REPORT TO

HIS ROYAL HIGHNESS THE PRINCE OF WALES

BY

SIR MICHAEL PEAT AND EDMUND LAWSON QC

13th March 2003

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INTRODUCTION AND SUMMARY OF CONCLUSIONS

Introduction On 11th November 2002, following the termination of the trial of Mr Paul Burrell, The Prince of Wales asked his Private Secretary, Sir Michael Peat, assisted by Edmund Lawson QC, to inquire into and report to him in respect of four matters raised in Press reports. His Royal Highness was concerned to know whether the Press reports were correct and, if so, to address any failings or deficiencies in the administrative procedures in his OYce. This is the Report which we, Sir Michael Peat and Edmund Lawson, have prepared and which sets out our findings and conclusions in respect of the following four questions. 1. Was there an improper cover-up of the rape allegation made by Mr George Smith in 1996? 2. Was there anything improper or remiss in the conduct of The Prince of Wales’s Household with respect to the termination of the Burrell trial? 3. Have oYcial gifts given to The Prince of Wales been sold? 4. Have any staV in the Prince of Wales’s Household received improper payments or other benefits? Sir Michael Peat, who became The Prince of Wales’s Private Secretary on 12th August 2002, was himself involved in discussion with the Police and others in connection with the Burrell trial; and he was involved in the disclosure made on 28th October 2002 to the Police and the Crown Prosecution Service (“CPS”) of The Queen’s earlier conversation with Mr Burrell. In these circumstances Sir Michael considered it best that he should not report with respect to this part of the Inquiry. Accordingly, the Section of our otherwise joint Report covering Question 2 is the exclusive responsibility of Mr Lawson.

The investigation As a non-statutory Inquiry, we had no power to compel the co-operation of those identified as having or possibly having information which concerned our terms of reference. We are pleased to say, however, that with very few exceptions1, all those approached by us agreed to assist whether by the provision of documents or information or both; and we are grateful to them. Early in our investigations we requested the help of the newspapers which had published substantial articles relating to one or more of the Questions. They were

1 Messrs. Burrell and Brown declined to be involved. Miss Mendham, Personal Secretary to the late Diana, Princess of Wales, spoke briefly to Sir Michael in respect of aspects of Question 1 but otherwise would not assist.

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unable to assist us beyond referring to the published material and, understandably, were unwilling to reveal sources. We had no lawful power to take evidence under oath. Principal witnesses were, however, interviewed by us, often in addition to their providing written accounts; others clarified their written accounts in informal interview. Appended, as Annex 1, is a list of those who have assisted the Inquiry. To the extent that individuals are criticised in this Report, notice of provisional criticisms was provided; and due account has been taken, in completing this Report, of representations made to us in response.

Conclusions A summary of our conclusions in respect of each of the four Questions is given below.

1. Was there an improper cover-up of the rape allegation made by Mr George Smithin 1996? No one believed Mr Smith’s rape allegation. The Prince of Wales gave no credence to it and Household staV with whom Mrs Shackleton discussed the allegation shared his disbelief. Hounslow Police did not give the allegation credence and did not investigate it. The allegation was not investigated by the Household because it was disbelieved, because Mr Smith declined to pursue his complaint and because investigation, to the extent that it was considered, was pointless. It had been decided that Mr Smith had to go; and those were the instructions received from The Prince of Wales. A, if not the, major concern from an early stage was to avoid publicity being given to what was believed to be a baseless allegation. There was also a proper concern to follow The Prince of Wales’s instruction that Mr Smith should be well provided for. The objectives were, therefore, to remove Mr Smith, without giving him cause to repeat the allegation; and to provide generously for his, Mr Smith’s, future. The two were obviously connected. A serious allegation of this sort should not, in our opinion, have been treated so dismissively, even though there was universal disbelief as to its veracity, without (at minimum) full and documented consideration of the decision not to investigate. It might have been diVerent if Mr Smith had unequivocally and apparently rationally confirmed that the allegation was not true. That is not, however, what he did. As recorded by Mrs Shackleton’s assistant, he only indicated that he did not wish to pursue it, expressly by reason of the ‘power’ of the alleged assailant (“AA”) and implicitly because he thought that he might be able to keep his job. No one considered the significance of the reasons given by Mr Smith. The reason for no proper consideration apparently being given to the matter probably lay in the ‘mind-set’ of those involved in the Household: ‘poor George’ had made up this allegation; publicity of it would be unfairly damaging to the ‘innocent’ AA; his having made, as they saw it, a false and serious allegation against AA made it impossible for him to work in the same Household as AA; his health problems made him unfit for duty; and so, ‘George had to go’.

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The settlement with Mr Smith was very generous, but not to the extent that we are driven to conclude that it derived from an improper motive (that is, to suppress the truth). In short, there was an anxiety to prevent dissemination or publication of Mr Smith’s rape allegation. There was, however, clearly a belief, genuinely held, that there was no truth in that allegation. There was not, therefore, an improper cover- up in the sense that those involved deliberately or dishonestly sought to suppress what they believed to be, or thought might be, true.

2. Was there anything improper or remiss in the conduct of The Prince of Wales’s Household with respect to the termination of the Burrell trial? The Prince of Wales had, throughout, serious concerns about the implications of Mr Burrell being tried. He was concerned at the prospect of himself and, more particularly, his sons being called as witnesses, and understandably worried that information personal to himself and his family would be revealed during the trial and be the subject of intense media interest. His main concern in that regard was the distress which could be caused to his sons by ‘revelations’, true or not, relating to their mother. Those concerns and worries were increased by the stance adopted by Mr Burrell’s lawyers after Mr Burrell was charged, in correspondence and in meetings. He would have preferred it if a trial could have been avoided. He was advised, however, that he could not properly intervene and should not be seen to be interfering with or seeking to influence the prosecution process, and he followed that advice. Several obvious opportunities presented themselves during the investigation to intervene and to stop the process, but none was taken. The disclosure made on 28th October 2002 of The Queen’s conversation with Mr Burrell was properly made. Had it not been made, those advising Her Majesty and The Prince of Wales could rightly and strongly have been criticised. The suggestion that the disclosure was made for improper motive and in the expectation of preventing the trial continuing finds no support in the available evidence. I conclude that there was no improper conduct by or on behalf of The Prince of Wales in respect of the termination of the Burrell trial.

3. Have oYcial gifts given to The Prince of Wales been sold? The policies and procedures in The Prince of Wales’s Household to record and control the receipt, maintenance and disposal of oYcial and other gifts, including the maintenance of inventory records, have been deficient. This was not, we believe, intentional, but the result of pressure of work and limited resources and in part because those involved had become accustomed to the informal practices then operating. The procedures have been or are in course of being enhanced to be in line with current best practice. It has always been the policy, even though not documented, that oYcial gifts should not be sold, exchanged, or given away other than to charity. However, there was no documented definition of oYcial gifts, and while The Prince of Wales himself was quite clear that they included gifts received during or in connection with an

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oYcial engagement recorded in the Court Circular and gifts sent in by the public, many staV were unaware of the definition, and had not been given any guidance as to how oYcial gifts should be treated. The procedures have now been enhanced and the definition of oYcial gifts extended to include all items given by businesses.

The lack of adequate records made it diYcult to identify whether or not oYcial gifts have been sold, exchanged or given away. However, a detailed exercise was undertaken to construct records for a three year period (1999 to 2001), using the new more comprehensive definition of oYcial gifts, in order to identify gifts received. We then sought to trace gifts with an estimated value of £150 or more. Of the 180 traceable oYcial gifts with an estimated value of £150 or more identified as having been given to The Prince of Wales during the three year period, 19 could not be accounted for. Probably most had limited realisable value if sold and none of the Royal Warrant Holders and suppliers to whom we wrote reported the purchase of any of these items. We believe that it is unlikely that The Prince of Wales would have asked for any of these items to be exchanged or sold; however, it is possible that they have been given to or taken by staV or destroyed, but we have no evidence to this eVect.

The Prince of Wales has passed on gifts he has been given to staV; however these have generally been lower value items, mainly prizes won or given at polo matches. The Prince of Wales has not as a matter of principle passed on oYcial gifts to staV, unless they are food or other perishable items, for obvious practical reasons, or small lower value items which he feels that the member of staV might enjoy. The latter were mainly items given to the Prince of Wales on overseas tours or on visits to organisations in this Country and, as far as we aware, have never included any items given or sent in by members of the public. No oYcial gifts at all will be given away in future, except to or for charity or (for practical reasons) if they are food, flowers or other perishable items with a value of £50 or less.

Replies from Royal Warrant Holders and other suppliers and responses to the staV questionnaire, identified three gifts (two were listed as a result of the 1999"2001 review and one fell outside the period), which under the new definition would be classified as oYcial, as having been sold or exchanged during the period since 1st April 1996. In two cases it was not realised at the time that the gifts concerned were oYcial and the third gift would only be classified as oYcial under the new more comprehensive definition of oYcial gifts introduced in this Report.

In addition, seven private gifts were identified as having been sold or exchanged during the six year period. No private gifts will in future be sold or exchanged, other than in exceptional circumstances and with the donor’s agreement.

In short, our investigations have identified one oYcial gift which has been sold (it was thought to be private), two which have been exchanged (one was classified as private at the time) and an unquantified number of smaller gifts which have been given to staV (because it was believed that they would otherwise go to waste). 19 gifts with a value of £150 or more were unaccounted for. In addition, oYcial gifts have been sold for charity. Policies and procedures in this area have been deficient. They need to be, and are being, enhanced.

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4. Have any staV in the Prince of Wales’s Household received improper payments or other benefits?

A range of audit tests has been undertaken, but no evidence has been found of staV selling, without authorisation, gifts given to The Prince of Wales or of staV taking unauthorised commissions or “slices” of the proceeds if authorisation has been given. However, inventory controls and other administrative procedures in this area have been deficient. They are in course of being improved.

There is also no evidence of Household employees taking or seeking corrupt payments from existing or aspirant Royal Warrant Holders, or other suppliers. StaV have accepted a range of gifts and entertainment from Royal Warrant Holders and other suppliers, the value in one case amounting in aggregate to several thousand pounds, despite a requirement in their terms of employment not to “accept presents from firms or tradesmen”. However, this term was not enforced and the practice of accepting presents and entertainment was with the knowledge and implicit approval of senior management.

Discounts have also been received by staV from Royal Warrant Holders and other suppliers in respect of personal purchases. This is not unusual in a number of organisations; however, there was a lack of a policy and procedures governing the practice in The Prince of Wales’s Household.

Administrative procedures have been or are being enhanced in these areas.

Insofar as the press comments and allegations have been directed at Mr Fawcett, our investigation has not produced any evidence of financial impropriety on his part. He did infringe the internal rules relating to gifts from suppliers, but opprobrium cannot attach to this because the rules were not enforced and he made no secret of such gifts. Press suspicions were understandably aroused by his involvement in the sale of gifts (which, unknown to the media, were all authorised by The Prince of Wales) and by it being widely known that he received valuable benefits from third parties. His robust approach to dealing with some people combined, perhaps, with his having been promoted from a relatively junior position within the Household, undoubtedly caused jealousy and friction in some quarters. This has encouraged some to voice rumours as to his financial probity; but they are just that, rumours. There is no evidence to justify a finding by us that he has been guilty of the alleged financial misconduct.

In short, we have found no evidence of staV selling gifts or other items without authorisation or of their taking commissions on sales. Gifts and discounts have been given to staV by suppliers; however, this was done with implicit authorisation and we have found no evidence that it resulted in decisions being influenced. Policies and procedures in these areas have been deficient. They need to be, and are being, enhanced.

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Charitable donations We have not considered the procedures governing donations to charities associated with The Prince of Wales as part of this review. This matter will be reviewed by the management and trustees of the charities concerned as part of their normal ongoing work.

Acknowledgements We wish to record our gratitude to all those who have assisted in our investigation and the preparation of this Report. In particular, we are indebted to Mrs. Winifred Whiteley, who served as Secretary to the Inquiry, and to Mr. Stuart Biggs and Miss Katerina Ivanova, both of counsel, who assisted in the gathering of evidence.

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QUESTION 1

WAS THERE AN IMPROPER COVER-UP OF THE RAPE ALLEGATION MADE BY MR GEORGE SMITH IN 1996?

Introduction 1.1 In 1996 The Prince of Wales and members of his Household became aware that George Smith, then employed as a valet, had alleged that he had been the victim in 1989 of homosexual rape by another employee who was still a member of the Household. The other employee was named by him. The allegation has never been proved or tested in Court. The media are aware of the identity of that other employee, as are we, but his identity has not been published in the UK Press. We will follow the same course and refer to the employee only as the alleged assailant, or “AA”. 1.2 Mr Smith’s allegations were, apparently, first made in late 1995, to a fellow- employee and also to Diana, Princess of Wales, to whom he repeated them in 1996. The Princess of Wales, it is suggested, made or attempted to make tape recordings of his allegations. If she succeeded in doing so, the whereabouts of the tape or tapes is unknown to us. The allegations came to the notice of The Prince of Wales and, through him, to the notice of some members of and advisers to his Household in October 1996. Also in October 1996, Mr Smith repeated the allegations to his local Police at Hounslow. After some initial equivocation, Mr Smith in October 1996 told both Household representatives and Hounslow Police that he did not wish to pursue the allegations. There was no formal investigation, either internally or by the Police, at that time. 1.3 At the end of 1996, a settlement was negotiated with Mr Smith for his departure from Household employment. An agreement involving a generous compensation package was completed in January 1997. At the core of our Inquiry in this Section is the question whether that agreement was motivated by a desire, on the part of Household, to “cover-up” Mr Smith’s very serious allegation. 1.4 The rape allegation lay dormant until 2001. In November 2000, repeated in April 2001 and in connection with the proceedings then contemplated against Paul Burrell, Lady Sarah McCorquodale (The Princess of Wales’s sister) told Police of her having found, after The Princess of Wales’s death, a ‘sensitive’ tape recording, which has been suggested to have contained the recording(s) of Mr Smith’s allegation as stated to The Princess of Wales. Lady Sarah recalled entrusting the tape and other items to Paul Burrell for safe-keeping: hence the issue being mentioned in connection with the Burrell investigation. As we are told by his solicitor, Mr Burrell denies that he had possession of the tape. In 2001, the Metropolitan Police investigated the rape allegations, and no proceedings were brought. 1.5 Our task is not to investigate or to assess the merits of Mr Smith’s allegations and we do not express and should not be thought to be expressing any view as to their truth or otherwise. Our sole responsibility is to report upon the

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suggestion that the Household was involved in an improper ‘cover-up’ of those allegations in 1996.

‘Improper cover-up’ and employer’s obligations 1.6 It is important that, at the outset, we indicate our understanding of the words ‘improper cover-up’ in this context and consider the obligations, and what might be the normal response of an employer, if a serious allegation is made by one employee against another. 1.7 With respect to ‘improper cover-up’, it seems to us that this means or implies actions taken with a view to suppressing the truth, or at least preventing an investigation of what may be true. 1.8 With respect to the employer’s obligations when one employee makes a serious allegation against another, there is ordinarily no formal, or legal, obligation upon the employer to investigate the truth of that allegation, particularly if, as in this case, the incident was alleged to have taken place outside the workplace and out of working hours. An employer and those advising will, however, doubtless wish to enquire as to the truth of the allegation, if its being made may aVect the continued employment of one or both of the employees concerned. If an employer is considering dismissing the complainant employee for reasons which include the making of false allegations, the employer would normally have to conduct some investigation into the circumstances surrounding the making of the allegation and its possible truth; otherwise, the contemplated dismissal may be found to have been unfair. 1.9 An allegation as serious as rape might, in particular, have required an investigation. It would have been concerning to continue to employ a possible rapist in a job which required trust and discretion. Alternatively, if the allegation was false, a reasonable employer would wish to consider whether the maker of such a serious false complaint against a colleague could still be employed. 1.10 It may be, of course, that a complaint is patently absurd and so inherently incredible that it can be rejected out of hand and the circumstance of its being made treated as a ground for dismissal without detailed investigation; but the employer would need to be mindful that, if the fairness of the dismissal was challenged, he would have to establish that it was reasonable peremptorily to have rejected the complaint. An employer may, of course, choose not to investigate, instead seeking to agree a financial settlement with the complainant employee in return for his voluntarily leaving. 1.11 Further, there is, we believe, no legal obligation upon an employer to ‘blow the whistle’ to Police in respect of an allegation of crime. A reasonable employer may wish to advise an employee complaining of crime that, if he wishes to pursue the complaint, he should go to the Police, who have the powers and expertise to investigate it, and/or to take independent legal advice. The employer cannot, however, force the employee to accept the advice; and, if he does not want to complain to Police, there is nothing further the employer should do vis-a`-vis a Police investigation.

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Confidentiality 1.12 The employer also has a right to confidentiality as do employees in respect of personal matters. There is nothing ‘wrong’, legally or morally, in an employer’s servants or agents (including his legal advisers) seeking to maintain confidentiality in respect of the employer’s aVairs; indeed the opposite applies. More specifically, in the current context, they may properly seek to suppress publicity being given to allegations which they believe to be untrue; but such conduct may attract suspicion and criticism if that belief has not been tested by some investigation of the truth.

Reliance on attendance notes 1.13 As appears below, we place some reliance upon the attendance notes prepared by The Prince of Wales’s solicitors, particularly in respect of meetings and discussions held in October 1996. The Prince of Wales having waived legal professional privilege, his solicitors have made available to us their files, including such notes; and we are very grateful for that. Attendance notes are often created solely as the solicitor’s internal note of discussions (although sometimes fuller notes will be prepared of significant meetings or where it is proposed that the notes should be provided to clients); they are summaries, not verbatim transcripts. 1.14 We have been told by The Prince of Wales’s solicitor, Mrs Fiona Shackleton2, (then a partner in Farrer & Co.) that telephone attendance notes should be approached with some caution, since they are prepared from rough notes and often not checked after dictation. Mrs Shackleton has pointed out to us that some of the typed notes do not accurately reflect manuscript notes made at the time; and we have inspected those manuscript notes in the light of that observation. Where a diVerence between the two is or may be material, we draw attention to that below.

Contents of this Section 1.15 In this Section, we first set out the background information known to us in relation to Mr Smith; and then report on the facts discovered by us relating to his rape allegation and the way in which it was handled in 1996. Finally, we set out our conclusions upon the evidence and the issues arising.

Background information 1.16 Mr Smith’s known background should briefly be referred to. Its relevance is limited to the fact that his background and in particular the problems from which he was known to be suVering contributed to a lack of credence being given to his allegations when they were made in 1996. Mr Smith has waived confidentiality in respect of his personal background and ‘problems’ which are referred to in newspaper articles written with his apparent authority.

2 Mrs Shackleton was and is a solicitor in independent practice. She had no general retainer from The Prince of Wales. At the time, her legal services were sought on an ad hoc basis.

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1.17 Mr Smith’s personnel file was not well-maintained by The Prince of Wales’s OYce. His file is incomplete and there is, for example, no record of absences through sickness or other causes; and scant reference to previous disciplinary matters. From the file we can, however, identify some of the background, supplementing that information by what we learned from Mr Smith in interview and from others employed in the Household at the time. 1.18 Mr Smith was a temporary employee in the Household from 1987. On 23rd September 1987 he signed an OYcial Secrets Act declaration and gave an undertaking of confidentiality. He was apparently initially seconded from the Welsh Guards. In interview by Police in 2001, Mr Smith said that The Prince of Wales ‘bought him out’ of the Welsh Guards, enabling him to become a full- time employee. 1.19 A ‘Terms of Service’ contract signed by Mr Smith on 23rd February 1995 refers to his (presumably ‘permanent’) employment as ‘Travelling Orderly’ to The Prince of Wales dating from 1st April 1989. The document contains a further confidentiality undertaking. Other information suggests that Mr Smith was promoted to ‘Assistant Valet’ in January 1993. 1.20 There are documents relating to an incident of alleged drunkenness in 1989, which is mentioned for completeness; but it did not result in formal discipline. No further incidents are referred to on the file until 1995. Various members of the Household have told us of their believing Mr Smith to have ‘a drink problem’ at this time; but there is no record, pre-June 1996, of any specifics or of what, if anything, was done about it. Mr Smith denies that he was alcoholic and does not acknowledge that he had a ‘drink problem’ at least not so as to aVect his work. 1.21 On about 25th October 1995, it was reported to Mr Richard Aylard, then Private Secretary to The Prince of Wales, that Mr Smith had been “taken ill”. He is reported to have been undergoing ‘marital problems’ and to have become chronically depressed. Mr Smith returned from Scotland to find that his wife had left him. This, for him, was ‘the last straw’. The report says that, in consultation with Mrs Yaxley, then Personnel OYcer, it was arranged that Mrs Yaxley’s assistant, Elizabeth Norris (now Mrs Burgess), would take Mr Smith from his Twickenham home to Highgrove where he could be looked after. As Mr Smith recalls, a number of people from the Palace came to his home in response to his distressed call. 1.22 The 25th October 1995 report to Mr Aylard refers to Mr Smith apparently suVering from post-traumatic stress disorder following his experience on the Sir Galahad in the Falklands conflict “and other experiences that he has not yet discussed until this time with anyone”. 1.23 Mrs Burgess recalls that during the journey to Highgrove, a deeply upset Mr Smith ‘poured out his heart’ to her, telling her at length about his horrific experiences in the Falklands on the Sir Galahad and mentioning problems in his childhood. He added, almost passingly, reference to ‘the fact’ that he had been raped by AA. He gave no detail; and Mrs Burgess did not ask him for any. She heard no more about the allegation until very much later, when there was

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Press publicity, that is in about 2001. She told no one about the allegation. She explained, in our view credibly, that she had been told this in confidence by Mr Smith. She thought that telling Mr Aylard would inevitably result in Mr Smith being ‘got rid of’ and so she kept quiet. 1.24 Mr Smith has no recall of telling Mrs Burgess about the alleged rape, but he got on well with and thinks highly of her. He does not doubt her credibility; but simply has no recall, which, having regard to his then condition, is hardly surprising. Her description of Mr Smith’s account of his personal history and problems, including the alleged rape, is remarkably similar to that recorded by Hounslow Police as given by Mr Smith in October 1996. 1.25 It is apparent, not only from the accounts referred to above, but also from contemporaneous observations made by Highgrove staV, that Mr Smith was at this time in an extremely disturbed state. 1.26 Mr Smith was referred for treatment to the Priory. This was the first of several stays by Mr Smith at the Priory. As Mr Smith explained in interview by the Police in 2001, his three stays at the Priory were paid for, after his staV health insurance cover was exhausted, by The Prince of Wales, the final balance being part of the settlement agreement referred to later. A number of Household staV, past and present, have referred to The Prince’s generous approach towards employees; this appears to be an example. There could have been no ulterior motive for such payments being agreed in 1995 and early 1996, since The Prince was not then aware of Mr Smith’s allegations. 1.27 As at 23rd November 1995 it was reported to The Prince of Wales that progress was being made at the Priory, which Mr Smith was expected to leave by Christmas, although he would need ongoing out-patient support. It was suggested, by Mrs Burgess, passing on the medical advice, that they should seek then to “ease him back in to his working life”. 1.28 It appears that during a stay at the Priory, Mr Smith was visited by The Princess of Wales, it being suggested that this was the occasion when he told her of the rape. Our information concerning this is contradictory and vague. Initially we understood that the rape allegation had been made during this first stay at the Priory; that may, however, not be right. Victoria Mendham, then The Princess of Wales’s Personal Secretary, has told us that she accompanied The Princess of Wales on a visit to Mr Smith when The Princess of Wales attempted, apparently unsuccessfully, to tape a conversation. However, we do not know the date of this visit and Miss Mendham has declined to assist us. 1.29 Mr Smith asserted to us that he first complained of the rape attack to The Princess of Wales during a visit she made to the Priory in late 1995 or early 1996. When interviewed by Police in July 2001, Mr Smith said that his first report of the rape allegation to The Princess of Wales (and Miss Mendham) had been at Kensington Palace (“I went to see her and she was just asking me about all diVerent stuV about AA”). He said that he had repeated the allegations to her sometime in 1996 when she visited him during his third stay at the Priory. He also told the Police that his revelation to The Princess of Wales occurred “at the end of 1996”, which, it seems to us, must have been a mistake.

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In the light of these confusing and contradictory accounts, the best we can do is to conclude that the rape allegation may have been made to The Princess of Wales in late 1995; or it may have been in early to mid 1996; at all events, it was obviously mentioned to her before October 1996. 1.30 Mrs Burgess referred us to an incident which occurred soon after Mr Smith’s discharge from the Priory. She could not be specific but thought this to be at about the end of 1995 or in early 1996. Mr Smith was reported to have ‘gone on a bender’, drinking in pubs in the Kensington area. She was sent out on her bike to look for him. While she was out, she received a message that Mr Smith was at Kensington Palace with The Princess of Wales. She went there. Mr Smith was or had been talking with The Princess of Wales; about what she does not know. Mr Smith told us that he had visited Kensington Palace at The Princess’s invitation probably in early 1996 when they “talked of lots of things” but not, he thought, the rape, although he could not be sure. He also referred to an occasion, at about the same time, when The Princess visited him at his home; on this occasion, he tells us, “we definitely talked about both rapes”. (Emphasis added) 1.31 We interrupt the chronology to refer to the allegation of a second rape, this being its first mention. In 2001, when interviewed by the Police, Mr Smith complained of a further alleged rape, which, he said, happened during a Royal visit abroad ‘a couple of years’ after the first, which he then dated as occurring in 1988.3 In October 1996 the Household and The Prince’s advisers were aware only of the 1988/9 allegation; and that appears to be the only allegation of rape made by Mr Smith to Hounslow Police in 1996 (see paragraph 1.43(b) below). 1.32 Returning to chronological events, we have no other information until June 1996. On 4th June 1996 Mr Aylard held a disciplinary hearing in relation to Mr Smith having been charged by Police with being “drunk in possession of a car”. Evidently the court hearing had yet to take place and the file note records that, if Mr Smith was found not guilty, the file note would be expunged. Mr Smith, according to the file note, was given a final warning as to his future conduct, in particular in relation to drinking. 1.33 The Household, by Mrs Yaxley, provided a ‘reference’ dated 24th June 1996 in connection with the court case. It was said that: “Mr Smith is a highly valued and liked member of the organisation and his duties are carried out at (sic) an extremely high standard. The Prince of Wales and key members of his staV are very aware of the personal traumas Mr Smith has been dealing with recently and I feel it is appropriate to say that at all times, when on duty, he has continued to work to the required high standard...” 1.34 On 7th August 1996 Mrs Yaxley reported to The Prince of Wales that Mr Smith had been taken back to hospital the previous evening “in the most awful state”. Medical advice suggested that he needed a month or more’s treatment for his alcoholism. She thought that he might be oV work for some time. She

3 The Mail on Sunday’s exclusive interview with Mr Smith published on 10th November 2002 attributed to him the suggestion that the second alleged incident happened in 1995.

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suggested that consideration be given to creating a job within the oYce for him. The tenor of the report is sympathetic to Mr Smith; and there was, then, an obvious desire to help him if possible. 1.35 By 22nd August 1996 Mr Smith was apparently out of hospital. On that day there is a record of a further meeting between him and Mr Aylard and others, when Mr Smith was told that he could no longer serve as Assistant Valet, but would work in the oYce. Mr Aylard warned him that he was not allowed to drink on duty, stating that “if at any time it was noticeable that he had been drinking, he would be instantly dismissed”. It was added that: “Although this change is for a trial period of 3 months, Commander Aylard made it very clear to Mr Smith that there was no guarantee that he would get his original position back, in fact it would be most unlikely.” The file note was counter-signed by Mr Smith amongst others.

The rape allegation 1.36 It is said by Mrs Burgess (paragraph 1.23) that the allegation was made to her in late 1995; but she told no one of it and did nothing about it, for reasons she explained. If, as is suggested to us, the allegation was made to The Princess of Wales in late 1995, that appears to have been during Mr Smith’s first stay at the Priory; alternatively or perhaps additionally, Mr Smith evidently made or repeated the allegation to The Princess of Wales in 1996. There is no ‘evidence’ of which we are aware that The Princess of Wales passed on the information or allegation at that time or at any time prior to the autumn of 1996, when she told The Prince of Wales. According to Mrs Yaxley (in a statement made to Police on 13th September 2001), The Princess of Wales telephoned her shortly before her, The Princess of Wales’s, conversation with The Prince of Wales and mentioned an ‘horrendous’ allegation made to her by Mr Smith about another member of staV. Mrs Yaxley could not recall if rape was specifically mentioned. There is no note of the conversation. 1.37 As far as we are aware, the first contemporaneous note referring to the allegation is that made by Mrs Shackleton, and dated 3rd October 1996, in which she records a telephone conversation with The Prince of Wales:4 “Attending POW...... Diana has been interfering & visiting George Smith, a valet who was suVering from post-traumatic stress syndrome— from Falklands—George was now alleging that AA had raped him years ago. You knew this to be absolutely untrue & you wanted this cleared up. FSS [Mrs Shackleton] asked what action to be taken. You said that George must go. You felt very sorry for him as he was an alcoholic and could not do his job properly but you could not have him causing trouble in your Household by spreading untruths about AA. AA was in a terrible state....—FSS to ring AJ5 to tell him to stop Diana interfering etc. & to sort out George making sure he was properly looked after.”

4 Farrer & Co’s attendance note style was to write in the second-person, as if writing to the person attended upon. 5 Dr. Julius, The Princess of Wales’s solicitor

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1.38 Amongst the papers provided to us by Mrs Shackleton and others, there are no records of any dealings by Household staV or advisers relating to Mr Smith’s allegation during the period immediately following that conversation, from 3rd October to 16th October inclusive. Mrs Shackleton’s next note is dated 17th October. Having regard to the concerns expressed by The Prince of Wales to Mrs Shackleton on 3rd October, it is strange, if that date is correct, that no action appears to have been taken by her during the following two weeks; at least there is no record of any action being taken.

1.39 Mrs Shackleton has very recently suggested to us that the 3rd October date on her manuscript note must be wrong, although that plainly was the date clearly written by her upon it. Her professional diary was, she tells us, very full for that day and there is no mention made of The Prince of Wales. The absence of a note in her diary is hardly surprising, bearing in mind that The Prince of Wales telephoned her out of the blue. She is unable to date the conversation, but suggests that, having regard to the urgency of the matter, it is inconceivable that as long as two weeks elapsed between the initial conversation with The Prince of Wales and her next recorded action. She thinks that the telephone conversation may have been as late as 16th or 17th October. Mrs Shackleton may well be right; if she is, there is no other record which enables us to identify the date upon which she was first instructed in respect of this issue by The Prince of Wales, who is himself unable to identify the precise date. Whenever the conversation occurred, The Prince of Wales has confirmed to us that the substance of it was accurately recorded in Mrs Shackleton’s note quoted above.

