her command: royal symbolism. She summoned Andrew to Windsor Castle and in a private ceremony invested him with the insignia of a Knight Grand Cross of the Royal Victorian Order, the highest possible honor for “personal service” to the Queen. From now on, Prince Andrew will be entitled to use the letters G.C.V.O. after his name and wear a red-white-and-blue sash complete with the order’s star-shaped insignia, made from sterling silver, silver gilt, and enamel.

Under the protection of the Queen, Prince Andrew was untouchable.

Spoiled but Loyal

Her subjects have a deep reverence for the Queen, who recently turned 85 and in 2012 will celebrate her 60th year on the throne, making her the second-longest-serving British monarch, after Queen Victoria. As things turned out, her symbolic intervention on Andrew’s behalf produced its desired effect. When I arrived in London, two weeks after Andrew’s investiture into the Royal Victorian Order, the British press had fallen all but silent about his murky connections. As for Buckingham Palace, which had been thrown into a state of frenzy by the Virginia Roberts story, it appeared to have regained the customary stiffness in its upper lip.

“The duke has a record of being loyal to his friends,” a royal source explained when I asked him about Andrew’s display of poor judgment. “Take his feelings for Sarah Ferguson. If you are a prince and you bring a woman into the royal life and, for whatever reasons, she’s spit out, you might have feelings of debt toward her. The duke feels that she’s been spattered and rejected. His close relationship with the Duchess of York is problematic, and there have been many problems over the last 5 to 10 years, all of which stem from the duchess. Some of the behavior of the duchess is inconsistent with being married to, or an ex-wife of, the duke. There’s no question but that Sarah’s been a financially self-destructive element in the duke’s life.”

A Buckingham Palace spokesman elaborated on this analysis of the prince’s personality. “The same kind of loyalty manifested itself last December, when the duke visited Epstein at his home in New York,” he told me. “Epstein was a friend of the duke’s for the best part of 20 years. It was the first time in four years that he’d seen Epstein. He now recognizes that the meeting in December was unwise.” A royal source added, “Don’t expect to see a photo of the two of them together.”

“Does that mean that Andrew has broken off all contact with Epstein?,” I asked.

“Hereinafter,” the source said, choosing his words with care, “we won’t see a photo.”

That seemed to leave open the possibility that Andrew intended to carry on his friendship with Epstein, but out of public view.

“I remember when Andrew and Jeffrey Epstein first became friends,” said someone who knows both men well. “Jeffrey had Andrew put on a pair of sweatpants for the first time in his life. He had him wear blue jeans for the first time. It was Jeffrey who taught Andrew how to relax.

“But the major reason Andrew hung out with Jeffrey was to get money for Sarah Ferguson,” this person continued. “Andrew feels responsible for Sarah. She walked away from their divorce with nothing, unlike Princess Diana, who got millions from Prince Charles. There have been newspaper reports that Sarah got £15,000 [$24,500] from Jeffrey, but I think that Sarah has actually received hundreds of thousands of dollars from him.” (Ferguson’s spokesman confirmed that she had received £15,000 from Epstein but wasn’t aware of any additional amount.)

“You have to understand that Andrew still loves Sarah,” the friend went on. “I was with Andrew and Sarah one day when they discussed getting remarried. At the time, Sarah didn’t want to remarry Andrew, because she thought she had a great career in America with Weight Watchers and books and all that. She thought her career would continue to support her expensive lifestyle, and she didn’t want to give all that up to become a boring royal again. Then, after Sarah’s American career collapsed, it was Andrew who didn’t want to remarry her. He told me, ‘Given Sarah’s weaknesses, she wouldn’t make an appropriate royal anymore.’ Also, for the sake of his daughters, Andrew didn’t want to cause a commotion at Buckingham Palace.

A GORDONSTOUN CLASSMATE REPORTEDLY DESCRIBED THE ADULT ANDREW AS “A MAN WITH A FAT BOTTOM WHO LAUGHS AT HIS OWN JOKES.”

