Al-Megrahi star guest at Gaddafi's party

If the British Prime Minister, Gordon Brown, is hoping that the furore over Abdel Basset al-Megrahi's release will die down now that the only man convicted of bombing Pan Am Flight 103 is back in Libya, he will be disappointed.

According to reports in the Arabic press, al-Megrahi will be at the centre of next month's celebrations to mark the 40th anniversary of the military coup that swept Libyan leader Colonel Muammar Gaddafi to power.

The event, to be attended by politicians, leaders and royalty, will be held in the full glare of the world's media. And, unfortunately for Brown and the many people left incensed by the Scottish Government's decision to release the terminally ill al-Megrahi on compassionate grounds, the former Libyan intelligence officer will be prominent.

Indeed, one Libyan official told the Asharq Alawsat newspaper that al-Megrahi will be "the main guest". This may explain why Britain's Prince Andrew is now unlikely to attend.

Seasoned diplomats believe the timing of the event, in effect Gaddafi's chance to showcase himself to the world, and al-Megrahi's release, are more than coincidental. Despite Libya having shaken off its pariah state status since it turned its back on terrorism and renounced weapons of mass destruction in 2003, Gaddafi has little to celebrate at the moment.

Libya's economy is dependent on oil, and its falling price amid the global recession has hit hard. And the country has only recently emerged from a period of soaring double digit inflation that saw large increases in housing costs and food prices. Al-Megrahi is a good news story at a time when Gaddafi badly needs one.

It was always unlikely, then, that the Libyan leader would respect Brown's request, by letter, to handle al-Megrahi's return "with sensitivity".

The Prime Minister's office released the text of the letter sent to Gaddafi on the day al-Megrahi was released, asking that the event be kept low key as a "high-profile" ceremony would distress his victims and their families.

Questions are now being asked about what role Brown and his Government played in co-ordinating the release. The letter refers to a meeting between the two leaders six weeks earlier at the G8 summit in Italy, adding that "when we met [there] I stressed that, should the Scottish Executive decide that Megrahi can return to Libya, this should be a purely private family occasion" rather than a public celebration.

Previously officials have said the two men's conversation in Italy at the beginning of July was brief and that, while the Lockerbie case was raised, Brown merely stressed the matter was for the Scottish Government to decide.

However, the new letter, addressed to "dear Muammar" and signed off by wishing him a happy Ramadan, suggests that the decision was well enough advanced and Brown well enough briefed to set terms for a homecoming - albeit unsuccessfully. A jubilant Libyan crowd, some waving Scottish flags, greeted al-Megrahi at the airport.

The official line from the Foreign Office is that it was a matter for the Scottish Government and there were no backroom deals.

Britain's Foreign Secretary David Miliband angrily dismissed claims that London strong-armed the Scottish Government into agreeing the release because it was keen to exploit a business relationship with Libya.

"I really reject that entirely; that is a slur both on myself and the Government," Miliband said.

But the denial was thrown into question when Gaddafi's son, Saif al Islam Gaddafi, insisted the decision to free al-Megrahi was tied to trade agreements.

"In all British interests regarding Libya, I always put you [al-Megrahi] on the table," Saif was reported to have said. Gaddafi himself increased the embarrassment by going on Libyan television to praise "my friend" Brown, the British Government, the Queen and Prince Andrew for "encouraging the Scottish Government to take this historic and courageous decision".

Further speculation came with the disclosure that the Business Secretary, Lord Peter Mandelson, met Saif this month while holidaying on the Greek island of Corfu. Yesterday, Mandelson said: "It has been a matter entirely for the Scottish Justice Minister to exercise his discretion."

But this suggestion is at best only partly true. Scotland could not have returned al-Megrahi to Libya without London paving the way.

Al-Megrahi's journey to freedom after the bombing that killed 270 people was established as the result of a clutch of bilateral treaties signed late last year between the British Government and Libya dealing with myriad issues including taxation, civil and commercial contracts and, significantly, prisoner transfers.

That all the treaties were signed at the same time has prompted speculation that both sides acknowledged there was what diplomats call "linkage" between them. Certainly, as MPs questioned the rationale for agreeing to the treaties with a country that has a dubious human rights record, the Government appeared in a rush to get them ratified simultaneously.

In March, the Justice Secretary, Jack Straw, wrote to the chairman of Parliament's joint committee on human rights, Andrew Dismore, explaining: "Both the Foreign Secretary and I believe that, in the interests of our judicial and wider bilateral relations with Libya, it is important to ratify all four [treaties] as far as possible at the same time. A delay beyond early April is likely to lead to serious questions on the part of Libya in regards to our willingness to conclude these agreements. The UK/Libya relationship is one of great importance."

Scotland's Justice Minister, Kenny MacAskill, will give a statement tomorrow to the Scottish Parliament. He is likely to face tough questioning on precisely why the bomber was not transferred to a Libyan jail, rather than sent home as a free man.

Yesterday FBI director, Robert Mueller - who as a Justice Department lawyer led the investigation into the bombing - described the release as a "mockery of justice".

WHAT THEY SAID

"The idea that the British Government ... would sit down and somehow barter over the freedom or the life of this Libyan prisoner and make it all part of some business deal ... it's not only wrong, it's completely implausible and actually quite offensive."
- British Business Secretary Lord Peter Mandelson

"Indeed your action makes a mockery of the rule of law. Your action gives comfort to terrorists around the world."
- US FBI director Robert Mueller in a letter to Scottish Justice Minister Kenny MacAskill

"In all British interests regarding Libya, I always put you on the table ... The exploitation of British-Libyan political and trade interests was always done with the aim of releasing Abdel Basset al-Megrahi."
- Muammar Gaddafi's son Saif al Islam Gaddafi to al-Megrahi

"[A] high-profile return would cause further unnecessary pain for the families of the Lockerbie victims. It would also undermine Libya's growing international reputation."
- British Prime Minister Gordon Brown to Muammar Gaddafi

TRADE MATTERS

* Libya's trade with Britain reached more than £1 billion last year and could increase exponentially if Libya's estimated £43.7 billion oil reserves can be tapped.

* In 2007, oil giant BP signed a near £1 billion deal to explore part of the Ghadames Basin, an area bordering Tunisia. Last week, just a day before Abdel Basset al-Megrahi was returned, BP said it was seeking companies keen to win contracts to start drilling. British Gas and Royal Dutch Shell have also signed deals.

* Aerospace firm BAE Systems is eyeing the market closely, while retailers like Marks & Spencer and Next are opening stores in Libya's capital, Tripoli. In the first five months of 2009, UK exports to Libya rose by 49 per cent, to £166 million.

- OBSERVER