High-living in the Low Countries: Belgium's blue-blooded bad boy

In a country where royalty is treated with reverence, the feckless ways of Prince Laurent are an embarrassment. Now the King's youngest son is embroiled in a fraud trial

He has always been the black sheep of the Belgian royal family, a young and flamboyant playboy prince whose love for fast cars, louche parties and beautiful women meant he was never far from the media spotlight.

But even by his standards, the latest furore surrounding Prince Laurent, the bad-boy youngest son of King Albert II, has been explosive. For this week, at a courtroom in the eastern city of Hasselt, the Ferrari-loving Prince made history: he became the country's first royal to appear as a court witness, in a hotly publicised criminal case.

For 15 minutes Laurent gave evidence in a fraud trial in which 12 people are accused of pocketing €2.2m (£1.4m) from Belgian navy funds. The Prince may not be accused of wrongdoing, but some of the money was used to renovate his villa in the 1990s.

He's been in trouble before; indeed, for the media at least, he has rarely been out of it. In his bachelor, partying, days his financial problems were legendary and his speeding tickets legion. The Prince is said to have had a particular fondness for racing the TGV train on a straight, stretch of motorway between the Belgian border and Paris.

But this time, revelations about the lifestyle of the 43-year-old "mouton noir" of the Belgian royal family have moved him beyond the realms of mere embarrassment. In a country where royalty is viewed with a reverence not accorded to its British counterparts since the 1980s, even monarchists are asking whether the institution has suffered crippling damage.

The Prime Minister, Guy Verhofstadt, has promised a debate on the lavish financial support from the taxpayer for the Prince and his siblings. Meanwhile enemies of royalty, particularly in an increasingly separatist Flanders - the northern, Dutch-speaking half of the country - are rubbing their hands in glee at the blow to one of the few surviving symbols of Belgian unity.

The youngest son of King Albert II and Queen Paola, Prince Laurent has the reputation of an action man who knows how to enjoy himself. Belgians do not regard him as especially bright. On arriving in America, the Prince is said to have asked for an explanation of the difference between the UN and the US.

Originally third in line to the Belgian throne, he was demoted by a constitutional change which allowed women the same succession rights as men. He now stands as number 11 in line to Belgium's crown.

Like Britain's Prince Andrew, he spent a spell in the navy where he qualified as a diver and a helicopter pilot. Other interests include jet-skiing and, of course, those high-performance cars. But, as a bachelor, the young Prince was also known for an interest in women of the fast variety. As the years went by and the partying continued, there was mounting pressure from the palace for Laurent to do what all princes must, and find himself a princess.

For a decade or so, he remained immune to the nation's collective wish for a fairytale wedding. Women, he was once quoted as saying, may be the most perfect beings, but women with whom he would like to live and have children with were more and more rare.

Finally, Prince Laurent cracked after meeting Claire Coombs, an Anglo-Belgian property surveyor who was born in Bath and grew up in Wavre, outside Brussels. The couple married in Brussels in April 2003, and Prince Laurent sought to turn his back on his playboy past.

The state of the marriage has been the subject of some debate in the Belgian media. In 2005, Laurent was forced to deny rumours that it was on the rocks after he appeared alone at several functions. But the couple, who already had a daughter, Princess Louise, silenced the sceptics by producing twin sons last year.

This did not, however, stop sniping over cash. Last year there was increasing speculation over the fact that Laurent, who earns €295,000 each year from the public purse, was having difficulty making ends meet.

Newspapers reported that royal advisers had urged him to reduce his spending, as the couple were reported to have had to dip into their savings. There were suggestions that they could not afford to hire a full-time nanny for their twins. Though reportedly unhappy with the roomy Villa Clémentine, a state-owned property in the leafy Brussels suburb of Tervuren, they were said to be unable to afford the larger estate they craved. Fairly or otherwise, Laurent began to win the reputation as a free-loader to add to the considerable baggage of his playboy past.

