Osborne is forced to admit he met oligarch FIVE times after crossing Mandelson (and just look who's smiling now)… The Prince of Darkness.

By James Chapman and Michael Seamark
Last updated at 1:37 AM on 22nd October 2008

George Osborne is struggling to contain a political firestorm over illegal donations as he paid the price of crossing Peter Mandelson.
The Shadow Chancellor was forced to admit discussing a potential £50,000 gift to the Tory Party from Russia’s richest man, and that he met him five times in total.
Mr Osborne was left fighting for his reputation after what allies claimed was a dirty tricks campaign orchestrated by Lord Mandelson.
Happy birthday to me: Lord Mandelson, who turned 55 yesterday, looks jubilant as his rival George Osborne battled accusations he discussed an illegal donation
Labour’s new Business Secretary had blamed him for leaking embarrassing details of private remarks about Gordon Brown during a holiday in Corfu this summer, when both visited aluminium billionaire Oleg Deripaska’s yacht.
Yesterday the row took an extraordinary twist as one of the Shadow Chancellor’s oldest friends, Nat Rothschild, stabbed him in the back.
He claimed in a letter to the Times that while on board the yacht Mr Osborne attempted to ‘solicit’ money for the Conservatives from Mr Deripaska.
Donations from foreign residents are against the law, though a gift from one of Mr Deripaska’s companies trading in Britain would have been permitted.
Ill at ease: Mr Osborne answers a barrage of reporters' questions yesterday
Mr Rothschild, a friend of Mr Osborne and Lord Mandelson, was hosting guests at his family villa in Corfu and apparently invited both men on to Mr Deripaska’s yacht.
Mr Osborne held a press conference yesterday lunchtime at which he categorically denied the claim that he and chief Tory fundraiser Andrew Feldman had sought cash from the aluminium tycoon.
He insisted: ‘We didn’t ask for money; we didn’t receive any.’
But Mr Rothschild was telling friends he would not ‘back down’ over the allegations and was even prepared to defend them in court.
Sources close to him say they have a ‘silent witness’ - a wealthy American named Jim Goodwin - who was present in Corfu and will back up Mr Rothschild’s claims.
The row over the Shadow Chancellor conveniently overshadowed fresh claims that Lord Mandelson, who signed off changes which benefited Mr Deripaska’s firm while EU trade commissioner, had known the Russian for far longer than he implied.
David Cameron made clear that his closest ally’s job is secure, insisting he had shown good judgment by turning down any donation and disclosing full details of his meetings with Mr Deripaska.
Last night the Shadow Chancellor issued an extraordinary statement admitting that he met Mr Deripaska five times. Four meetings took place over one August weekend.
He insisted he had not solicited or received any donation, or ever discussed directly with Mr Deripaska the possibility of him giving money.
He was forced to concede that he had been involved in a conversation with Mr Rothschild over the possibility that the Russian oligarch could make a donation.
Knife in the back moment: Nat Rothschild and his accusing letter to The Times
However, he placed the blame firmly on Mr Rothschild - saying he had initiated the discussion - and effectively accused his friend of lying by claiming that he had ‘solicited’ cash.
Mr Osborne said Andrew Feldman had stated that a donation could come only from a ‘legitimate UK trading company’, while the Tories insisted that the possibility of a donation from Mr Deripaska or one of his companies was dismissed on the grounds it would ‘not be appropriate’.
But aides admitted that decision had never been relayed to Mr Rothschild. Despite Mr Cameron’s backing, some Tory MPs were privately questioning Mr Osborne’s judgment in entertaining even a brief discussion about a donation from a foreign source.
The row comes at the worst possible time for Mr Osborne, who has faced criticism over his response to the banking crisis.
Gift: Lord Rothchild's estate on Corfu where Mr Osborne enjoyed a free holiday
And it seems in danger of escalating after Mr Rothschild was said to be furious that his version of events in the letter to the Times had been questioned.
A source close to the banking heir said he had been ‘ incandescent’ with rage that his privacy had been invaded when Mr Osborne divulged private conversations with Lord Mandelson while enjoying his family’s hospitality.
The source said he had telephoned Mr Osborne to tell him he had decided to make his allegations public in a ‘highly emotional’ phone call.
The same source claimed that Lord Mandelson was ‘obviously pleased’ that the Tory donations row had erupted, but insisted he had not orchestrated it.
Shortly after his appointment as Business Secretary this month, Lord Mandelson was embarrassed by claims that he had told Mr Osborne that Gordon Brown had presided over a ‘culture of debt’ during the Corfu holiday, and ‘dripped poison’ about the Prime Minister.
He retorted at the time that he also had dirt to reveal from his unlikely heart-to-heart with the Shadow Chancellor.
Trappings of wealth: Billionaire Deripaska's superyacht Queen K in Venice
He issued what was widely seen as a threat to Mr Osborne when he said: ‘I would no sooner talk about in public what he said to me about his colleagues than I hope he would what I said about my colleagues.’
In his letter, Mr Rothschild said he was writing because it ‘ill behoves all political parties to try and make capital at the expense of another in such circumstances.’ He added: ‘ Perhaps in future it would be better if all involved accepted the
age- old adage that private parties are just that.’
He said Mr Osborne ‘found the opportunity of meeting with Mr Deripaska so good that he invited the Conservatives’ fundraiser Andrew Feldman, who was staying nearby, to accompany him on to Mr Deripaska’s boat to solicit a donation’.
He added: ‘Since Mr Deripaska is not a British citizen, it was suggested by Mr Feldman, in a subsequent conversation at which Mr Deripaska was not present, that the donation was "channelled" through one of Mr Deripaska’s British companies.
‘Mr Deripaska declined to make any donation. I mention this because it turns out that your obsession with Mr Mandelson is trivial in light of Mr Osborne’s actions.’
However, doubts were cast over Mr Rothschild’s version of events last night when it emerged that there were three different versions of his letter to the Times.
It was apparently amended twice because of legal concerns and clarifications to his account of the affair.

pictures will be posted soon