“After Jeffrey was convicted, I phoned Andrew and told him, ‘You cannot have a relationship with Jeffrey. You can’t do these things.’ And he said, ‘Stop giving me a hard time. You’re such a puritan.’ From there, our conversation descended into a screaming match, and finally Andrew said, ‘Leave me alone. Jeffrey’s my friend. Being loyal to your friends is a virtue. And I’m going to be loyal to him.’

“Andrew has a stubborn streak. He does stupid things out of hubris, to show that he can do them. If he likes someone, he’ll ignore the truth about that person. And that goes both for Jeffrey and Sarah. He thinks that he can power his way through everything. He’s an adored second son. His mother, the Queen, dotes on him, favors him above all her other children, and excuses his every foible.”

A framed photograph of Andrew in his naval uniform is prominently displayed on the Queen’s desk in her study at Buckingham Palace. Her undisguised affection for her second son stands in sharp contrast to her cool relationship with Prince Charles, with whom she never properly bonded when he was a child. Charles was born just after World War II, when Elizabeth was overwhelmed by her awesome new public responsibilities. She was frequently away on extended foreign trips, and when she was at home she deferred on family matters to her husband, Prince Philip, who was known to belittle their shy, sensitive son cruelly in public.

By the time Andrew was born, 12 years later, things were different. The Queen had gained a great deal of self-confidence, and she wanted to make up for the shortcomings in her parenting of Charles. Right after Andrew’s birth, she sent a note to her cousin Lady Mary Cambridge. “The baby is adorable,” she wrote. “All in all, he’s going to be terribly spoilt by all of us, I’m sure.”

The spoiling never stopped. “Whenever she hears that Andrew is in Buckingham Palace, she’ll send him a handwritten note, and he always goes to see her,” a former Palace aide told Geoffrey Levy and Richard Kay of the Daily Mail. “If he’s in jeans, he’ll change into a suit. And he always greets ‘Mummy’ in the same way—bowing from the neck, kissing her hand, and then kissing her on both cheeks. It’s a little ritual that she adores. Believe me, he can do no wrong.”

Like many spoiled younger sons, Andrew often comes across as arrogant, self-indulgent, and thoughtless of other people’s feelings. A classmate from his days at Gordonstoun—the school that Philip, Charles, and Andrew all attended—reportedly described the adult Andrew as “a man with a fat bottom who laughs at his own jokes.” At a recent lobster dinner, one of the guests turned to Andrew and said, “Sir, you’ve got the big one.” To which Andrew shot back, “How do you know?” and broke into peals of laughter.

The Ladies’ Man

His behavior toward women runs the gamut from boorish to oafish. A woman who attended a weekend party with him at a country house in Dorset recalled his clumsy manners. “I woke up on Saturday morning with a fire extinguisher pointed at my face, behind which was the face of the foolishly laughing prince,” she said. “I told him, ‘Go away!’ It turned out that he had gone to all the girls’ rooms.”

Another woman who knows Andrew well told The Times of London that he looks uncomfortable at parties unless he’s got a girl fawning over him. “[He is] pretty base in terms of women,” she said. “He is a boobs-and-bum man. There is nothing sophisticated about it. One minute you’re having your bum pinched, and the next minute he is reminding you he is Your Royal Highness.”

Since his divorce, Andrew’s most serious romance has been with Amanda Staveley. Andrew invited her to Buckingham Palace and Balmoral, the royal estate in Scotland. He called her “darling,” and she called him “babe.”

“He all but got down on bended knee to ask Amanda to marry him,” Richard Kay, the Daily Mail’s veteran royal writer, told me. “He clicked with Amanda. She’s a feisty girl, a strawberry blonde, and an extrovert. Andrew’s fascinated by money, and Amanda’s got plenty of that. She sounded out a lot of people, including me, about what life would be like as a member of the royal family, and she came as close as possible to saying yes. But to become the Duchess of York she’d have had to put herself in the background and give up her career, and she didn’t want to do that.”

