By J.D. Reed
March 11, 1991 12:00 PM

On a chilly Wednesday night early last month, the slimmed-down Duchess of York, perky in a black-and-white-check suit, her red mane flying and her blue-gray eyes alight with mischief, breezed into London’s Toto’s Italian restaurant, one of her chic haunts. In tow were a dozen or so Sloane Ranger pals intent on a pasta-and-wine bash. Never mind that husband Prince Andrew was away on sea duty until May with the Royal Navy or that British troops were risking their lives in the gull war—both of which seemed to call for quietly keeping the home fires burning. Instead, the most exuberant of royals partied so loud and long, reportedly paying special attention to two young men in the group, that a disgruntled diner at a nearby table tipped off the tabloids. Trumpeted London’s Sun next morning: FERGIE’S NIGHT AT BOOZY PARTY!

After months of living a relatively quiet life, which for Sarah Ferguson, 31, means staying off the front pages, she’s up to her old, high-profile, low public-approval tricks again. Fergie-Bashing ’91 is off to a fast start. During a recent interview with French TV, Prince Charles accused the press of reducing the lives of the royal family to a soap opera. If so, Fergie—the daughter of Charles’s polo manager, Maj. Ronald Ferguson, and the recently widowed Susan Barrantes—is once again whipping up much of the suds.

What has Britain bubbling this time? For one thing, Fergie has fallen in with a fast crowd who hang out at such trendy watering holes as Annabel’s and Tramp. The Yorks have tried to convey a picture of marital bliss. But nearing the fifth anniversary (March 19) of their engagement. Fergie continues to jet off to Switzerland and France, ignoring daughters Beatrice, 2½, and baby Eugenie, 11 months, and royal ribbon-cutting duties. Fergie’s antics have become an embarrassment to the Windsors. Her skirts are too short and the list of her indiscretions too long.

Worst of all, the current buzz in Buckingham Palace is that Fergie has developed a very close friendship with lanky, tanned Steve Wyatt, the Europe-based wealthy scion of a Texas petroleum family. Although there is no real evidence that Dallas-style dalliance is going on behind Andrew’s back, some royal watchers are speculating that the relationship may be more than platonic. Insists one palace insider of her recent behavior: “She’s getting away with murder.”

At the center of the stir is the 6’2″, blue-eyed Wyatt, 35, a consultant to several U.S. oil companies who shares Fergie’s sweet tooth for fun. The two probably have known each other for years, given that the Wyatt and the Ferguson families are old friends, but the pair got much better acquainted in the autumn of ’89, when Fergie was a guest of Steve’s socialite mother, Lynn, in Houston.

Since then, Steve and Fergie have palled around so much that British Intelligence, which monitors royal activity, is said to have confidentially alerted the Prime Minister’s office that the pair could create “a major royal scandal.” Bachelor Steve took Fergie and “aspiring actress” Pricilla Phillips, a mutual American friend, to Morocco for five days last May aboard the family’s private jet. She jaunted again with him to the south of France last summer. But when Fergie seated Wyatt next to the Queen at a private dinner party. Her Majesty, who must be aware of the whispers, was annoyed.

Wyatt, who at times has been spotted as a “walker” for older, wealthy Lone Star women who move in his jet set, may not be as smooth as the satin lapels on a prince’s dinner jacket, but his rough-hewn personality has its appeal. According to one London hostess who has entertained him, he’s “hunky…gorgeous…very Richard Gere, an all-American boy very into his body, aware of his muscles and tan, but not brain-thick either.” The attraction is not at all one-way. Wyatt is reportedly so smitten with the Duchess that he keeps her picture by his bed in his Cadogan Square apartment near Buckingham Palace.

Steve may be new to royal circles, but his family is no stranger to England’s tabloid press. Some years after Steve’s mother, Lynn, divorced his father, New York City Realtor Robert Lipman, Lipman killed a woman in London—in 1968 he strangled 18-year-old Chelsea barmaid Claudie Delphine Delbarre. The self-confessed alcoholic and drug addict claimed that he was on “an LSD trip from hell” at the time and had no memory of the crime. Found guilty of manslaughter, he served six years in prison. Wyatt—who was legally adopted along with his younger brother, Douglas, by Lynn’s second husband, natural-gas multimillionaire Oscar Wyatt, in 1963—has in the past maintained that his real father was killed by a train in Austria. But his fate remains mysterious. A Texas newspaper report says that the 6’6″ Lipman committed suicide in prison, and British gossip columnist Nigel Dempster claims that Lipman is still alive.

