Charles denies cronyism over Scilly deal with Camilla's sister

By Guy Adams

Last week, journalists were given off-the-record briefings about a report due out this Thursday from the House of Commons Public Accounts Committee.

They were told it calls for an end to the Duchy's exemption from corporation and capital gains tax, and criticises "obscurities and potential conflicts of interest" in the way the office of the Prince is run.

That is only the start of it, however. For I gather that the (mostly Labour) group of MPs has also taken a keen interest in a business deal between the Duchy and the interior designer Annabel Elliot.

Mrs Elliot was paid to renovate three holiday cottages on the Isles of Scilly, which - as potential conflicts of interest go - is pretty near the knuckle, since she just happens to be the sister of Camilla Parker Bowles.

Clarence House last night rejected charges of cronyism. "People are appointed on merit," they said. "Mrs Elliot was employed in the same way as any other contractor and her work has been extremely successful in terms of guests' feedback and bookings."

* Pete Doherty might have duetted with Elton John at Live8, but he's just managed to fall out with 35,000 other members of London's gay community.

On Saturday, Doherty's band, Babyshambles, was scheduled to perform at the Big Gay Out, Britain's biggest gay music festival, in Finsbury Park.

However, true to form, they failed to show up. As a result, the festival's promoters - with whom the band had a £20,000 contract - are considering legal action.

"Doherty was supposed to play at 6pm, and present Mr Gay UK with his trophy," they say.

"It was a huge disappointment to Mr Gay UK, to our crowd, and to several dozen camp dancers, who were due to appear on stage with him."

Fellow musicians are also highly upset. "We flew out from Detroit for this show and he lives round the corner," said Dick Valentine, of Electric Six. "It's all a bit much. I don't care if Babyshambles are the thing, or not."

* As Pandora predicted, Sienna Miller decided to attend the Cartier International polo on Sunday armed with just a giant pair of sunglasses and her best friend, Matthew Williamson.

The celebrity aristocracy didn't all steal headlines at the event, mind. For as Miller threw her public V-sign at Jude Law from the sponsor's tent, Lord Brocket was left standing outside in the rain.

A forlorn figure, he was spotted speaking to friends across a white picket fence after the jewellery firm neglected to invite him to its bash. "I've been away for a while and people seem to have moved on," he (sheepishly) explained.

Brocket was once a shoo-in for society events, but his stock has been tarnished by two prison sentences: one at HMP Springhill for insurance fraud, the other on I'm a Celebrity ... Get Me Out of Here!

* I hope Otis Ferry hasn't gone to ground after his mauling at the hands of Tony Benn on Question Time last month.

On Saturday, the tweedy pin-up was due to take part in a public debate on the future of hunting at the CLA Game Fair. But sadly, he didn't show.

"We were telephoned and told that Otis has been confined to bed with meningitis," says an organiser.

"We believe him, of course: he's a hero in these circles, and would be highly unlikely to run away from this sort of public appearance."

I should think not. Ferry's sparring partner was to be the Lib Dem MP Lembit Opik - a soft touch compared to the formidable, vegetarian Mr Benn.

* Unlike many Fleet Street rivals, The Observer is neither a champion of family values nor a resting place for prurient "kiss-and-tell" tales.

Which is just as well, because one of its - happily married - senior journalists is at the centre of a fruity scandal after being caught on CCTV in an athletic clinch with a female member of the canteen staff.

"The footage shows them in a basement training room," I'm told. "Of course, training was the last thing on their minds.

"Everyone in the building knows about it, and poor old [*****] is facing a disciplinary."

The scandal comes at a tricky time for The Observer, which recently announced a round of voluntary redundancies. "Once more, bosses have been fiddling while Rome burns," remarks one galley-slave, unsportingly.