There were reports that Fergie encouraged Andrew to marry Staveley. However, given the unconventional nature of Fergie’s relationship with her former husband, there is reason to doubt that. In fact, those who know Fergie wonder if she has sabotaged most of Andrew’s female relationships and would have found a way to scuttle the marriage if Amanda had accepted Andrew’s proposal. According to this line of reasoning, Fergie still exercises a powerful hold over Andrew and counts on her access to his sources of money.

“Andrew hired a team of accountants to investigate Fergie’s debts,” said a royal-watcher. “He paid off several million pounds’ worth of her debts at 25 English pence to the pound. Where did that money come from? Andrew certainly never had that kind of money. No one can prove it, but the assumption is that Fergie’s debts were quietly retired by the Queen.”

People who have spent time with Andrew’s daughters, Beatrice and Eugenie, come away impressed by their warmth and unpretentious nature. “At a fashion show, I was sitting with Eugenie,” said Richard Dennen, a style writer for The Sunday Times, “and Charlotte Casiraghi, the daughter of Caroline of Monaco and the granddaughter of Grace Kelly, showed up, dressed in cool French chic. She introduced herself to Eugenie in the most impeccable French: ‘Hello, I am Charlotte.’ And Eugenie replied, ‘Hi, I’m Eug,’ which came out sounding like ‘Hi, I’m Huge.’ It was typical old-squire braying English, completely old school, and it was charming.”

But it was Beatrice, not the more extroverted Eugenie, who stood out at the royal wedding with her outré hat. (Beatrice would later auction the hat on eBay, raising $130,000 for charity.) No one knew whether Fergie had influenced Beatrice in her choice, but everyone agreed that Fergie—who has gone clubbing with Beatrice and Eugenie— exerts a great deal of control over her daughters’ lives. Both girls are said to be in awe of their mother and try to be like her.

When Beatrice was 17, she fell in love with a disreputable American by the name of Paolo Liuzzo. He was seven years older than Beatrice, but Andrew and Fergie encouraged the romance and invited Liuzzo to join the family on a vacation at the exclusive Swiss ski resort Verbier. It later turned out that Liuzzo had a rap sheet in America, including a manslaughter charge for taking part in a drunken scuffle that resulted in a man’s death. (Liuzzo eventually pleaded guilty to an assault-and-battery charge and received three years’ probation and 100 hours of community service.) Beatrice was heartbroken when the relationship ended and she had to return to Goldsmiths, which is part of the University of London.

“Beatrice was clearly embarrassed when it was revealed that Fergie took money to introduce an undercover reporter to Prince Andrew,” said someone who has been with the princess at charity balls and nightclubs. “A friend went to Royal Lodge to comfort Beatrice, who wouldn’t leave the house because she was so ashamed and didn’t want to have to deal with the press. The friend spent two nights with her while she cried.”

Andrew’s Future Outlook

During the weeks leading up to the royal wedding, the impact of Andrew’s problems on the future of the monarchy was the subject of much discussion in London. The festivities coincided with the most sweeping fiscal retrenchment in Britain since World War II, which forced the coalition government to cast a gimlet eye at the hefty bill for the royal family. In an era of record budget deficits, it didn’t help the royals’ case for people to read that Andrew had spent roughly $13 million refurbishing Royal Lodge and that, until recently, Princesses Beatrice and Eugenie had 24-hour police protection at a yearly cost to taxpayers of $820,000.

Nor are average Britons keen to hear royals whine about being short of money. The Queen, who is reputed to be among the richest people in the world, with a net worth of about $20 billion, receives $60 million from the government to cover her expenses. Most of her fortune is tied up in priceless art treasures, jewels, and Crown Estates, none of which she can sell. According to Philip Beresford, who follows royal finances for The Sunday Times, the Queen has liquid assets of about $500 million—one-third in shares of blue-chip companies, one-third in revenue-producing properties at Sandringham and Balmoral, and one-third in racehorses and a stamp collection. Last year, the Queen paid the British treasury nearly $328 million in taxes. Plus, she has to come up with money to support all the minor royals staying in Kensington Palace.