1.40 It is apparent that Mrs Yaxley spoke to Mr Smith during the first half of October: there is no note of her conversation(s). Plainly, as a matter of good practice, there should have been. We have, however, had the benefit of her recollection of that contact, and there is some reference to it in the Police notes (see paragraph 1.43(d)).

1.41 Mrs Yaxley says that when she first spoke to Mr Smith, he confirmed his allegation of rape to her and indicated that he wished to pursue the allegation. She says that, later, he indicated that he was unsure whether to pursue the matter; and later still, he said that he did not wish to pursue his allegation. These discussions all took place, as she recalls, during early to mid October 1996. That Mrs Yaxley was in contact concerning the rape allegation is supported by Police records of what they were being told at the time by Mr Smith. Police records also confirm her recollection that, after initial equivocation, Mr Smith indicated that he did not want to pursue a complaint.

1.42 In interview by us, Mr Smith was adamant that he had never spoken to Mrs Yaxley concerning the rape. We do not doubt his sincerity, but he is, in our view, mistaken.

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Police records 1.43 It is apparent from Police records that, during October, Mr Smith discussed the rape allegation with his local Police. Police records made available to us (with Mr Smith’s consent, for which we are grateful) confirm that Mr Smith made the rape allegation to Police at Hounslow. Mr Smith has told us that he does not recall doing so; nor, indeed, does he recall any contact with Hounslow Police. At the time, however, he was plainly unwell, and there is no reason not to accept as, substantially accurate, the contemporaneous records made by Police OYcers concerning the frequent contact between them and Mr Smith in October and early November 1996. It is recorded that: a) On and after 7th October 1996, Mr Smith complained to local Police at Hounslow that he was the victim of an unknown man who had approached him at his home and in the street and had threatened him with violence, including with a gun. Police were called by Mr Smith on a number of occasions in connection with this. CCTV footage was closely examined in respect of occasions when Mr Smith alleged the gunman to have appeared, but no trace of the gunman was ever found or any sighting of him made. It seems that this may have been a figment of Mr Smith’s disturbed imagination. b) According to Police records, on 13th-15th October, Mr Smith told investigating oYcers of his background and various personal problems (as he had done with Mrs Burgess a year earlier), including the alleged rape in 1989. Mr Smith identified the alleged rapist by name. The note reads: “Victim states that one night they got very drunk and AA raped him”. c) On 15th October, Police records indicate that Mr Smith expressed himself unsure whether he should pursue the allegation of rape. The note reads: ‘Advised to consider the matter. It occurred in 1989 and thus can make the decision when he is ready and feels able to cope. Report outlines lack of forensic opportunities or medical evidence.’ There is a record of Mr Smith revealing his having discussed the issues with, amongst others, his medical ‘counsellors’, Victoria Mendham and The Princess of Wales, who, Mr Smith thought, would have told The Prince of Wales. As mentioned above, we have not had the benefit of Miss Mendham’s assistance. d) The topic was revisited by Police the following day, 16th October, with Mr Smith, who is recorded as referring to Mrs Yaxley having been to see him, telling him that ‘people at work’ knew of the rape allegation and of ‘the sensitive issue of publicity’. According to the note: “DC Carter talked to Smith about the allegation against AA. Smith indicated he is unsure what to do but is adamant he did not wish to make a formal complaint. DC Carter intimates that his problem with this stems from getting someone to believe him. ...” e) Except for a reference dated 18th October when Mr Smith is recorded as referring to Mrs Yaxley having contacted him inter alia ‘wanting to know

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what he intended to do about AA’, there is no further reference in the 1996 notes to the rape allegation. It appears not to have been pursued by Police in the light of Mr Smith’s expressed desire not to make a formal complaint. Detective Inspector Hudson, in a submission dated 25th February 2002, reports that the ‘CRIS’ (Crime Report Information System) opened by Hounslow Police in respect of the rape allegation “was discontinued because of the unreliability of previous allegations made by Smith”. f) There was continued contact between Police and Mr Smith up to 6th November 1996; but this—and a statement made by Mr Smith to Police on 30th October—did not relate or refer to the rape allegation, but to the complaint concerning the armed stalker.

The Household 1.44 Reverting to Mrs Shackleton’s attendance notes, on 17th October 1996 she and her assistant, Miss Fiona Brown, attended upon Mrs Yaxley (it appears, by telephone). The note prepared by Miss Brown states that: “You said that George Smith had begun re-issuing allegations in respect of AA... He is saying that AA raped him in 1989. He has told Hounslow Police but has not yet made a statement and does not know if he will proceed with the allegations. You have explained to him how serious it is to make such allegations. Mrs Shackleton asked you if there was any truth in it. You said you did not think so. AA was horrified when told and vehemently denied the allegation. Mr Richard Aylard also believes that there is no truth in the rumour. Mrs Shackleton said that, if George Smith is fantasising, that is one thing, but if the matter is true then it has to be dealt with.” 1.45 Thus, it appears that by 17th October, Mr Smith had been “re-issuing” the allegation of rape (and, perhaps, allegations of financial irregularity—see paragraphs 1.55-1.57). Neither Mrs Shackleton nor Mrs Yaxley was able to help us as to what was intended to be conveyed by ‘re-issuing’. Perhaps this meant no more than that Mr Smith had repeated to Mrs Yaxley and was believed to have told Hounslow Police that which he was reported to have told The Princess of Wales earlier. 1.46 It is clear from the Police notes referred to above that Mr Smith had indeed told Hounslow Police of the rape allegation. There was, however, no communication between the Household or its advisers and Hounslow Police relating to the matter, save, possibly, for the Police contacting the oYce to obtain confirmation that Mr Smith was, as he told them, a member of the Household staV. 1.47 This much is plain: to the knowledge of some members of the Household, at that time, 17th October 1996, Mr Smith was alleging that he had been the victim of male rape, but was uncertain as to whether he wished to persist with the allegation. On any view, this was an allegation of serious crime and was, apparently, recognised as such, at least by Mrs Yaxley and Mrs Shackleton.

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The Household did not know that, on 16th October, Mr Smith had told Hounslow Police that he did not wish to pursue a complaint. 1.48 The 17th October 1996 attendance note of Mrs Shackleton’s conversation with Mrs Yaxley also records:

- reference by Mrs Yaxley to a conversation the previous day with The Princess of Wales, who, it was said, “hates” AA;

- a suggestion that The Princess of Wales had been given a written account of his allegation by Mr Smith in August 1996;

- discussion as to Mr Smith’s removal; it was suggested that he might be unfit to work on “medical grounds”, as he was allegedly alcoholic; and there was discussion as to steps to be taken to ascertain his medical position;

- reference to newspaper interest in the allegations, “a lid” having been kept on that by the Press OYce “explaining how unstable George is”;

- reference to Mr Smith having had two previous warnings: “...but these were more than a year ago, so he cannot be dismissed on this basis. You said you want George out. If he is going to make allegations, you do not want him to be an employee. However, his dismissal has to be above board”. Mrs Shackleton understood that, in the last-mentioned point, Mrs Yaxley was conveying The Prince of Wales’s wishes and instructions to her, confirming the ‘George must go’ instructions given to Mrs Shackleton during the initial telephone conversation with The Prince of Wales.

A note? 1.49 On 17th October 1996 Mrs Yaxley wrote to The Princess of Wales requesting a copy of “the notes made in the summer”. The Princess of Wales replied on 21st October 1996 that “I am afraid that I am unable to accede to your request because I have made a commitment of confidentiality to George.” The Princess added, somewhat cryptically, “The purpose of my drawing this to your attention is so that you, with all your resources, might be able to deal with the matter.” 1.50 At the same time Mrs Shackleton pursued a similar enquiry with Dr. Julius, The Princess of Wales’s solicitor. According to Mrs Shackleton’s file note, she spoke to Dr. Julius on 18th October 1996. The file note states that: “FSS [Mrs Shackleton] said the most important thing is finding out the truth. FSS: 1. Wants to investigate them [the allegations] with all information available [and asked Dr. Julius to seek his client’s help “to find out the truth”] ...; 2. Further, it is vital that this does not get into the public arena ...”

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There is also a manuscript note made by Miss Brown which attributes to Mrs Shackleton these observations about ‘the truth’: “I am not saying there is no truth in the allegations .... want to know truth, want justice”. The typed note includes: “You said you had taken on board the following points: 1. We want to conduct an investigation to find the truth of the matter without press involvement; 2. We want minimal involvement between the two Households.” 1.51 The last-quoted observation doubtless reflects the ill-feeling which then existed between the two Households, into which we do not consider it necessary to go further. Its only possible relevance is that there was plainly a feeling held, by some at least of those involved within The Prince of Wales’s Household, that Mr Smith’s allegation of rape was in a sense devalued, in terms of its credibility, by it having come to light only after the supposed intervention of The Princess of Wales. It was thought that she might encourage such an allegation out of a desire to ‘cause trouble’ for The Prince of Wales and for AA. Whether that was a reasonable apprehension is not for us to judge, but it was plainly felt by some. 1.52 Dr Julius reverted to Mrs Shackleton later the same day. As recorded by Miss Brown (‘you’ being Dr. Julius): “You said that your client understood our position. She was not responsible for the leak to the press.6 She did not mention a “note” from George; you said you would be very surprised if there was such a note and if there was it was unlikely she would volunteer for us to have a copy of it; your client has told you that George told her he had been sexually abused a long time ago; The Princess did not tell you about any allegations to (sic) finances; The Princess said that she had not visited George since August.” 1.53 Thus, the result of both Mrs Yaxley’s and Mrs Shackleton’s separate requests was that no note was forthcoming. If there was or were any such note or notes, we have not seen it or them. When Mr Smith saw Mrs Shackleton on 21st October 1996, as recorded in her attendance note, he “categorically denied” having given to The Princess of Wales a written statement. No reference was made at this stage to the possibility of any tape recording of Mr Smith’s allegation being in existence. 1.54 Thus, by 17th or 18th October 1996, the position, as it was known to the Household, was that Mr Smith persisted in his allegation of rape. As Mrs Shackleton was told, that allegation was disbelieved by The Prince of Wales, Mr Aylard and Mrs Yaxley; and it was vehemently denied by AA. Mrs Shackleton had made clear to Dr. Julius the need to investigate Mr Smith’s allegations and “to find out the truth”. Anxiety was also being openly expressed as to the need to avoid—or the desirability of avoiding—press publicity being given to, in particular, the rape allegation.

6 A story relating to an alleged ‘assault’ on Mr Smith had reached some members of the Press whose interest in the allegation is referred to in paragraphs 1.48 and 1.82

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Financial allegations? 1.55 There are references in Mrs Shackleton’s files to some, unspecified, financial allegations also being made by Mr Smith. Mr Smith recalls making no such allegations, other than a suggestion of misappropriation of sums from a cash float available to staV. The Prince of Wales apparently was informed of them and, as was his prerogative, indicated that he did not want them pursued. We mention them in part for completeness and in part since on occasion Mrs Shackleton’s notes refer to ‘the allegation’ without it being apparent to which allegations reference is intended. Our task is limited, however, to investigating the allegation of an improper cover-up in respect of the rape allegation. 1.56 Mr Smith and those representing him have suggested that his, Mr Smith’s, ‘suspension’ in October 1996 was related to a financial allegation against him concerning some cash which had gone missing from the valets’ cupboard at St. James’s Palace. That matter was the subject of an investigation by the Equerry, Fergus Williams, who reported in respect of it. No copy of that report is on file or can be found. It is referred to, however, in a memo from Captain Williams to Mr Aylard of 18th September 1996, in which Captain Williams mentions his ‘relatively inconclusive’ findings ‘due to the lack of real evidence’. 1.57 Captain Williams has told us, from his recollection, that “during the investigation, no evidence was forthcoming as to the whereabouts of the money or who may have stolen it”. The only real significance of this incident is that it had been dealt with, insofar as it could be, by mid September 1996 and was no longer a ‘live’ issue when the rape allegation came to the notice of The Prince of Wales and the Household in October 1996. Thus, whether Mr Smith was suspended in October 1996 or placed on indefinite sick leave (and Mr Smith said to the Police on 3rd July 2001 that he had been placed on sick leave), that would not appear to be related to the missing cash incident.

Dismissal? 1.58 The next recorded discussion, on 17th October, was between Mrs Shackleton and Mrs Yaxley. The dismissal option was then discussed. Mrs Shackleton researched the employment position and the dismissal option, taking internal advice at Farrers from an employment specialist. This produced her letter of 18th October to Mrs Yaxley, which referred to the previous day’s conversation: “You explained George’s potentially precarious mental state and alcohol related problems. You would like, if possible, to terminate his employment contract with immediate eVect.” 1.59 The letter, non-controversially, goes on to advise as to Mr Smith’s contractual and statutory rights as an employee, including the need for procedural fairness to be observed. Mrs Shackleton warned that if Mr Smith was unfairly dismissed, he: “...would have a claim worth approximately £13,000 (based on 7 years’ service and George being under 417—if either is higher, the compensation

7 Mr Smith was 36 at the time

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would be greater). Far worse than the claim itself and the potential liability would be the risk of publicity in which the media would have a field day.”

A need toinvestigate 1.60 Mrs Shackleton also advised that if the Household acted in breach of Mr Smith’s contract, that could diminish the ability to rely upon the contractual confidentiality clause. The concern apparently was that Mr Smith could argue that a breach of his contract could serve to release him from that clause. 1.61 Mrs Shackleton recommended that to remove Mr Smith, the Household should either seek to dismiss him “in textbook fashion” (which would involve a lengthy process of suspension, investigation and interviewing Mr Smith) or to reach a private settlement in respect of any financial claims and confirming his ongoing duty of confidentiality. 1.62 As to the need for investigation, Mrs Shackleton wrote, having referred to the options of dismissal or settlement: “Whichever of these routes you wish to go down I would have thought that a sensible first step would be to suspend George pending a disciplinary interview with him. Some thought will be needed on the reason for the suspension and subsequent disciplinary interview, but depending on the circumstances the oVence of bringing the Household into disrepute may be the best one. During the period of suspension you would be obliged (in unfair dismissal terms) to carry out a thorough investigation. This would include asking for written statements from Diana, Princess of Wales, [AA] and any other individuals who may have something to say in relation to George’s conduct and the validity or otherwise of his allegations. As you know, George is currently in a serious medical condition. I think it would be unreasonable of you to take any decisions in relation to his employment without seeking an opinion from George’s doctor and/or psychiatrist. For example, the question could be asked whether or not any reliance can be placed on George’s allegations given his current state of mind. In order to ask questions of George’s doctor as you know you will however need George’s consent under the Access to Medical Reports Act 1988. I can supply a form of consent if you need this. Once you have completed an investigation you will be in a position to call George to interview (or to visit him if this is simpler) to put any allegations of misconduct to him and hear his responses. At this stage it should have become quite clear whether you are dealing with a case of gross misconduct, incapability or an employee making a genuine complaint. In the first of these three scenarios you may decide to dismiss without notice in the knowledge that you would be justified in doing so. In the latter two scenarios, and presuming you still want George to go, I would suggest going down the settlement route. Paying him a sum of money up front would end up cheaper than keeping him on long term sick pay, and much simpler.”

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1.63 In summary, the written advice was that, whether Mr Smith was to be dismissed or a settlement with him sought, there had first to be a proper investigation. The advice given by the letter of Friday 18th October was later qualified or modified in the discussion on the following Monday, 21st (see paragraph 1.79). 1.64 As at 18th October, dismissal was regarded as a possible option, but it would involve a lengthy process which could not be guaranteed to avoid a claim by Mr Smith and unwelcome publicity; settlement would avoid those risks. The latter course would also accord with The Prince of Wales’s expressed wish (on 3rd October 1996 or whenever he first spoke with Mrs Shackleton) that Mr Smith should be “properly looked after”. 1.65 Also on 18th October Mrs Shackleton spoke to The Prince of Wales. There is no separate attendance note (it was not, we understand, Mrs Shackleton’s custom to make notes of ‘private’ discussions with The Prince of Wales) but the note of a meeting on the same day with Mrs Yaxley records that “FSS said she had spoken to The Prince this morning and told him there may be truth in some of the allegations”. The use of ‘allegations’ suggests that the rape and the financial allegations were being referred to. The note continued: “They are very serious allegations and there is no smoke without fire.” Then: “You [that is, Mrs Yaxley] have told The Prince that things have to be done correctly...... The Prince is aware that George has made sexual and financial allegations..... The Prince has told you that he is not concerned about the money...... ” 1.66 A separate attendance note dated 18th October 1996, also referring to a discussion with Mrs Yaxley, contains reference, presumably emanating from Mrs Yaxley, to the fact that “George has decided not to continue with the allegations”. That is entirely consistent with the Police record (of which no one in the Household was then aware) that on 16th October Mr Smith had stated to them his ‘adamant’ resolve not to complain formally. In interview by us Mrs Yaxley added that the reason given by Mr Smith was ‘because of the impact it would have on his children’. The note says that “Miss Brown advised you to take a note of today’s conversation with George when he stated he no longer intended to press allegations”. Either that advice was not heeded or any note made has not survived. 1.67 A meeting with various Household staV was agreed for the following Monday, 21st October 1996. Mrs Shackleton says that she convened the meeting, being anxious to learn from senior staV or associates of the Household what they knew or believed about Mr Smith’s allegation. The note says that, after that meeting on the 21st, Mrs Shackleton and Miss Brown “would then meet with George to take a statement”. Mrs Yaxley told us that, in the light of Mr Smith’s equivocation to her as to whether he wished to pursue his complaint, “I wanted someone from outside the oYce to see Mr Smith, so it was decided that Mrs Shackleton would do it”. Mrs Yaxley understood that a purpose of the meeting with Mr Smith was to obtain confirmation or otherwise of his intentions in respect of pursuing the rape allegation; as appears below, Mrs Shackleton tells us that she did not consider that to be a purpose of the meeting.

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1.68 Miss Brown has pointed out to us that her manuscript, contemporaneous, note of the 18th October discussion with Mrs Yaxley includes this (not in the typed note) attributed to Mrs. Shackleton: “...important to ameliorate situation, doing PoW a great service. We need tofind outif any truth , if not, fine.” (Emphasis added). Thus, at that stage, there was recorded a desire to ‘find out ... the truth’, consistent with the advice recorded in the lengthy quotation from Mrs Shackleton’s 18th October letter set out above.

1.69 On 21st October 1996 Mrs Shackleton met Mr Colin Trimming (a Chief Superintendent in the Metropolitan Police, The Prince of Wales’s principal protection oYcer and a very long-serving associate of the Household), Miss Sandy Henney (then Press Secretary), Mrs Yaxley and, for part of the meeting, Sir Stephen Lamport8 (then Deputy Private Secretary). Mr Aylard was due to leave The Prince’s service shortly and did so at the year-end. It does not appear that he played any material part in the discussions held about Mr Smith’s allegations.

1.70 First, according to Miss Brown’s note of the meeting, there was discussion concerning the unspecified financial allegations. The note then records a discussion amongst those present as to what were said to be Mr Smith’s “specific allegations”. In respect of “sexual abuse”, this is recorded:

“Mrs Shackleton asked if George had been abused. Mr Trimming replied he was of the opinion that he had not. Mr Trimming said that there had been some form of ‘close liaison’ between two members of The Prince’s Household staV ...... but not in relation to George.”

1.71 Referring first to the last-quoted sentence above, we asked Mr Trimming to explain. Mr Trimming told us that he was aware of a fairly close social or ‘drinking’ relationship between Mr Smith and two members of The Princess’s Household, and that he could well have told Mrs Shackleton and the meeting about that, in the context of concern having been expressed that Mr Smith’s allegations surfaced from contact with The Princess of Wales or her Household.

1.72 More substantially, Mr Trimming agreed, however, that he probably did advise Mrs Shackleton and the meeting of his opinion that Mr Smith’s rape allegation was unlikely to be true. He expressed that opinion not least on the basis that he would have expected to have learned of such an allegation and/ or to have noticed something wrong in the inter-relationship of AA and Mr Smith had there been any truth in it. However, Mr Trimming insisted that he had proVered that opinion on the understanding that the only source of Mr Smith’s allegation of rape was the communication by The Princess of Wales. As he asserted, if he had known that Mr Smith had made the allegations to others (such as to Mrs Yaxley, as he had), no question could have arisen of his reacting dismissively to it, and the allegation “would have had to have been properly investigated, involving the Police”.

8 Mr Stephen Lamport was knighted in June 2002 and is therefore referred to as Sir Stephen Lamport in this Report.

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1.73 We have some diYculty with Mr Trimming’s explanation and will revert to this in paragraph 1.168 below. It clearly was known, at least within the inner circle of members of the Household, that Mr Smith had repeated the allegation of rape other than to The Princess of Wales.

1.74 Whatever the basis for Mr Trimming’s opinion, here was another member or associate of the Household saying that he did not believe the allegation of rape; and it was, of course, significant that such an opinion was expressed by a Chief Superintendent of Police.

1.75 In the note and also under the heading of ‘Sexual Abuse’, it is recorded that Mrs Yaxley added that: “....the problem with George was that he had been abused [in his youth]; as a result of this abuse, he now saw all the ‘bad people’ in his life as potential rapists.” Putting the amateur psychiatry to one side, that Mr Smith had been abused in his youth was something which he had told to a number of people, including Mrs Burgess and Hounslow Police (paragraphs 1.23 and 1.43(b)).

1.76 The only other observation in the note relevant to the rape allegation is:

“Mrs Shackleton said that if George has withdrawn his allegations of sexual abuse, then this must be documented. There was also a question as to whether he is in a state to make any allegation or deny it. Nevertheless, we must still record his denial as this is evidence of his state of mind and perhaps his inability to make the allegation in the first place.

Mrs Yaxley confirmed that George had been asked if he wanted someone present when Mrs Shackleton went to see him later today but he had said he did not.”

1.77 This, apparently, refers initially to Mr Smith having spoken further to Mrs Yaxley (no record exists save for Miss Brown’s short note of 18th October 1996, referred to in paragraph 1.66 above) to indicate that he had ‘decided not to continue with’ his allegation.

1.78 The 21st October 1996 internal meeting then turned, as recorded in the note, to the topic “What can be done for George?”. Mrs Shackleton referred to the need, in accordance with The Prince of Wales’s wishes, to consider what could be done “on a humane level”. Sir Stephen Lamport, now part of the meeting, confirmed that The Prince of Wales “wanted to do the right thing by George”, being “most concerned to ensure that the dismissal ‘cushion’ is suYcient”. The consensus was that there was unlikely to be any ongoing role for Mr Smith within the Household, a concern expressed by Sir Stephen being “that George could do nothing within the Household that would keep him away from AA”. Plainly, Mr Smith having made the allegation against AA, whether he withdrew it or decided not to pursue it, it would be diYcult if not impossible for the two to work together. Mr Smith told us that he did and does not agree that this created a problem.

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Avoiding an investigation 1.79 There follows a passage in the note, which records Sir Stephen (‘SL’) obviously reacting to Mrs. Shackleton’s 18th October letter : “SL wondered if some form of agreement could be reached with George to settle this matter which would avoid an investigation. FSS said that would be possible, but George would have to have separate legal advice to ensure the settlement was acceptable and the confidentiality clause would have to be part of the settlement.” (Emphasis added) 1.80 Sir Stephen told us that, although he may have said something to that eVect, he had no intention of sweeping the allegations ‘under the carpet’, as opposed to wishing to avoid unnecessary publicity in respect of an allegation which was believed to be untrue and ‘withdrawn’. As to confidentiality, Miss Brown’s manuscript note records this exchange: “SL: If George knows how much is being done for him, may not want to go to press FSS: Must accord with his employment contract so don’t lose weapon of confidentiality clause.” 1.81 In the 18th October letter, quoted in paragraph 1.62 above, it was advised that an investigation should be carried out whether the dismissal or the settlement route was chosen. On 21st October the advice was that a settlement could be sought to be achieved without an investigation, provided that Mr Smith was represented and that confidentiality was preserved. 1.82 Finally at the 21st October 1996 internal meeting, Miss Henney, the Press Secretary, raised the issue of earlier press enquiries relating amongst other things to an alleged “assault on George”. According to the note Miss Henney said that she had told ‘the Press’, presumably not for publication, that Mr Smith was “extremely disturbed and could be pushed over the top; he was mentally ill; and he had been traumatised ..... in his youth and suVered in the Falklands campaign”. Miss Henney tells us that she gave such information to one editor and then only on ‘a deep background basis’. The allegation was not then published. 1.83 The meeting note concludes: “In conclusion, SH [Sandy Henney] made the comment that there would be a problem when George’s money runs out .....” 1.84 In connection with the imminent meeting with Mr Smith, Miss Brown’s manuscript note (not translated into the typed note) records Mrs Shackleton’s indication that “I’ll tell him that if he brings it into open, then we look v. heavily into his background etc.: v. (sic) ruin chances of getting another job”.

Meeting with Mr Smith on 21st October 1996 1.85 From the Household meeting, Mrs Shackleton and Miss Brown went to see Mr Smith at his home. As already referred to, Mrs Yaxley told us that she had been anxious that such a meeting should be held so as to confirm ‘in a more formal

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setting’ the informal indication given to her by Mr Smith that he did not wish to pursue his allegation. Mrs Shackleton recalls that the purpose of the meeting was to further her instructions that “George must go” and to ascertain Mr Smith’s aspirations in order to start the settlement process. Miss Brown produced an attendance note of the meeting, which we have seen. 1.86 Mr Smith, in his interview with us, strongly challenged the accuracy of that note and said that the rape matter was not mentioned. This seems unlikely, given the purpose of the meeting, whether Mrs Yaxley’s or Mrs Shackleton’s recollection is relied upon. In addition, we must have regard to the obvious unreliability of Mr Smith’s recollection of other discussions about the rape (such as with Hounslow Police and Mrs Yaxley). It is clear that those discussions took place, although he now has no recall of them; but, it is plain that Mr Smith was unwilling on 21st October to discuss the rape allegation in any detail. 1.87 In the absence of any other note of the meeting and of any other reliable account, we conclude that the note records at least the substance of the conversation. Miss Brown tells us that Mr Smith appeared to be nervous at the prospect of notes being taken; accordingly, she felt unable to take a full note but made a few rough notes, on the basis of which and relying upon her recollection, she dictated the typed attendance note immediately upon her return to the oYce. The note records that Mr Smith had previously ‘declined’ to have anyone else present. It also records that Mrs Shackleton advised Mr Smith that she was The Prince of Wales’s solicitor, that he might want to take his own legal advice and that he had no duty to answer her questions. 1.88 It is important to repeat verbatim what the 21st October note of the meeting with Mr Smith records in respect of “allegations made by you”: “FSS asked you about the allegations you had made in respect of AA. You did not wish to discuss this with FSS. You said that you had discussed it with your counsellor and those discussions were private. You did not want to press any charges. FSS asked you if you were saying you did not want the allegations investigated. She made it quite clear that you did not have to say yes and the decision was entirely up to you. You replied that AA was too powerful. You have told your counsellor that you do not intend to press any charges.” (Emphasis added) 1.89 The significance of this account is obvious: Mr Smith did not convey that he ‘withdrew’ his allegation. Rather he said that he did not wish to “press charges”; and he volunteered what was, apparently, his reason, namely that AA was “too powerful”. AA’s alleged ‘power’ within the Household has been referred to by many of those interviewed by us and Mr Smith’s view of this was clearly shared by others. 1.90 Although, as referred to above, Mr Smith denies that there was any discussion of the rape allegation with Mrs Shackleton, the note does accurately reflect Mr Smith’s then state of mind, as he explained it to us: (a) it is correct that he did

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not wish to ‘press charges’; and (b) he was concerned that AA was ‘too powerful’. That what is noted coincides with Mr Smith’s then-held views suggests strongly that the note is accurate. 1.91 Later that day Mrs Shackleton spoke to AA by telephone; he had telephoned to find out “how we had got on this morning”. Miss Brown’s typed note of the conversation includes Mrs Shackleton reporting to AA that Mr Smith “is saying that everything he said to his counsellor was private and he withdraws any allegations made.” (Emphasis added) If that note accurately records or summarises what was told to AA, the ‘report’ misrepresents what Mr Smith had said. Miss Brown has told us, with reference to her manuscript notes, that the typed note is inaccurate. Her manuscript notes contain no reference to the allegation being ‘withdrawn’ but contains the passage: “FSS—left it. Didn’t go into allegations and didn’t want to go into witch- hunt: at moment he’s not repeating anything he said to his counsellor”. 1.92 That is consistent with Miss Brown’s note of Mrs. Shackleton’s 21st October conversation with Miss Henney, which records that Mr Smith “would not talk to FSS about any of the allegations”. Miss Brown’s note of Mrs Shackleton’s 22nd October 1996 discussion with Mrs Yaxley also refers to this telephone conversation: “FSS had had a chat with AA; she had told AA that as far as the sexual allegations were concerned, he appeared tobe in the clear .” (Emphasis added) 1.93 AA told us that at or about that time he also met Mrs Shackleton passingly at St. James’s Palace and had been told something to like eVect. 1.94 Reverting to the attendance note of the meeting with Mr Smith, the conversation then turned to Mr Smith’s hopes and aspirations. Mr Smith is recorded as saying that he wished to return to work for The Prince of Wales; his job was “his life” and he expressed devotion to The Prince of Wales, in respect of whom he would never breach confidence. He became “very agitated” when it was suggested that it might not be ‘practical’ for him to return to his former job. He asserted that he would not have a problem returning to work with AA ‘once he was stronger’. He was “terrified” of losing his job and all that went with it. 1.95 Mrs Shackleton drew to Mr Smith’s attention his obligation of confidentiality which would continue to bind him if he was to leave “with a financial package.” According to the note, she added: “....these allegations would hurt The Prince and his Household, not to mention your family. Mrs Shackleton said you should be very wary of the press and should bear in mind what happened to Ken. You said your counsellor had told you that you would have another nervous breakdown if this got into the Press.” 1.96 That could be read as a threat; but Mrs Shackleton assures us that this was not intended. The note speaks for itself. The reference to ‘Ken’ is apparently to a previous valet who had, we are told, allegedly breached confidence and left The

