George Osborne has been on the news channels since lunchtime denying his old friend Nat Rothschild's assertion that the Conservatives did solicit a party donation from Oleg Deripaska, Russia's Mr Aluminium. His statement reiterating the point has just been emailed to reporters from party HQ, describing in detail his dealings with the Russian since first meeting his at the Davos economic forum in January.
Is Osborne in the clear? Yes and no. He and chief of staff Andrew Feldman, also a David Cameron chum as I explained in an earlier post today, say their contacts with the Russian in Corfu this summer extended from economics to world politics but never touched upon party finance - let alone either man "soliciting or asking for a donation". But they do confirm that between those social gatherings Feldman, Osborne and Rothschild did discuss a donation on the terrace of the Rothschild villa, incidentally one of several the family owns on the island.
But the issue was raised by Rothschild, says the Tory statement. After Feldman (who had not met Mr Aluminium at this stage) had explained the tight rules - introduced by Labour in 2000, later circumvented by Cameron and copied by Tony Blair with regard to undeclared loans) - it was again Rothschild who pointed out that Deripaska now owns Leyland DAF: that would permit a legal corporate donation as long as the firm was not simply being used to launder a personal donation from a foreign citizen.
The holidaymakers all met again later - but again no donations were mentioned - and only back in London was a donation raised again - by Rothschild again, the Tory pair say. The Tories later decided a donation would not be right.
Rothschild's version has it the other way around - that the initiative came from Tories - and it sounds as if his City PR man has been briefing the BBC's Robert Peston to the effect that Nat will not back down. We shall see.
Peston's diversion from verbally bombing the world economy may turn this little row - so far trivial, but enjoyable - into a valuable contribution to saving the planet from poverty. He does less harm this way.
It is looking more serious than it looked this morning, for the Tories if not everyone else. Tory pundit Guido Fawkes, the self-styled Robin Hood blogger, is writing like Michael White, appearing to make light of the allegations, and blaming it all on Mandelson. Hezza is doing the same. Making light of these sort of media "scandals" is usually right - though Guido likes to mock those of us who sometimes suggest that sleaze allegations against the political class are mostly exaggerated or wrong.
Some Tory MPs are delighted that Master George is in trouble because they see him as too cocky and clever, though I spoke to an ex-cabinet minister, now a Tory peer, who felt that Osborne's gossip to embarrass Peter Mandelson - the cause of the row - was merely silly. But Rothschild's attack on his old friend was unforgivable. As with much else, we shall see.
It may all blow over. But if rich men reach for their lawyers and refuse to back down there may be trouble ahead. Peacemakers are probably hard at work in expensive offices and homes. The damage may be to Osborne's reputation as a man of character, fit to be chancellor and - one day perhaps - PM, Brown to Cameron's Blair. This is a bad dispute to get mixed up in. It makes him look a cad.
It also reminds voters that Labour's money problems in recent years have allowed the Tories to get away with some highly questionable fundraising activities, not illegal but not very nice. Lord Ashcroft's influence remains what it has long been, albeit at a lower profile. And didn't Dave 'n' George make a big fuss this summer about Russia's assault on Georgia and the unaccountable plutocracy that Vladimir Putin's post-Soviet state has become?
Say what you like about Mandelson, back in office he has helped to put the other side on the back foot. But the collateral damage will hurt all sides.
