His master’s trust was absolute. By some accounts, only Fawcett was allowed to squeeze toothpaste onto the prince’s brush. Perks of the job came to include a house in the London suburbs worth $720,000.

No longer. This week, Fawcett resigned his post. The one-time trusty had fallen victim to the official report into the running of the prince’s household, which was launched last year after the collapse of the trial of royal butler Paul Burrell. His faults: what the report called a “robust approach” to colleagues–Fawcett’s bullying manner is well known–as well as his readiness to bend the rules on receiving gifts from outsiders. Fawcett apparently collected Cartier and Tiffany watches, a $4,800 discount on a dining-club membership and a 50 percent discount at the same exclusive shirtmaker used by his boss without declaring them. (The report, does, however, explicitly clear Fawcett of any financial impropriety and notes that he made no secret of the gifts.)

That’s heady stuff for Britain’s royal-watchers. News of the report’s conclusions squeezed even the approaching war out of the lead slot on the front pages of the national press. After all, this was the concluding chapter in the story with everything: missing gifts, sexual assault, royal high life and the marital feuds of the late Princess Diana. Better still, the source was unimpeachable. The report’s author: the prince’s own private secretary, Sir Michael Peat.

As the prince himself conceded in a statement, parts of the 111-page report do not make “comfortable reading.” Peat hasn’t pulled his punches. He called administrative procedures at St. James’s Palace, the prince’s London home, “very weak,” noting that the system for logging gifts was widely ignored and reporting that some could not be traced. As the Times of London editorialized: “Reassuringly it is beginning to seem that in his private secretary at least the prince has recruited an employee strong-minded enough to say ’no’.”

True, the royals are cleared of the trickiest allegations. In particular, Peat finds no evidence of any improper involvement in the trial of Burrell, who was charged with stealing a hoard of Princess Diana’s belongings before Queen Elizabeth’s intervention cleared his name. (The queen said midtrial that she had known Burrell was keeping the items.) But there’s plenty more to trouble the prince. In the mid-’90s, a valet’s allegation of homosexual rape by a palace staffer was treated “dismissively,” says the report, and never fully investigated–perhaps because the valet was seen as too close to Diana.

Just as embarrassing is the record on handling unwanted gifts. How will the unnamed fellow royal respond to the disclosure that his present to Charles–a watch and pen given on a visit to the prince’s country home, Highgrove, for tea–was later sold for about $15,000. The prince kept the money. Says royal biographer Robert Lacey: “This represents a modern example of an understandable but deplorable trend that goes back to the start of the 20th century, when members of the royal family would store up the most ghastly gifts they had been given and hand over to each other at Christmas to howls of laughter. Gifts are given as tokens of affection and respect and should be treated as such.”

In fairness, keeping track of the unceasing flow of gifts poses a bureaucratic challenge. From 1999 to 2001, according to the report, the prince received a total 2,394 gifts ranging from livestock and jewelry to 205 paintings, drawings and other pieces of artwork. The prince has now promised a cleanup that should bring standards on the disposal of gifts in his own household up to those already enforced by the queen at Buckingham Palace.

Yet, the overall picture that emerges from the report suggests a casual approach to the rules rather than outright pocket-lining by individuals. Even Peat concedes: “There have been serious failings, but they have been failings of the organization as a whole.” The prince is described as a “generous employer” happy to give away gifts to low-paid staff. Chauffeurs or grooms, for example, can apparently expect to pick up the prince’s prizes–champagne, say, or a watch–after a polo match.

The indulgent attitude may help explain the gentle handling of Michael Fawcett, who begins his new life as a freelance “events organizer” with a reputed $800,000 severance payment and the promise of regular work from his old boss. On the other hand, cynics speculate that only such generosity could ensure that Fawcett would resist the temptation to join other disgruntled royal servants in selling their inside-the-palace exclusives to the tabloid press.

Happily for Charles, he was many miles away from Britain on an official visit to Bulgaria when the report hit the streets. Not that he can ever escape those delicate problems that go with high office. Presents received so far on the trip include a lapel pin and a set of ceramic pots. It’s unlikely that those will now find their way to deserving servants.