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Prince of Wales’s employment. The manuscript note taken at the time of the meeting includes the (possibly rhetorical) question asked of Mr Smith in the context of the making of allegations “What would you have to gain?”. Miss Brown has told us that Mrs Shackleton’s approach throughout the meeting was “wholly sympathetic and unthreatening towards” Mr Smith. 1.97 Paragraph 4 of the note deals with Mr Smith’s conversations with The Princess of Wales. He said that in the summer he had had ‘a chat’ with her and that she had stopped him committing suicide. Notwithstanding what might be thought to be a debt of gratitude for that, the note records that: “You said you find The Princess devious and you do not think you can trust her. When she phoned you last week and asked to see you, you declined. You said The Princess was not helping you and you do not find it useful to speak to her.” 1.98 Mr Smith, to us, strongly denied that he had said anything derogatory about The Princess of Wales. Whether he did or not has no or little bearing on our investigations. It is not necessary for us to reach a final view on that, although, for the reasons already given, the assumption must be that the note, as opposed to Mr Smith’s recollection, is more likely to be accurate. 1.99 The note concludes with reference to Mr Smith having been “extremely distressed” throughout the interview, making it, perhaps, diYcult to rely upon anything said by him. Mr Smith is recorded as having referred to someone trying to shoot him, the Police being involved. As mentioned above, Mr Smith had indeed made such complaints to the local Police. 1.100 When interviewed by Police on 3rd July 2001 (according to the interview transcript provided to us by the Metropolitan Police), Mr Smith asserted that during the interview with Mrs Shackleton and Miss Brown “they wanted to pay me a settlement to keep my mouth shut.” He was asked “Is that what they said to you?”. He replied, “Yes”. Later he was asked, “....did they say what the settlement was for?”. He replied “Well just basically to keep my mouth shut not (sic) to go to the papers about AA”. 1.101 That, however, does not correspond with what Mr Smith told us in interview and in his written responses to our questions, those responses being confirmed by him in interview. He said “I do not recall any suggestion that the price of the settlement included the withdrawal of my complaint...... the settlement may in part have been motivated by ensuring (sic) my continued silence....”; but that, he said, would be speculative. Further, Mr Smith was adamant in interview with us that the rape was not mentioned in the meeting with Mrs Shackleton. It is impossible to place reliance upon Mr Smith’s recollection: that is not to criticise him but reflects the obvious problem he has in remembering or giving consistent accounts, explicable by reference to his ill-health. 1.102 The same day, 21st October, Mrs Shackleton reported on this meeting to Miss Henney. Miss Brown’s attendance note includes: “FSS said that George was a complete wreck. He was not capable of doing anything. He was terrified by AA. He would not talk to FSS about

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any of the allegations but there was a nasty glint in his eye when he asked about a compensation package and the applicability thereafter of the confidentiality clause.... Your fear is that George will either hurt himself or explode to the newspapers.” 1.103 The ‘nasty glint ...’ section quoted above appears to be at variance with the note of the meeting with Mr Smith or at least suggests that Mr Smith was being disingenuous in his assurances of confidentiality there recorded. In any event, the concerns then being expressed related to the ‘danger’ of Mr Smith publicly repeating his allegations. 1.104 There followed discussion as to what could be done to improve Mr Smith’s prospects of rehabilitation and finding a job. 1.105 Miss Henney tells us that she does not specifically recall Mrs Shackleton reporting to her on the meeting with Mr Smith; but she does recollect learning that Mr Smith ‘did not want to take forward the allegation’. As Miss Henney put it recently to us: “no victim prepared to make his case, so no case to answer, no story, no cover-up”. 1.106 As referred to above, Mrs Shackleton also spoke to AA on 21st October. The conversation is said to have lasted an hour and, according to the attendance note, included discussion as to whether Mr Smith could return to work and AA’s views as to the allegedly “huge failure in the personnel system” and its failure properly to deal with Mr Smith. The note records that AA was “prepared to do anything (he) could to help George, provided somebody would take responsibility for helping him and there was a structure to this.” There may have been some substance in the criticisms of the personnel ‘system’, but that is not a topic for this Report. Miss Brown’s manuscript note refers to Mrs. Shackleton using the words “want to get him out without explosion”. 1.107 There is no contemporaneous note of which we are aware relating to this, but, according to Mr Aylard in his Police statement made on 21st September 2001, he recalls Mrs Shackleton seeing him after her meeting with Mr Smith and telling him that Mr Smith “did not wish to make any complaint”. That was an accurate summary of the outcome of the meeting. Mr Aylard’s view was that “in view of the fact that no allegation had been made to me, despite George being given every opportunity to make such an allegation, I decided that it would not be appropriate to interview AA”. 1.108 Mr Aylard referred in his Police statement to seeing a copy of the note of Mrs Shackleton’s interview with Mr Smith: “I recognise this the (sic) report shown to me at the time.” A copy of the note was sent to Mrs Yaxley by Mrs Shackleton. Mr Aylard now believes that it was not until the Police investigation in 2001 that he saw a copy of the report, but that is inconsistent with his 21st September 2001 statement. There is nothing in Mr Aylard’s Police statement as to this, but, according to a very recent Police suggestion, when interviewed by them prior to making a statement, he was “asked what he did about the suggestion George Smith didn’t want his allegation against AA

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investigated because of AA being too powerful. Mr Aylard said he did nothing, although in hindsight he realises he should have done something.” 1.109 Mr Aylard denies that he made such an admission. He oVered to discuss the topic with us in the presence of the Police OYcers who interviewed him, but declined to authorise provision to us by Police of the interview note. We have, however, been informed by the Police solicitors that the brief contemporaneous note of the interview does not contain the passage quoted immediately above, which is based, therefore, solely upon the Police OYcer’s recollection. 1.110 On 22nd October 1996 Mrs Shackleton further discussed the issues with Mrs Yaxley. According to the note, Mrs Shackleton advised that: “....it appeared to be unthinkable to put him back in his job. It would be very tricky and he would have to be permanently monitored. We therefore have to find a humane way out of this situation.” 1.111 The conversation otherwise was to do with the steps which might be taken in connection with any settlement with Mr Smith, including his housing requirements. Mrs Yaxley was to provide (and did provide the same day) to Mrs Shackleton a copy of Mr Smith’s personnel file, which was said to be “rather a mess”; records of attendance and absence through ‘sickness’ were, for example, not kept. 1.112 We have seen the personnel file; it was incomplete and, as already mentioned, otherwise deficient. It is obviously important in any well-regulated organisation that full and proper records are maintained as to an employee’s ‘record’, including appraisals, attendance records, disciplinary matters etc.. At the time, this was not done. Nothing sinister is to be inferred from this: rather it appears to have derived from an absence of relevant experience on the part of Mrs Yaxley (and Mrs Burgess, latterly her deputy) and an absence of guidance or ‘rules’ to be followed by the personnel function. 1.113 On the same day, 22nd October, Miss Brown discussed the employment position and options with Mr David Smellie, an employment specialist at Farrers. It was suggested that the options were (1) to leave Mr Smith on long- term sick leave; (2) to enter a “compromise agreement” on ‘generous’ terms; or (3) to try to find him alternative employment. Mrs Shackleton discussed this on 24th October with Mrs Yaxley. The second option was preferred and Mr Smellie was ‘instructed’ on 24th October to prepare a draft letter seeking a compromise/settlement; but it appears that no letter was in fact sent and that without prejudice discussions were held initially with Mr Smith’s ‘new’ solicitor, Mr Benson of Needham and Grant. As Mr Smellie was told “the idea is that George leaves as quickly and quietly as possible, with the confidentiality agreement intact and suYcient backing, both financial and medical, to help him on his way”. 1.114 Mr Smellie recalls that, when he was first consulted, it was on the basis that the Household members and advisers involved had already and firmly concluded that Mr Smith’s rape allegation was wholly false and that there was a move to dismiss him for making such a serious and false allegation. Mr Smellie sensibly

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saw a real potential diYculty in basing dismissal on the making of a false allegation; if Mr Smith were sacked for maliciously making up false allegations, a tribunal might conclude that his conduct was attributable not to malice, but to his ill-health, in which case dismissal would likely be held to have been unfair. Mr Smellie advised accordingly.

Settlement negotiations 1.115 Mr Benson was introduced through the agency of The Princess of Wales or her Household. Mr Smith recalls speaking with The Princess of Wales very soon after his meeting with Mrs Shackleton on 21st October, although he is vague about the detail. According to Mr Smith, she was concerned that he should be properly represented. That is confirmed to us by her then Comptroller, Michael Gibbins, who suggested, and introduced Mr Smith to, Mr Benson. Mr Smith says that his previous solicitor had declined to act, since the matter was ‘too big’. The Princess of Wales and Mr Gibbins acted quickly. The first meeting between Mr Benson and Mr Gibbins (Miss Mendham also attending) occurred on 24th October. Mr Benson first met Mr Smith the following day. Mr Gibbins has explained: “I told Chris Benson that my understanding of the formal reason for the termination of his employment was his dependency on alcohol which left him incapable for driving duties. I also said that The Princess of Wales had told me the allegation of rape was in fact the substantive reason for his dismissal. I told Chris Benson that although he could not directly divulge his awareness of the allegation to the lawyers acting for The Prince of Wales’s OYce, he should use that knowledge to gain advantage in obtaining a favourable settlement.” 1.116 Mr Gibbins has told us that The Princess of Wales “took a close personal interest” in what was happening and wanted to be kept informed of developments. He passed that on to Mr Benson, was indeed kept informed and forwarded the information to The Princess of Wales. 1.117 Mr Benson has confirmed to us that he was introduced to the matter as Mr Gibbins describes. He was made aware of the rape allegation. He does not have a record of being told of the (possible) existence of a tape or tapes, although Mr Gibbins (who was aware of the suggested existence of a tape or tapes) thinks that he would have told him of its or their alleged existence. Mr Benson volunteered to Police in 2001 and confirmed to us that in his subsequent negotiations he ‘used the rape allegations as a background bargaining counter’, doing so ‘very carefully, I hope subtly and without aggression .. only .. when we reached sticking points of importance.’ We return to this below. 1.118 Mrs Shackleton and Mr Smellie met with Mr Benson on 28th October 1996 to discuss Mr Smith’s requirements. According to Miss Brown’s later attendance note, Mr Benson, slightly unusually, asked that no contemporaneous note of the meeting be taken. The attendance note states that Mr Benson made the point that his client “did not want to go down the ‘allegations’ route as it could injure The Prince and also George himself”. This, perhaps, was the first use of the ‘background bargaining counter’. The manuscript (but not the typed) note

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of the meeting also records this, which must be attributable to Mr Benson: “if can get decent deal, won’t have to decide as to:—(1) George’s credibility; (2) AA’s truth.” There was obviously an element of threat in that observation. The discussion otherwise focused on Mr Smith’s three needs, namely a job, money and a home. 1.119 Mrs Shackleton reported back on this meeting to Mrs Yaxley; and expressed the hope “that we could agree a figure of less than £20,000 for George, although he does have £5,500 of debts”. According to Miss Brown’s manuscript (but not the typed) note, Mrs Shackleton also reported to Mrs Yaxley that “George certainly repeated (the) sexual allegations to his solicitor”. 1.120 After this, although letters were written in Mrs Shackleton’s name and signed by her (after she had approved and/or amended them), the negotiations on behalf of The Prince of Wales were carried out by Mr Smellie. 1.121 Further discussions and negotiations took place between Mr Smellie and Mr Benson. There was nothing particularly remarkable about the negotiations, save that there is some further evidence of Mr Benson ‘playing the rape card’. Mr Benson has produced to us a file note of a meeting with Mr Smellie on 9th November 1996. In it he records the proposals then made on behalf of The Prince of Wales. Those proposals involved a cost of some £20-22,000. Mr Benson’s note records this, after setting out the proposals: “These are bare bones. G. made v. serious allegations, if true would make terms not. v. generous. You [Mr Smellie] don’t know if true or not.” 1.122 This is the only file note in Mr Benson’s papers to reveal the use of this tactic. Mr Benson has told us in relation to the rape allegation that he “just wafted it around”, saying something to the eVect that “it would be a pity if it all came out”. He suggests that he referred to the rape soon after the first proposals were made by Mr Smellie. There were, he recalls, some ‘sticking points’ but he cannot remember what they were or any other detail relating to the use of this tactic. 1.123 Mr Benson was aware of the obvious sensitivity on the part of the Household to there being adverse publicity if Mr Smith’s allegation was repeated more widely. Further, as he says, he advised Mr Smith that, as The Prince of Wales’s advisers also appreciated, no confidentiality provision (whether from the employment contract or from a term of any settlement agreement) could prevent Mr Smith from making complaint to the Police. Whether the allegation was true or not, and even if the agreement could not prevent Mr Smith making the allegation to the Police, anything that discouraged Mr Smith from disclosing the allegation to the Press, had an obvious if unquantifiable ‘value’ in the settlement discussions. 1.124 We have asked Mr Smellie for his recollection of the use of this tactic. He does not dispute Mr Benson’s account but says that there was never any detailed discussion of the rape allegation, which was hardly mentioned. As Mr Smellie saw it at the time, reliance on the ‘rape card’ was unlikely to assist Mr Smith, since the allegation was firmly believed to have been spurious: reliance upon it could have rebounded to Mr Smith’s disadvantage in negotiation since the

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making of false allegations, whether through malice or by reason of mental ill- health, could be argued to have justified Mr Smith’s dismissal. As Mr Smellie recalls, greater emphasis was placed by Mr Benson upon (a) the need for generosity given Mr Smith’s past service; (b) the importance of helping Mr Smith to recover from his illness; and (c) Mr Smith’s war record and experiences: any settlement which left Mr Smith in financial or personal diYculty would ‘look bad’ for the Household. 1.125 On 14th November 1996 Mrs Shackleton wrote in collaboration with Mr Smellie to Mrs Yaxley setting out the then-current proposals, whereby Mr Smith was to be declared redundant as part of a package which included:

- payment of up to £10,000 in respect of Priory fees;

- payment of Mr Smith’s debts up to £6,000;

- the provision of rented accommodation and payment of the rent for 12 months;

- a redundancy payment equal to 12 months salary, less benefits;

- help with finding a job; and

- a contribution to legal expenses; plus

- a further confidentiality agreement. 1.126 The letter concluded: “I suspect the bottom line in all this is that the Household is caught over a barrel. Regardless of the accuracy or otherwise of George’s allegations it would not presumably want (a) those allegations to appear in print or (b) to be reported as putting a Falklands hero out on the streets. The proposals contained in this letter could therefore be well in excess of George’s maximum legal claim against the Household. On the other hand, unless you put into place a 12 month cushion such as this which will enable George to be rehabilitated and hopefully re-employed, George is likely to represent a continuing worry. Would you rather pay this money now in the hope that the situation can be turned around, hopefully for good, or would you be prepared to dismiss George and take the consequences? I think the former is preferable.” 1.127 Further negotiation followed, mainly involving Mr Smellie and Mr Benson. Again, there was nothing remarkable about it and it does not require detailed recounting. It culminated, eventually, in agreement being reached, in full and final settlement of any claims Mr Smith might have, in the terms of Mr Smellie’s letter to Mr Benson of 16th January 1997. The final terms, in addition to agreeing the termination of employment as at 31st December 1996 and provisions incidental to that and referring to housing and providing for ‘outplacement counselling’, provided for payment to or on behalf of Mr Smith of:

- a lump sum £30,000, part of which was to be used for discharging the Priory fees and Mr Smith’s debts, the balance being held by Needham and Grant and paid by them in discretionary instalments to Mr Smith;

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- up to a further £4,400 depending upon the availability to Mr Smith of housing and other benefits;

- legal fees up to £3,600 ! VAT. 1.128 Thus, the cost of the final agreement to The Prince of Wales’s Household was about £38,000. Farrers’ 18th October 1996 letter had suggested that Mr Smith’s claim might be in the region of £13,000; by 28th October 1996, the ‘hope’ was being expressed that settlement might be achieved for some £20,000, although reference was then made, additionally, to Mr Smith’s £5,500 debts; and the ‘package’ which was the subject of Mr Benson’s 9th November note (above) would have cost in the region of £20-22,000. On any view, however, the actual settlement figure was substantially above earlier forecasts. We return below to the reasonableness of the settlement figure. 1.129 The final agreement contained two provisions concerning confidentiality: “6.2 your client confirming that he will continue to abide by the confidentiality terms and undertakings to which he is a party ...., that he has at all times acted and will in the future continue to act in accordance with those undertakings. 6.3 your client agreeing to maintain as secret and confidential the terms of this agreement and the circumstances leading up to it (save in relation to such disclosure as is necessary to his professional advisers or as required by law).” 1.130 Having regard to the importance attached in the minds of those advising The Prince of Wales to publicity and confidentiality, we wondered whether these provisions were ‘special’ to Mr Smith’s case and called for files relating to other employment terminations. We noted that in the papers relating to the redundancy of an employee in December 1996 (the identity of the employee is irrelevant, save to state that she had, as far as we are aware, absolutely no involvement in the ‘Smith aVair’) the confidentiality provisions were in all material respects the same as those employed in the Smith agreement. 1.131 On the basis of that example, which was very close in time to the conclusion of the Smith agreement, it seems that no unusual confidentiality provisions were sought to be imposed or agreed in his case. Mr Smellie has confirmed to us that the confidentiality provisions were “no more than the standard confidentiality term included in any such settlement”. This was corroborated by the confidentiality provisions agreed in a later, 1999, settlement with a Household employee (whose identity, again, is irrelevant for these purposes) who claimed constructive dismissal: those, too, were substantially the same as the provisions contained in the Smith agreement. 1.132 Incidentally, we note that the notice given to the employee who had been made redundant was substantially in excess of her statutory entitlement; and, although the Household had been advised that the employee could simply have been declared redundant, it was agreed to pay to the employee very substantially more than her statutory redundancy entitlement, the amount paid being in eVect the maximum she could hope to achieve if the dismissal had

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been held to be unfair. This lends some corroboration to the anecdotal accounts received from a number of Household staV as to a ‘policy’ of generosity in dealing with staV who were asked to leave. 1.133 Mr Smith duly signed the agreement; and Mr Benson gave a formal certificate confirming that he had provided Mr Smith with independent legal advice relating to it and confirming that the conditions made applicable to compromise agreements by a variety of employment legislation had been complied with. 1.134 There, in January 1997, the history ends, save for steps taken in compliance with the settlement agreement. It is appropriate to record that, until the matter re-surfaced with the Police investigation in 2001 and press publicity began, Mr Smith was apparently as good as his word. The allegations were not repeated or published by him during that period.

The 2001 investigation 1.135 Nothing further was heard of the rape allegation until it was mentioned, peripherally, in the course of the Burrell Police investigation in 2000/2001. In late 2000, Police were told by Lady Sarah McCorquodale that she had entrusted to Mr Burrell a ‘sensitive’ tape recording referring to a rape allegation. The Police enquired of Mr Burrell as to his alleged possession of the tape; and he denied having it. Beyond that, it does not appear that anything was then done by Police in connection with the rape matter. 1.136 The rape issue was resurrected as a result of a meeting which occurred on 30th April 2001 at Mrs Shackleton’s oYce, the principal purpose of which was to discuss a letter addressed to Prince William by Paul Burrell (see paragraph 2.12 under Question 2, below). Those present were: Mrs Shackleton Lady Sarah McCorquodale Detective Chief Inspector de Brunner9 Detective Sergeant Roger Milburn Michael O’Kane, the Crown Prosecution Service (”CPS”) lawyer responsible for the Burrell case; and Lyndsay Gittus, a junior CPS employee and the note-taker. 1.137 What was said at the 30th April meeting may provide an insight into what had been done in 1996, and why, which is why it is considered here. There are disputes, which we must try to resolve, as to what was said and questions of interpretation arise in connection with what was said by Mrs Shackleton. Accordingly, we must address this in some detail. Two main issues arise: (i) whether Mrs Shackleton indicated during the meeting her prior knowledge of the alleged existence of ‘the rape tape’; as we understand,

9 Detective Inspector Maxine Bamford has been promoted and married since the date of the meeting and is therefore referred to as Detective Chief Inspector de Brunner in this Report.

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she was not aware of its alleged existence at the time of the 1996/7 negotiations (and there is no reference to such a tape in the internal notes of the time); but one version of the discussion referred to below, if accurate, would suggest that she did have knowledge of the tape before Spring 2001; and (ii) whether what was then, nearly five years on, said by Mrs Shackleton about her instructions in 1996 casts light upon the approach adopted by her and others to the settlement achieved with Mr Smith. Further, what was then said and the explanations for what was said may be relevant to assessing whether there was, in 1996, an ‘investigation’, as such, into Mr Smith’s allegation.

What was said about the rape and the rape tape 1.138 Mrs Shackleton provided to us a copy of a 5-page meeting note, apparently prepared by Miss Gittus, being the copy provided to Mrs Shackleton after the meeting. That note says nothing about the rape allegation. On 31st January 2002, the Metropolitan Police provided to us another, longer (10-page) version of that note, being, they say, the copy provided to them by the CPS. This does say something about the rape allegation and mentions the existence of a tape. Mrs Shackleton had previously told us that the rape and the tape were mentioned at meeting, although no reference to them appeared in the (5-page) note provided by the CPS to her. Mr O’Kane tells us that the shorter note contained what were thought to be ‘non-sensitive events’, some but not all of the ‘sensitive’ material being included in the 10-page note. 1.139 Putting aside the confusion caused by the diVerent versions of the meeting note, it is apparent that there was mention of the rape allegation and the tape recording, albeit that this was not recorded in the 5-page note. We have heard and read a number of accounts of what occurred. 1.140 On 17th May 2001 Mrs de Brunner, who took no detailed notes during the 30th April meeting, made a witness statement in which she gave this account: “FSS [Mrs Shackleton] then brought the conversation onto wider issues, again asking the caseworker not to record what she was saying...... Lady Sarah then asked about the contents of the box, and I think this was in the context of other items that were stolen, which didn’t belong to Prince Charles. FSS didn’t know what Lady Sarah was talking about, and therefore said something like: ‘look we are all being open and frank here, what are you talking about?’ Lady Sarah said something like: ‘I don’t want to say in this company’. FSS then pushed the point again, and Lady Sarah then said: ‘I mean a signet ring, some letters from Prince Philip, some divorce documents and a tape which was sensitive’. FSS then made further comments saying: ‘if you are talking about the rape, then I know all about that’. Lady Sarah said: ‘Yes’. FSS said: ‘Oh, that was the allegation that AA raped George Smith, well I was asked tomake it goaway’ . I said something like: ‘What do you mean’, FSS said: ‘this must NOT go down on the record what I am saying is privileged information, but I am saying

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that I had written instructions from the boss, to make the whole business go away, which I did, but it was one of the lowest points in my professional career, by the way, who has the tape now?’ Lady Sarah said: ‘Paul Burrell has it’.” (Emphasis added) 1.141 In interview by us, Mrs de Brunner and Mr Milburn confirmed the accuracy of that account, which was given by Mrs de Brunner, curiously without her being permitted to refer to any CPS contemporaneous note of the meeting. In particular, both asserted that the first mention of ‘rape’ was made by Mrs Shackleton, as soon as Lady Sarah spoke of the ‘sensitive’ tape without revealing its subject-matter. They maintained that assertion, notwithstanding having drawn to their attention the diVerent account (below) recorded by the CPS. Lady Sarah has told us that she agrees with Mrs de Brunner’s account save for (a) the reference to ‘letters from Prince Philip’; Lady Sarah says that there were no such letters in the box and that she did not refer to any such letters; and (b) the suggestion that Mrs Shackleton referred to ‘written instructions’. Lady Sarah recalled no mention of any instructions being ‘written’. 1.142 Mr O’Kane was first asked for his recollection on 12th June 2001. We have seen no statement from him but the contemporaneous note of the interview with him on 12th June, which he has confirmed to us is substantially accurate, reads: SM (Lady Sarah McCorquodale) raised subject of property they knew PB had which was not on the charge sheets. FS: ‘What property do you mean?’ SM: ‘I don’t want to say—it’s secret’ FS: ‘What do you mean? No need to have secrets’ SM: ‘If I tell you, it will get back to Bolland’10 FS: ‘I won’t tell Bolland anything’. (FS said she didn’t see eye to eye with Bolland.) SM: ‘Found box in Diana’s apartment. PB asked to look after it because I was going on a train and it was too cumbersome. PB’s got the box. In the box: letters, tape. Tape about a rape’ FS: ‘I know all about that!’ ??: ‘Tape of GS balling (sic) about being raped by AA’ ..... FS: ‘I know all about that. I was asked tomake it goaway’ FS became muted FS: ‘It was a terrible business. He was paid. I had to go to Twickenham to see him. He was a pathetic figure. It was the low point of my 22-year legal career.’” (Emphasis added)

10 Mr Mark Bolland was Deputy Private Secretary to The Prince of Wales until April 2002.

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1.143 The 10-page CPS note seen by us does not refer to the assertions about making it go away or the low-point of Mrs Shackleton’s professional career (the explanation for those omissions being that these comments were expressed to be ‘oV the record’). It does, however, mention Lady Sarah’s reference to the tape: “SM: ‘There is a recording of a male, George Smith, raped by AA and his description of it, Patrick JeVerson’s letter of resignation, James Hewitt’s signet ring and documents relating to the divorce’ FS: ‘I know about the rape because I dealt with his unfair dismissal.’” 1.144 Thus, both Mr O’Kane’s 12th June 2001 recollection and the CPS 10-page note indicate that Lady Sarah referred to the rape allegation before Mrs Shackleton’s interjection. Mrs Shackleton says that the CPS note is accurate in this respect: she knew nothing of the suggested existence of a tape until Lady Sarah mentioned it at this meeting. Mr O’Kane tells us that he has “checked the CPS files and .. can confirm that, to [his] recollection, Lady Sarah mentioned the word “rape” first at the conference”. Mr Milburn suggested to us that there existed yet a further version of the CPS typed note of the 30th April meeting, this third version contradicting the assertion that Lady Sarah first mentioned the rape. Mr O’Kane says that he came across no such third version and has no recollection of it. We can take this curious discrepancy of recollection no further. 1.145 We are faced with a conflict of evidence on this potentially significant point, namely who first mentioned the rape (significant since it bears upon whether Mrs Shackleton knew before 2001 of the alleged existence of the tape). On the one hand, the Police OYcers and Lady Sarah assert that no mention was made of rape before Mrs Shackleton made her observation. On the other, the CPS note, Mr O’Kane’s 12th June 2001 recollection and Mrs Shackleton’s memory support the fact that rape was first mentioned by Lady Sarah. We do not question the good faith of the providers of the diVerent accounts; but only one can be correct. There is no other evidence to suggest that, by this time, Mrs Shackleton was or should have been aware of the suggested existence of a tape recording of Mr Smith’s allegations. If we have to resolve this issue, the balance of probability must favour the account contained in the CPS contemporaneous note, which is that the rape was mentioned by first Lady Sarah.

‘Making it go away’ and the ‘low point of my professional career’ 1.146 There are other diVerences between Mrs de Brunner’s account and that provided in the 12th June 2001 interview by Mr O’Kane. They have in common, however, a number of observations, including:

- attributing to Mrs Shackleton the expression, “I was asked to make it go away”; and

- Mrs Shackleton referring to the low or lowest point of her professional career.

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Neither of these assertions is contained in the first (5-page) version or second (10-page) version of the formal meeting notes. As mentioned above, that is because they were made ‘oV the record’. It is apparent to us that something to this eVect was said. 1.147 Naturally, we invited Mrs Shackleton’s reaction to and comments upon these points. In short, she accepts ‘the gist’ of what was recorded in Mrs de Brunner’s statement and Mr O’Kane’s interview note, although there are some possibly material discrepancies considered further below. 1.148 Some of what was contained in Mrs de Brunner’s statement had been put to Mrs Shackleton when she was interviewed by Detective Inspector Redmond on 12th October 2001. We have a typed copy of Mr Redmond’s note of that interview, which is in very brief form and obviously does not record the whole conversation. The note records that Mrs Shackleton’s ‘instruction’ from The Prince of Wales in respect of the rape allegation was “to sort it out”. As referred to in paragraph 1.37 above, Mrs Shackleton’s note of her 3rd October 1996 telephone conversation with The Prince of Wales said that he “wanted this cleared up” and that “George must go..”. 1.149 This is to be compared with the expression “I was asked to make it go away” apparently used by Mrs Shackleton at the 30th April 2001 meeting. According to Mr Redmond’s note of his interview with Mrs Shackleton, this was said by her to have been “poor use of language”. In respect of the suggested use of the expression, Mrs Shackleton told us: “I accept that at this meeting I may not have chosen my words as carefully as I might. If I used the expression ‘make it go away’ that was perhaps inelegant shorthand for my instructions which were to sort the matter out in a way that enabled Smith to leave decently. I do not accept that either of the terms ‘make it go away’ or ‘sort it out’ necessarily infer any impropriety and definitely did not in this case. If it is now to be suggested that I was, in eVect, admitting at this meeting to an involvement in covering up the alleged rape: (a) I emphatically reject that as a fact or a legitimate construction or inference of what I said; (b) nobody suggested that or asked about it at the time; (c) it would have been a strange audience to which to make such an admission since there were two senior Police OYcers present; and (d) as appears below, a separate Police investigation which had these notes and interviewed me decided that it was not even necessary to take a witness statement from me.” 1.150 In respect of the reported use of an expression relating to the low or lowest point of her professional career, Mrs Shackleton says that: “I am sure the reference to “low points in my professional career” would have been in answer to “how did I feel about it”. ... I do not, in fact,

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remember saying it was one of the lowest points in my professional career, but had one of those present said “how did you feel” I may well have said “pretty sad about it generally”. This again is taken out of context because if one had met George Smith one could not have helped feeling sad about his predicament, albeit that it had not been caused by the allegations hitherto made but not repeated. Furthermore, by investigating the allegation I was exceeding the precise instructions I had been given and I was under pressure for a solution to be reached more speedily than I was able to achieve. To that extent, it was a very diYcult position for me professionally.” 1.151 Given the unanimity on the point of all others present and Mrs Shackleton’s own response, it seems to us clear that something to the eVect of a ‘low professional point’ was said. What was meant by it is less clear. 1.152 A number of other issues arise in respect of the ‘oV-the-record’ discussions at the 30th April meeting, including the following.

Written instructions? 1.153 Mrs Shackleton is adamant that she referred at no stage to “written instructions” from The Prince of Wales and her assertion in this respect is supported by Lady Sarah’s recollection. Further, as a matter of fact, Mrs Shackleton, as she tells us, did not have written instructions. We have seen no written instructions from The Prince of Wales in this respect and no reference anywhere else to written instructions; and the indications are that his ‘instructions’ to Mrs Shackleton were invariably communicated orally.

Reference to the handling of the rape allegation in 1996 1.154 Whoever first mentioned the rape allegation, it is necessary to consider what Mrs Shackleton said by way of explaining her earlier involvement in dealing with the allegations made by Mr Smith. 1.155 Mrs Shackleton explains to us that her intervention, referring to her knowledge of the rape allegation, was made for this reason: “In one sense, being told that the tape related to Smith/AA was a relief and the reason I disclosed that I knew all about it was precisely the reverse of what might be inferred from the notes now made available. I thought that by telling the assembled people that it had all been taken very seriously and dealt with, indicated that it had been dealt with properly. I did not mention anything about covering up and I wanted them to know that I had been asked to sort the matter out which it had been.” 1.156 Further, in this connection, the notes of Mr Redmond’s October 2001 interview with Mrs Shackleton include the following attributed to her:

- In respect of the allegations by Mr Smith, Mrs Shackleton is recorded in the interview note to have said, “It was my objective to find out what happened ... Role to explore it and if necessary refer it on ... My job was not to investigate a rape allegation but to make sure G.S. was treated

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fairly.” Explaining that Mrs Shackleton tells us, “When asked what my role was I believed that my role was to explore the truth and, if necessary, do what was appropriate. .... Where I am reported as having said “My job was not to investigate a rape allegation,...... ” I meant that I had not been instructed or asked to investigate a rape allegation although that is what I did as best I could in the circumstances. My instructions had been to make sure that George Smith was treated fairly.”

