Pan Am Flight 103 - Compensation From Libya

Compensation From Libya

On 29 May 2002, Libya offered up to US$2.7 billion to settle claims by the families of the 270 killed in the Lockerbie bombing, representing US$10 million per family. The Libyan offer was that:

• 40% of the money would be released when United Nations sanctions, suspended in 1999, were cancelled;
• another 40% when US trade sanctions were lifted; and
• the final 20% when the US State Department removed Libya from its list of states sponsoring terrorism.

Jim Kreindler of New York law firm Kreindler & Kreindler, which orchestrated the settlement, said:

"These are uncharted waters. It is the first time that any of the states designated as sponsors of terrorism have offered compensation to families of terror victims."

The US State Department maintained that it was not directly involved. "Some families want cash, others say it is blood money," said a State Department official.

Compensation for the families of the PA103 victims was among the steps set by the UN for lifting its sanctions against Libya. Other requirements included a formal denunciation of terrorism—which Libya said it had already made—and "accepting responsibility for the actions of its officials".

On 15 August 2003, Libya's UN ambassador, Ahmed Own, submitted a letter to the UN Security Council formally accepting "responsibility for the actions of its officials" in relation to the Lockerbie bombing. The Libyan government then proceeded to pay compensation to each family of US$8 million (from which legal fees of about US$2.5 million were deducted) and, as a result, the UN cancelled the sanctions that had been suspended four years earlier, and US trade sanctions were lifted. A further US$2 million would have gone to each family had the US State Department removed Libya from its list of states regarded as supporting international terrorism, but as this did not happen by the deadline set by Libya, the Libyan Central Bank withdrew the remaining US$540 million in April 2005 from the escrow account in Switzerland through which the earlier US$2.16 billion compensation for the victims' families had been paid. The United States announced resumption of full diplomatic relations with Libya after deciding to remove it from its list of countries that support terrorism on 15 May 2006.

On 24 February 2004, Libyan Prime Minister Shukri Ghanem stated in a BBC Radio 4 interview that his country had paid the compensation as the "price for peace" and to secure the lifting of sanctions. Asked if Libya did not accept guilt, he said, "I agree with that." He also said there was no evidence to link Libya with the April 1984 shooting of police officer Yvonne Fletcher outside the Libyan Embassy in London. Gaddafi later retracted Ghanem's comments, under pressure from Washington and London.

A civil action against Libya continued until 18 February 2005 on behalf of Pan Am and its insurers, which went bankrupt partly as a result of the attack. The airline was seeking $4.5 billion for the loss of the aircraft and the effect on the airline's business.

In the wake of the SCCRC's June 2007 decision, there have been suggestions that, if Megrahi's second appeal had been successful and his conviction had been overturned, Libya could have sought to recover the $2.16 billion compensation paid to the relatives. Interviewed by French newspaper Le Figaro on 7 December 2007, Saif al-Islam Gaddafi said that the seven Libyans convicted for the Pan Am Flight 103 and the UTA Flight 772 bombings "are innocent". When asked if Libya would therefore seek reimbursement of the compensation paid to the families of the victims (US..33 billion in total), Saif Gaddafi replied: "I don't know".

Following discussions in London in May 2008, US and Libyan officials agreed to start negotiations to resolve all outstanding bilateral compensation claims, including those relating to UTA Flight 772, the 1986 Berlin discotheque bombing and Pan Am Flight 103. On 14 August 2008, a US-Libya compensation deal was signed in Tripoli by US Assistant Secretary of State David Welch and Libya's Foreign Ministry head of America affairs, Ahmed al-Fatroui. The agreement covers 26 lawsuits filed by American citizens against Libya, and three by Libyan citizens in respect of the US bombing of Tripoli and Benghazi in April 1986 which killed at least 40 people and injured 220. In October 2008 Libya paid $1.5 billion into a fund which will be used to compensate relatives of the

1. Lockerbie bombing victims with the remaining 20% of the sum agreed in 2003;
2. American victims of the 1986 Berlin discotheque bombing;
3. American victims of the 1989 UTA Flight 772 bombing; and,
4. Libyan victims of the 1986 US bombing of Tripoli and Benghazi.

As a result, President Bush signed Executive Order 13477 restoring the Libyan government's immunity from terror-related lawsuits and dismissing all of the pending compensation cases in the US, the White House said. US State Department spokesman, Sean McCormack, called the move a "laudable milestone ... clearing the way for a continued and expanding US-Libyan partnership."

In an interview shown in BBC Two's The Conspiracy Files: Lockerbie on 31 August 2008, Saif Gaddafi said that Libya had admitted responsibility for the Lockerbie bombing simply to get trade sanctions removed. He went on to describe the families of the Lockerbie victims as very greedy: "They were asking for more money and more money and more money". Several of the victims families refused to accept compensation due to their belief that Libya was not responsible.

February 2011 In an interview with Swedish newspaper Expressen on 23 February 2011, Mustafa Abdul Jalil, former Justice Secretary of Libya, claimed to have evidence that Gaddafi personally ordered Al-Megrahi to carry out the bombing.

Quotes: " told Expressen Khadafy gave the order to Abdel Baset al-Megrahi, the only man convicted in the bombing of Pan Am Flight 103 over Lockerbie, Scotland, which killed all 259 people on board and 11 on the ground on 21 December 1988. 'To hide it, he (Khadafy) did everything in his power to get al-Megrahi back from Scotland,' Abdel-Jalil was quoted as saying."

Al Jalil's commentary to the Expressen came during widespread political unrest and protests in Libya calling for the removal of Ghaddafi from power. The protests were part of a massive wave of unprecedented uprisings across the Arab world in: Tunisia, Morocco, Bahrain and Egypt, where Egyptian protesters effectively forced the removal of long-term ruler, Hosni Mubarak, from office. Jalil's comments came on a day when Ghaddafi's defiance and refusal to leave his command prompted his brutal attacks on Libyan protesters.

Abdel-Jalil stepped down as minister of justice in protest over the violence against anti-government demonstrations.

Contingency fees for lawyers

On 5 December 2003, Jim Kreindler revealed that his Park Avenue law firm would receive an initial contingency fee of around US$1 million from each of the 128 American families Kreindler represents. The firm's fees could exceed US$300 million eventually. Kreindler argued that the fees were justified, since "Over the past seven years we have had a dedicated team working tirelessly on this and we deserve the contingency fee we have worked so hard for, and I think we have provided the relatives with value for money."

Another top legal firm in the US, Speiser Krause, which represented 60 relatives, of whom half were UK families, concluded contingency deals securing them fees of between 28 and 35% of individual settlements. Frank Granito of Speiser Krause noted that "the rewards in the US are more substantial than anywhere else in the world but nobody has questioned the fee whilst the work has been going on, it is only now as we approach a resolution when the criticism comes your way."

In March 2009, it was announced that US lobbying firm, Quinn Gillespie & Associates, received fees of $2 million for the work it did from 2006 through 2008 helping the PA103 relatives obtain payment by Libya of the final $2 million compensation (out of a total of $10 million) that was due to each family.