THE Prince of Wales swiftly agreed last night to extend the scope of the royal palaces cash-for-gifts inquiry after the ignominious collapse of the second royal butler trial in a month.

St James’s Palace decided to act to deflect any possible criticism following the disclosure at the Old Bailey that a note, written by the Prince on an old envelope, apparently authorised his staff to sell off a “very good gold wedding ring”.

Police also announced an inquiry into why the prosecution was brought against Harold Brown, a former butler to Diana, Princess of Wales, and Princess Margaret. He had been accused of stealing a £500,000 jewel-encrusted model dhow from the estate of the late Princess but in the aftermath of the Paul Burrell case no evidence was offered against him yesterday.

Sir Michael Peat, the Prince’s private secretary, is already conducting an inquiry into reports that private gifts worth more than £100,000 a year were being sold by palace staff in return for commission.

Sir Michael, in an interview with The Times, said that he would be writing to Mr Brown’s lawyers, who yesterday revealed the existence of the note about the ring. He said: “The first we knew was when it was disclosed in court. I am writing to the defence lawyers and asking them to provide me with the relevant information, which we can follow through. This will be included in a register of allegations which I am assembling to ensure we have a full and open inquiry.”

The disclosure about the ring was made by James Townend, QC, for the defence, who told the court that the Prince had written: “There is a very good, gold wedding ring here which someone in the office might find useful.” This was in response to a statement by the prosecution that played down the extent of royal gifts to servants.

Senior members of the Royal Household are baffled about why the CPS allowed the case to proceed after the collapse of the Burrell case. The cornerstone of Mr Brown’s defence was that Mr Burrell had authorised the sale.

Mr Burrell last night contradicted Mr Brown’s version of events. He told the Daily Mirror, which won a bidding war for the rights to his story, that he did not give Mr Brown his authorisation to sell the dhow.

The Princess would never have given permission for such an expensive gift to have been sold, he said, adding that he was not given money from the dhow to give to the Diana Memorial Fund.

Mr Brown, 51, was cleared of stealing the dhow and other jewellery without his trial even beginning. The prosecution had applied on Monday for an adjournment until the spring, when Sir Michael’s inquiry would have been completed, but were refused by the Recorder of London, Judge Michael Hyam.

Sir David Calvert-Smith, Director of Public Prosecutions, ruled that no evidence should be offered against Mr Brown or the jeweller Jan Havlik, who had been accused of handling stolen goods. Blaming the collapse of the trial of Paul Burrell, Mr Brown’s successor as butler to the Princess, Mr Boyce said that there was no realistic prospect of conviction. The inquiry and trials have cost taxpayers £2 million.

Sir John Stevens, Commissioner of the Metropolitan Police, immediately called in Bill Taylor, the recently retired Inspector of the Scottish Constabulary, to investigate police handling of the case.

St James’s Palace later made it clear that the ring was not the Prince’s own wedding ring, which he continues to wear. Its origin remains a mystery.

In a highly unusual move William Boyce, QC, for the prosecution, spent nearly an hour outlining evidence against the two defendants before confirming that the case had been dropped.

Mr Brown, who became Princess Margaret’s butler in 1995 after leaving the service of the Princess of Wales, pleaded not guilty to three charges of theft and was formally acquitted by the judge. Mr Havlik also pleaded not guilty to three handling charges and was formally cleared.

James Brotherton, Mr Brown’s solicitor, said later: “Harold Brown is clearly delighted by the result. He has always maintained his innocence. He is pleased the prosecution have offered no evidence against him.”

He added: “He has no intention of selling his story now or in the future, which is entirely consistent with 30 years loyal service to the Royal Family.”

Mr Burrell, who flew to the US yesterday to appear on the Larry King Live show, refused to speak about the collapse of yesterday’s trial. Asked for his reaction he said: “No, I’ve nothing to say about that.”

Mr Burrell has recently been the target of death threats and his florist shop in Holt, North Wales, was this week damaged in an arson attack. He was accompanied on his scheduled flight by a bodyguard.

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