- The note also attributes to Mrs Shackleton the observation that, “If I believed he had been raped, I was prepared to resign my job”. This, says Mrs Shackleton to us, is a ‘most misleading’ note. “I was asked what I would have done if I had believed or had any evidence that he had been raped and I had been asked to conceal this. The answer that I gave was that if this had been the case I would have been prepared to resign from the job, i.e. as solicitor to The Prince of Wales.” Mr Redmond’s response to that explanation was: “...neither myself or DS Anthony have any recollection of actually saying to Mrs Shackleton that she had been asked to conceal anything. She may have believed that was what we may have been suggesting from the overall tenor of the interview. Mrs Shackleton was asked some very awkward and sensitive questions, all of which she dealt with.”

Arising from the 30th April 2001 meeting 1.157 Although the Police OYcers investigating the Burrell matter were aware of the rape allegation and the suggested existence of a tape recording well before the 30th April meeting, the allegation had not been investigated by them. As they, Mrs de Brunner and Mr Milburn, tell us, however, what was said at that meeting by Mrs Shackleton immediately and seriously concerned them. Mrs Shackleton’s references to ‘making it all go away’ and to ‘one of the lowest points of my professional career’ suggested to them the possibility at least that there had been an attempt to suppress the allegation. 1.158 Immediately after the meeting, Mrs de Brunner reported her concerns to her superiors. There was launched a separate investigation into the rape allegation and, to some extent, into what had been done about that allegation in 1996. The latter explains why Mrs Shackleton was interviewed by Mr Redmond on 12th October 2001. We refer above to the brief notes of that meeting. In any event, the 2001 Police investigation into the rape allegation or allegations (the second rape allegation then also being made by Mr Smith who was interviewed at some length) concluded with no further action being taken; further, no action was deemed appropriate in respect of the manner in which the allegation had been dealt with in 1996. 1.159 We have reported the concerns felt by Mrs de Brunner and Mr Milburn arising from what was said at the 30th April meeting, concerns reported to their superiors, and should also mention that Commander Alan Brown, the Metropolitan Police OYcer in overall command of the 2001 Police

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investigation into Mr Smith’s rape allegation, wrote to Sir Stephen Lamport on 8th March 2002 that: “I can unreservedly confirm that Mrs Shackleton was not the source of the information that led to the investigation [of the rape allegation] nor did she do anything to encourage the investigation, indeed, quite the reverse is true. Furthermore, throughout her dealings with Police, Mrs Shackleton dealt professionally and appropriately with issues of confidentiality.” The giving of such a testimonial and its terms suggest that Commander Brown did not share the concerns expressed to him, those concerns having by then been investigated and no action deemed appropriate.

Conclusions 1.160 Having completed our review of the principal facts identified by us during this part of our Inquiry, it remains to consider what inferences and conclusions are to be drawn from those facts in order to answer the Question, “Was there an improper cover-up of the rape allegation made by Mr George Smith in 1996?”. While answering that question is our principal task, a number of incidental issues also requires to be addressed: (1) Was there any investigation into Mr Smith’s allegation? (2) If not, should there have been? (3) Why was there no investigation? (4) The roles and conduct of Household staV (5) The role and conduct of Mrs Shackleton (6) Was the settlement so ‘generous’ as to indicate an improper attempt to buy Mr Smith’s silence? (7) Was there an improper cover-up?

(1) Any investigation? 1.161 Just as there was no Police investigation of Mr Smith’s allegation in 1996, there was none within or on behalf of the Household which went beyond seeking the views of senior staV and an associate (Mr Trimming) of the Household. Mrs Shackleton in her 18th October 1996 letter advised that an investigation should be conducted; but that advice was not followed. Instead, the settlement route was pursued. At the outset (for example to Dr Julius) and much later (to DI Redmond in October 2001) Mrs Shackleton spoke of ‘a need to find out the truth’ or ‘an objective to find out what happened’, but she did not investigate the truth of the allegation beyond seeking the views of others as described above and asking Mr Smith generally about the allegations, receiving no answer save that he did not wish to press charges.

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(2) Should there have been an investigation? 1.162 The advice given in Mrs Shackleton’s 18th October 1996 letter was sound: she advised that, whether the Household was considering dismissing Mr Smith or contemplating a settlement with him, an investigation should first be conducted. Ideally, that should have occurred. We recognise, however, that any internal investigation would, had it been undertaken, have been substantially frustrated by Mr Smith’s refusal to discuss his allegation and his indication that he did not intend, for whatever reason, to pursue it. 1.163 Hounslow Police did not investigate the allegation once Mr Smith announced that he did not wish to pursue a formal complaint (perhaps also influenced by its staleness and Mr Smith making other allegations which appeared imagined). The Police are not to be criticised for their negative decision; and it would be harsh to criticise a considered decision by the Household to the same eVect. It is, however, unfortunate that there is little evidence of ‘a considered decision’ by the Household, as discussed further under point (4) below.

(3) Why was there noinvestigation? 1.164 No credence had been given to the allegation by The Prince of Wales. His ‘instructions’ from the outset to Mrs Shackleton were that ‘George must go’, on generous terms. Mr Smith had been well looked-after by the Household in the past, despite his various problems which themselves cast considerable doubt upon his ability to continue to serve and be relied upon. His making what was perceived to be a wholly false allegation against a fellow-employee was ‘the last straw’. 1.165 Senior Household staV were not only aware of The Prince of Wales’s view but shared it. They gave no credence to Mr Smith’s allegation. It appears that those in the Household expressing their disbelief were aVected by some or all of the following:

- Mr Smith was thought, with some justification, to be suVering from severe medical and mental ‘problems’, making him, as it was perceived, an unreliable source; it was understood that his allegations to Police about an armed stalker had been shown to be imagined;

- the allegation related, then, to 1989 (the later allegation relating to a more recent alleged rape, did not feature in his 1996 allegation); since then he had worked in the relatively small Household, in contact with AA; no one had been aware of any problem or diYculty arising between Mr Smith and AA, such as might have been expected to reveal itself had the incident alleged occurred; and

- the fact that the allegation came to be reported initially via The Princess of Wales served to devalue it; the acrimony then existing between St. James’s and Kensington Palaces was such that this was suspected to be just another ‘shot’ in the battle. Miss Henney put it graphically to us: “All we had was one poor, sad individual making an allegation of assault some years before to The Princess, who, at that time, quite frankly wanted to find ways of hurting/embarrassing her husband”.

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1.166 Although Mrs Shackleton advised on 18th October that an investigation should be conducted, there was obviously concern that anything which protracted the process of Mr Smith’s removal, the ultimate objective, and which risked adverse publicity in the Press was to be avoided. We refer above to the exchange between Sir Stephen Lamport and Mrs Shackleton at the 21st October Household meeting (i.e.: “SL wondered if some form of agreement could be reached with George to settle this matter which would avoid an investigation. FSS said that would be possible, but George would have to have separate legal advice to ensure the settlement was acceptable and the confidentiality clause would have to be part of the settlement”) and to Sir Stephen’s explanation that he was anxious to avoid unnecessary publicity in respect of an allegation believed to be untrue and ‘withdrawn’. There is recorded earlier discussion at the 21st October meeting that Mr Smith’s complaint had or may have been ‘withdrawn’, information which Mrs Shackleton advised should be ‘documented’. 1.167 If Sir Stephen’s comments on 21st October 1996 suggested a desire to avoid a proper investigation of the rape allegation, irrespective of its possible truth, that would obviously be concerning. We conclude however, that, as explained by Sir Stephen to us in interview, there was no bad faith and that the desire to avoid an investigation and possible publicity was underpinned by a genuine belief that the allegation was untrue. That belief was fortified by an understanding at the meeting that Mr Smith had ‘withdrawn’ or was not to pursue his allegation. 1.168 The belief that the allegation was untrue was, as we have seen, shared and communicated to the 21st October meeting by Mr. Trimming, whose views, both as a high-ranking Police OYcer and as a long-term associate of the Household, would have carried some weight. As already stated, we have some diYculty with Mr Trimming’s explanation that he was unaware of Mr Smith having spoken of his allegation to anyone other than The Princess of Wales and that, had he been aware of the allegation being made to third parties, he would have advised diVerently. The important fact, however, is that he also disbelieved the allegation and did not suggest an investigation, either internally or by Police. He was apparently unaware that Mr Smith had already reported the matter to Hounslow Police. 1.169 Once Mrs Shackleton reported on her meeting with Mr Smith on 21st October 1996 and confirmed that Mr Smith did not want ‘to press charges’, this was seen to be a conclusive reason for not troubling further with the truth or otherwise of the allegation. The potentially disturbing principal reason given by Mr Smith for his decision was eVectively disregarded.

(4) Roles and conduct of Household staV 1.170 It was unfortunate that this problem fell, by chance, to be dealt with during what was a transitional period in respect of control of The Prince of Wales’s OYce. Mr Aylard was due to stand down as Private Secretary at the year-end and Sir Stephen Lamport had already been nominated to succeed him. Mr Aylard played little if any role in the handling of ‘the Smith aVair’: he was soon

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to leave and executive control was in the course of being handed over to Sir Stephen. Sir Stephen, as reported above, did have more involvement in such limited discussions as there were within the Household and with Mrs Shackleton, but not being (yet) Private Secretary, power and responsibility had not devolved to him. In a sense, we suspect that the Smith problem ‘fell between the cracks’. 1.171 Management of this serious problem was, it appears, essentially delegated to Mrs Yaxley, a relatively junior employee who had been promoted to the role of Personnel OYcer although, then, she lacked qualifications and substantial experience in that post. That is not a criticism of her but, as we see it, a fact. Otherwise, the handling of the problem was delegated to Mrs Shackleton, who was a solicitor, not an employee of the Household and someone with no management role. She, in turn, was never given clear instructions, beyond ensuring that ‘George must go’. In her 18th October letter she had advised an investigation. 1.172 There was little recorded discussion of this advice at the Household meeting on 21st October, when, in response to Sir Stephen’s query as to whether it could be avoided, the notion seems to have been simply abandoned. A problem is that this apparent decision was taken before Mr Smith had confirmed that he wished to ‘withdraw’ his allegation (although after he had intimated to Mrs Yaxley that he did not want to pursue the matter). If the attendance note of the 21st October meeting is accurate, the decision not to investigate was taken without proper or full discussion. There is certainly no minuted detailed discussion such as would have been appropriate for a decision of this significance. 1.173 The only contact between ‘management’ and Mr Smith, after his complaint became known, was conducted on the Household’s behalf by Mrs Yaxley and that was confined to seeking to establish whether he wished to pursue his complaint. No one appears to have considered what seems to us to have been the obvious course, that is, saying to Mr. Smith something along the lines, “You have made a very serious allegation. If it’s true, you should go to the Police with it. If you wish, we can arrange for you to receive some independent advice from a solicitor as to what is involved in that. If it’s not true, please tell us now...”. Putting it coarsely, Mr Smith should have been invited to ‘put up or shut up’; and that could and should have been done internally, by someone who knew Mr Smith.

(5) Mrs Shackleton’s role and conduct 1.174 Mrs Shackleton was ‘only’ a solicitor: her role was to carry out her instructions to the best of her ability, provided that her instructions did not involve illegality or the contravention of any professional standards. Her instructions were, from the beginning, to secure Mr Smith’s removal from his employment (and to ensure that he was ‘properly looked after’). As Mrs Shackleton acknowledges, a solicitor does not blindly carry out her instructions. She had a duty to advise her client, The Prince of Wales, and his representatives, the senior Household staV, as to what she, in her professional opinion, considered

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to be the best and proper action to take. She could, however, only advise. If her advice was not accepted, then, subject to her not being required to act illegally or in breach of professional standards or otherwise being professionally ‘embarrassed’, she had to get on with trying to comply with her client’s instructions. 1.175 She had no duty herself to investigate the truth of Mr Smith’s allegations. In her 18th October 1996 letter, she advised that, whether dismissal or compromise was contemplated, an investigation should take place. That advice was, we think, entirely reasonable and proper. It was not followed. When Sir Stephen on 21st October asked if an investigation could be avoided, she agreed that it was possible, subject to conditions. 1.176 We find it surprising that the clear advice given in the earlier letter was so readily abandoned without further discussion; but the ‘new’ and diVerent advice could not be described as ‘wrong’. We suspect that this change of tack was dictated or aVected by the reported withdrawal by Mr Smith of his allegation and by concern that carrying out The Prince of Wales’s instructions (‘George must go’) would be delayed by an investigation. The decision had been made. Mrs Shackleton’s role was to see that it was implemented as soon as possible, minimising the risk of adverse publicity and any publication of what were seen to be baseless allegations. 1.177 That brings us to her meeting with Mr Smith on 21st October 1996. We are concerned that Mr Smith was seen without his own lawyer or some independent third party in attendance. We are mindful that Mrs Yaxley spoke with Mr Smith before the meeting and secured his agreement to his being unaccompanied at the meeting. There is a conflict of recollection between Mrs Yaxley and Mrs Shackleton as to the purpose, or at least one of the purposes of the meeting. Mrs Yaxley understood that the meeting was to obtain confirmation that Mr Smith did not wish to pursue his complaint. Mrs Shackleton did not believe that to be so. 1.178 We do not doubt the sincerity of what each has told us. The problem this causes is, perhaps, a good illustration of the confusion which can arise when clear, preferably written, instructions are not sought by or provided to a solicitor. Quite what the purposes of the meeting with Mr Smith were remain unclear to us. Plainly, Mrs Shackleton envisaged asking him about the rape allegation. She did so at the meeting. Her own note records that she asked generally “about the allegations you had made in respect of AA”, even though she knew from the earlier meeting that day that there was not to be an investigation. We assume that she asked the question nonetheless to satisfy herself that there was no truth in the allegation. 1.179 Having regard to what was thought to be Mr Smith’s confused state at the time and the seriousness of his allegation, it would, we think, have been better if Mrs Shackleton had sought herself to persuade him to be accompanied, rather than relying entirely on Mrs Yaxley in this respect. In particular, if one of the purposes of the meeting was to obtain his confirmation that he did want to press charges, we would have expected this to have been done, not by reason of compliance with any particular professional standard, but as a matter of

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common sense. Mrs Shackleton opened herself to the suggestion that pressure had been brought to bear upon Mr Smith (a suggestion which he was later to make to Police in 2001, albeit one which was not made by him in interview by us). 1.180 Mrs Shackleton strongly disagrees that she had any obligation beyond stressing, as she did, to Mr Smith that she was not his solicitor, that he might want to obtain his own advice and that he did not have to answer questions; and that she regarded it as an adequate safeguard to have her assistant in attendance. We acknowledge that this is a judgmental matter; but we remain of the view that it would have been preferable if greater eVort had been made, if possible, before the meeting, to prevail upon Mr Smith to be represented. It is fair to say, however, that no complaint was made by Mr Smith’s new solicitor, appointed a few days later, as to the conduct of the meeting with Mr Smith. 1.181 Confusion has arisen in consequence of Mrs Shackleton’s references to her desire or need ‘to find out the truth’, both before and long after the 21st October meeting. Yet, at the same time, she stresses to us that she was not charged with investigating the matter. The assertions are diYcult to reconcile. How does one discover the truth without investigating? There is no doubt that she did not in fact investigate. As to ‘finding out the truth’, this appears to have been limited to satisfying herself at the 21st October meeting with Household staV and Mr Trimming than no one believed the allegation or had any information which suggested that it was true and to enquiring generally of Mr Smith about the allegation. 1.182 Had it been desired to conduct an internal investigation into the allegation of serious crime, we have no doubt that Mrs Shackleton, recognising her own lack of professional experience in respect of criminal law and procedure, would have advised and insisted upon obtaining specialist advice. Specialist employment law advice was sought by her in 1996 in respect of the employment issues arising. In 2001, when advising in respect of the Burrell matter, Mrs Shackleton, at an early stage, secured the services of leading counsel with extensive criminal experience. That she did not do so in 1996 speaks for itself. Mr Smith’s allegation was not believed and was not pursued by him; thus, there was no perceived need for an internal investigation. Mrs Shackleton tells us that, had she discovered anything to suggest that there might be substance in Mr Smith’s allegation, her approach would have been diVerent. 1.183 Soon after the 21st October 1996 meeting with Mr Smith, Mrs Shackleton handed over conduct of the settlement negotiations to Mr Smellie, although she retained an overseeing role. There was nothing in the conduct of those negotiations by Mrs Shackleton or Mr Smellie which requires further comment. The apparent generosity of the settlement is considered separately below. 1.184 There remains to consider what was said by Mrs Shackleton at the 30th April 2001 meeting with Police and Lady Sarah. As above, we are satisfied that Mrs Shackleton did not volunteer knowledge of the ‘rape tape’ at that meeting. We remain, however, puzzled as to what she said about her instructions being ‘to make it go away’ and her reference to her meeting with Mr Smith having been

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the or a ‘low-point’ of her professional career. Having regard to her explanation to us and to the other evidence, we are satisfied that she said both, or at least words to the same eVect. 1.185 As to the former (making it go away), it is of concern that, as a solicitor, she volunteered, even ‘oV-the-record’, her confidential instructions, although we understand that she considered this to be in the best interests of her client at the time. Second, the phrase used may have suggested, as it did to the Police OYcers present, that there may have been a desire to ‘remove’ the problem regardless of the truth of the allegation. We do not believe that that was the desire or objective and we accept Mrs Shackleton’s denial that such was the case. The words used were, however, unfortunate. 1.186 With respect to the latter, although we have considered carefully Mrs Shackleton’s explanation to us (paragraph 1.150 above), we still have diYculty understanding what was meant by the reference to a or the professional low- point. The only record we have of the meeting with Mr Smith is Miss Brown’s note (which, as referred to above, we accept to be substantially accurate). There is nothing in it which should cause professional distress to an experienced solicitor. 1.187 It is not Mr Smith’s recollection, as imparted to us, that Mrs Shackleton put him under particular pressure in respect of the rape allegation. Indeed, he does not recollect it being discussed; so there appears to be nothing professionally ‘shameful’ in the conduct. Further, it would be bizarre if an experienced and undoubtedly able solicitor, such as Mrs Shackleton, had intended to ‘confess’ to Police OYcers and others any professional impropriety on her part. Accordingly, the use of this peculiar expression remains something of a mystery. We accept that no admission of impropriety was intended to be made by Mrs Shackleton. 1.188 Finally, it was reported in some quarters that Mrs Shackleton acted in breach of professional requirements of confidentiality in ‘revealing’ to Police in 2001 Mr Smith’s rape allegation. Those reports were incorrect. Commander Brown, as mentioned above, has indicated that Mrs Shackleton was not ‘the source of information’ that led to the 2001 Police investigation of the rape allegation. That was confirmed to us by Mr Milburn. The making of the rape allegation and the alleged existence of a tape recording concerning it had first been mentioned to him by Lady Sarah during a conversation in November 2000, early during Police investigations into Messrs. Brown and Burrell. This explains an observation attributed to Mr Milburn in the CPS 10-page note of the 30th April 2001 meeting: after Lady Sarah at that meeting referred to having given the chest or box containing inter alia the tape to Mr Burrell, Mr Milburn said, “I’ve asked Paul Burrell about this. He says he doesn’t know what I’m talking about.” 1.189 We would add that Commander John Yates, who succeeded Commander Brown in about April 2001 in relation to the Burrell and Brown/Havlik investigations, volunteered to us in interview that, in his assessment, Mrs Shackleton conducted herself during those investigations “with honour and integrity” in diYcult circumstances.

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(6) Generosity of the settlement? 1.190 Was the settlement so generous as to show that an attempt was being made improperly to ‘buy’ Mr Smith’s silence? No price could, lawfully, ‘buy’ from Mr Smith his right to make a complaint of crime to the Police. Mrs Shackleton recognised that and advised accordingly; and, as mentioned above, Mr Benson advised to similar eVect. Was the settlement price, however, intended to dissuade Mr Smith from repeating his allegation? That question is not susceptible to a simple answer. 1.191 That the settlement was generous was recognised at the time and rightly so. Lacking expertise ourselves, we have taken advice from counsel experienced in employment matters. We are advised that, on the facts now known, a case could have been mounted to justify Mr Smith’s (fair) dismissal from service; but that establishing the right to dismiss him without compensation was far from certain; and that it would have made commercial good sense to settle with him. If he had been dismissed and applied successfully for compensation for unfair dismissal, the maximum payable to him (ignoring anything further had a recommendation for re-employment been rejected) would have been some £13,000. 1.192 Doubtless it is no coincidence that this is the figure first mentioned by Farrers (paragraph 1.59). We are further advised that, ordinarily, including a confidentiality provision in any settlement is likely to ‘cost’ the employer, ‘maybe a few thousand pounds’, the actual amount depending obviously on the perceived value of the information which the employer seeks to protect. 1.193 In the light of that advice, it would appear that the settlement sum was more than twice the maximum which Mr Smith could reasonably have hoped to have obtained had he been wholly successful in unfair dismissal proceedings. That is so even allowing for the legal costs payable in respect of such proceedings. 1.194 We are also advised that it was, in employment counsel’s experience, ‘unusual’, in any ‘ordinary’ employment case, for such matters as the Priory fees and Mr Smith’s debts to feature in the calculation. Obviously neither would or could feature in an employment tribunal’s award. As against that, this was not an ‘ordinary’ case. Further, it is pointed out to us that it was also unusual for the settlement agreement to exclude any potential claim by Mr Smith for personal injury. No such claim had been intimated by or on behalf of Mr Smith. However, a clause precluding such a claim might well have been included lest Mr Smith had later sought to claim that his medical/mental condition had been brought on by actionable wrongs/omissions during the course of his employment. That exclusion would have had some, if unquantifiable, ‘value’. 1.195 The upshot is that the settlement is to be described as very generous. All concerned vigorously deny that its generosity was part of an improper scheme to ‘gag’ Mr Smith. We recognise, of course, that no one is likely to make an admission to us to the contrary, and the amount does attract some suspicion. Having regard, however, to the impetus from the top and from the beginning of the matter to treat Mr Smith well and humanely and having some regard to the custom of generosity in dealing with employees upon their leaving The

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Prince of Wales’s service, we are not persuaded that the amount agreed was so large and so far in excess of any ‘norm’ that it can only be explained as improper ‘hush-money’. As referred to above, no payment and no confidentiality provision could prevent Mr Smith, had he been so minded, making to Police, and pursuing, an allegation of serious crime.

(7) Was there an improper cover-up? 1.196 As stated at the outset, we approach this question upon the basis that ‘improper cover-up’ means or implies actions taken with a view to suppressing the truth, or at least preventing an investigation of what may be true. 1.197 We have no doubt that all those involved in the decisions made in late 1996 disbelieved the allegation made, as did the Police. It may be said that the Household staV should not have been so ready to dismiss the allegation with no or no real investigation; but that does not detract from the genuineness of their belief. There was plainly an acute anxiety to prevent, insofar as was possible, the repetition and publication of what was believed to be a false allegation. There was not, however, as we conclude, a desire to suppress the truth. 1.198 Thus, the answer to the Question posed in our Terms of Reference is, “No”.

Summary conclusions 1.199 No one believed Mr Smith’s rape allegation. The Prince of Wales gave no credence to it and Household staV with whom Mrs Shackleton discussed the allegation shared his disbelief. Hounslow Police did not give the allegation credence and did not investigate it. The allegation was not investigated by the Household because it was disbelieved, because Mr Smith declined to pursue his complaint and because investigation, to the extent that it was considered, was pointless. It had been decided that Mr Smith had to go; and those were the instructions received from The Prince of Wales. 1.200 A, if not the, major concern from an early stage was to avoid publicity being given to what was believed to be a baseless allegation. There was also a proper concern to follow The Prince of Wales’s instruction that Mr Smith should be well provided for. The objectives were, therefore, to remove Mr Smith, without giving him cause to repeat the allegation; and to provide generously for his, Mr Smith’s, future. The two were obviously connected. 1.201 A serious allegation of this sort should not, in our opinion, have been treated so dismissively, even though there was universal disbelief as to its veracity, without (at minimum) full and documented consideration of the decision not to investigate. It might have been diVerent if Mr Smith had unequivocally and apparently rationally confirmed that the allegation was not true. That is not, however, what he did. As recorded by Mrs Shackleton’s assistant, he only indicated that he did not wish to pursue it, expressly by reason of the ‘power’ of AA and implicitly because he thought that he might be able to keep his job. No one considered the significance of the reasons given by Mr Smith.

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1.202 The reason for no proper consideration apparently being given to the matter probably lay in the ‘mind-set’ of those involved in the Household: ‘poor George’ had made up this allegation; publicity of it would be unfairly damaging to the ‘innocent’ AA; his having made, as they saw it, a false and serious allegation against AA made it impossible for him to work in the same Household as AA; his health problems made him unfit for duty; and so, ‘George had to go’. 1.203 The settlement with Mr Smith was very generous, but not to the extent that we are driven to conclude that it derived from an improper motive (that is, to suppress the truth). 1.204 In short, there was an anxiety to prevent dissemination or publication of Mr Smith’s rape allegation. There was, however, clearly a belief, genuinely held, that there was no truth in that allegation. There was not, therefore, an improper cover-up in the sense that those involved deliberately or dishonestly sought to suppress what they believed to be, or thought might be, true.

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QUESTION 2

WAS THERE ANYTHING IMPROPER OR REMISS IN THE CONDUCT OF THE PRINCE OF WALES’S HOUSEHOLD IN RESPECT OF THE TERMINATION OF THE BURRELL TRIAL?

Introduction 2.1 As I understand it, the criminal proceedings brought against Mr Paul Burrell arose out of Police investigations into the activities of another Kensington Palace employee, Mr Harold Brown. In January 2001 Police visited Mr Burrell’s home address and seized a substantial amount of property which, allegedly, had belonged to Diana, Princess of Wales. In due course Mr Burrell was charged by the Police, as Mr Brown had been. Mr Burrell was charged with the theft of a very substantial quantity of property said to have belonged to The Princess of Wales and of some property alleged to have belonged to The Prince of Wales and to Prince William. The Burrell trial ended suddenly on 1st November 2002, when the Prosecution oVered no further evidence and invited Mr Burrell’s acquittal. My task is limited to reviewing whether there was improper intervention in the Burrell case, by or on behalf of The Prince of Wales. 2.2 There has been no suggestion of improper intervention on the part of the Household in respect of the trial of Mr Brown (and his co-accused, Mr Havlik): those proceedings were terminated by the Crown Prosecution Service (“CPS”) oVering no evidence on 3rd December 2002.

Early history 2.3 The Police investigation into Mr Brown and Mr Havlik began in 2000 and concerned a dhow and various items of jewellery said to have belonged to The Princess of Wales. According to Mr William Boyce QC (leading counsel for the Crown in both the Burrell and the Brown cases), in his explanation to the Central Criminal Court on 3rd December 2002, Mr Brown gave a variety of explanations for his conduct, including, latterly (in November 2000) that he had acted on the direction of Mr Burrell (an allegation denied by Mr Burrell). It was Mr Brown’s reference to Mr Burrell in November 2000 that led Police to visit and search Mr Burrell’s home in January 2001. 2.4 The Metropolitan Police have provided to me a summary of their dealings with the Household relating to the Burrell proceedings (a “Sequence of Events” schedule); and Commander Yates, Detective Chief Inspector de Brunner (Detective Inspector Bamford, as she was when the case began) and Detective Sergeant Milburn have assisted me in interview. What follows includes material gleaned from the Police documents and those interviews and information learned from The Prince of Wales, members of the Household, The Prince of Wales’s solicitor, Mrs Fiona Shackleton, and others.

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2.5 Police investigating the Brown case were in contact with The Prince of Wales’s then Private Secretary, Sir Stephen Lamport, in late 2000. He expressed a willingness in principle on behalf of the Household to assist Police. The goods alleged to have been stolen in the Brown/Havlik case were the property of The Princess of Wales or her estate. There later arose some issue as to whether the dhow belonged to The Prince of Wales or, as Mrs Shackleton indicated was plainly the case pursuant to the divorce settlement, The Princess of Wales. This is not an issue which needs to distract me. Mr Brown was not a member of The Prince of Wales’s Household. Mr Milburn’s recollection is that Sir Stephen indicated that the Household would support a prosecution which did not involve an employee of The Prince of Wales’s Household, the implication being that there might be less enthusiasm if a member of that Household had been intended to be prosecuted. 2.6 In January 2001 and arising from assertions made in interview by Mr Brown, Police searched Mr Burrell’s home, seized a large amount of property and arrested him on suspicion of theft. They reported these events to Sir Stephen. Various of the items were shown to Sir Stephen and Mrs Shackleton, amongst others. Nothing is alleged to have been said at that stage to discourage the Police from pursuing their criminal investigation, although there was early concern at the possibility of The Prince of Wales being required to give evidence.

Meeting on 3rd April 2001 2.7 On 3rd April 2001, before charges were preferred against Mr Brown or Mr Burrell, there was a meeting at St. James’s Palace attended by, amongst others, Sir Stephen Lamport, Sir Robin Janvrin (Private Secretary to The Queen), Mrs Shackleton, members of The Princess of Wales’s family, Police OYcers and CPS representatives. There was substantial, minuted discussion. 2.8 The meeting began with Sir Stephen’s introduction: “Stephen Lamport stated that he wanted today’s meeting to take stock of the investigation and to see what position has been reached. He expressed appreciation to the Police for how well-informed they have kept everyone.” 2.9 The discussion then turned first to aspects of the Brown case, including ownership of the dhow: (a) In that regard the CPS representative volunteered that: “The prospect of Prince Charles giving evidence is extremely unattractive. It’s not an avenue we need to go down. There’s plenty of evidence regarding the provenance of the dhow from other witnesses.” (b) He added that it was “extremely unlikely” that the Defence in the Brown case would seek to call The Prince of Wales and that, if they did, “no judge in the country” would agree to issue a witness summons. Such unequivocal assurances obviously allayed concerns in respect of the Brown case and the topic was not, I believe, raised again in respect of that case.

