Libya denies Lockerbie cash offer

270 lost their lives in the crash in 1988

Libya has denied suggestions by a New York law firm that it offered $2.7bn to compensate the families of the victims of the 1988 Lockerbie disaster as part of a deal to lift sanctions.

"Libya has nothing to do with this so-called agreement and is not a party to it," an official statement said.

However, it conceded that Libyan businessmen and lawyers had held talks with lawyers of the families, though it said it had not been informed officially.

The BBC's Justin Webb in Washington says Libya's denial could be meant for domestic political consumption.

But he adds that it underlines the difficulties the world community has in dealing with Libya's leader, Muammar Gaddafi, and the potential for any deal to fall apart.

UN demands that Libya must

Admit responsibility

Disclose all it knows about Lockerbie case

Compensate victim's relatives

Renounce terrorism

A partner in Kreindler and Kreindler, the firm representing the victims' families, told the BBC earlier on Wednesday he expected Libya to admit responsibility for the bombing very soon - perhaps within a couple of weeks.

The British Foreign Office said the Libyan, British and American officials were due to meet in London on 6 June to discuss the question.

Under the alleged deal, each victim's family would receive $10m, but 40% of the total money would be disbursed when UN sanctions were lifted and another 40% when the US sanctions were removed.

The remaining 20% would be paid when Libya was removed from the US State Department's list of sponsors of international terrorism.

Sanctions

But the US rejected the offer, saying Libya had to accept responsibility for the bombing.

"The compensation is something that the families have to work out with the Libyans," a State Department official told the AFP news agency.

"The sanctions are a governmental matter," he added.

The UK Foreign Office welcomed the offer, if genuine, as "a sign that Libya wishes to respond to the requirements of the UN resolutions".

Gaddafi is keen to put an end to the affair

However, a Foreign Office spokesman also said Libya would need to comply with all UN resolutions for sanctions to be lifted.

The admission of responsibility is a particular sticking point with officials and relatives alike.

Charles Kreindler, from the company Kreindler and Kreindler, speaking on the BBC's The World Today programme, said the admission could come within weeks.

"We could see Libya accept responsibility in the near future - perhaps in the next couple of weeks," Mr Kreindler said.

"If that occurs and if the compensation is promptly paid, as it should be under the settlement agreement, then you would see UN sanctions being lifted," he added.

'Blood money'

Last year, a Scottish court convicted a Libyan intelligence agent, Abdelbaset Ali Mohmed Al Megrahi, for the mass murder and for smuggling an explosive aboard the flight.

The other co-defendant, Al-Amin Khalifa Fhimah, was acquitted.

Officially, Libya has refused to admit liability, but Colonel Gaddafi is known to be keen for his country to return to the international fold.

Pan Am Flight 103 exploded in mid-air and crashed in Lockerbie

The relatives also want to see Libya confess its guilt in the affair.

"If Libya is still not willing to acknowledge they planned and committed the mass murder of 270 people and issue and comply with all of the conditions of the US Government and UN security council - then everything given to the families would be blood money," said Vicky Cummock, whose husband was killed.

Her views were echoed by Dan Cohen, whose daughter Theo was murdered in the bombing.

"Libya's got to do something else too, they have got to come clean on this," Mr Cohen said.

"I don't want Libya taken off the terrorism list in the United States, I'll be damned if I'm going to become a cheerleader to rehabilitate the person who murdered my daughter," he added.