While Steve has kept a lower profile than his parents, his own romantic life has had curious ups and downs. In 1989 he was set to marry striking Dorice Valle Risso, the daughter of a Lima industrialist, on a Peruvian mountaintop. But Dorice broke off the engagement without explanation.

Just how serious is his friendship with Fergie? Some friends bristle at the suggestion of a romance. “Everyone here thinks the rumor is very funny, but it’s not true,” says one of Lynn’s Houston chums. “Fergie likes to have fun, and Steve’s a lot of fun.”

Amid the rumors, Andrew sails a steady—and blithe—course. When not at sea on the Royal Navy’s frigate HMS Campbeltown, on which he is in charge of the vessel’s two Lynx antisubmarine helicopters (he did get in a round on the links when the ship docked at Cadiz, Spain), he seems content to work on his 28-handicap golf game or kick back with the kids at Sunninghill Park. (The Yorks’ brand-new $10 million, 50-room and 11-employee Berkshire country estate, labeled South-york by critics, is a sore point for Britons.) Andrew is well acquainted with Wyatt. The Texan was on the Yorks’ guest list for a collective royal birthday party in December at Buckingham Palace, and the same month Andrew accompanied Fergie to a London bash thrown by Wyatt. When privately asked about the Wyatt-Fergie relationship, Andrew reportedly becomes angry and defensive. He apparently feels that his wife should be allowed to have her own circle of friends without all the fuss.

When Andrew is at sea, Fergie spends only a night or two per week in her peach-color boudoir at Sunninghill, where she enjoys such amenities as a huge marble bathtub dubbed HMS Fergie by the builders. She prefers the convenience of her Buckingham Palace apartment, which is closer to the London nightlife and where the expenses come out of the Queen’s pocket. Fergie’s children remain for the most part at Sunninghill, looked after by head nanny Alison Wardley and her three assistants. Mum sees far less of her kids than does doting mother Princess Diana.

But children were on both women’s minds the other week when they dropped strong hints that neither would have any more. “I’m sticking with two,” Di told a woman while visiting a Glasgow maternity hospital, adding that “my husband is getting worried about his age.” In the town of Aberdare, South Wales, Charles, 42, confirmed his concern with a horsey metaphor, claiming that he is “past breeding age.” According to Linda Lewis, the wife of a gulf-bound serviceman with whom Fergie visited on a royal outing, “I told her I had one son and didn’t want any more. She said she was stopping with Eugenie because two girls were a bit of a handful and because Beatrice came into her room every morning at 6, saying, ‘Mummy, I’m ready for my breakfast.’ ” (That must be news to Bea’s four nannies.)

Despite such affecting exchanges, Fergie is once again in trouble with the public and the press for other reasons too. Although the Yorks had a joint allowance of $338,000 from public funds in 1990, the Duchess made only 108 official engagements, while hardworking sister-in-law Anne, the Princess Royal, notched 768 and Diana 323. According to a recent poll in the Mail on Sunday, 74 percent of those questioned consider Fergie to be taking advantage of her royal status, compared with only 10 percent for Di. “The criticism that she has contributed to the unpopularity of the monarchy has hurt her to the core,” says Ingrid Seward, author of a forthcoming book on Fergie. “I hope it doesn’t break her spirit. How much criticism can one person take?”

She had better be ready for a royal portion. For one thing, Fergie has assembled a dubious set of pals. Palace insiders view her current coterie as a rich set of commoners who might be fine for Monaco’s Grimaldi girls to get down with but are hardly proper for a woman whose husband is fourth in line to the British throne. (Andrew follows Charles and his sons, William, 8, and Harry, 6.) Besides Wyatt and Phillips, Fergie’s friends include the likes of American Peter Brant, with whom Fergie stayed on a Connecticut visit last year. Brant served 84 days in a federal prison camp last year for failure to keep proper tax records.