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(c) Similar assurance was given in respect of the prospect of The Princes being required to give evidence in the Burrell case, that prospect being “very, very unlikely”. The CPS representative volunteered his view: “I imagine that Paul Burrell’s defence will be that he was acting as custodian”. (d) In respect of the Burrell case, assurance was given by the CPS, relating to correspondence recovered from Mr Burrell, that the trial judge could make “an order .. banning the Defence from making reference to the contents of the letters” and orders banning the jury from disclosing such contents. Whether such advice was right or not perhaps matters less than the fact that it appears to have assuaged concerns held by members of the Household. (e) The CPS and Police declined to discuss the evidence or its strength. The perceived gravity of the alleged oVences was underlined, however, by the CPS representative’s indication that, if convicted, Mr Brown “would probably get 3-5 years. It might possibly be higher for Burrell”. (f) There was discussion about an “aggravating feature” of the case being a serious breach of trust. Detective Superintendent Hunt volunteered that “another aggravating feature would be if there was evidence of the sale of other similar items”. When Sir Stephen asked if there was evidence of sale, the CPS advised that it would be “unwise” to answer the question at that stage. Later, at a meeting on 3rd August 2001, that reticence disappeared: see paragraph 2.39 below. (g) There was this exchange between Sir Stephen (“SL”) and Commander Brown (“CB”): “SL: What would the CPS do if the owners said that they didn’t care and didn’t want the property back? CB: We wouldn’t even bother submitting papers to the CPS if the witnesses were not prepared to give evidence.” 2.10 This was an obvious opportunity, before Mr Burrell was charged, to discourage—in eVect to prevent—the prosecution proceeding. In respect of the property allegedly stolen by Mr Burrell from The Princess of Wales or her estate, this would have required prevailing upon her executors to withdraw any complaint. Whether they would have been persuaded is debatable and speculative; of significance is that no attempt was made then to persuade them. 2.11 The next day, 4th April 2001, Sir Stephen reported to The Prince of Wales pointing out, inter alia:

- that most of the items allegedly stolen by Mr Burrell were the property of The Princess of Wales, and that, therefore, although the Police would have regard to the views of The Prince of Wales and other Members of the Royal Family, The Princess of Wales’s executors had a more direct say;

- that, although a joint approach might be made on behalf of The Prince of Wales and the Executors to compromise the position, seeking the

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return of all the allegedly stolen items, “for reasons which I know YRH shares (that course) is simply unthinkable; a wrong of huge proportions has been committed and it needs to be put right...”; and

- that the collective view of those advising The Prince of Wales, formally and informally, was that “there is no alternative but for formal charges now to be made against both men...... there can be no question of what is now the right course of action in all the circumstances..”. The Prince of Wales accepted that advice for the time being, but wished it still to be explored whether a prosecution could properly be avoided. He has told me that, to that end, he asked his then Deputy Private Secretary, Mr Mark Bolland, to explore that possibility. The Prince of Wales suspected that Sir Stephen may been unduly influenced by what he understood to be the strong views of the Executors in favour of prosecuting (implying no criticism of him); thereafter Sir Stephen did not play a substantial role.

Approach by Mr Burrell to Prince William 2.12 During the early stages of the investigation, Mr Burrell, by letter of 19th April 2001, wrote to Prince William. The text of his letter read: “I so wish that I could have spoken with you in confidence during the past few months. There is so much to explain. Items which have been taken from me, many of which were given to me for safe-keeping, should be returned to you. I know that you realise that I would never betray the trust and confidence which your mother placed in me and that I remain the person you have always known.” 2.13 That letter was delivered via Mr Bolland, who liaised with a journalist close to Mr Burrell, who told Mr Bolland that Mr Burrell was anxious to write directly to The Prince of Wales and/or Prince William. Mr Bolland agreed to act as intermediary. As further explained below, Mr Bolland’s intermediary role continued thereafter and until about August 2001.

Meeting on 30th April 2001 2.14 On 30th April 2001, Mrs Shackleton with Lady Sarah McCorquodale, The Princess of Wales’s sister, met Police and CPS representatives, principally to discuss Mr Burrell’s letter. Prince William was away at the time and not expected back until June. The CPS lawyer suggested that the letter reflected “Burrell .. trying to lay the foundations for a defence... . He is also making it clear that sensitive information might come into the public domain if he is prosecuted. This letter may in due course need to be exhibited.” 2.15 This is of some interest:

- albeit that the letter was written after Mr Burrell’s arrest and, thus, could cynically but reasonably be seen as self-serving, it did foreshadow his “safe-keeping” defence of which the CPS were therefore well aware (and

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as had been forecast by the CPS lawyer at the 3rd April meeting: paragraph 2.9(c) above); and

- his claim in respect of “safe-keeping” was consistent with his conversation with The Queen (in respect of the safe-keeping of documents, as revealed on 28th October 2002). 2.16. Under Question 1, dealing with the handling of the 1996 allegation by Mr Smith, we refer at paragraphs 1.138 and 1.144 to the confusion surrounding and conflicting accounts relating to the notes of the 30th April meeting. I will not revisit that topic. For these purposes, I refer to the 10-page note prepared by the CPS and provided to the Police, Mr O’Kane, formerly of the CPS, having vouched its accuracy. 2.17 Attributed to Mrs Shackleton, in the middle of the noted discussion relating to the letter to Prince William, is the observation that she had received communications from Mr Bolland (“MBo”) and Sir Stephen (“SL”); with regard to Mr Bolland, Mrs Shackleton is recorded as saying that he told her that “SL will not be coming back into the frame. Prince Charles ..... does not want it going any further and is very determined.” Although the note is not clear, “it” seems to be a reference to the Brown case, although “it” may extend to both outstanding cases. Mrs Shackleton is also recorded as saying: “I received a phone call from SL, he was very keen for me to stop Brown being charged. I advised that he would either have to prove that the dhow belongs to him or admit that he had no locus” (that is, no interest such as might entitle him to intervene). “I received another call telling me not to deal with SL, only to discuss these issues with MBo. I was told that Paul Burrell (PB) will return the items. MBo won’t tell me who the intermediary is. I am called later by MBo who informs me that PB has sent the letter he wrote to William to his solicitor. ...” 2.18 Later in the meeting, the note says that Mrs Shackleton added: “I expected PB to give it back. MBo got that letter written. SL told me. It was hand-delivered to St. James’s and we knew it was coming, someone told Prince Charles that it was coming.” Again the note is confusing, in this case as to the meaning of the first “it”. Presumably this is intended to refer, generally, to the property. 2.19 Lady Sarah, as one of The Princess of Wales’s executors, pointed out that since most of the property concerned belonged to The Princess of Wales’s estate, the “final decision” in respect of supporting a prosecution rested with the Executors. Whether Prince William would lend his support was discussed; Mrs Shackleton indicated that she did not want Prince William “to move out of tandem” with the Executors, adding that “it needs to be all or nothing”, meaning that the prosecution should either be supported by everyone, including the Royal Household, or by no-one. 2.20 Notwithstanding the views recorded as having been expressed by Lady Sarah, the opportunity was presented by Mr Burrell’s letter for it to be said by or on behalf of The Prince of Wales and/or Prince William that they believed in Mr

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Burrell’s good faith or were inclined to accept his assurance that he acted only out of a desire to ensure the safe-keeping of The Princess of Wales’s belongings. If that had been said by either or both, the CPS would have been in diYculty in pursuing a prosecution. But, the opportunity was not taken, although it was made clear that The Prince of Wales would prefer it if the prosecution did not going ahead.

Retaining a criminal-law specialist

2.21 At a very early stage (by April 2001) Mrs Shackleton had recognised that specialist criminal-law advice could be needed and she retained Mr Robert Seabrook QC for that purpose. He was retained initially to advise in respect of a query raised with Mrs Shackleton by Mr Burrell’s solicitors as to the extent to which Mr Burrell was bound in his explanations to Police by contractual confidentiality and/or the OYcial Secrets Acts; but his retainer soon extended to advising generally in relation to the criminal proceedings. Suggestions reported in the media that Mrs Shackleton, who was and is not a criminal practitioner, misguidedly acted without specialist advice are wrong.

2.22 Mr Seabrook was and is a senior and respected Silk, who had advised The Prince of Wales in connection with the divorce proceedings. Additionally, he had substantial experience in criminal law and procedures. I have had the advantage of a very detailed account from Mr Seabrook of his involvement and have seen his written advice of 29th October 2002. His advice, consistently throughout, was that there could and should be no intervention on behalf of The Prince of Wales in either of the contemplated prosecutions, but that it would be entirely proper for there to be discussions aimed (i) at avoiding the necessity for either The Prince of Wales or The Princes to be involved as witnesses and (ii) at recovering property alleged to have been illicitly removed.

2.23 Soon after Mr Seabrook’s involvement in 2001, the Press reported allegations concerning the existence of tapes of the Smith allegations and suggesting consternation by The Prince of Wales at the risk of their disclosure in the criminal proceedings. Some sectors of the Press later suggested that it was concern about these tapes which prompted the revelation by The Queen in late October 2002 with a view to stopping the Burrell trial. If that had been the concern, one might have expected something to have been done about it far sooner.

2.24 As to the substance of the reported concern, Commander Yates suggested to me that it would have been diYcult for Mr Burrell to have produced the tapes since he had denied having them in his possession or control. A tape was referred to during the 30th April 2001 meeting with Mrs Shackleton (discussed under Question 1 above), as was Mr Milburn’s account of Mr Burrell’s response: “he says he doesn’t know what I’m talking about”. To the knowledge, therefore, of the Police and members of and advisers to the Household, Mr Burrell could not produce the tapes (if, indeed, he has them) without admitting that he had lied to the Police.

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2.25 On 2nd May 2001, the “Sequence of Events” schedule provided to me by Mrs de Brunner and Mr Milburn refers to a telephone call to Mrs de Brunner from Mr O’Kane of the CPS, in which he is said to have referred to a conversation with Mrs Shackleton who is reported to have said that she “had received two phone calls indicating not wanting to prosecute” (sic) and adds the quotation, “Prince Charles didn’t want to prosecute and wanted it all to go away and be stopped.” Mr O’Kane told me that he had no recall of any such conversation with Mrs Shackleton after the 30th April meeting, the only telephone conversation which he had with her after the meeting relating to his inadvertent removal of one of her files. I accept Mr O’Kane’s account. 2.26 In the three months following the 30th April meeting and while the Police were pursuing their investigations into the Burrell case (Mr Brown had been charged in April), there appears to have been no substantial contact between the Police and the Household or Mrs Shackleton. Certainly, no-one has suggested that there was any further conversation with the police or the CPS about The Prince of Wales’s or his Household’s concerns as to the prosecution of Mr Burrell being pursued. The Prince of Wales continued, however, to be gravely concerned. 2.27 On 24th July 2001 Mr Bolland met informally with Mr Burrell, who requested a meeting with The Prince of Wales. Such a meeting was arranged by Mr Bolland to take place after the formal meeting due to occur on 3rd August (below). In the result, the meeting with Mr Burrell was cancelled. I return to this topic in paragraph 2.48 below. 2.28 Mr Seabrook has told me that on 31st July 2001 he was at a “pre-briefing meeting” at Mrs Shackleton’s oYces attended by Police OYcers who were investigating (a) the Smith rape allegations and (b) the alleged thefts by Mr Burrell. The meeting was in anticipation of a further meeting to take place with The Prince of Wales, police representatives and others on 3rd August. 2.29 As recalled by Mr Seabrook, Superintendent Gwilliam, responsible for the Smith investigation, sought disclosure of any 1996 material held by Mrs Shackleton relating to the Smith allegations. On Mr Seabrook’s advice, Mrs Shackleton subsequently made available to the Police her contemporaneous material, including the note of her attendance on 21st October 1996 upon Mr Smith. 2.30 At the same meeting Commander John Yates explained the history of the Brown and Burrell cases. According to Mr Seabrook, Commander Yates explained that Mr Burrell’s home had been searched pursuant to information given by Mr Brown in the dhow investigation. Mr Seabrook adds that Commander Yates indicated that “it could now be verified that large quantities of items had been sold abroad and there was compelling evidence that there had been a big shift in Mr Burrell’s standard of living including the acquisition of two properties”; there was said to be “a strong case” against him. 2.31 Commander Yates strongly disagrees that he said this; but he recalls that he used “words to the eVect that he was optimistic that Police would be able to evidence the sale of property abroad” and that he may have indicated that he

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was “hopeful that there would be a strong case” against Mr Burrell. This diVerence of recollection is probably insignificant in the light of what, indisputably, was said at the Highgrove meeting a few days later. Mr Seabrook also told me that Commander Yates indicated Mr Burrell’s stance to be: “You will never prosecute me because it is so sensitive...”, Mr Burrell also claiming that many of the items had been gifts to him. 2.32 Mr Seabrook recalls discussing with Commander Yates how properly to avoid The Prince of Wales and/or Prince William being required to give evidence in the Burrell trial and Commander Yates’ assurance that every endeavour would be made to select as the subject of charges only items where ownership was not in dispute, i.e. avoiding the need for any evidence from The Prince of Wales or Prince William as to ownership. Commander Yates does not dispute Mr Seabrook’s account.

Meeting at Highgrove on 3rd August 2001 2.33 There followed the meetings on 3rd August at Highgrove. By this stage Mr Brown and Mr Havlik had already been charged and committal proceedings were awaited. Mr Burrell was on Police bail and was due to return for further interview on 9th August. 2.34 First, Mr Seabrook and Mrs Shackleton met The Prince of Wales and Prince William. Mr Seabrook was unable to guarantee that neither would be required as a witness, but passed on the re-assurance given by Commander Yates. Neither The Prince of Wales nor Prince William relished the prospect of a “public” prosecution; but both accepted that it would be inappropriate for there to be interference with the prosecution process. 2.35 Following the private meeting, the meeting with Police, led by Commander Yates, began. I have seen the Police (Mrs de Brunner’s) notes of the meeting, together with Commander Yates’ briefing note prepared for the meeting (a 2- page document dated 3rd August 2001). The latter note includes, on page 2, the following: “Set out some possible options re Burrell—MPS [Metropolitan Police Service] perspective—for you to be advised: 1. Do nothing—terminate investigation—property issues—parties claim under Police Property Act—court proceedings 2. Do not proceed with criminal investigation—seek disclaimer from Burrell—return property to the Estate and other losers 3. Support criminal investigation 4. Support !!!!!!!!! (sic) but on a bespoke basis— some losers support continued investigation, some not. 5. MPS preference is for a collaborative way forward on either 1-3” 2.36 Mr Seabrook did not recall those “options” being raised in the meeting, but Commander Yates is sure that he referred to them. Mr Seabrook has confirmed, however, that Mrs de Brunner’s notes are an accurate summary of

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what was discussed. Those notes conclude thus, supporting Commander Yates’ recollection: “..Yates closed the meeting by requesting in due course an indication as to whether a prosecution would be supported or not, as the case had large resource implications...... A general discussion took place around the possible options, which Commander Yates gave during his initial briefing.” 2.37 It is, in any event, clear that the Police were anxious to know whether or not The Prince of Wales and his Household would support or oppose Mr Burrell’s prosecution. Mrs Shackleton is recorded as saying that she would contact Police in due course with the indication requested. 2.38 Thus, whether or not the “options” were set out as starkly as in Commander Yates’ note, it is plain that at the meeting the Police were inviting an indication of “support” from The Prince of Wales, implying at least that without his support, the prosecution might not go ahead. Since most of the property in Mr Burrell’s possession belonged to The Princess of Wales’s estate, one might have thought that the attitude of The Princess of Wales’s executors would have been more relevant to the Police approach to pursuing a prosecution. Commander Yates, however, confirmed to me in interview that, in his view, if The Prince of Wales had opposed the prosecution of Mr Burrell, that would have been an end to it. Commander Yates could express only a hypothetical view, since, in fact, opposition was not expressed. 2.39 During the 3rd August meeting with Police and according to Mrs de Brunner’s note, the Police indicated that:

- they were “in a position to show that Mr Burrell’s lifestyle and finances altered drastically after the death of The Princess of Wales”; reference was made to his acquiring two properties and to “large movements of cash in and out” of Mr Burrell’s bank accounts;

- in relation to Mr Burrell, “Police are in a position to evidence that large quantities of items have been sold abroad to several dealers. In addition an independent source has shown Police photographs of several staV members dressing up in clothing belonging to The Princess of Wales at a party before packaging them up and sending them abroad”; and

- Commander Yates “states he believed that the Police had a strong case and indicated that it would (be) diYcult to restore property to its rightful owner without a prosecution”.

Misrepresentation? 2.40 Subsequently, much was made by the Defence at Mr Burrell’s trial—and, to an extent, pre-trial, in their representations to The Prince of Wales’s advisers—as to the alleged Police “misrepresentations”, in particular in the first two bullet points above. Mrs de Brunner has provided to me a detailed explanation of what she had intended to convey and the basis for it. Commander Yates

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thought that Police had referred to no more than indications or information— as opposed to “evidence”—of sales by Mr Burrell. 2.41 The note, however, speaks for itself. The Prince of Wales very clearly remembers the revelation relating to there being evidence of sales by Mr Burrell, which strongly influenced his view. Commander Yates acknowledged to me that this was another opportunity presented to The Prince of Wales to stop the prosecution in its tracks, indeed to stop it before the Police proceeded formally to charge Mr Burrell; but that opportunity was not taken. As The Prince of Wales recalls, it was his view and that of those advising him immediately after the meeting that, in the light of the evidence referred to by the Police during this meeting, it would be inappropriate for him to oppose the proposed prosecution of Mr Burrell. 2.42 It ought, however, to be noted that, as I have been told and appears to be public knowledge, there was in fact no evidence produced at trial of Mr Burrell having sold items belonging to The Princess of Wales. The 3rd August 2001 meeting note was disclosed to Mr Burrell’s lawyers as “unused material” pre-trial. Lord Carlile, Mr Burrell’s leading counsel, has told me that: “..it was clear that the Police gave dramatically unsupported information during the meeting, whilst explicitly seeking the views of The Princes as to whether they would support a prosecution of Mr Burrell and never corrected the misinformation given.” 2.43 As appears below, the Police assert that they did, before trial, inform members of or advisers to the Household that there was no evidence of sale. There is some dispute as to this. There is, however, no dispute but that Mr Burrell’s advisers, in their confidential meetings with Mrs Shackleton and others, did impart that there was no such evidence.

Support for the prosecution 2.44 As recalled by Mr Seabrook and Mrs Shackleton, after the meeting with the Police, there was further private discussion with The Prince of Wales and Prince William. There remained concern as to the potential for either to become involved as a witness, but the conclusion reached was that they could not and should not oppose the prosecution. Mr Seabrook remembers Prince William volunteering that “there was no alternative to supporting the prosecution”. As Mrs Shackleton expressed it a few days later in an e-mail on 6th August 2001, “This decision was made easier as the Police now have evidence that Mr Burrell has been converting items into cash, particularly in America.” 2.45 Immediately after the private meeting Mrs Shackleton recalls speaking by phone to Commander Yates and telling him words to the eVect that “the Household line would be to let nature take its course”. Commander Yates does not specifically recall that, but inclines to accept that such a conversation occurred. He, then, was on leave, but a few days later, on 6th August 2001, Mrs de Brunner has a note of “discussing possible charges” with Mrs Shackleton: impliedly, as Commander Yates acknowledged, that is likely to have followed

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upon an indication from Mrs Shackleton of the Household’s support for the prosecution; otherwise, the 6th August discussion would not have occurred.

Mr Burrell charged 2.46 Mr Burrell was charged on 16th August 2001. There were three charges, alleging the theft of property belonging to The Prince of Wales (Charge 1), The Princess of Wales (Charge 2) and Prince William (Charge 3). In due course those charges were translated, in similar form, into the 3-count Indictment. The Schedules to the charges and to the Indictment referred to:

- 6 items of property alleged to have belonged to The Prince of Wales;

- 303 items of The Princess of Wales’s property (including many photographs, personal belongings and items of clothing; of possible relevance to the later revelation of Mr Burrell’s conversation with The Queen, the indictment also referred, as items 235-252, to a limited amount of personal correspondence); and

- 22 items, mainly personal cards, said to have belonged to Prince William. 2.47 Thus, although the vast bulk of the allegedly stolen property belonged to the estate of The Princess of Wales, there were nonetheless specific counts relating to property said to belong to The Prince of Wales and Prince William (cf. the assurance given to Mr Seabrook and referred to in paragraph 2.32 above). Mr Burrell’s lawyers soon started to exploit the fact that neither The Prince of Wales nor Prince William, the alleged “losers” in relation to Counts 1 and 3, was being called by the Prosecution.

Meeting proposed with Mr Burrell 2.48 Before leaving the events of August 2001, prior to Mr Burrell being charged, this topic must be considered. After the 3rd August meeting at Highgrove, Police heard (how or from whom is not apparent) that it had been planned, after the meeting attended by them that day, that Mr Burrell was himself to meet The Prince of Wales. The meeting did not take place, as they understood, solely because, before it, The Prince of Wales was injured in a polo accident. They suspected, rightly as it transpired, that the meeting had been arranged by Mr Bolland. Much later, by letter of 22nd August 2002 to Mrs Shackleton, Mr Burrell’s solicitors referred to Mr Bolland acting as intermediary between Mr Burrell and The Prince of Wales and/or his Household and referred to the meeting planned for 3rd August. 2.49 Neither Mrs Shackleton nor Mr Seabrook was aware of such a proposed meeting. On 8th August 2001, Police saw Mr Bolland. According to their account at the meeting, in the presence of Mrs Shackleton: “DS Milburn asked Mr Bolland if he had had any contact or meetings with Paul Burrell. Mr Bolland initially refused to answer DS Milburn’s question. Mr Bolland asked Mrs Shackleton if he had to answer the question. Mrs Shackleton gave the appropriate advice.” [In interview by me, Mr Milburn said that the “appropriate advice” was “to tell the

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truth”.] “Mr Bolland then admitted to meeting with Mr Burrell on 24th July 2001...” 2.50 Mr Bolland has explained to me that his initial reticence was due to his believing that his contact with Mr Burrell had been confidential, both to The Prince of Wales and to Mr Burrell. He did not volunteer to Police information relating to the proposed meeting between The Prince of Wales and Mr Burrell for the same reason. 2.51 The account Mr Bolland gave of the meeting on 24th July was later set out in a witness statement taken from him by Police on 13th August 2001. There he said: “I have been asked by DS Milburn whether I have had any contact with Paul Burrell either directly or indirectly. The answer to this is twofold. Paul Burrell has attempted to contact me via third parties on several occasions. I understand the reason for this was in an attempt to arrange a meeting with The Prince of Wales and/or Prince William. The most recent contact was on 24th July 2001. I met Paul Burrell at a wine bar.... We met at 2.45pm and the meeting lasted approximately 25 minutes. In essence, Paul Burrell gave me a sob story in which he stated that his life was in tatters, he did not understand what was happening to him and that he had no current source of income, and as a result his family was suVering. He told me that he wanted a meeting with The Prince of Wales to try and resolve the current situation.” Nothing was said in the statement about the meeting arranged for 3rd August. 2.52 Mr Bolland’s explanation in respect of the proposed meeting is as follows: he had continued, after April 2001 (see paragraph 2.13 above) to liaise with the journalist who was close to Mr Burrell. In the course of that liaison, he was told that Mr Burrell was anxious to meet with him. This led to the meeting on 24th July, an accurate summary of which was contained in his Police witness statement. 2.53 Mr Bolland duly reported to The Prince of Wales Mr Burrell’s desire for a meeting with him, The Prince. Mr Burrell still had not been charged at this stage. The Prince of Wales, who had made no secret of his misgivings as to a public prosecution, agreed to meet Mr Burrell, with whom he had enjoyed a reasonable relationship when Mr Burrell had worked for both himself and The Princess of Wales. His hope was that if Mr Burrell apologised, confirmed (in accordance with his earlier letter to Prince William referred to in paragraph 2.12.above) that he had intended only to retain the property for safe-keeping, agreed to return all the property and promised that he would not reveal information personal to The Princess of Wales, it might be unnecessary for Police to charge Mr Burrell. The Prince of Wales’s major concern was the eVect which publicity of any salacious allegations made by Mr Burrell might have on his sons. 2.54 Accordingly, Mr Bolland made the necessary arrangements—during the week or so prior to the Highgrove meeting on 3rd August—for The Prince of Wales

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to meet confidentially with Mr Burrell. The meeting was due to take place on the early evening of 3rd August. Nothing was said to anyone else about the proposed meeting, including Mrs Shackleton; as mentioned above, it was confidential. Mr Bolland candidly acknowledges that they did not want the Police to know of the meeting, at least until after it had been held, and that there was probably an apprehension that, if Mrs Shackleton had been told of it, she would have advised against it.

2.55 In fact, the meeting did not happen. Mr Bolland tells me that, after the meeting with Police and others at Highgrove on 3rd August and in the light of the revelations then made by Police (as to Mr Burrell selling goods, photographs, etc.), he suggested to The Prince of Wales that a meeting would be inappropriate; and The Prince of Wales agreed. This was confirmed to me by The Prince of Wales. Accordingly, Mr Bolland contacted Mr Burrell, who was already en route, and cancelled the meeting. It is true that during that afternoon The Prince of Wales was injured in a polo accident; but, by then, the meeting had already been cancelled. I do not have the advantage of Mr Burrell’s account. As mentioned above, he declined cooperation with this Inquiry.

2.56 The proposal to meet privately with Mr Burrell was ill-advised and dangerous. It opened The Prince of Wales to suggestions of possible interference in the Police process. It being arranged secretly fuels that suspicion. That said, Mr Burrell had not been charged. The motive of The Prince of Wales in agreeing to the meeting was understandable and it was not his intention to interfere in any way with the evidence in the case. Happily, the meeting did not take place.

2.57 As I understand—and as was confirmed to me by Mr Bolland—there was no further contact after this by Mr Bolland with Mr Burrell; and The Prince of Wales informs me that he had no subsequent contact, direct or indirect, with Mr Burrell. I have seen and heard no evidence to contradict this. Such later contact as there was occurred between the lawyers representing Mr Burrell and The Prince of Wales’s lawyers.

2.58 The Police statement taken from Mr Burrell on 13th August 2001 included some formal identification of various property seized by Police and confirmed by Mr Bolland to have been the property of The Prince of Wales. The Police OYcers candidly told me that their obtaining this statement, thus making Mr Bolland technically (at least potentially) a prosecution witness, was Machiavellian. They understood that Mr Burrell’s bail terms precluded his having any contact with any prosecution witness; and, by this device, they sought to inhibit or prevent further contact between Mr Burrell and Mr Bolland. Mr Bolland himself recognised the Police “tactic” for what it was. He tells me that in some ways this was a relief to him. It provided a justification for why he should have no further contact with Mr Burrell—and he did not. In the result, Mr Bolland was not a prosecution witness called at Mr Burrell’s trial.

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Further concerns expressed 2.59 Commander Yates told me that, two days after Mr Burrell was charged on 18th August 2001, he received a telephone call from Mrs Shackleton, expressing, in very general terms, the concerns felt by The Prince of Wales as to the prosecution. According to the note provided to me and confirmed to me by Commander Yates: “Commander Yates explained the legal process and stated that he would alert the Commissioner that The Prince of Wales had some concerns. Commander Yates was aware that The Prince of Wales had been invited by the Commissioner to discuss any issue with him .... . Commander Yates informed Mrs Shackleton that he would make sure that Maxine de Brunner kept her up to date with significant developments.” 2.60 Mrs Shackleton does not have a note, but agrees that such a conversation took place. The Commissioner of the Metropolitan Police, Sir John Stevens, reports via the Police Solicitor that, “...while The Prince of Wales registered concerns about the possibility of his and Princes William and Harry having to give evidence, having regard to the media interest that would inevitably follow, no pressure was brought to bear upon him [the Commissioner] nor were representations made to him that appeared to be aimed at deterring the prosecution.” 2.61 After Mr Burrell was charged, the prosecution took its normal course in anticipation of a trial. I have not been privy to the prosecution documents served in connection with the proposed trial; and it is outside my remit to consider the strengths or weaknesses of their case or the prosecution process, save only if they impact upon the allegation of intervention in that process by or on behalf of The Prince of Wales.

2.62 Reverting to the letter of 19th April 2001 from Mr Burrell, referred to in paragraph 2.12 above, no reply had been sent. In the summer of 2001, it was discussed with Mr Seabrook, who was asked to advise on how, if at all, Prince William might reply. According to Mr Seabrook, after the meeting with Police on 3rd August and their disclosures at that meeting, Prince William accepted advice not to reply to the letter at all, a decision which Mr Seabrook regarded as “entirely understandable and sensible”. It appears that no reply was sent.

Approaches by Mr Burrell’s lawyers 2.63 Thereafter there was correspondence from Mr Burrell’s solicitors with Mrs Shackleton and further involvement by Mr Seabrook, latterly in discussions with Lord Carlile: (a) In the autumn of 2001 Mr Burrell’s solicitor, Mr Andrew Shaw, sought a meeting with The Prince of Wales, his approach being referred to Mrs Shackleton. Mr Shaw wrote to The Prince of Wales on 17th September 2001, seeking “an audience”. His letter referred to “the extreme delicacy of the situation” and to the inevitability of (unspecified) “matters of a very private nature” being mentioned in the trial. He added that Mr Burrell’s

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loyalty etc., notwithstanding, “in the course of the trial process, both you and The Princes will be mentioned in some detail”. Mr Shaw sought the opportunity to meet to discuss the defence strategy etc. There was no reply from The Prince of Wales, but the letter was referred to Mrs Shackleton, to whom any further correspondence was invited to be addressed. (b) In October, Mr Shaw wrote to Mrs Shackleton indicating that, if he did not receive co-operation, he would “have to apply for a witness summons” for the attendance of The Prince of Wales at trial, and that a similar course was anticipated in respect of Prince William. Both, he said, had “relevant” evidence to give, as they were “the complainants” or losers in respect of two of the charges. (c) Also in October 2001 Mr Shaw wrote suggesting that the Police were guilty of “potentially misrepresenting the situation”, apparently the first reference to this suggestion; by the same letter he sought confirmation that royal employees were be released from their obligations of confidentiality if approached as Defence witnesses for the trial. This involved the obvious hint that confidential and possibly sensitive matters would be raised at trial. (d) Mrs Shackleton having rebuVed the suggestion that The Prince of Wales was a relevant witness, in November 2001 Mr Shaw wrote, in attempted justification of his assertion that The Prince of Wales and Prince William were relevant witnesses, that “ownership is very much a live issue”. If it was then thought to have been a “live issue”, before trial, as appears below, it ceased to be one in respect of Charges 1 and 3, since Mr Burrell disclaimed any interest in all but two of the items alleged to have belonged to The Prince of Wales and Prince William. (e) At the same time, Mr Shaw emphasised that the Defence would wish at trial to establish the “intimate” trust reposed in Mr Burrell by The Princess of Wales and that the conduct of the Defence would necessitate “close examination of matters relating to the activities of the Royal Family (and the Spencer family too)...”. The threat was obvious. (f) On 19th November 2001, Police confirmed to Mrs Shackleton that neither The Prince of Wales nor Prince William would be called as a prosecution witness. (g) By his letter of 27th November, Mr Shaw sent to Mrs Shackleton a copy of a written argument said to have been submitted to the Court in anticipation of an “abuse of process” argument proposed to be mounted on Mr Burrell’s behalf. This demonstrated a change of “tack” from the earlier approach which threatened witness summonses. Now the argument was that Mr Burrell could not have a fair trial (and therefore the proceedings should be stayed or halted as an abuse of process) because of the Prosecution’s failure or refusal to call The Prince of Wales and Prince William as witnesses. As I understand, this argument was never in fact deployed before the Court.

