The scandal pertained to Lord Randolph's older brother, Lord Blandford, who had an affair with the wife of one of the Prince of Wales' (Bertie, aka Edward VII) friends, the Earl of Aylesford.
While Aylesford was away in India with the PoW, Blandford carried on a scandalous affair with Ayelsford's wife, Edith. When Edith wrote to her husband in India that she intended to leave him for Blandford, he returned to London immediately, threatening divorce and openly/publicly condemning Blandford's conduct. He also told everyone that the Prince of Wales was on his side in condemning Blandford.
Lord Randolph thought it was unfair that the PoW should be so harsh on Blandford, given the PoW's own track record with married women, and so he threatened to make public letters the PoW himself had written to Ayelsford's wife, not so long before her affair with Blandford. Lord Randolph was unhappy with the prince's very public (and hypocritical) denouncement of Blandford so he went to visit the Princess of Wales and exposed his plans regarding the letters to her. This infuriated the PoW (challenging Randolph to a duel against the heir to the throne, which no man of honor could accept), and made the Churchills outcasts in their social milieu, so they went to Ireland when the Duke of Marlborough was offered the position of Lord Lieutenant (as a sort of consolation, byt the queen, because of Bertie's snub), and Randolph was suggested as his father's personal secretary during his tenure there.
This scandal is also depicted in Jennie: Lady Randolph Churchill (1974) (ep 3, iirc). That series on Jennie Jerome also contains another scene referred to in Edward the Seventh (1975), in which Blandford's wife pours a bottle of ink on his head (I think it was mentioned by one of Edward's sisters, or perhaps the wife of one of his friends?).
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