Sex, drugs and royal blackmail?

The story of the socialite, the sex tape and a scandal on the doorstep of Buckingham Palace
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Sex, cocaine, royalty, blackmail, a socialite from London's clubland locked up in a top security jail, and an Italian lawyer who has represented some of the most evil criminals of recent times... when we learn the full story, it could be a let-down, but for now it sounds like the ingredients are in place for a rollicking scandal to set the nation talking.

The authorities had gone to unusual trouble to keep the whole story quiet. It began at the height of the summer, but it was not until the weekend that the first details leaked out. Yesterday, two men who are in prison accused of blackmail were named for the first time.

They are Ian Strachan, a 30-year-old, Scottish-born London property developer and Sean McGuigan, who is 10 years older and with a less glittering background. His home is close to a council estate in Battersea.

They are accused of trying to blackmail a member of the Royal Family. The alleged victim's name is protected by law from disclosure, and Buckingham Palace is saying nothing officially. But there has been an authoritative steer that it is not a senior member of the Royal Family. The court order protecting his identity did not deter bloggers yesterday from speculating freely.

In some of the smarter circles of London society there was astonishment that a man like Mr Strachan could have become mixed up in something serious enough to land him in London's high-security Belmarsh Prison, which has also been used to hold international terrorist suspects.

He is a smartly dressed, university-educated London clubber who gives off an air of wealth. One tabloid described him as "a socialite with a millionaire lifestyle". One of the numerous photographs of him in circulation shows him sprawled on the floor during a party with both hands clutching the right ankle of a smart, attractive young woman who is dressed in very short trousers.

Mr Strachan claims to have met Princes William and Harry twice, and knows Princess Anne's daughter, Zara Phillips, and Lord "Freddie" Windsor, son of the Duke of Kent.

His lawyer, Giovanni di Stefano, described him as having moved in socially elevated and hard-partying circles.

When he was at grammar school in Aberdeen, where he grew up, he was known as Paul Adalsteinsson. He took his mother's name after his parents split up. The family had a home in Northburn Avenue, Aberdeen, and ran a clothes shop.

Mother and son now have a house in Chelsea, where house prices are among the highest in the world.

His co-defendant, 40-year-old McGuigan, comes from a more downmarket part of London, on the south side of the Thames. A neighbour was quoted in yesterday's Evening Standard in London as saying he was "rough", and "not the kind of guy I would want to get to know and no one else here would either".

The story began on 2 August, when an employee in the private office of a member of the family received a disturbing telephone call from a man who identified himself only by his first name, who allegedly wanted money. He left a mobile phone number. Reportedly, he claimed to have a video of a royal aide having oral sex with a man said to be a member of the royal family.

In a later call, the same man reportedly claimed that the royal aide featured in the video also had cocaine, given to him in an envelope bearing his employer's personal royal insignia. He claimed to have a video of cocaine being laid out on a coffee table, cut with a Harrods charge card, and snorted by the royal aide.

The recordings were said to have been made on a mobile phone and from a hidden camera, in a flat close to Buckingham Palace.

A senior legal adviser to the royals told the caller that he would have to see the material before any cash changed hands.

Almost six weeks after the first phone call, on 11 September, two men arrived at a suite in the Hilton Hotel, in Park Lane, Mayfair, thinking that they were going to meet a royal aide.

They showed a video they had brought with them and offered to hand it over, but are said to have asked £50,000 for it.

In fact, the person negotiating with them was not a royal flunkey at all, but a detective from the Metropolitan Police's kidnap and blackmail unit.

The entire conversation was recorded by police officers in the adjoining room. The two men had no sooner made their alleged demand for money than they were arrested and handcuffed. Strachan's lawyer has claimed that his client's hand was broken when the handcuffs were put on.

Two days later, they made a secret appearance before magistrates to be remanded in custody on a single charge of blackmail, to appear at the Old Bailey on 20 December.

If blackmail was the two men's intention, it was the first known attempt to blackmail a member of the Royal Family since 1891, when Albert Victor, Duke of Clarence, an uncle of Queen Victoria, paid out £200 to retrieve letters that he had written to prostitutes.

It is common in blackmail cases for the court to try to protect the identity of the alleged victim. In this case, however, the authorities originally sought total secrecy. The magistrates' hearing was held in camera, meaning that the press and public were excluded. The same blanket secrecy will be in force again when one of the men applies to a judge to be released on bail pending his trial.

That level of secrecy is unusual in British adults courts, where the principle normally applied is that justice must be seen to be done. It is believed to have been requested by the Crown Prosecution Service, as the only way to protect the identity of the alleged blackmail victim.

On the same day, a judge signed an order warning that "there is to be no publication or disclosure of anything that would lead to the identification of the alleged victim in this case, the witnesses, or any companies connected with this case. The order is necessary to prevent the administration of justice being frustrated in relation to complainants in this type of allegation."

But the public curiosity roused by the case has raised new questions about the internet, where such orders are virtually unenforcable. Some web sites yesterday were inviting readers to guess the identity of the royal. Several names were being bandied about by bloggers, in complete disregard of the judge's instruction.

Some aimed high, ignoring the guidance from Palace sources that the person concerned is one of the less well known members of the Queen's extended family and the observation that a businessman who had incriminating material about someone in direct line to the throne would surely ask for a higher price than £50,000.

It was not until the story broke in The Sunday Times, more than six weeks after the magistrates' court hearing, that the existence of an alleged blackmail was publicly confirmed, in a terse statement from Scotland Yard that "a 30-year-old man and a 40 year-old-man appeared at the City of Westminster magistrates' court on September 13, each charged with one count of blackmail". The names of the two arrested men were released yesterday.

When the case comes to trial, the argument may hinge on who first mentioned money. The defence will say that the two men were simply offering to hand over the compromising material, and that it was a royal employee who raised the possibility of paying for it.

Meanwhile another colourful figure has entered the story, in the person of Strachan's legal adviser, Giovanni di Stefano, a man who is prepared, in principle, to represent Satan, should Old Nick's case ever come to court. Mr di Stefano once said: "Everybody hates Satan, but we never actually heard his side of the story."

The notoriety of some of Mr di Stefano's real-life clients is up there with the Devil's – including Saddam Hussein, Slobodan Milosevic, and Harold Shipman. He also defended the convicted paedophiles Gary Glitter and Jonathan King, the notorious landlord Nicholas van Hoogstraten, the multiple killer Jeremy Bamber and the road rage killer Kenneth Noyes.

And he was lawyer, spokesman and business partner of the Serbian warlord Arken, and claims to have met Osama bin Laden in Baghdad in 1998.

When he was an infant, his parents moved from southern Italy to Northampton, where Mr di Stefano later tried unsuccessfully to buy the town football club. He made a similar failed bid for Norwich FC.

Mr di Stefano was in Iraq acting for the former deputy prime minister Tariq Aziz when he had a call from Strachan's mother, on 9 September, two days before the police sting in Park Lane.

"My client denies that he asked for any money. It was in fact the office of the individual who first offered money," Mr di Stefano insisted.

He has also asserted that the video is less sensational than it was made out be.

"I wish to state there is no tape of a sex act in existence," he said. "What there is in existence are tapes, both audio and visual, of an assistant to a member of the royal family boasting of how the person received a sex act. Whether that act took place, I do not know."

So, we are now possibly down to a story of how a minor royal was not actually filmed performing oral sex, and perhaps never performed oral sex, but made a very bad choice of employee, which may or may not have set off a failed attempt at blackmail. It is possibly not much of a royal scandal at all but, hey, that is not going to stop a lot of people enjoying it while it lasts.