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2.64 In essence, the Defence (the legitimacy of whose tactics is not for me to question) sought, in the latter part of 2001, to put pressure upon The Prince of Wales and his advisers:

- suggesting that The Prince of Wales (and Prince William) could be compelled to testify and/or could/should be called by the Prosecution as witnesses, failing which they would be called by the Defence; and

- hinting, at least, that embarrassing revelations could or would have to be made during the trial. Notwithstanding that, no approach was made by or on behalf of The Prince of Wales to the prosecuting authority with a view to stopping the trial.

Contact with prosecuting counsel 2.65 In late 2001 Mr Seabrook tells me that he made contact with Mr William Boyce QC, who was instructed to lead for the prosecution, “to establish a line of communication” should one be necessary. He further tells me that Mr Boyce indicated, perfectly properly, that he felt it inappropriate to have any discussion with anyone on behalf of The Prince of Wales, lest this gave rise to any disclosure problems. Accordingly, he had no discussions with Mr Boyce about the continuation of the prosecution. I asked Mr Boyce if he could assist me in connection with the inquiry. He responded: “I have had no personal contact with The Prince of Wales or any member of his Household, nor have I received any direct communication from him (them)—all communications have been with the Police and/or the CPS. The decisions to commence and conclude the proceedings against Paul Burrell were taken by the CPS. In the circumstances, I do not consider that I am able to assist you.” 2.66 Much later, Sir John Nutting, who advised the Executors, also made a “courtesy call” to Mr Boyce, to record his interest: similarly, Sir John Nutting tells me, Mr Boyce indicated that he could and would have no discussions with those acting for “the losers”.

Ongoing concerns 2.67 In early 2002 The Prince of Wales remained concerned as to the possibility of his and/or Prince William being called to give evidence, not least in the light of the approaches made on behalf of Mr Burrell. Mr Seabrook discussed this with The Prince of Wales on 28th February 2002, having previously been reassured by Commander Yates that the Prosecution would avoid their being called and going so far as to say, as Mr Seabrook recalled, that “the Prosecution would be stopped rather than doing that”. Commander Yates does not dispute that he may have said something to this eVect. Mr Seabrook sought, as he saw it not very successfully, to assuage The Prince of Wales’s concerns in that respect. He wrote to Sir Stephen Lamport on 4th March 2002 referring to The Prince of Wales’s “deep unhappiness about it all” and oVering to advise further if required.

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2.68 Notwithstanding The Prince of Wales’s unhappiness and continuing fears as to the prospects of being called as a witness, there was no suggestion, let alone any instruction, to Mr Seabrook to eVect any interference in the prosecution process.

Leading up totrial

2.69 Mr Milburn tells me that in late April or early May 2002, he met Mrs Shackleton at her oYce to provide an update. He says that during that meeting he told Mrs Shackleton that “no sales had been proved” (compare the information given at the 3rd August 2001 Highgrove meeting), but asserted that this did not aVect the case against Mr Burrell. Whether or not this information was then imparted by Mr Milburn, Mrs Shackleton soon learned the same information from Mr Burrell’s lawyers. Mrs Shackleton does recall the issue of whether there was evidence of sales being brought up in discussions with Mrs de Brunner and/or Mr Milburn at about this time and up to and during the trial: the burden of what she understood was that while the police still believed that there had been sales, they had no “hard” evidence to produce at Court. Looking ahead, she recalls that late during the trial she was told by police that they were hoping to make reference, in Mrs de Brunner’s re- examination, to sales in the USA.

2.70 In the summer of 2002, Mr Burrell’s lawyers drew to Mrs Shackleton’s and Mr Seabrook’s attention what they asserted to have been the seriously misleading information given to The Prince of Wales (and Prince William) as to the strength of the case against Mr Burrell. A diYculty from the viewpoint of The Prince of Wales’s advisers was that Mr Burrell’s lawyers insisted that their approach was confidential and was not to be disclosed to the CPS. There was also discussion as to the extent to which Mr Burrell might disclaim interest in some or all of the property which was the subject of the indictment.

2.71 On 20th August 2002 Mrs Shackleton and Mr Seabrook met Lord Carlile, his junior Mr Ray Herman and Mr Burrell’s solicitor, Mr Shaw, at the request of the Defence team. Although the Defence team stipulated that the discussion was to be confidential, Mr Seabrook made plain at the outset (as recorded in the note made by the Defence junior) that both the Police and the Executors had been told of the fact of the meeting taking place. As the note records, Mrs Shackleton and Mr Seabrook were there “simply .... in order to listen to what was being said”.

2.72 The burden of the “submissions” made on behalf of Mr Burrell was that seriously misleading information had been provided by Police to The Prince of Wales at the 3rd August 2001 meeting and, in eVect, that The Prince of Wales’s “consent” to the prosecution had been procured by a misrepresentation. It was said that there was no evidence that Mr Burrell had sold “a single item”; and that there was no evidence that Mr Burrell had been present at a party, presumably the party at which photographs were allegedly taken of people wearing The Princess of Wales’s clothing (see paragraph 2.39 above).

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2.73 It was indicated that the main issue at Mr Burrell’s trial would be the allegation of dishonesty: he would say that much of the property recovered had been given to him or bought by him and/or his wife. The note records that: “He watched Mrs S-K shred letters. He felt he was the custodian of them. Closure had not occurred.” (What this means is not clear.) “Probably should have given them to HRH.” 2.74 Notably, nothing was said (since Mr Burrell’s advisers knew nothing of it, as Lord Carlile has confirmed to me) of Mr Burrell having mentioned his safekeeping, or acting as “custodian” of, documents to The Queen. 2.75 It was indicated that “without prejudice to the defence at trial” Mr Burrell would unconditionally disclaim his interest in various items of property identified in schedules. In due course, under cover of a letter dated 2nd October 2002, Mr Burrell’s solicitors confirmed that he disclaimed any claim of right to four of the six items identified in the Schedule attached to the Indictment as belonging to The Prince of Wales and to all of the items identified as belonging to Prince William. In fact, it had been indicated on Mr Burrell’s behalf that he would also disclaim any interest in most of the very substantial quantity of property said to have been the property of The Princess of Wales. Mr Burrell’s solicitors were, however, reluctant that the Executors, who were to give evidence at his trial, should know that. They wished to maintain a “bargaining position” with the Executors for some possible future approach whereby if the Executors would agree to “withdraw” their criminal complaint, then Mr Burrell would give a disclaimer. 2.76 The note of the 20th August 2002 meeting does not record this in terms, but as Lord Carlile explained to me: “We suggested that the decision as to whether The Prince of Wales should support a prosecution had been taken on the basis of unsupported false information and that this might lead his legal advisers to take steps to inform the Prosecution that they were concerned about the continuation of the case.” 2.77 Mr Seabrook got the same “message”: “They were clearly suggesting that HRH might initiate some steps that might procure a discontinuance of the prosecution, without being specific.” Mrs Shackleton and Mr Seabrook committed to nothing at the meeting, which, again, was expressed by Mr Burrell’s advisers to be confidential.

Meeting with the Police on 30th August 2002 2.78 Sir Michael Peat, with Mrs Shackleton, met Mrs de Brunner and Mr Milburn on 30th August 2002. He had taken over as Private Secretary to The Prince of Wales on 12th August and had obviously been “briefed” by Mrs Shackleton as to the history of and recent developments in the Burrell case, although he was given only limited information deriving from the “confidential” meeting with the Burrell lawyers. The Police OYcers felt that they were given an

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unnecessarily “hard time” by Sir Michael when he questioned the strength of the case. They felt that it was not for him to raise such questions. Mrs Shackleton was inhibited by being unable to refer to the arguments advanced by Mr Burrell’s lawyers. Sir Michael had an understandable concern that it would hardly be in the interests of The Prince of Wales and his family to suVer the undesirable publicity of a public trial, if that trial was likely to achieve nothing but the acquittal of Mr Burrell. 2.79 The Police view was that their case had been reviewed by the CPS and by leading counsel and assessed to be fit for trial. The Police OYcers say that they mentioned the absence of evidence of sales by Mr Burrell. Sir Michael does not recall that but he was not aware of the detail of the representations made by Police at the 3rd August 2001 Highgrove meeting, so any such mention by Police may not have been remarkable. 2.80 On 11th September 2002, Mrs Shackleton and Mr Seabrook met Sir Michael Peat to discuss developments. Part of the meeting was attended by Lady Sarah McCorquodale and Mr Michael Gibbins (with both of whom I have discussed this meeting). Sir Michael conveyed The Prince of Wales’s observation that “if the property could be returned without the necessity of a trial, that would be ideal”. Concern was also expressed at adverse publicity being generated in a case which, if it was as weak as was suggested by some, might or would likely result in acquittal. 2.81 In addition to the account given to me by The Prince of Wales’s advisers, I have seen a “file note” of this meeting made later, on 19th December 2002, by Lady Sarah and Mr Gibbins and given by them to the Metropolitan Police (who have copied it me). Mr Milburn tells me that he requested the note after the 11th September meeting had been mentioned passingly to him by Lady Sarah during a conversation on 10th December. This note says: “Sir Michael’s principal concern was the possible adverse repercussions of this court case ... . He was also worried that this was not a strong case and that there was a risk of acquittal. He believed the Police evidence/case against Paul Burrell was weak. We also discussed whether there was a chance of the case being halted before 14th October. This could possibly involve a disclaimer from Mr Burrell. We stated on behalf of the Executors that our only wish was to have the property found at Mr Burrell’s home returned to the Estate. There was no question of the Executors interfering with the judicial process.” 2.82 This account is consistent with what I have been told by Mr Seabrook and Mrs Shackleton, and it accords generally with Sir Michael’s recollection. Evidently, the discussion was to an extent prompted by the “revelations” made by the Burrell Defence team on 30th August, together with the suggestion made by them that some sort of disclaimer could be provided. 2.83 Mr Seabrook clearly recalls advising that The Prince of Wales, whatever his concerns and however reasonable they were, had no power to influence the continuation or otherwise of the prosecution; and he repeated advice as to the

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obvious undesirability of The Prince of Wales or those acting for him even appearing to be seeking to exercise any such influence. As he recalls, that advice was accepted.

Separate advice tothe Executors? 2.84 It was discussed at the meeting whether Mrs Shackleton could properly advise the Executors whilst also acting for The Prince of Wales; the Executors’ interests did not necessarily coincide with those of The Prince of Wales and Prince William. Mr Seabrook and Mrs Shackleton discussed this further and, as a result, it was suggested to the Executors that they should be separately advised. In consequence, Sir John Nutting was retained. 2.85 I have had the advantage of seeing the Advice later provided by Sir John and of discussing the issues with him. His written Advice, of 4th October 2002, was expressed to be given “because the Executors wish to know what prospects exist for persuading the CPS to bring the prosecution to a halt in the event that Burrell is now willing, which I understand to be the case, to make a disclaimer in relation to all the property found in his possession.” Prior to advising formally, Sir John Nutting had discussed the matter both with Mr Seabrook and with Mr Gibbins, who was informally advising Lady Sarah. 2.86 The burden of Sir John Nutting’s detailed Advice was that an approach to the CPS to discontinue based upon Mr Burrell being willing to disclaim had no prospect of success. As he summarised it, “Renunciation” (i.e. a disclaimer) “by the defendant would not .... be a valid reason for the CPS to oVer no evidence”. He also advised as to the decision to continue or discontinue the prosecution being one for the CPS and the CPS alone and he counselled against intervention by or on the part of the Executors. He advanced a number of practical reasons for that. Sir John Nutting’s understanding, as he told me, is that his approach was entirely consistent with that adopted by Mr Seabrook (and Mrs Shackleton) in the advice given to The Prince of Wales.

Meeting between Mr Seabrook and Lord Carlile on 30th September 2002 2.87 In the meantime, that is between the 11th September meeting and Sir John Nutting advising in writing on 4th October, Mr Seabrook had further contact with Lord Carlile. Each has given to me his independent account of the private discussion which they had on 30th September. This was a significant meeting. The accounts are to similar eVect. 2.88 According to Lord Carlile: “I told him that the essence of the defence was Burrell’s unique and very close relationship with The Princess; that their closeness was a ticking time bomb that could embarrass the young Princes greatly, as some matters may have been held back. There was material to cause them distress and to embarrass The Prince of Wales. I referred to various personal issues that might arise during the trial, not all of which have emerged in their entirety despite the extensive publicity. I suggested that the case was a disaster waiting to happen for the Royal Family and that

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they had been deceived by the Police at Highgrove. I reiterated my consistent view that the prosecution was likely to fail. I suggested that a joint “push” was needed from The Prince of Wales, the executors/ Spencers and from Payne Hicks Beach.

Mr Seabrook responded by expressing huge sadness at the situation on behalf of The Prince of Wales in particular. The situation was “mightily sensitive” and the Executors would have to drive events if there was to be any approach to the Prosecution. He asserted that we were making a huge assumption that it was what the Police said that led to co-operation towards the prosecution by The Prince of Wales. As Mr Seabrook said, there would be no initiative from The Prince of Wales, but if an approach came from the Executors there would be co-operation. Mr Seabrook and I had a fruitful discussion about the transfer to The Princes of items seized at Mr Burrell’s home”

2.89 Mr Seabrook’s account is that:

“At the outset he” (Carlile) “emphasised that there was no possibility of a plea of guilty. He again outlined the nature of the defence case and allowed me to read part of the defence psychiatric report referring to Burrell’s obsession with the memory of the late Princess and his commitment to her. He also outlined some of the intimate allegations that he would make concerning the late Princess. He said he had successfully resisted involving either HRH or Prince William and, subject to a possible abuse of process application, he expected to continue to do so. He agreed to procure a full written disclaimer to the property belonging to both of Their Royal Highnesses (which he did) subject to it not being disclosed to the Police/CPS. I explained the very sensitive position in which HRH was. Whilst HRH was not ill-disposed to Burrell, he could not be seen to be interfering in the course of justice. The most that could be expected was that, if the executors made an approach to the CPS (which they might find very diYcult to do), HRH would certainly co-operate in any resolution approved by the CPS which avoided a trial. Lord Carlile produced to me a suggested draft statement that the Prosecution might use on the termination of a prosecution. He wondered whether, notwithstanding a plea of not guilty, a testimonial might be provided. Mindful of what Sir Michael had said, I did not reject this out of hand but said I would take instructions.”

2.90 The burden of the suggestion being made by Lord Carlile was that in the light of (a) the Police misrepresentations, (b) the potential for embarrassing revelations at the trial, and (c) the proVered disclaimer, The Prince of Wales should intervene to deter the prosecution from proceeding. Mr Seabrook explained that, even if The Prince of Wales sympathised, he could not properly interfere; but that an approach by the Executors, based largely on the disclaimer, would certainly not be opposed and would likely be supported by The Prince of Wales.

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2.91 As above, Lord Carlile had prepared and gave to Mr Seabrook a draft of a statement which, he suggested, might be read if the prosecution was discontinued. The essence of it was to record the main concern of the “complainants” (The Prince of Wales, Prince William and the Executors) as having been to secure the return of the property which had been removed. It referred to psychiatric evidence as to Mr Burrell having been traumatised by The Princess of Wales’s death and the aVect that that may have had on his mind at the time of the alleged misappropriations; to Mr Burrell having received many gifts from The Princess of Wales; and to Mr Burrell’s acceptance “that there are many things in his possession that he should not have retained. His retention of such items may have been as a result of his stress reaction to the death of The Princess of Wales”. Interestingly, this apologia contains no suggestion of items being retained by Mr Burrell for safe-keeping. In fact, the statement was never used.

Advice toexecutors 2.92 Lord Carlile recalls speaking subsequently, on 2nd October 2002, to Mr Seabrook by telephone when he was told by Mr Seabrook of Sir John Nutting having been retained to provide independent legal advice to the Executors. Lord Carlile had no contact with Sir John Nutting. 2.93 Mr Seabrook did, however, meet Sir John Nutting, as he recalls on 3rd October, when Mr Seabrook explained that, although The Prince of Wales would prefer to avoid the publicity of, and any “personal” revelations during, a public trial, the advice given to him was that, even if he could intervene (which was doubtful), he could not be seen to be doing or attempting anything which might result in suggestions that he had interfered with the course of justice. Any initiative would have to come from the Executors, if they were advised that they could properly intervene. 2.94 As Sir John Nutting has explained, he did not take this as a suggestion that the Executors should intervene, rather that they should take their own course as they might be advised. 2.95 In the result, and as already referred to above, Sir John Nutting advised the Executors on 4th October that they could not intervene with any prospect of success and, for various reasons, should not in any event intervene or seek to do so. 2.96 Pausing to review the position as it was during the two months or so before the scheduled trial date (14th October 2002):

- strong representations were made to The Prince of Wales’s advisers by Mr Burrell’s lawyers seeking to procure their/The Prince of Wales’s intervention in the prosecution process;

- this involved stick, carrot and excuse: “stick” in the threat of embarrassing revelations (and some ongoing suggestion that The Prince of Wales and/or Prince William would be witness summonsed); “carrot” in respect of the proVered disclaimer; and “excuse” in that they presented

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an apparent justification for the intervention, namely the alleged misrepresentation of the case by Police in August 2001; but

- The Prince of Wales was clearly advised not to seek to intervene; and

- he did not do so. There had been, in eVect, a renewal of the Defence “oVensive” launched unsuccessfully in the latter part of 2001; but, it was again unsuccessful.

Nointerference? 2.97 Lord Carlile expressed this view to me: “Mr Seabrook was extremely careful at all times to protect the interests and propriety of action by The Princes and in this I am sure that Mrs Shackleton supported him. The suggestion that there was any attempt to interfere in the prosecution is absurd. Indeed, if I have a view on this, it is that St. James’s Palace did too little in the way of attempting to bring to an end a prosecution that was unfair to Mr Burrell and had caused him and his family terrible anguish and severe hardship. A joint approach involving the Executors, The Princes and the Defence, founded on the misinformation provided at the Highgrove meeting, might well have brought the case to an end and avoided much (but not all) of what has followed.” 2.98 Lord Carlile’s views were endorsed by Mr Shaw, Mr Burrell’s solicitor. I do not know what if any views on the topic are held by Mr Burrell, who declined to be interviewed by the Inquiry. I express no view as to Lord Carlile’s hypothesis that a joint approach might or would have achieved that result. It is significant, however, that he scorns the suggestion of there having been any interference. 2.99 His observations are consistent with what I have been told by the Police, including the Commissioner (see paragraph 2.60 above) and those involved in the prosecution process:

- as above, Mr Boyce has confirmed that he received no approach;

- the Director of Public Prosecutions, Sir David Calvert Smith has told me that: “Whilst it was reported to me via members of my staV that The Prince of Wales had concerns about the proposed prosecution, no pressure was brought to bear on the CPS nor were any representations made to the CPS such as appeared to be aimed at deterring the prosecution or terminating it pre-trial”; and

- the trial judge, the Honourable Mrs Justice RaVerty, has informed me that “at no stage had I any intimation that HRH The Prince of Wales, directly or indirectly felt that the trial should be terminated”. 2.100 Thus, all the evidence points to one conclusion only: although there were concerns expressed on his behalf, there was no pre-trial intervention by or on

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behalf of The Prince of Wales directed at seeking a termination of the prosecution.

The trial and disclosure of the meeting with The Queen 2.101 The trial began on 14th October 2002, and continued, with a predictable blaze of publicity. I do not have a transcript of the proceedings, but have seen numerous of the contemporaneous press reports, and I have had the advantage of being provided by Mr Shaw, Mr Burrell’s solicitor, with junior counsel’s very detailed notes of the trial. From time to time during the trial, Commander Yates, on his own initiative, spoke by telephone to Sir Michael to give an up- date as to progress, but nothing material was mentioned in addition to what was reported in the Press. On Monday 28th October, the prosecution case and evidence were drawing to a close. The following day, the jury were sent away and no evidence was heard. The Court did not sit in public thereafter until Friday 1st November, when Mr Boyce announced that no further evidence was oVered against Mr Burrell, whose formal acquittal inevitably followed. 2.102 It is necessary to review the circumstances in which the trial came to a peremptory end, by reason of publicised allegations or suggestions that this was engineered by “Royal” intervention. 2.103 In making his statement on 1st November 2002, Mr Boyce indicated that the prosecution case had been opened on the basis, and had proceeded on the “false premise”, that Mr Burrell “had never told anyone that he was holding anything for safe-keeping.” As the Police at least were aware, Mr Burrell had “told” Prince William of his safekeeping items in his 19th April 2001 letter. Presumably Mr Boyce meant that Mr Burrell had told no-one before his arrest in January 2001. 2.104 On Friday 25th October before the memorial service at St. Paul’s for the victims of the Bali bombings, the Duke of Edinburgh mentioned to The Prince of Wales that The Queen had had a private conversation after the death of The Princess of Wales with Mr Burrell in which Mr Burrell had referred to his safekeeping documents. Her mentioning this to The Duke was, apparently, prompted by the publicity relating to the ongoing trial, of which she was aware. She had not previously considered the conversation of any relevance, since the correspondence belonging to The Princess of Wales was but a small part of large quantity of property alleged to have been stolen by Mr Burrell. Previously, as The Prince of Wales has explained to me, he had been unaware of there having been a meeting between The Queen and Mr Burrell, let alone an occasion when the topic of safe-keeping had been raised. 2.105 Sir Michael Peat was told of this on Saturday 26th October by The Prince of Wales, who suggested that Sir Michael might speak directly to The Queen. On Sunday 27th October, Sir Michael spoke to Her Majesty who confirmed her recollection to him, to the eVect that Mr Burrell had said that he was going to look after some of the papers of The Princess of Wales for safekeeping, as he was concerned as to what might otherwise happen to them. She had made no comment to Mr Burrell.

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2.106 Sir Michael thought that plainly this should be disclosed to the Police and, the same evening or the following morning, he asked Mrs Shackleton to do so. 2.107 On Monday 28th October, Mrs Shackleton spoke by telephone to Commander Yates: his note (made the next day) of the substance of the conversation records Mrs Shackleton telling him of information received from Sir Michael to the eVect that The Duke of Edinburgh had mentioned to The Prince of Wales that, before Mr Burrell had been charged, Mr Burrell had indicated to “the source” (The Queen) “that he was very concerned at the amount of shredding being carried out by Lady Sarah and Mrs Francis S-Kydd. He indicated that he intended to keep some documents for safe-keeping. The source did not respond in any way.” 2.108 Mrs Shackleton has seen the note and comments that “shredding” had been supposition on Sir Michael’s part, as opposed to reported conversation by The Queen. 2.109 Later the same day, Commander Yates spoke by telephone to Sir Michael. Commander Yates’ note records that: “MP was able to clarify that the meeting referred to took place in the immediate aftermath of the death of Diana at the time that Lady S et al were carrying out the shredding. Confirmed that source was non- committal about whether the keeping of the documents was a good or bad thing. Confirmed that it was to do with papers and nothing else. Confirmed that PB did not explain what type of documents he was keeping. OV-record stated that source did not expect PB to keep items for ever.” 2.110 Sir Michael acknowledges that he may have used the word “shredding”, but insist that The Queen had not. She had told him something to the eVect that Mr Burrell had said that he was concerned as to what might otherwise happen to the papers and was “concerned about what might happen at Kensington Palace”. Sir Michael had heard elsewhere suggestions of shredding taking place but had no first-hand knowledge. Shredding had been mentioned by Mr Burrell’s lawyers in the 20th August 2002 meeting (paragraph 2.73, above). 2.111 On Tuesday 29th October Police (Mrs de Brunner and Mr Milburn) attended at St. James’s Palace to take short statements from Mrs Shackleton and Sir Michael Peat relating to the revelation. Mr Seabrook was in attendance. Inter alia, the Police OYcers, apparently acting as instructed, enquired whether The Queen or St. James’s Palace asserted or “claimed” public interest immunity (“PII”) in respect of the disclosure relating to Her Majesty’s conversation. Mr Seabrook, having obtained instructions from Sir Michael and from The Queen’s Private Secretary, Sir Robin Janvrin, was able to indicate that no PII “claim” was made. 2.112 Mrs de Brunner and Mr Milburn both recall, as they told me, that Sir Michael explained that the disclosure had been made because of concern that a problem might be created if Mr Burrell was convicted without such information being known. They recall Mr Seabrook saying something to the eVect that this was “a storm in a tea-cup”. No-one suggested, they told me, that this information

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should cause the Prosecution “to throw the towel in”. The burden of what I am told by Sir Michael, Mrs Shackleton and Mr Seabrook is that none of those representing the Household expected or foresaw that the information disclosed would result in the prosecution being abandoned. As they saw it, the disclosure related only to the small quantity of correspondence included in the charges against Mr Burrell. 2.113 The statement made by Mr Boyce in Court on 1st November included: “Mr Burrell’s defence statement, in which a meeting is mentioned, was not drawn to the attention of either The Queen’s or The Prince of Wales’s OYces. The Prosecution consider that there was no reason to do so. I am informed that because The Queen’s personal property was not involved and because of concerns to avoid any suggestion that Buckingham Palace was trying to interfere with the investigation of this case, The Queen was not briefed on the way in which the case against Mr Burrell was being prepared. Therefore, Her Majesty had no means of knowing until after the trial had started of the relevance to the prosecution of the fact that Mr Burrell had mentioned to her that he had taken papers for safe-keeping.” 2.114 Whether there should have been consultation by Police with The Queen in the light of Mr Burrell having referred to a meeting with her, albeit not to its subject-matter, is not within the remit of this Inquiry. It is correct that Her Majesty was “not briefed on the way in which the case against Mr Burrell was being prepared”; but, as referred to in paragraph 2.7 above, her Private Secretary, Sir Robin Janvrin, was included in the briefing meeting held on 3rd April 2001. As Mr Boyce explained in Court, neither The Queen nor Sir Robin on her behalf was later told, however, of Mr Burrell’s reference in his Defence Statement to a meeting with Her Majesty. 2.115 Those are the facts so far as they are known to me. I have not, as part of the Inquiry, enquired further of The Queen or The Duke of Edinburgh, having no licence to do so. The Prince of Wales, however, has confirmed that his understanding and recollection are as set out above.

The trial halted 2.116 Plainly, the revelations to Commander Yates on Monday 28th October prompted the adjournment application the following morning. Lord Carlile and the Defence team were not told the reason for that adjournment or for the adjournments over the next two days, 30th and 31st October, save that, as they understood, a PII issue had arisen and was being canvassed with the Judge. The Police OYcers inform me that PII was not an issue, consistent with the 29th October indication, above, that no PII was claimed or asserted on behalf of The Queen or The Prince of Wales. I am not privy to what was discussed privately with the Judge. The Prince of Wales’s representatives were not further consulted. 2.117 As part of the narrative history I might add that I am told by Lord Carlile that, coincidentally, it was while awaiting for the outcome of the Prosecution’s private discussions with the Judge that he and his team learned from Mr

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Burrell, for the first time, of his claim to have told The Queen that he was safe- keeping documents. 2.118 Be all that as it may, on 1st November Mr Boyce announced the prosecution’s decision, as above. The sole reason advanced in the public statement made by Mr Boyce on 1st November for the decision to oVer no further evidence was the revelation of the conversation with The Queen and its implications. 2.119 Was the revelation made in order to derail the trial, as suggested in some of the media? There is absolutely no evidence which could justify such a conclusion. If it was done with such a motive, it was done subtly and deviously, since there could be no assurance that the snippet of conversation relating only to documents would result in the Prosecution oVering no evidence in relation to the whole raft of goods alleged to have been stolen. As indicated above, there was no overt pressure applied either on the CPS or coming to the notice of the trial judge. As also mentioned above, I am told that those involved in the revelation on behalf of The Prince of Wales did not have that expectation and were surprised at the outcome. Mr Seabrook was evidently not expecting the trial to end suddenly, since on 29th October 2002 he submitted an Advice to The Prince of Wales relating to a request made to Mr Seabrook by Lord Carlile for a “testimonial” to be provided for use by Mr Burrell. The “strong” advice given was that no such testimonial should be provided for use in the trial; any “reference” provided for Mr Burrell should be limited to use in mitigation in the event of conviction. 2.120 One can understand that there might arise a cynical suspicion that what occurred derived from a desire to prevent embarrassing revelations during Mr Burrell’s defence case, which was about to start; but the existence of such a motive is inconsistent with there having previously been numerous prior opportunities to intervene to prevent or stifle the prosecution, none of which opportunities was in fact taken. 2.121 The allegation that the disclosure was made in order to derail the trial is a serious one. It amounts to, or comes close to, one of attempting or conspiring to pervert the course of justice. Clear and compelling evidence would be required before such an allegation could be found to be made out. Not only is there no “clear and obvious” evidence, there is simply none. 2.122 I conclude that neither pre-trial nor in the events immediately preceding Mr Burrell’s acquittal was there any interference, proper or otherwise, by or on the part of The Prince of Wales to procure the termination of Mr Burrell’s trial.

The Brown trial 2.123 Since mention has been made, as part of the narrative, of the proceedings against Messrs. Brown and Havlik, I refer briefly and by way of postscript to what happened to those proceedings. On 3rd December 2002, the CPS via Mr Boyce announced at the Central Criminal Court that it was not to pursue the trial of Mr Brown and Mr Havlik. I am not aware of the reasons for that decision beyond those announced in public. There is no evidence of which I am aware of there having been any contact with The Prince of Wales or his

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Household concerning this trial after the history given at the meetings in 2001, other than passing “progress reports”. There is certainly no evidence or suggestion of any intervention or attempted intervention in respect of the decision announced on 3rd December. That decision was exclusively the responsibility of the CPS. It is not for me to make any comment upon it.

Summary conclusions 2.124 The Prince of Wales had, throughout, serious concerns about the implications of Mr Burrell being tried. He was concerned at the prospect of himself and, more particularly, his sons being called as witnesses, and understandably worried that information personal to himself and his family would be revealed during the trial and be the subject of intense media interest. His main concern in that regard was the distress which could be caused to his sons by ‘revelations’, true or not, relating to their mother. Those concerns and worries were increased by the stance adopted by Mr Burrell’s lawyers after Mr Burrell was charged, in correspondence and in meetings. He would have preferred it if a trial could have been avoided. He was advised, however, that he could not properly intervene and should not be seen to be interfering with or seeking to influence the prosecution process, and he followed that advice. Several obvious opportunities presented themselves during the investigation to intervene and to stop the process, but none was taken. 2.125 The disclosure made on 28th October 2002 of The Queen’s conversation with Mr Burrell was properly made. Had it not been made, those advising Her Majesty and The Prince of Wales could rightly and strongly have been criticised. The suggestion that the disclosure was made for improper motive and in the expectation of preventing the trial continuing finds no support in the available evidence. 2.126 I conclude that there was no improper conduct by or on behalf of The Prince of Wales in respect of the termination of the Burrell trial.