Another of the in crowd is Lulu Blacker, one of Princess Eugenie’s godparents. Blacker became pregnant by businessman Edward Hutley without marrying him, a development regarded as not quite cricket in palace circles. Blacker had been at Eugenie’s christening in December with the Queen, who is titular head of the Church of England, which frowns on having children out of wedlock. Says a longtime acquaintance: “You have to remember that Sarah is not very bright and has bad judgment when it comes to people. Sometimes she just carries on as she did before marriage, with no consideration for her royal status.”

Nor has she overcome her Fergie the Freeloader image, which was sharpened when she failed to turn over to charity the entire proceeds from the two children’s books she wrote. She reportedly gave only a small percentage. Equipment suppliers, for instance, reportedly outfitted the Sunninghill kitchen and bathrooms gratis. Although the royals help hype British products, tradition discourages them from using their influence to promote private business deals. When, before last year’s Iraqi invasion of Kuwait. Fergie used Buckingham Palace to host a meeting between Wyatt and an Iraqi oil minister—a get-together intended to further Wyatt’s business interests—she was severely reprimanded by the Palace for the breach of protocol. “She gives the impression.” said the Daily Mail recently, “of a council estate [public housing] girl in the typing pool who’s married the boss’s son and is exploiting it for all she can get.”

Even sectors of British industry, which have long counted on royal support and patronage to bolster their products and programs, have soured on Fergie. Some fear that she will seek favors and others don’t want their names associated with hers. Says one corporate spokesman, “Her values are not our values.”

To counter the Duchess’s unpopularity, the Palace has undertaken a hasty—and often clumsy—public-relations campaign. Amid her partying. Fergie has been sent off to a clutch of war-related events and has stepped up her visits to hospitals. She already had cut short a skiing holiday in Klosters (with Beatrice in tow) when the gulf war began. Said she: “It’s my own decision. I have not been called back. I think it’s the right thing to do.”

Yet despite the broadsides and the bashing, the faux pas and the flirtations, there remains something energetic and eager and downright outrageous about Fergie that touches the rebellious spirit in many folks. And there is a wellspring of affection for her within the royal family. “The Queen likes her because she rides with her,” says veteran royal author Brian Hoey. “Prince Philip likes her because she’s taken up carriage driving, and Prince Charles likes her because she’s learned to fly a helicopter and she’s good company. Princess Anne gets on terribly well with Fergie and could help her a lot.”

Fergie’s new shape, fashions and hair bring a verve to royal outings. Far from the “frumpy Fergie” and Duchess of Pork image of her in pre-Beatrice days, Fergie appears glowing and svelte. Although she began losing weight shortly after Bea’s birth (an insider says, “she tried every quack in town” to shed pounds), some say her relationship with the body-worshiping Wyatt has made her more figure-conscious. Fergie works out every day, often with personal trainer (and transplanted Massachusetts native) Josh Salzmann and, according to a friend, “smokes like a chimney” in an effort to tame her appetite.

The Duchess’s new dresses and coifs are the work of her “mod squad,” the enthusiastic team of Nicky Clarke and his wife, Lesley, who have overseen her transformation from Clydesdale to Thoroughbred. Hairstylist Nicky, who numbers among his clients Diana Ross, Margaret Thatcher and Brooke Shields, and who often wears jeans to the palace to “do the Duchess,” styled the famous red mane in long, straight tresses, because, he says, “Seeing her all the time as a person who had curly hair, it was kind of obvious to go for the opposite.” Lesley, Fergie’s sartorial coach and adviser, discreetly shops for the size 10 Duchess at upscale shops like Brown’s, Harvey Nichols and Harrods. The look, according to her, is “neat but fashionable, smart but young.”

Still, some critics insist that—no matter how haute her couture—Fergie is simply not cut from the right cloth to be a royal. But it is unlikely that a monarchy that has survived more than 900 years can be seriously hurt by a headstrong young woman with more enthusiasm for life than common royal sense. “She’s not going to shake the monarchy in the slightest.” says Hoey. “She’s a bit like a child let loose in a sweet shop: You eat all you can until you are sick and then never want it again. Once she gets used to it. she’ll settle down.” The question is, when?

J.D. Reed, Terry Smith, Laura Sanderson Healy and Rosemary Thorpe-Tracey in London