The statutory probe will examine dealings at the Mahfouz Foundation - set up by Saudi billionaire Mahfouz Marei Mubarak Bin Mahfouz.

       It is the latest crisis to hit the Prince's charitable organisation following the alleged "cash for honours" scandal.

       One of Charles's closest confidantes, Michael Fawcett, last week resigned as chief executive of the Prince's Foundation amid claims he had promised to help secure a knighthood and British citizenship for donor Dr Bin Mahfouz.

       Yesterday, the Charity Commission said of the Mahfouz Foundation: "The commission has been engaging with its trustees since September after media reports alleged donations, intended for the Prince's Foundation, went instead to the Mahfouz Foundation. Some of these funds were then subsequently transferred elsewhere."

       The watchdog has also identified concerns around the trustees' governance and financial control of the charity.

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       The Prince's Foundation is already being investigated by the Scottish Charity Regulator over allegations it accepted a six-figure sum from wealthy Russian donor Dmitry Leus.

       Graham Smith of campaign group Republic said: "It's time there was full disclosure and transparency from the royals." He said standards expected of MPs should also apply to the governance of royal charities.