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QUESTION 3

HAVE OFFICIAL GIFTS GIVEN TO THE PRINCE OF WALES BEEN SOLD?

Introduction

3.1 Press reports at the end of 2002 alleged that ‘oYcial’ gifts to Members of the Royal Family were frequently sold or given to Household staV who then sold them. Our investigation is limited to the practices in respect of oYcial gifts in The Prince of Wales’s Household.

3.2 The Press alleged that oYcial gifts were sold on behalf of The Prince of Wales by Michael Fawcett, his Personal Consultant, Mr Fawcett sharing the sale proceeds with The Prince of Wales or otherwise receiving some commission, whether authorised or unauthorised. That allegation with respect to commission, for which we found no evidence, is more appropriately addressed in Section 4 below.

3.3 The Press were unable to provide to us any information in relation to these practices beyond the general allegations which had been published. Accordingly, we sought to compile a list of oYcial gifts received over a three year period and to ascertain whether any of the more valuable gifts in financial terms, taken as those with an estimated value of £150 or more, had been sold or otherwise disposed of. This process was made more diYcult because proper records of gifts received had not been maintained.

3.4 Another diYculty was the absence of any comprehensive definition of ‘oYcial gift’. Categorisation in the past was based on an informal understanding of the term; the distinction between ‘oYcial’ and ‘private’ gifts, however, was generally understood, with oYcial gifts being those given on or to mark an oYcial occasion. Mr Fawcett told us that he understood that ‘an oYcial occasion’ was an occasion recorded in the Court Circular, although he would not always have been aware whether an event had been recorded there. A ‘private’ gift was understood to be one given to The Prince of Wales for Christmas or his birthday or by someone who was a relative or personal friend. An obvious complication could arise where a personal friend presented a gift during an ‘oYcial occasion’. Further, a number of gifts such as those sent in by members of the public were not covered by either definition.

3.5 The list for the three year period was drawn up using the more comprehensive definition of oYcial gift which has recently been drafted by The Queen’s and The Prince of Wales’s Households, and by referring to oYce records, including programmes for engagements and thank you letters, and by seeking information from Household staV.

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3.6 As a result of the wide-ranging approach needed to identify oYcial gifts, the procedures referred to above have also identified some private gifts. While this Inquiry is not concerned with private gifts, we include some facts and comments in this respect because they cast some light on the allegations concerning oYcial gifts reported in the Press. 3.7 We are of course conscious that, when looking for evidence of the sale of oYcial gifts, we were largely dependent upon anecdotal evidence, unless there was documentary evidence of a transaction; and we recognise that, if there were unauthorised sales (including sales involving payment of commissions), those concerned are unlikely to volunteer such facts to us. Accordingly, we have looked at the information given to us with a proper degree of cynicism. We lack the powers which investigating agencies, such as the Police and the Inland Revenue, possess and have had to do our best to tap potential sources of information and to review it with care. In the end, we can only reach our conclusions on the evidence available to us. 3.8 We approach the question “Have oYcial gifts been sold?”, first by examining the scale of gifts received and the then guidelines and procedures relating to the receipt of gifts. Second, we report generally as to the current or more recent practices concerning the receipt and handling of gifts within the Household and give our recommendations as to how those practices might be improved. Finally, we address the evidence available to us concerning the alleged sale of oYcial gifts. We have also considered whether oYcial gifts have been exchanged or given away.

Scale of gifts 3.9 The Prince of Wales receives, and gives, a large number of gifts. For example, The Prince of Wales’s OYce has records of 2,394 oYcial gifts received during the three years 1999, 2000 and 2001. During the three months to the end of January 2003, when there can be greater certainty that complete records have been maintained, The Prince of Wales received 248 oYcial gifts. The majority of the gifts have relatively low monetary, although not intrinsic, value and were given personally to The Prince of Wales or sent in by members of the public. During the year to 31st March 2002 The Prince of Wales gave approximately 719 gifts. 3.10 Higher value gifts are usually only received from Middle Eastern donors. It is understood that the giving of presents is traditional in the Middle East and that the gifts tend to be more numerous and higher in value.

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3.11 OYcial gifts received during the three years 1999 to 2001 are categorised as follows.

Animals and livestock 5 Arms and armour 15 Books, papers and manuscripts 1,117 CDs, videos and tapes 249 Clocks and watches 9 Clothing and outdoor accessories 127 Coins 10 Furniture and carpets 13 Games and toys 22 Garden ornaments, trees, plants and shrubs 55 Glass and ceramics 23 Household items and kitchenware 46 Medals, certificates and awards 34 Miscellaneous items 129 Models, sculptures and ornaments 78 Paintings, drawings, photographs and artwork 205 Pens and stationery 53 Perishables and consumables 130 Silver and jewellery 32 Toiletries 12 Wine and spirits 30 2,394

3.12 One Press report suggested that suppliers hopeful of receiving Royal Warrants “deluged the Palace with hundreds of items each week”. Potential and existing suppliers do provide samples of their goods occasionally by agreement, but it is understood that unsolicited samples would not generally be accepted. The understanding, until now, of what was an ‘oYcial gift’ did not extend to such goods as may have been given by suppliers.

Guidelines and procedures for the acceptance, receipt, classification, recording, storage and disposal of gifts 3.13 There have been guidelines, prepared and circulated by The Queen’s Private Secretary, for the acceptance of gifts by Members of the Royal Family for a number of years. The guidelines are available for reference by all Private Secretaries to Members of the Royal Family. The most recent were circulated in 1995, with revised guidelines circulated in draft in August 2002. The guidelines issued in 1995 primarily dealt with the acceptance of gifts and discounts by Members of the Royal Family. A summary of the 1995 guidelines is as follows.

- Presentations by governments, guilds, trade associations, civic bodies and the like can normally be accepted.

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- Presents from foreign countries should generally be declined, except when the Foreign OYce recommends that they should be accepted. If a present has been sent from a distance, the donor is usually informed that, since it cannot be accepted, it must either be returned or arrangements made for it to be given to a charitable body.

- Gifts from commercial enterprises should normally be refused, except as a souvenir of a visit to a factory or showroom, or on the occasion of the marriage of a Member of the Royal Family. It should be made clear that acceptance of a gift should not be used to promote sale of a product.

- Gifts from members of the public should normally be accepted if they are flowers, perishable foodstuVs, small items of sentimental value, stamps for the Royal Collection and books given by the authors (provided the subject matter is not controversial). Otherwise gifts are returned with an expression of thanks.

- Money oVered with the request that a Member of the Royal Family distributes it to a charity of his or her choice is not accepted. The donor is asked to make the choice.

- It is implicit that gifts are never solicited.

- Any oVer of an excessive level of discount (i.e. above about 50%) should not be accepted. 3.14 The draft guidelines circulated in August 2002 were essentially the same, but contained additional provisions including the following three based on the Ministerial Code (a code of conduct for the guidance of Ministers issued by the Cabinet OYce).

- No gifts or hospitality should be accepted which would, or might appear to, place the recipient under an obligation.

- All oYcial gifts received at home and abroad should be recorded and acknowledged. A list of gifts received overseas should be given to HM Customs & Excise on return.

- OYcial gifts should be stored in royal residences, and displayed or worn in public when possible and appropriate. 3.15 The draft guidelines also included, for the first time, a definition of oYcial gifts: “gifts given during an oYcial engagement or in connection with the oYcial role or duties of the Member of the Royal Family”. This definition was provided to and used by the Chancellor of the Exchequer when answering a Parliamentary Question from Norman Baker MP on 2nd July 2002. 3.16 The guidelines prepared by The Queen’s Private Secretary were for reference by the Private Secretaries of all Royal Households, but each Household is autonomous and, while the 1995 guidelines were included in the procedures manual for The Prince of Wales’s Household, the manual was not distributed within the Household or referred to.

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Practice in the Household—generally 3.17 The procedures which The Prince of Wales’s Household followed for many years, until the past few months, with respect to the acceptance of gifts were mainly based on custom and practice and were not documented. The underlying approach was that, because it might appear ungrateful and discourteous to decline, gifts were generally accepted unless the value was disproportionate to the donor and circumstances, or there were strong commercial connotations or other obligations attaching to the present. Gifts were accepted from commercial enterprises including polo prizes and Christmas and birthday presents (it is understood that this is not an unusual commercial practice for valued customers). If someone asked before giving a present they were generally politely discouraged unless the gift was to mark an important oYcial occasion or was from a personal friend. 3.18 Advice regarding gifts to mark oYcial occasions would be given by one of The Prince of Wales’s Private Secretaries; advice to personal friends of The Prince of Wales was given by Mr Fawcett.

Recording gifts 3.19 The Prince of Wales’s Household has had a system for recording the receipt of gifts since the late 1960s. It was recognised that the then system was deficient in a number of respects and a new system was introduced in January 1996 which, subject to amendments made during the past few months, is still in use. The system should work as follows.

- Any member of staV receiving a gift on behalf of The Prince of Wales should fill in section 1 of a Gifts Received Form (“GRF”). Section 1 of the GRF records the item, the donor and the occasion on which it is given. Until recently, there was no “box” on the GRF to indicate whether a gift was oYcial or private.

- On completion of section 1, a copy of the GRF is sent to the Assistant Archivist for input to the computer.

- The member of staV completing the form, or if there is any doubt in his or her mind one of the Private Secretaries, recommends how the gift should be dealt with. This is recorded in section 2, ‘Action’. This will determine how the gift is treated unless it is to be seen by The Prince of Wales.

- Gifts for The Prince of Wales to see (which include a large proportion of all the gifts given) are sent to Highgrove, with a copy of the GRF and become the responsibility of the House Manager. The House Manager lays the gifts out (with oYcial gifts in one place and private gifts in another) and asks The Prince of Wales for his decision in respect of each of them. The House Manager then completes section 3 of the form, ’The Prince of Wales’s decision’.

- When finally completed the GRFs are returned to the Assistant Archivist at St. James’s Palace to update the computer record.

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3.20 For gifts received on an overseas tour, the completion of the GRFs is the responsibility of the Private Secretary accompanying The Prince of Wales and should be preceded by the preparation of a list of all gifts received for submission to HM Customs & Excise on return to the UK. The list also helps to ensure that thank you letters are sent for all gifts. 3.21 In addition to considering the staV questionnaires referred to below, we also interviewed a number of Household staV as to the extent to which the GRF system was complied with. It became clear from these enquiries that the GRF procedures have not been adhered to consistently. Although the procedures have been in place for a number of years and should have been known to staV, and despite presentations to staV by the Archivist and Assistant Archivist on the subject, the latest in June 2002, there was until recently inadequate compliance with the gifts recording system. 3.22 We have found that, again until recently, records of gifts received are incomplete and that, where GRFs have been completed, descriptions are sometimes not suYcient to enable subsequent identification of the gift referred to. Further, lists of gifts received on overseas tours have also not always been prepared and submitted to HM Customs & Excise. The instances on which this occurred have now been reported to Customs & Excise. 3.23 The practice has been that some of The Prince of Wales’s property including gifts received, which was kept at St. James’s Palace or Highgrove, was included on a computer based inventory system maintained initially by a full-time curator and then by a part-time inventory clerk; however, the inventory clerk left in 2000 and was not replaced and the system fell into disuse. The current system involves the manual entry onto the computer of information contained on the GRFs: obviously, if no GRF is completed and submitted to the Assistant Archivist, no computer entry is made. 3.24 Various members of staV currently maintain various inventory records. For example, we learned in interview that the House Manager at Highgrove maintains his own record of The Prince of Wales’s picture collection. The Head Gardener at Highgrove keeps a computerised record of plants, trees etc. including those received as gifts. However, there is no central co-ordination of their records.

What happens togifts? 3.25 As a matter of practice (again, there is no documented policy) gifts may be:

- displayed in one of The Prince of Wales’s residences;

- worn by The Prince of Wales (eg a watch or coat);

- used to furnish or decorate staV living accommodation;

- kept in storage at Highgrove or St. James’s Palace;

- given to or auctioned for charity;

- given to members of staV or others;

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- sent to Mr Fawcett at St. James’s Palace as potential future gifts for friends or relatives of The Prince of Wales;

- sold or exchanged; or

- destroyed. The first three headings above require no further explanation; the remainder are discussed below.

Storage 3.26 Those oYcial gifts, which are not required for display purposes or other use, are usually stored at Highgrove. The only dry cellar space available is now used for storage of gifts, some of which are quite valuable, together with miscellaneous items. There is also only limited storage space at St. James’s Palace.

Charity auctions 3.27 In recent years some less valuable gifts given to The Prince of Wales directly or sent in by members of the public have been auctioned to staV in aid of charity. Examples include books, stationery, tapes and CDs, toys and games, items of clothing and accessories, glassware and china, paintings and ornaments, household items and consumables. The list of items to be auctioned is approved by The Prince of Wales, who also chooses the charity to which the proceeds are donated. Auctions are held annually. The first one was held in 2000, raising £1,370 for FARA. The second was held in 2001, raising £1,800 for The Cotswold Care Hospice. The most recent was held in September 2002, raising £2,000 for the Arpana Charitable Trust. 3.28 On occasion, The Prince of Wales suggests that some items might be given directly to a charity with which he is involved. Other items are sent to charities directly in a ‘charity box’. Charity boxes have, in particular, been sent to charities associated with The Prince of Wales and which have charity shops. There are no formal guidelines for items auctioned for or given directly to charity; however, anything that might identify provenance is removed and there is a record of items auctioned to staV and of the money raised. A record is now also kept of items sent in charity boxes.

Gifts tosta V 3.29 It is apparent, from answers to staV questionnaires and from what we were told in interviews, that The Prince of Wales is considered generous by his staV and others who work for him. Prizes won or given at polo matches, for example a pen, a watch or champagne, are in particular quite regularly given to the groom, chauVeur or others accompanying him. The Prince of Wales does not as a rule pass on oYcial gifts to staV, unless they are food or other perishable items, for obvious practical reasons, or small lower value items which he feels that the member of staV might enjoy. A photograph, some perfume (when in the Middle East), a teddy bear, a print (when in Italy), two ornaments, a

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painting and a print (when in Canada), two woolly hats, a commemorative tankard, a teapot and some cups and saucers, a mirror (when in Ireland), a clock (from Japan), a small model of an aeroplane (when in the Middle East) and a wooden chalice are amongst the items noted by staV on their replies to the questionnaires. No instance has been identified of The Prince of Wales passing on an item sent in by a member of the public to one of his staV (or anyone else). 3.30 From a number of staV interviewees, we have learned that it is not always made clear whether the item concerned is a gift or a loan; for example, a painting may be ‘given’ to be hung in the member of staV’s living accommodation, the member of staV being uncertain whether this was an outright gift or a long term loan and not feeling it appropriate to ask. A memo was sent to all staV in January 2001 asking them to complete a Gift Declaration Form, listing all items belonging to or originally given to The Prince of Wales which he had lent or given to them. This form was not, however, completed and returned by most staV. 3.31 When the trial of Mr Brown and Mr Havlik was aborted on 4th December 2002, reference was made publicly by Mr Brown’s leading counsel to a note said to have been from The Prince of Wales oVering a gold wedding-ring to staV. There was much publicity given to this at the time. Neither the circumstances in which the note was circulated nor when it happened was detailed in Court. We sought to investigate this but Mr Brown’s solicitors, as they told us on Mr Brown’s instructions, declined to provide any information about the note. No reference to it or the wedding-ring can be found in the records maintained by The Prince of Wales’s OYce. The Prince of Wales unsurprisingly told us that he had no recollection of the ring or the note. We have, therefore, been unable to reach any conclusion in respect of the ring. 3.32 If a gift received by The Prince of Wales is given directly by him to a member of staV it is unlikely that any record will have been kept of it or of to whom it was given. It would often be the case that a gift would be passed on by The Prince of Wales to a member of staV immediately or very soon after its receipt; thus no GRF would have been completed. The lack of any record has possible tax implications for the recipient member of staV in that he or she may be taxable on the value given. As soon as it was appreciated that there was a tax issue in this respect, in November last year, the Inland Revenue was contacted by The Prince of Wales’s OYce and a procedure agreed to address the matter. Detailed information has been submitted to the Inland Revenue and the tax due, which has now been agreed, will be paid. 3.33 Most gifts to staV from The Prince of Wales are bought on his behalf for that purpose. A stock was and is maintained of items, such as photograph frames, used as staV presents. The OYce’s Finance Department also keeps records for tax purposes of Christmas and leaving gifts given to staV by The Prince of Wales, but not of gifts received by him and passed on to staV. 3.34 As we are advised, gifts received by The Prince of Wales are unlikely to be subject to tax on receipt, because they would not be gifts received “from or by reason of employment”.

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Gifts sent to Mr Fawcett for the storeroom 3.35 As already referred to, it was the practice of The Prince of Wales, after reviewing gifts laid out for his inspection at Highgrove, on occasion to direct that some gifts should be sent to Mr Fawcett at St. James’s Palace and kept as possible future gifts, for friends, relatives or others. Mr Fawcett recently showed us the current stock kept by him, including gifts for staV which had been bought in. A variety of gifts given to The Prince of Wales was there, including pens, ornaments and bottles of wine. Where a GRF had been completed, it would (or should) show that the gift had been transferred to the St. James’s Palace storeroom.

Sale or exchange of gifts 3.36 Gifts given privately, or thought to have been given privately, have occasionally been sold or exchanged. 10 instances have been identified when this happened during the period since 1st April 1996. The gifts sold or exchanged were all given by personal contacts or friends in this Country or abroad, in particular the Middle East, and were generally higher value items. The unwritten policy has always been that only private, rather than oYcial, gifts should be sold or exchanged. This matter is discussed in more detail in paragraphs 3.57 to 3.61 below. 3.37 If a gift is sold or exchanged for more than £6,000, Capital Gains Tax may be payable if a gain has been realised. In five of the 10 instances the sales or exchange value exceeded this limit. However, it is unlikely that any tax will be payable because the gifts were sold or exchanged relatively soon after their receipt. This matter is currently under discussion with the Inland Revenue and any tax due will be paid.

Destruction 3.38 Gifts are not as a matter of policy destroyed; however, as referred to above, there is little storage space at either Highgrove or St. James’s Palace and, the storage space that there is, is in the basement. Previously there was a problem with damp and this meant that items may have been destroyed to release space or because of deterioration from damp or other causes while stored. It is understood that gifts have been destroyed on a number of occasions during the 1990s. 3.39 For example, some fabrics and cushions were destroyed as a result of moth infestation, as well as some items aVected by damp in the basement at Highgrove. Wedding and other gifts have been destroyed in order to release space and small gifts which cannot be given to or auctioned for charity, such as some clothing, bedding, drawings, home-recorded videos and tapes, have been destroyed. On occasion pictures, including some oYcial gifts, were destroyed. It is understood that, sometimes, gifts which have been identified for disposal have been salvaged and kept by staV. There has been no policy governing the destruction of gifts and no records have been kept.

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Conclusions in respect of policies and systems for accepting, recording and disposing of gifts

3.40 There is no doubt that the policies and systems have been deficient in many respects. We do not believe that there has been anything deliberate or reckless about this, but that it reflects the fact that The Prince of Wales’s OYce and Household are exceptionally busy and have not had the time or the resources to devote to these matters. Also, most staV have grown up with and got used to the rather informal procedures in use. The issues revealed by the charges brought against Mr Brown and Mr Burrell have encouraged a review of procedures in respect of gifts and a recognition that the previous practices need to be revised. New policies and procedures that have been or will be introduced to improve the administrative procedures in this area include the following.

New proposals—policy and definition of ‘oYcial gifts’

3.41 New policies and guidelines for oYcial gifts have been agreed by The Queen’s and The Prince of Wales’s Households. They include the provision that all oYcial gifts received by The Prince of Wales should be regarded as having been received by him on behalf of The Queen.

3.42 To implement this requires a clear definition of “oYcial gifts”. The definition deriving from the discussions between the Households is:

“OYcial gifts are (a) gifts presented to a Member of the Royal Family during or in connection with any oYcial engagement or duty, (b) gifts sent in or given by businesses, and (c) gifts given or sent in by individuals not personally known to the Member of the Royal Family.”

3.43 Further, it is agreed by the two Households that oYcial gifts:

- may be used or consumed by the Member of the Royal Family;

- may be displayed in properties on the Royal Estates;

- may become part of the Royal Collection;

- may be placed on loan;

- may be given to a registered charity or sold for charity; or

- if perishable items with an individual value of less than £50, may be given to third parties, including staV (on the grounds that it would be impracticable or not cost-justifiable to give them to charity).

It is also agreed that the destruction of oYcial gifts should be avoided if at all possible and should only occur with The Queen’s permission.

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Recommendations as to systems and procedures 3.44 The adoption of the definition and guidelines above should provide a clear framework for those responsible for the handling and administration of gifts. In addition, there need to be proper and enforced procedures governing the management of gifts and the recording of related details. Accordingly: (a) the guidelines referred to in paragraph 3.41 above need to be summarised shortly and simply and drawn to the attention of all staV responsible for dealing with gifts, including a written definition of the meaning of “oYcial gifts”, as given in paragraph 3.42 above; (b) the GRF system needs to be complied with and adequate descriptions of gifts and donors clearly recorded; the Form should be simplified, so as clearly to identify whether a gift is oYcial or private (and to indicate where there is doubt) and to facilitate transfer of the information onto the computer system; controls are also required to ensure that the completed GRFs are submitted to the Archivist for transfer of the information onto the computer system (using, for example, a sequential numbering system); (c) procedures are required to ensure that any disposal of or a decision to destroy a gift is notified for entry on the computer record; a proper inventory of all gifts is also essential, so that any gift can easily be located or its disposal confirmed: allocating an inventory number to each gift and, if possible, aYxing that number to the gift is desirable; a photographic record should be kept of all gifts above a specified value; (d) gifts received on foreign tours must not only be the subject of GRFs, but also be listed for immediate submission to HM Customs & Excise on return to the UK; (e) a log or register is required of all gifts donated to charity (or submitted for charity auction); it is suggested that surplus gifts should be given to charities, approved by The Prince of Wales, for sale or auction, rather than being auctioned to staV with the proceeds given to charity; (f) no oYcial gifts should be sold, exchanged or given away, except in the latter instance, if they are perishable items with a value of less than £50; (g) a record must be made and retained of all gifts (whether bought-in for the purpose or passed on by The Prince of Wales) to staV; staV must be advised of their obligation in respect of tax on gifts received by them in the course of their employment; and should be required to provide an annual declaration of gifts received by them (including gifts from third parties if received in the course of their employment); (h) there must be a record of any decision by The Prince of Wales to sell or exchange, in exceptional circumstances, a private gift; and details should be recorded of the sale/exchange transaction; oYcial gifts will not be sold or exchanged; and (i) storage facilities should be extended and improved so as to minimise the risk of deterioration of gifts; gifts should not be destroyed save

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exceptionally and then only with the express authority of The Queen, a record being kept of such authority; details should be recorded of what has been destroyed and why.

3.45 We recognise that implementing these procedures will involve expense. It has been estimated, in view of the volume of gifts received by The Prince of Wales, that they will cost up to £50,000 a year to implement, before taking account of longer term storage costs. There is, however, a legitimate public interest in the preservation and safeguarding of oYcial gifts made to The Prince of Wales; and the costs would in our opinion be justified.

Have any oYcial gifts been sold, exchanged or given away?

3.46 We have investigated whether there is evidence to indicate that oYcial gifts have been sold; and have extended the question to include oYcial gifts which may have been exchanged or given away. In the absence of any clear definition of what is, or is not, an “oYcial gift”, we had first to adopt a working definition; and we have used that set out in paragraph 3.42 above.

3.47 Because, as referred to above, the records maintained in The Prince of Wales’s OYce were incomplete, we needed to reconstruct a list of all oYcial gifts received over a given period. The sheer volume of gifts meant that, if we were to report within a reasonable time, it was necessary to select a reasonably short period but one which was long enough to enable a proper view to be formed. We opted to examine in detail the position over the three calendar years, 1999- 2001 inclusive. We did not include 2002 since the analytical work started before the year-end.

3.48 In order to compile this list of oYcial gifts (using the “new” definition), the following procedures were followed:

(a) All oYcial engagements and meetings undertaken by The Prince of Wales in the UK and abroad during the three year period were listed. The engagements included foreign tours, visits to the UK by foreign Heads of State and members of foreign royal families and regional visits in the UK including visits to commercial organisations, hospitals, charities and the armed forces. There were 1,778 engagements in total.

(b) A review was conducted of the engagement files (including Press cuttings), thank you letters and oYce records in connection with the engagement or meeting, as well as the computer records of gifts received, to identify any gifts received in connection with each engagement. The programme for the engagement will say if a gift is presented and thank you letters are written for all gifts where the recipient is known. All gifts identified were listed.

(c) Gifts from the public sent to or dealt with by the General Correspondence Section at St. James’s Palace were added to the list.

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(d) Gifts noted on the lists prepared in connection with overseas tours were included, if not already identified as a result of the procedures referred to above.

(e) Private gifts were noted, if identified, but no further action was taken with regard to them.

3.49 There can be no certainty that these procedures identified all the oYcial gifts received during the three year period. However, they, and the additional procedures referred to in paragraph 3.53, were reviewed by KPMG, the external auditors of The Prince of Wales’s Household, who have confirmed (a copy of their letter is attached as Annex 2) that the procedures should have provided a reasonable basis for reaching a conclusion on the substance of the reported allegations.

3.50 2,394 oYcial gifts were identified as a result of this exercise, using the new and more comprehensive definition of oYcial gift set out in paragraph 3.42 above. The 2,394 gifts included 439 gifts sent in by members of the general public, of which 19 were returned and 353 given to charity or auctioned to raise money for charity. Of the remaining 67 items, 39 were retained in various oYces or at Highgrove, 12 were destroyed and 16 were unaccounted for.

3.51 As an indication of the incompleteness of the previous record keeping, only 903 of these 2,394 gifts had been recorded on the computer system. This suggests that less than 40% of gifts received had been recorded on GRFs.

3.52 For reasons of practicality it was decided to try to trace only those with an estimated value of £150 or more. 223 gifts fell into this category (but did not include any gifts sent in by members of the public) and were listed separately. However, the description given for 31 of these was not suYcient to enable them to be identified and there were 12 perishable items, leaving a balance of 180 items, which in theory could be traced.

3.53 We then sought to identify the whereabouts of these 180 gifts and adopted the following procedures.

(a) Circulating a list of the items widely, including to The Prince of Wales’s personal staV and Mr Fawcett for them to note the locations of items of which they were aware.

(b) Circulating a questionnaire to all staV in The Prince of Wales’s Household asking them for any information they might have as to where oYcial gifts are located and whether they knew of any being given away, sold, exchanged or destroyed.

(c) Sending a letter to the Household’s 171 Royal Warrant Holders and 36 other major suppliers asking them whether, during the period since 1st April 1996, they had purchased or exchanged any items from The Prince of Wales’s Household or from people who they thought might be connected with The Prince of Wales’s Household.

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(d) Writing to the seven newspapers which had published stories on oYcial gifts being sold or exchanged to ask whether there was any more specific information which they could provide. Six replied and were unable to help with further specific information.

(e) Writing to the two commercial enterprises, one in this Country and one in the United States, which were identified as dealing in royal memorabilia. The UK businessman, Mr Peter Smith, asserted that he had not bought or otherwise dealt in oYcial gifts and that there was no substance to the Press reports which suggested to the contrary. The U.S. dealer, Miss Carroll, declined to assist us.

(f) Meeting a number of Royal Warrant Holders and interviewing 10 members of staV to ask further questions.

3.54 Of the 180 items, 161 have been traced and 159 can be confirmed as still being in the possession of The Prince of Wales’s Household. As a result of a reply from a Royal Warrant Holder two (rugs) were identified as having been exchanged. The remaining 19 comprise nine pictures, two models, a silver paper-knife and some silver cuV-links, two bowls (one glass and one china), a teddy bear, a clock, a piece of framed embroidery and a bench.

3.55 Thus, the result of trying to ascertain what had become of recorded oYcial gifts was in some measure unsuccessful. We cannot say that some of the 19 items were not sold; but there is no evidence that they were. If they had been sold, retailers might have reported the transactions to us as they have done in other instances, unless of cause the transaction was clandestine or otherwise improper.

3.56 It is improbable that the unaccounted for gifts were, to any material extent, given to staV, since the anecdotal evidence suggests that staV gifts were usually items of relatively small financial value (and the “missing” gifts are in the category of those estimated to have been worth over £150); and we have not identified any of the 180 gifts as having been given to staV. Some may have been lent to or taken by staV or destroyed, but, in the absence of records, we have no evidence to this eVect.

Items identified as having been sold or exchanged

3.57 As referred to above, attempts to trace the 180 oYcial gifts did not identify any which had been sold, (although two where identified as having been exchanged). However, responses to the staV questionnaire and from the 171 Royal Warrant Holders and 36 other suppliers written to identified five companies that had purchased or exchanged items from The Prince of Wales’s Household during the period since 1st April 1996. A total of 10 gifts were involved, of which 7 were clearly private, using the new broader definition of oYcial gifts, and realised on sale or exchange £40,800. There are therefore three instances where, applying the new definition, oYcial gifts received during the period since 1st April 1996 have been sold or exchanged.

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3.58 In the first case the gift comprised a watch and a pen with a combined value of £9,600. It was given by a member of a foreign royal family whom The Prince of Wales had known for 20 years or more and who had come to have tea with him at Highgrove. The visit included discussion of oYcial matters and was recorded in the Court Circular. It was therefore technically an oYcial occasion. However, in view of the length of time that he had known his visitor, whom he regarded as a friend, and the fact that it was an informal occasion at Highgrove, The Prince of Wales believed that the gift was private. 3.59 In the second case The Prince of Wales was given a rug worth £2,800 at an oYcial engagement. About six months after the event it was exchanged for another rug and, when the exchange was made, the origin of the original rug and the fact that it was an oYcial gift was overlooked. 3.60 The third case also relates to an oriental rug. When received the gift was correctly classified as private, because the occasion on which it was given was not recorded in the Court Circular. It is only the broader definition now being introduced which would classify the gift as oYcial. The rug which had a value of £10,000 was taken in part exchange for a more expensive rug. 3.61 The above transactions were eVected on The Prince of Wales’s behalf by Mr Fawcett, as he confirmed to us. Mr Fawcett’s principal duties include the arrangement of dinners, lunches, concerts and receptions given by The Prince of Wales, fundraising and dealing with the receipt and giving of most gifts to and from The Prince of Wales. He also helps with the decoration and arrangement of The Prince of Wales’s residences. Each transaction was carried out at The Prince of Wales’s request, as he confirmed to us. He authorised the sales or exchanges because he believed that it would be wasteful to keep gifts given privately with quite a high value which would not be used. The donors were not informed that the gifts were to be sold or exchanged.