Prince Charles’s financial situation resembles that of his mother, though on a reduced scale. As the steward of the Duchy of Cornwall, he gets an annual income of $26 million from great tracts of land in the southwest of England. But he can’t sell any of that property for profit. He donates about 60 percent of his income to charity, and another large chunk goes to pay taxes.

Recently, the hard-up British government decommissioned the country’s last operational aircraft carrier, the H.M.S. Ark Royal, leading The Wall Street Journal to proclaim in a front-page headline, SUN SETTING ON BRITISH POWER. It would be premature to say that the same is true for the British monarchy, though it, too, will have to adapt to the stringent economic realities of the 21st century.

That doesn’t mean, as some have suggested, that the monarchy is doomed to fade away or that there is a groundswell of support in Britain to replace it with a republic. On the contrary, a recent opinion poll showed that 76 percent of Britons are proud to live under a monarchy. But it does mean that the institution of the monarchy is in a state of flux at a critical moment. Both Elizabeth II and the Duke of Edinburgh are advanced in years and may not be able to carry on their responsibilities much longer.

At her 1953 coronation, Elizabeth swore oath to serve God and her subjects, and she shows no desire to abdicate the throne, now or ever. There are signs, however, that she has begun to retreat from public life. She has turned over many of her royal duties to Charles, sending him on foreign trips in her stead and allowing him to confer knighthoods. Last Christmas she reportedly invited Prince William to sit in on his first meeting of the Way Ahead Group, preparing him for the day he becomes King.

Like his mother, Princess Diana, William has a knack for connecting with ordinary people, a quality his father conspicuously lacks. “William is a key player in the future monarchy,” said a source who has studied the matter closely. “He’s going to help direct how things will happen. The popularity of William and Kate is very important. It’s the oxygen the monarchy needs for survival.”

A substantial number of Britons are in favor of Charles’s stepping aside in William’s favor after the Queen dies. But tampering with the succession to the throne would precipitate a constitutional crisis. It would require an act of Parliament plus the passage of legislation by all the Commonwealth governments, neither of which is likely to happen. What’s more, it is well known in royal circles that Camilla is keen to become the first commoner Queen and that Charles is eager to gratify her wish.

“What’s far more likely to happen,” said the royal-watcher Robert Jobson, “is that there will be a seamless change of power in the monarchy, a gradual shift away from the Queen. Charles’s influence will gain, as will William’s. During the last years of Elizabeth’s reign, Charles and William will be like shadow kings.”

Charles turns 63 in November, and given the longevity of the Windsor line, he may have a long wait to ascend the throne. But assuming he outlives his mother, he will become King. He has made no secret of the fact that he intends to make significant changes in the monarchy. To begin with, he’s determined to be seen as the representative of a more inclusive society. He has stated that he will be the Defender of the Faiths— plural— not simply the Church of England, which would be a monumental departure from nearly 500 years of tradition. He also wants a thriftier, pared-down monarchy, which is not so open to criticism.

All of this is bad news for Prince Andrew. Up till now, Andrew and his daughters have lived a charmed life. To please her favorite son, Queen Elizabeth has taken Beatrice and Eugenie under her wing and given them a place of honor on the balcony of Buckingham Palace during state occasions. Over the objections of her husband, the Queen has indulged Andrew’s wish to live under the same roof as his ex-wife, and she has turned a blind eye to his improper behavior.

But the time is nearing when Prince Charles will take a more significant role in running the affairs of the British monarchy. And as Queen Elizabeth’s power wanes and Charles’s power grows, Andrew is likely to find himself out of a job and out of luck.