British intelligence sources report to WMR that a series of high-level financial deals between Libya, British Prime Minister Gordon Brown, Chancellor of the Exchequer Alistair Darling, Business Secretary Peter Mandelson, former Speaker of the House of Commons Michael Martin, and Scottish First Minister Alexander Salmond resulted in the release from a Scottish prison of Abdelbaset Ali al-Megrahi, the Libyan Arab Airlines officials convicted of planting the bomb on board Pan Am 103 that killed 281 people on the plane and in the village of Lockerbie in 1988. Megrahi�s colleague, Lamen Khalifa Fhimah, was acquitted of charges in the terrorist attack.

In fact, according to the British intelligence sources, the Libyans were never responsible for the bombing of PanAm 103, which was carried out by the Iranians and their Popular Front for the Liberation of Palestine-General Command (PFLP-GC) proxies in Lebanon�s Bekaa Valley in retaliation for the shooting down by the USS Vincennes of an Iran Air Airbus-300 over the Persian Gulf in July 1988 that killed all 290 passengers and crew.

WMR discovered from Cypriot authorities that the bomb intended for PanAm 103 arrived at Larnaca International Airport on a private plane from Lebanon, was placed on a flight to Frankfurt and then transferred to a feeder flight from Frankfurt to London Heathrow and, ultimately, on the ill-fated PanAm Boeing 747 bound for New York.

National Security Agency (NSA) and Government Communications Headquarters (GCHQ) intercepts of Iranian and Greek banking communications proved the Iranian connection but the U.S., British, and Israeli governments saw fit to blame Libya�s Muammar Qaddafi for the attack.

Negotiations on the deal to free Megrahi, who stood to embarass the British and U.S. governments with new evidence of his innocence if the appeal of his conviction had gone forward, began last October after two major Scottish banks, Halifax Bank of Scotland (HBOS) and Royal Bank of Scotland (RBS), collapsed. After HSBC and Barclays made overtures to the Bank of England to buy HBOS and RBS, the proposals were rejected by what is known in Whitehall as the �Larnarkshire Mafia� -- Brown, Darling, and Martin -- that intervened in the Scottish financial crisis and ordered that public money via commercial funds be used to prop up HBOS and RBS. Eventually, Lloyds TSB bought HBOS creating Lloyds Banking Group, which was, itself, later bailed out by the British government.

The word from Whitehall is that, although Parliament is in summer recess, senior staffers know that a major secret deal was worked out between Number 10 and Number 11 Downing Street (the residences of the Prime Minister and Chancellor of the Exchequer, respectively) and Qaddafi and sealed after a meeting two weeks ago between Mandelson and Qaddafi�s son, Saif al Islam Qaddafi, at a Rothschild family-owned villa on Corfu.

The deal worked out is that profits realized from future oil and gas deals between Britain and Libya will be used to bail out the Scottish banks. As for speculation that Labor wants to use the Scottish financial crisis to prove that current plans by the ruling Scottish National Party (SNP) government to move Scotland toward independence and that Scotland cannot fare on its own without London. Brown and Salmond, a former RBS senior economist who negotiated Scotland North Sea oil revenue spending plans between RBS and the government while working for the bank, are on very close terms, according to our sources. Brown, a former British Chancellor of the Exchequer, and Salmond knew exactly what they were getting in return from Qaddafi and his son when they hammered out the �bailout-for-Megrahi� agreement -- the financial bailout of Scotland�s two largest banks that were riddled with toxic bad loans by sweetheart oil and gas deals with Libya. Qaddafi was celebrating more than Megrahi�s release at the public ceremony in Libya -- the mercurial Libyan leader, once considered a pariah, is now one of the most influential business moguls in Great Britain -- on both sides of Hadrian�s Wall. 

Previously published in the Wayne Madsen Report.

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