Conclusions 3.62 The policies and procedures in The Prince of Wales’s Household to record and control the receipt, maintenance and disposal of oYcial and other gifts, including the maintenance of inventory records, have been deficient. This was not, we believe, intentional, but the result of pressure of work and limited resources and in part because those involved had become accustomed to the informal practices then operating. The procedures have been or are in course of being enhanced to be in line with current best practice. 3.63 It has always been the policy, even though not documented, that oYcial gifts should not be sold, exchanged, or given away other than to charity. However, there was no documented definition of oYcial gifts and, while The Prince of Wales himself was quite clear that they included gifts received during or in connection with an oYcial engagement recorded in the Court Circular and gifts sent in by the public, many staV were unaware of the definition, and had not been given any guidance as to how oYcial gifts should be treated. The procedures have now been enhanced and the definition of oYcial gifts extended to include all items given by businesses.

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3.64 The lack of adequate records made it diYcult to identify whether or not oYcial gifts have been sold, exchanged or given away. However, a detailed exercise was undertaken to construct records for a three year period (1999 to 2001), using the new more comprehensive definition of oYcial gifts, in order to identify gifts received. We then sought to trace gifts with an estimated value of £150 or more. Of the 180 traceable oYcial gifts with an estimated value of £150 or more identified as having been given to The Prince of Wales during the three year period, 19 could not be accounted for. Probably most had limited realisable value if sold and none of the Royal Warrant Holders and suppliers to whom we wrote reported the purchase of any of these items. We believe that it is unlikely that The Prince of Wales would have asked for any of these items to be exchanged or sold; however, it is possible that they have been given to or taken by staV or destroyed, but we have no evidence to this eVect. 3.65 The Prince of Wales has passed on gifts he has been given to staV; however these have generally been lower value items, mainly prizes won or given at polo matches. The Prince of Wales has not as a matter of principle passed on oYcial gifts to staV, unless they are food or other perishable items, for obvious practical reasons, or small lower value items which he feels that the member of staV might enjoy. The latter were mainly items given to The Prince of Wales on overseas tours or on visits to organisations in this Country and, as far as we aware, have never included any items given or sent in by members of the public. No oYcial gifts at all will be given away in future, except to or for charity or (for practical reasons) if they are food, flowers or other perishable items with a value of £50 or less. 3.66 Replies from Royal Warrant Holders and other suppliers and responses to the staV questionnaire, identified three gifts (two were listed as a result of the 1999- 2001 review and one fell outside the period), which under the new definition would be classified as oYcial, as having been sold or exchanged during the period since 1st April 1996. In two cases it was not realised at the time that the gifts concerned were oYcial and the third gift would only be classified as oYcial under the new more comprehensive definition of oYcial gifts introduced in this Report. 3.67 In addition, seven private gifts were identified as having been sold or exchanged during the six year period. No private gifts will in future be sold or exchanged, other than in exceptional circumstances and with the donor’s agreement. 3.68 In short, our investigations have identified one oYcial gift which has been sold (it was thought to be private), two which have been exchanged (one was classified as private at the time) and an unquantified number of smaller gifts which have been given to staV (because it was believed that they would otherwise go to waste). 19 gifts with a value of £150 or more were unaccounted for. In addition, oYcial gifts have been sold for charity. Policies and procedures in this area have been deficient. They need to be, and are being, enhanced.

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QUESTION 4

HAVE ANY STAFF IN THE PRINCE OF WALES’S HOUSEHOLD RECEIVED IMPROPER PAYMENTS OR OTHER BENEFITS?

Introduction 4.1 There were suggestions in the Press following the trial of Mr Paul Burrell that some staV employed by The Prince of Wales’s Household had received improper payments or other benefits from Royal Warrant Holders or other suppliers. The allegations extended to: (a) selling items given to The Prince of Wales without authorisation and keeping the proceeds or, if the sale was authorised, taking a commission or “slice” of the proceeds (as referred to in paragraph 3.2 above); and (b) receiving gifts, discounts or entertaining from suppliers as inducements to do business with them or to recommend them for the grant of a Tradesman’s Royal Warrant of Appointment. 4.2 Although the allegations were cast fairly generally, they were, in particular, aimed at Mr Fawcett (whose principal duties are described in paragraph 3.61). We have accordingly sought to ascertain whether any and, if so, what benefits may have been received by Household staV, in particular Mr Fawcett, and, to the extent that such benefits were received, whether they were improper. 4.3 If secret commissions were paid or improper payments made to induce favour, neither the donor nor the recipient would be likely to admit such practices to us; and, because the payments would be illegal, they would be most unlikely to be recorded in writing. Similarly, there is unlikely to be any record of unauthorised sales and misappropriation of the proceeds, which would be theft by the perpetrator. As mentioned above, we lack the powers of oYcial investigating agencies. We were, therefore, dependent principally upon disclosures made and accounts given to us by suppliers and by Household staV. We were alive to the possibility that information given to us might not be reliable. We sought to assess the credibility of that information in interview and by writing and/or by speaking to a range of third parties. 4.4 In this Section we address:

- the alleged unauthorised sale of gifts and the misappropriation of the proceeds (ie theft); and alleged payment of commissions in connection with the sale of gifts;

- the procedures governing the grant or renewal of Royal Warrants;

- the receipt of gifts or other benefits from suppliers, including Royal Warrant Holders;

- discounts;

- gifts and gratuities received by staV, other than from suppliers;

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- our recommendations in respect of the above; and

- our conclusions with respect to the Press criticism of Mr Fawcett.

Unauthorised sales or commission? 4.5 As detailed in Section 3, the absence of properly maintained records of gifts received and inventory records and our inability to trace the whereabouts of some gifts make it diYcult to determine whether items have been sold with or without authorisation. 4.6 Also as set out in Section 3, in view of this, we sought to reconstruct a record of all oYcial gifts received during the three-year period, 1999-2001, and to trace those with an estimated value of £150 or more. We also enquired of Household staV, Royal Warrant Holders and other suppliers, the Press and other parties for any information known to them relating to any sales of gifts during the period since 1st April 1996. This resulted in our identifying 10 occasions when gifts (seven of which where clearly private) had been sold or exchanged, all of which transactions were authorised. As reported above, we discovered no evidence of other sales; we have therefore found no evidence of unauthorised sales and the misappropriation of the sales proceeds. 4.7 When taking the steps described in paragraph 3.53 of Section 3, we also asked Household staV, Warrant Holders and other suppliers, the Press and other parties (including two companies reported to have dealt in Royal memorabilia) for any information known to them in relation to the payment, or seeking of payment, of commission or the conferring of other benefits related to the sale of gifts. No one admitted to participating in such an arrangement and no specific evidence (as opposed to rumour) of such an arrangement was provided. 4.8 The procedures adopted by us were reviewed by KPMG, the Household’s external auditors, who have confirmed (a copy of their letter is attached as Annex 2) that they should have provided a reasonable basis for reaching a conclusion on the substance of the reported allegations. 4.9 In short, our investigations revealed no instance of an unauthorised sale and the misappropriation of the proceeds or the taking of commission upon (or a “slice” of the proceeds of) sales. 4.10 Some items may have well been sold by staV or by ex-staV to companies dealing with Royal memorabilia or to others. As far as we are aware, however, these would have been items which had been given to the staV concerned by The Prince of Wales (eg Christmas and birthdays cards and presents, leaving presents, signed photographs, and so forth), rather than stolen items.

Royal Warrant procedures 4.11 A Royal Warrant of Appointment has potential commercial value to the holder. This could lead to temptation on the part of an aspirant supplier to seek to curry favour with Household staV believed to have some influence in the appointment process. No supplier has admitted to us making any payment or conferring any benefit for that purpose; and no member of staV has admitted

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to receiving payment or benefit in this respect; although, as referred to above, such an admission is unlikely to be made. 4.12 The procedure by which a supplier is granted a Royal Warrant or has its warrant renewed is as follows. Applications for new warrants are collected together by the Royal Warrants Holders’ Association and submitted to the Lord Chamberlain’s OYce in The Queen’s Household. The Lord Chamberlain’s OYce itself keeps a record of existing Warrants and advises Households annually of Warrants due to be considered for renewal. Within The Prince of Wales’s Household, views and comments are then sought from Household staV upon new and renewal applications. An informal, internal committee meets to consider the applications. The committee consists of the Private Secretaries, the Treasurer, the Press Secretary, the Financial Controller, the Head of Personnel and Administration, Mr Fawcett, and the Archivist, who acts as the “secretary” of this group. Warrants are also assessed for the applicant’s compliance with the environmental standards set by The Prince of Wales. 4.13 Recommendations are then made to The Prince of Wales for his approval. Finally, The Royal Household Tradesmen’s Warrants Committee meets to review all applications for consistency of approach across the Households, and may refer back questions to The Prince of Wales’s OYce for further consideration. The Prince of Wales’s current representatives on that committee are The Prince of Wales’s Treasurer and the Archivist. 4.14 Mr Fawcett, who has for some time been a member of the informal internal committee, told us in writing that “I am .... unable to influence nor guarantee the awarding of Royal Warrants to any company.” It is probably an over- statement to say that Mr Fawcett cannot influence the grant or renewal of a warrant. Any member of the internal committee could do so and, in interview, Mr Fawcett accepted that, while not directly involved in the committee’s decisions, he could influence a decision by expressing his own views on Warrant Holders’ services. However, he denied having done so for ulterior motives. We are aware of no evidence of any improper influence being brought to bear by Mr Fawcett or any other member of the internal committee relating to the grant or removal of Royal Warrants. The potential to influence the decision, however, and the need to remove any possibility of it being suggested that improperly motivated influence has been brought to bear, emphasise the importance of having clear rules in respect of the receipt of gifts and other benefits from Royal Warrant Holders and other suppliers.

The receipt of gifts and other benefits from suppliers 4.15 There have been in place, since at least 1985, procedures relating to the ordering of, purchase of and payment for goods and services. These include a requirement to have independent authority for contracts or payments in excess of a given sum, as from June 1997, £2,000. There is also provision in the standard terms of employment that Household employees must not “accept presents from firms or tradesmen”.

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4.16 The authority rules have not been followed. Some Heads of Department would only ask for authorisation for orders and purchases, regardless of the amount involved, if they thought that the expenditure involved would cause their overall budget for the year to be exceeded. As a result, in some cases there has been no division of duties, with the same person able to order the goods and approve the invoice for payment without any secondary authorisation required or any formal requirement to obtain quotes or competitive tenders. However, a number of Heads of Department have regularly asked for quotes and tenders. There is no evidence that this failure has caused any prejudice or loss; but it is plainly poor practice and the rules need to be complied with. 4.17 The rule against receipt of gifts from firms or tradesmen has also not been followed . This is not to say that the practice of accepting gifts from suppliers was or is widespread. Most staV are not involved in the purchase of goods and services and do not have any contact with suppliers, although in some cases diaries and other small items are given on an unsolicited basis. That is, strictly, in breach of the rule, but is regarded as harmless. 4.18 However, the practice of gifts being given by suppliers, and by others, is well established in the section of the OYce which is responsible for arranging the charity events and other entertaining for, and the purchase of gifts on behalf of, The Prince of Wales. This section is headed by Mr Fawcett who in 2002, for example, received gifts and other benefits (such as membership of a club) from suppliers or others dealing with the Household with a total value of approximately £5,000. We are told that the club membership (subscription £3,000 p.a.) is supplemented by his receiving an annual credit of £1,000 to be spent on meals and entertaining; part of the quid pro quo is that he introduces potential new members to the club. 4.19 Mr Fawcett told us that some of those who run the businesses with which he deals had become personal friends over the years, and, for example, gave him presents on his birthday and at Christmas, and that other presents were given by those who had attended the events which he had arranged and were grateful to him for making the occasions so successful. As he put it: “They reward me for the work I have carried out on their behalf. I receive numerous bottles of champagne, chocolates and small things, which all go to my home address. Last Christmas [2002] I received about a dozen presents.” He also told us of gifts received “as a mark of gratitude” from “professional friends” including a TiVany watch, a Cartier alarm clock and a Pasha pen. 4.20 Major suppliers are also in the habit of providing unsolicited Christmas presents to staV, such as food hampers, wine and other gifts. Many will also give substantial discounts to Household staV buying goods on their own behalf (as discussed in paragraphs 4.27 to 4.31 below). 4.21 While the receipt of the gifts referred to above was contrary to the Household’s terms of employment and to normal best practice, staV had never been reminded of these terms of employment. Mr Fawcett told us that, as far as he knew, there was ‘no oYcial guidance in relation to the receipt of gifts provided to staV’. We think that he and others were genuinely under that misapprehension, since the rules were never referred to or sought to be

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enforced. Mr Fawcett certainly made no secret of the nature and extent of the gifts and benefits received by him; according to some interviewees, this has generated a certain amount of envy. We have heard stories of other valuable benefits, such as free holidays, being given to him but have seen no evidence to support such stories or rumours, and Mr Fawcett has denied these suggestions. 4.22 The practice of staV accepting gifts from suppliers was known to successive Private Secretaries and others responsible for running the OYce, but nothing was done to prevent or discourage it. Similarly, the fact that discounts are given is well-known, but there has been, until very recently, no comprehensive central record maintained of which suppliers allow what discounts and to whom. 4.23 In order to try to ascertain the scale of gifts made to or other benefits conferred upon staV by suppliers, the following procedures were undertaken. (a) Writing to the Household’s 171 Royal Warrant Holders and 36 other major suppliers to ask whether they had given gifts, discounts or other benefits, including commissions, to Household staV, during the period since 1st April 1996. In all cases, we asked for full details of the nature of any arrangements. Replies were received from all those written to apart from two Royal Warrant Holders and further discussions were held with a number of them. All confirmed that they had not paid any commissions; however, substantial information regarding gifts and discounts was provided as referred to in paragraph 4.26 below. (b) Writing to six newspapers which had referred to allegations in these areas to ask whether they could provide any further information. Five replied but with no further specific information. (c) Circulating a questionnaire to the 100 full and part-time staV in the Household to ask them to declare any gifts, payments, discounts or benefits received from suppliers or other third parties deriving from, directly or indirectly, their employment by The Prince of Wales’s Household. All replied and the information provided is referred to in paragraph 4.25 below. (d) Compiling a “register of allegations” and, in addition to writing to the newspapers and circulating the staV questionnaire, contacting 10 specific individuals by telephone, in person or in writing, whom we believed or had been told might have information relevant to our Inquiry in these areas. All responded but no significant new information was received. (e) Conducting interviews with 10 staV, three former employees (including the Accountant) and various Warrant Holders. This provided no new evidence of specific gifts or payments. 4.24 The replies from Warrant Holders and other suppliers and from the staV questionnaires revealed that a large number of gifts had been given to staV and that entertainment and discounts had been provided. StaV also declared payments and gifts given as gratuities. There were no material discrepancies between information provided by Warrant Holders and other suppliers and that provided by staV.

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4.25 50 Royal Warrant Holders and other suppliers reported that they had given presents, and/or discounts to staV. In addition, the replies to the staV questionnaire recorded 56 instances of gifts and entertaining given by other parties, including occasional Christmas hampers to members of the OYce and gifts from charities and others for whom Mr Fawcett (on behalf of The Prince of Wales) has organised events. The Prince of Wales is also generous in giving all his staV Christmas presents. The tax implications of these gifts have been raised with the Inland Revenue and the tax liability has been agreed. 4.26 The rule, honoured previously mainly in the breach, forbidding the receipt of ‘trade’ gifts is sensible and similar to that in many outside organisations. It needs to be enforced, perhaps with some sensible exception for low value gifts. We know of no instance where actual favour has been shown to any supplier which can be related to any gift made, but gifts made in the context of a commercial relationship can lead to an appearance or suspicion of malpractice. The fact that a supplier may be or become a personal friend should make no diVerence. Part of the requirement for those working in the Household is that they must politely decline gifts proVered by friends who have or who are seeking a commercial relationship with the Household.

Discounts 4.27 As referred to above, some Warrant Holders and other suppliers also give discounts to The Prince of Wales’s Household and to Household staV for personal purchases. Discounts within sensible limits for the Household itself may be regarded as normal practice for a large and important customer. 4.28 It is also not unusual for discounts to be given to staV for personal purchases, again within sensible limits. Many suppliers oVer discounts to private sector companies, for example, based on volume. Discounts are available to Household staV from 29 Royal Warrant Holders and other suppliers covering items such as leased cars, clothing, dry cleaning, electrical goods, stationery, food and drink, china, jewellery and goods sold in the Royal Collection and Highgrove shops. A number of these suppliers also give discounts to staV from other organisations and companies, although sometimes at lower rates (for example 20% rather than 25%). 4.29 The discounts range from 10% of the sales price to 50%. Only one supplier gives a 50% discount, which is the discount given to its own staV, and that is now only given to one Household employee, Mr Fawcett. Mr Fawcett’s arrangement (which was implicitly approved) dates back to the time when some 10 years ago and with The Prince of Wales’s authority he worked part- time for the supplier concerned. Some of the discounts are given to staV directly and in other instances the discount is only given if the purchase is made by the Household on behalf of the member of staV concerned. Leased cars are the principal item falling into the latter category, eg the car is leased through the Household rather than directly to the employee. 4.30 In most organisations personal discounts for staV are listed and approved centrally by senior management. The procedures, however, have been less formalised in The Prince of Wales’s Household (in part because it is not funded

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with public money). There has been no overall policy and discounts have not been subject to senior management approval. In two instances, higher percentage discounts were given to more senior staV. A list of the discounts of which it was aware has been kept by the Personnel OYce, which also deals with discounts which are given to staV via the Household. However, the list of discounts was not complete, had not been approved and had not been made known to all staV. The policies and procedures with respect to discounts need to be enhanced. 4.31 The only staV discounts that give rise to a taxable benefit are leased cars and arrangements for collecting the tax payable through the PAYE system have been in place for many years.

Other gifts and gratuities 4.32 There was also no policy, or any written directive, governing the receipt of gifts (other than from suppliers) and gratuities by staV. In addition, the tax implications of these gifts and gratuities for the employees concerned were not explained to them. This matter has now been raised by the Household with the Inland Revenue and all tax due will be paid. 4.33 We enquired of staV as to their receipt of such benefits by means of the staV questionnaire. Their replies, further tested where appropriate in interview, were, we thought, candid. They revealed many gifts to domestic and oYce staV during tours abroad, in particular to the Middle East (including items as valuable as expensive watches) and various gratuities for domestic staV attending on guests staying with The Prince of Wales. It is of course quite usual for ordinary “tips” to be given to staV by visitors, guests or, indeed, hosts; and it could cause embarrassment if staV were required to refuse them. 4.34 A problem may arise where a wealthy guest, host or visitor bestows what to him may be a gift of no consequence, but to most of us would be regarded as of a value disproportionate to the service provided. For example, Mr Fawcett told us that he had received, as thanks for arranging a painting exhibition in the Middle East, a valuable Rolex watch. The answer to this may lie, not in prohibiting such gifts (which would be diYcult to police in any event) but in setting out clear rules to staV in respect of the declaration of all such gifts, not only for Inland Revenue purposes (and, subject to value, for HM Customs & Excise if the gift is received abroad and imported), but also for the Household’s records.

Recommendations 4.35 In the course of the description of current practices, we have made a number of recommendations as to future policy and procedure. We summarise and supplement those recommendations as follows.

- Clear guidelines should be drawn up and circulated to all staV setting out the Household’s rules in respect of gratuities, gifts and hospitality, and explaining the tax implications. It should be a requirement that all gifts must be declared on a pro forma issued for that purpose and that any

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member of staV who receives an oVer of hospitality should seek the approval of his or her Head of Department before accepting it.

- Consideration should be given to the introduction of an annual return to be completed by all Household staV each January giving details of gifts or hospitality received from suppliers to the Household during the previous year.

- The existing rules in respect of independent authority being required for purchases exceeding a stated value (presently £2,000) should be enforced, as should the other rules, which exist but are not followed, in respect of ordering and purchasing procedures.

- There should be a policy for staV discounts received. StaV discounts should primarily be negotiated for items required to support work duties (eg suits to look well-presented). The same level of staV discount should be available to all staV. All discounts should be listed, approved and regularly reviewed by senior management, with the policy and list made available to all staV. As a matter of policy, no staV discounts should be accepted if the discount is greater than the supplier oVers its own staV or the level of discount would result in the supplier making a loss.

- Simple rules should be introduced concerning the declaration by staV of all other benefits received from third parties; and staV must be advised of their obligation to declare such gifts to the Inland Revenue and, where they are received abroad and subject to value, to HM Customs & Excise on re-entering the UK.

- Cash transactions should not be permitted other than in exceptional circumstances.

The position of Mr Fawcett 4.36 As referred to above, in the aftermath of the Burrell trial, press allegations of financial impropriety were levelled in particular at Mr Fawcett. We have already indicated that we have found no evidence to support the allegation that he profited personally from the sale of gifts, whether by taking commission or otherwise misappropriating the proceeds. We followed up reported allegations that he had received improper benefits from Warrant Holders and other suppliers, and sought statements from and, where appropriate, interviewed representatives of suppliers. 4.37 By way of example, we noted a press allegation concerning his involvement in a contract for a large number of candles ordered from Gainsborough Decorations Limited and interviewed the Managing Director at some length. It is apparent that Mr Fawcett, although he was involved in it, was not responsible for the contract; and the Managing Director credibly asserted, under detailed questioning, that no financial impropriety on Mr Fawcett’s part had occurred or been suggested. Similar assurances were given and confirmed in interview by, for example, representatives of Garrard and Asprey.

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4.38 It became apparent when interviewing staV, suppliers and others that Mr Fawcett was not liked by some. His perceived position of influence combined with what many asserted to be on occasion an overly robust approach was commented on. He was acknowledged to be extremely good at his job in organising functions and in “getting things done”; but his manner of ensuring that things got done had, apparently, on some occasions in the past caused oVence. We mention this not in any way to impugn Mr Fawcett, but to try to understand why allegations may have been made against him. 4.39 Interviewees were asked and where appropriate pressed to speak about the publicised allegations of financial impropriety directed at Mr Fawcett. Some suggesting that they ‘knew’ that Mr Fawcett had been involved in such practices. Closer questioning revealed that “knew” meant “had heard” or “had read”. Rumours and hearsay were plentiful. There was, however, no instance in respect of which anyone was able to give us first-hand evidence of financial malpractice, or give a “lead” which led us to any direct evidence. Some were plainly influenced by pejorative reporting in sectors of the Press, on a “no- smoke-without-fire” basis; others asserted that the Press reporting accorded with their own beliefs or suspicions; but none could provide any evidence upon which we could reach any conclusion that Mr Fawcett had been guilty of financial malpractice. 4.40 Mr Fawcett was, it seemed to us, candid as to his own ‘benefits’ and his involvement in the sale of gifts. What he told us reconciled to all material extents and purposes with what we learned from other sources. His information led us, in some instances, to return to suppliers whose previously- supplied information was demonstrated to be incomplete. There was one instance (a £2,500 cash receipt for the sale of a private gift of a watch) where he had not volunteered the information until the counter-party’s account was put to him. The £2,500 has not been recorded in the accounting system. Mr Fawcett explained in interview that he had forgotten about the transaction and could not remember what had happened to the cash, but thought that “it had something to do with purchasing pots”. He has since told us that pots and rugs were bought with the cash and that they can be found at Highgrove. He accepts that there is no record of the purchase. The current Financial Controller has confirmed to us that she was aware that amounts due had been settled in cash by Mr Fawcett from time to time. 4.41 The outcome has been that, although there were many rumours relating to Mr Fawcett and many press allegations against him, our enquiries have not produced any proper evidence that he acted with financial impropriety. In other words, there is no evidence to lead us to conclude that Mr Fawcett received improper payments or other improper benefits.

Conclusions 4.42 A range of audit tests has been undertaken, but no evidence has been found of staV selling, without authorisation, gifts given to The Prince of Wales or of staV taking unauthorised commissions or ‘slices’ of the proceeds if authorisation has been given. However, inventory controls and other administrative

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procedures in this area have been deficient. They are in course of being improved. 4.43 There is also no evidence of Household employees taking or seeking corrupt payments from existing or aspirant Royal Warrant Holders, or other suppliers. StaV have accepted a range of gifts and entertainment from Royal Warrant Holders and other suppliers, the value in one case amounting in aggregate to several thousand pounds, despite a requirement in their terms of employment not to “accept presents from firms or tradesmen”. However, this term was not enforced and the practice of accepting presents and entertainment was with the knowledge and implicit approval of senior management. 4.44 Discounts have also been received by staV from Royal Warrant Holders and other suppliers in respect of personal purchases. This is not unusual in a number of organisations; however, there was a lack of a policy and procedures governing the practice in The Prince of Wales’s Household. 4.45 Administrative procedures have been or are being enhanced in these areas. 4.46 Insofar as the press comments and allegations have been directed at Mr Fawcett, our investigation has not produced any evidence of financial impropriety on his part. He did infringe the internal rules relating to gifts from suppliers, but opprobrium cannot attach to this because the rules were not enforced and he made no secret of such gifts. Press suspicions were understandably aroused by his involvement in the sale of gifts (which, unknown to the media, were all authorised by The Prince of Wales) and by it being widely known that he received valuable benefits from third parties. His robust approach to dealing with some people combined, perhaps, with his having been promoted from a relatively junior position within the Household, undoubtedly caused jealousy and friction in some quarters. This has encouraged some to voice rumours as to his financial probity; but they are just that, rumours. There is no evidence to justify a finding by us that he has been guilty of the alleged financial misconduct. 4.47 In short, we have found no evidence of staV selling gifts or other items without authorisation or of their taking commissions on sales. Gifts and discounts have been given to staV by suppliers; however, this was done with implicit authorisation and we have found no evidence that it resulted in decisions being influenced. Policies and procedures in these areas have been deficient. They need to be, and are being, enhanced.

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ANNEX 1

SCHEDULE OF THOSE WHO ASSISTED THE INQUIRY

Notes: * indicates that the individual, usually in addition to providing written evidence, was interviewed by one or both of Sir Michael Peat and Edmund Lawson. < indicates that the individual provided written evidence, which was discussed with him/her or his/her representative without formal interview. Those with no marking provided written evidence or oral evidence in a telephone discussion. Not listed separately are the staV who completed staV questionnaires relating to gifts, commissions etc., the 169 Royal Warrant Holders and 36 other suppliers from whom written answers were obtained.

Position/Organisation Represented or assisted by HRH The Prince of Wales*

Richard Aylard* Private Secretary to HRH to 1996; previously Assistant Private Secretary Nigel Baker* Assistant Private Secretary from June 2000 Maxine de Brunner* Detective Chief Inspector, David Hamilton & Guy Metropolitan Police Morgan, Metropolitan Police Solicitors (‘MPS’) Christopher Benson< Solicitor, partner in Needham & Grant, now Wragge & Co Mark Bolland* Deputy Private Secretary to HRH to April 2002; previously Assistant Private Secretary William Boyce QC Crown’s leading counsel in Burrell & Brown trials Gianluca Brozzetti* Chief Executive, A & G UK Limited Fiona Brown Solicitor; assistant to Mrs. Fiona Shackleton

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Position/Organisation Represented or assisted by Elizabeth Burgess* (nee Assistant Personnel Stephen Venton, Norris) OYcer at St. James’s Greenfields, Chichester Palace (‘SJP’) 1992 to 1996, then Highgrove secretary to 2001 Tony Burrows* Accountant at SJP to February 2002 Sir David Calvert-Smith QC Director of Public Prosecutions/Head of the CPS Lord Carlile of Berriew QC< Leading Counsel for Mr Burrell Virginia Carington* Personal Assistant to HRH, since August 2000 Kelly Cooper* Assistant to Michael Fawcett, since January 2002 (full-time); previously part-time Phyllida Dare* Personal Assistant to HRH from 1996 to August 2002 Robert Davies* Chief Executive of The Prince of Wales’s International Business Leaders Forum Steve Eaves* International Sales Director, Asprey Michael Fawcett* Personal Consultant to Christopher Murray & HRH from May 1998; Angus McBride, Kingsley Deputy to Personal Napley Assistant to HRH from April 1997; previously Valet

Bernie Flannery* Butler to HRH from 1993; previously Assistant Butler Amelia Freer* Assistant to Michael Fawcett from April 1997 to September 1999 Michael Gibbins* Formerly Comptroller to

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Position/Organisation Represented or assisted by Diana, Princess of Wales Roger GiVord Chairman, English Chamber Orchestra and Music Society Alison Gourlay* Assistant to Mr Fawcett, part-time from January 2001 Sandy Henney Press OYcer to HRH, 1993-2000 Tim Hirsch< Managing Director, Spink David Howard* Head Gardener at Highgrove from Feb. 1998 Paul Hudson Detective Inspector, MPS Metropolitan Police David Hutson* Archivist at SJP from 1990 Kevin Knott* Treasurer to HRH from February 2003; previously Deputy Treasurer Sir Stephen Lamport* Private Secretary to HRH, 1996-Aug. 2002; previously Deputy Private Secretary Kevin Lomas* House Manager at Highgrove from 1993 Lady Sarah McCorquodale Sister to Diana, Princess of Wales & an executor to her estate Rosa Monckton Non-executive director, Asprey London Limited Peter McMurray-Cole Gainsborough Decorations Limited Roger Milburn* Detective Sergeant, MPS Metropolitan Police Philippa Norman Financial Controller at SJP since April 2002 Sir John Nutting Bt. QC* Leading Counsel advising Executors Michael O’Kane CPS lawyer in charge of

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Position/Organisation Represented or assisted by Burrell and Brown cases Tony Rabey* Assistant Butler to HRH from 1993 Lady Anne RaVerty The Hon Mr Justice RaVerty DBE, trial judge for the Burrell case The Baroness Rawlings Former director, English Chamber Orchestra and Music Society Timothy Redmond< Detective Inspector, MPS Metropolitan Police Robert Seabrook QC< Leading Counsel retained to advise HRH from early 2001 Fiona Shackleton* Solicitor to HRH; Peter Stockwell, Payne formerly partner in Farrer Hicks Beach & Co., now partner in Payne Hicks Beach Lady Elizabeth Shakerley Proprietar, Party Planners Andrew Shaw< Solicitor and partner in Walker Smith, Mr Burrell’s solicitors Sir Tom Shebbeare* Chief Executive of The Prince’s Trust David Smellie Solicitor & partner in Farrer & Co. George Smith* Until January 1997 an Paul March, Clintons employee in HRH’s Household Peter Smith Royal and Regal Memorabilia Sir John Stevens Commissioner of Police MPS for the Metropolis Viscount Suirdale Burberry Limited David Thomas* Garrard & Co Limited Colin Trimming* Formerly Chief Superintendent in the Metropolitan Police; HRH’s Personal Protection OYcer in 1996

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Position/Organisation Represented or assisted by Fergus Williams Equerry to HRH in 1996 Martin Wilson Group Legal Adviser, Christies John Yates* Commander, MPS Metropolitan Police Amanda Yaxley* Personnel OYcer at SJP, 1993-1999

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ANNEX 2

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