Osborne stumbles: but is there a bigger story about Mandelson? Melissa Kite says that the shadow chancellor should have known better than to cross the most brutal spin-doctor in Westminster, or flout the conventions of the super-rich. But we should not be distracted from the Business Secretary's true role in this saga.(George Osborne, Peter Mandelson)(Cover story)

If George Osborne survives the spectacular fallout of his now notorious Corfu adventure he may want to review the way he spends his holidays. If a bespoke travel agent arranged his recent sojourn he should be asking for his money back, because sunshine breaks don't come much more disastrous than this one. Not since John Fowles's character Nicholas in The Magus has a man stepped on to a Greek island and got himself into such a surreal muddle.

Admittedly the ingredients for intrigue were already in place when Mr Osborne arrived among the olive groves. A Russian oligarch, the scion of a banking dynasty, the most feared spin-doctor ever to prowl Downing Street... something should have told Mr Osborne that this holiday was going to be trouble. How he must now wish he'd sat on the beach on his own with a good book and given Nathaniel Rothschild and his friends Oleg Deripaska and Peter Mandelson a wide berth. Instead, Mr Osborne somehow managed to enter a social whirl with all three which has culminated in an almighty clash of conflicting loyalties and a blaze of sleaze allegations which threatens to ruin his reputation.

To recap: Friday 22 August, Osborne goes aboard Deripaska's yacht for tea at the invitation of his old university chum Nat Rothschild, who is a friend and business adviser to the Russian, along with Mandelson.

Saturday 23 August, Osborne enjoys dinner in a taverna with Rothschild and Mandelson during Elisabeth Murdoch's 40th birthday celebrations.

Sunday 24 August, Osborne and his family leave their rented house and go to stay at the Rothschild villa. On the terrace that evening they have drinks with Andrew Feldman, Tory chief executive, who was also staying on the island. (Was anyone influential not holidaying on Corfu this …