In fact, the money issue had been there for some time. In the 1990s there was controversy over how he should be remunerated while he promoted environmental and animal rights causes. These revolved around the creation of his charitable foundation, a royal institute for the sustainable management of natural resources and the development of clean technology, also called the IRGT (Institut Royal pour la Gestion Durable des Ressources Naturelles et la Promotion des Technologies Propres). The issue centred on the funds for the project that were needed to make the foundation official and allow the Prince to award himself a salary.

Now comes the fraud trial that has catapulted Laurent to unwanted prominence. The Prince was been summoned as a witness in the case in which ex-servicemen are accused of siphoning off Belgian navy cash - up to €1.2m of which may still be missing.

Laurent's day in court was demanded by the defence team of Colonel Noël Vaessen, a former royal adviser, who took charge of the villa renovations and who claimed that the Prince knew that some of the money he signed for was used for fraudulent purposes. Prosecutors have demanded a three-year prison sentence for Mr Vaessen, a retired naval officer.

Adding to the scandal, Mr Vaessen has spoken to the press of Laurent's lavish spending and of how, during those bachelor years, the Villa Clémentine was "transformed into a house of ill repute, while he became the doorman of the Moulin Rouge." Even the Prince's appearance before a judge was controversial as King Albert II had to sign an official decree waiving royal immunity in order for the testimony to be given. He did so after promising that in Belgium "nobody is above the law". Thus, for a few hours the Prince became a normal Belgian citizen, waiting his turn in the courthouse before taking the stand.

Speaking in Flemish he insisted that the judge address him simply as "Mr". The Prince admits that he knew the money to renovate the villa came from the navy but that, since the building is state-owned, this did not seem abnormal. He said that he "never suspected the legality of this practice", but that "Vaessen told me the navy would pay". Pressed further on the origins of the funds, the Prince simply answered: "I did not look into the books of the navy, I believed him implicitly."

The clouds gathering over the royal family have political significance in Belgium. Divisions between the Francophone south and the Dutch-speaking north are becoming steadily more bitter as politicians speculate about the prospect of a break-up of the country founded in 1830.

In Antwerp, around a third of voters support the separatist and far-right Vlaams Belang (Flemish Interest). But a broader swath of Flemish society believes that too much of the wealth it generates is transferred to less prosperous Wallonia. French and Dutch speakers increasingly spurn each other's language in favour of learning English. The royal family, along with the national football team, is one of the few institutions that glue together the two communities.

King Baudouin, a devout Roman Catholic, became something of a national icon after ascending to the throne when his father King Leopold III abdicated in 1951, and ruling for 42 years. While the monarchy is still popular in Belgium, the unquestioning support Baudouin enjoyed has been eroded in recent times.

In the late 1990s, King Albert II admitted the existence of an illegitimate daughter, Delphine Boël. Moreover, the royals have come in for growing flak in Flanders, where critics portray them as symbols of Francophone arrogance. When the heir to the throne, Prince Philippe, married in 1999, his photogenic bride, Mathilde, was criticised for making mistakes in Flemish on TV.

Opposition political leaders have called on the government to limit royal salaries to include only King Albert, Queen Paola, Crown Prince Philippe and Princess Mathilde.

This week Mr Verhofstadt, a Flemish Liberal who leads a fractious coalition government, said the Prince Laurent affair had been used "by certain forces" to attack "the monarchy and the country". The Prime Minister said he wanted to produce proposals to modernise the state and produce a "third way" between those who simply want to stick to the status quo, and separatists who want an independent Flanders.

Even Prince Laurent seems to know how much trouble he has brought upon the Belgian royals. Yesterday he was less the playboy and more the penitent prince as he promised to pay back all the public money spent on the villa, a sum of €175,000.

His public appearance was accompanied by none of the normal swagger associated with those bachelor days, nor any sign of the trademark Ferrari. In fact, Prince Laurent travelled to court, and into the legal history books, in a Smart car.