Libya Will Compensate Lockerbie Relatives

Libya will attempt to take its first step on the path toward re-entering the international community next week when officials from Tripoli and the US and British governments meet in London to discuss the £1.86bn compensation deal on offer to the Lockerbie families.

Officials from the Arab country have told lawyers acting for the US relatives that Libya is prepared to offer reparation to the families of 270 people killed in the 1988 bombing. The compensation deal is conditional on international sanctions being lifted.

Before this can happen, the US and British governments are demanding that Libya complies with UN resolutions, which include admitting its role in bombing Pan Am flight 103 - something Muammar Gadafy, the Libyan president, has refused to do.

The Foreign Office confirmed yesterday that a meeting between officials from Libya, the US and Britain has been scheduled for June. But there is still a wide divide between the three countries and an end to UN and US sanc tions appears a long way off. "There are issues other than compensation that must be sorted out. These include Libya renouncing terrorism, accepting the actions of its officials, and cooperating with any future inquiries," said a Foreign Office spokesman, adding: "If this offer is genuine, it represents a sign that Libya does wish to respond to these UN resolutions."

The compensation proposal was put to New York law firm Kreindler and Kreindler by a team of lawyers and intelligence officials whom the Libyan government has privately admitted had its authority.

Yesterday, however, the Libyan state news agency, Jana, said the Libyan government denied being part of the deal. Speaking on condition of anonymity, however, a Libyan official confirmed to Associated Press that a deal was on the table.

Under the terms of the compensation deal revealed by Kreindler and Kreindler, who act only for American families in a US civil class action, Libya is prepared to offer around £7m to the families of every one killed in the Lockerbie bombing.

The payment would come in three stages. The first 40% comes when the UN lifts its sanctions, the second 40% when the US government follows suit, and the remaining 20% would be paid when Libya is removed from the US state department's list of regimes that sponsor terrorism.

Before any moves to lift sanctions can go ahead, the compensation deal must be accepted by American and British families. Yesterday some of them gave a mixed response to the offer.

John Mosey, who lost his daughter Helga, 19, in the atrocity, said that the money would go some way towards "lightening the burden" on his family.

"Obviously it's just another chapter closed and one can't pretend that one isn't pleased," he said. "One isn't unhappy to have a little more money, but it's not compensation, it's blood money."

American relatives said that, while the offer of compensation was welcome, they were reluctant to accept if that meant Libya would return to the international fold.

"It is a terrible position to put us in," said Susan Cohen, of New Jersey, whose daughter, Thea, 20, was on the plane. "You could give me $50m, do you think I'm going to betray my kid's memory and suddenly become a cheering section for the Libyans?"

Last week, the US state department conceded that Libya had taken steps towards repairing its international image, and it admits there are no credible reports of the country's involvement in terrorism since 1994.

But it remains likely that the Bush administration will press for international sanctions to remain, after a report by the CIA report that claimed Libya was seeking weapons of mass destruction

A Libyan agent, Abdel Baset al-Megrahi, is serving a minimum of 20 years in a Glasgow jail for planting the bomb which brought down flight 103. An appeal by him was rejected in March, but he continues to maintain his innocence.