Focus on escrow account

Lawyers for families of the 1988 Lockerbie bombing victims and for Libya met in London yesterday to try to complete arrangements for a bank account to hold $2.7 billion in Libya's proposed compensation, a source familiar with the talks said.

"All major matters of substance have been settled. We are on schedule. All that is needed now is to conclude the procedural details of the escrow account," said the source, who spoke on condition that he not be identified.

"The meeting is in progress here in London," he said. Diplomats said Libya had agreed to pay compensation of up to $10 million for each of the 270 victims of the mid-air bombing of Pan Am Flight 103 over the southern Scottish town of Lockerbie and to formally accept responsibility.

If it does so this week as expected, diplomats said UN sanctions imposed on Libya in 1992 and suspended in 1999 after Tripoli turned over two Libyan suspects for trial could be permanently lifted, perhaps as early as next week.

Under the deal between the families and Libyan officials, Libya could ultimately pay up to $10 million in compensation for each of the 270 victims that may be covered by the settlement. An initial $4 million would be paid once the UN sanctions are ended. This would be followed by another $4 million if the United States lifts its own sanctions and by $2 million if it drops Libya from the US list of state sponsors of terrorism.

If Washington does not take these steps within eight months of Libya paying the $2.7 billion into the escrow account, Libya would pay only $1 million more, bringing the total compensation to $5 million per victim.