US transfers $504 million to Lockerbie families

The US has handed over $504 million to the families of victims of the 1988 Lockerbie bombing as part of a settlement of their claims against Libya, a senior US official said yesterday.

The transfer, which was made on Friday, represents the first payout under an agreement reached by Washington and Tripoli in August to resolve US private lawsuits against Libya for alleged acts of terrorism, US Assistant Secretary of State David Welch told reporters.

Under that deal, the State Department said last month Libya had paid $1.5 billion into a fund to compensate US victims of suspected Libyan acts of violence. Another $300 million was paid to compensate victims of the US bombing of Libya in 1986.

Beyond the transfer announced yesterday, Mr Welch said he expected that "within days" a further $32 million would be distributed to other Lockerbie victims and roughly $283 million to the families of Americans killed and injured in the 1986 bombing of the Labelle disco in Germany.

The remaining roughly $700 million will be paid out to other claimants over time. The settlement removed the last obstacle to the full restoration of US-Libyan ties and Welch said he was confident that the US Congress would now approve the nomination of an American ambassador to Tripoli and to provide the funds for building an embassy there.

Lawmakers had held up both moves because of unhappiness that Libya had not arranged for the compensation of US victims.

After years of estrangement, Libya began a dramatic improvement in relations with Washington with its 2003 decision to give up the pursuit of weapons of mass destruction.