A senior Bush administration official Thursday left open the possibility that American and other oil companies who want to do business with Muammar el-Qaddafi are secretly paying off his debt to victims of the Pan Am 103 and Labelle discotheque bombings.

The Bush administration, pressured by Congress, has made full satisfaction of the $1.5 billion debt a prerequisite for restoring full diplomatic and commercial relations with Libya, which renounced its pursuit of nuclear weapons in 2003. 

The payments were supposed to be completed in September, but a first installment arrived "just ... overnight," David C. Welch, Assistant Secretary of State for Near East Affairs, said during a hastily arranged telephone conference Thursday with reporters.

 

Welch would not say how much was paid, who it came from, where it was deposited,  or when the balance would be forthcoming.

The Libyans were supposed to pay into a "humanitarian fund" set up expressly for this purpose, as well as to pay compensation Qaddafi demanded for deaths and damage inflicted by U.S. jets that attacked Libya in response to the 1986 discotheque bombing.

But Libya has now side-stepped that requirement with a mystery payment on its behalf.

Welch said he was refusing to disclose the amount paid on Libya's behalf, deposited in a "U.S.-controlled" bank account, because "I think there's a high level of interest in the claimant community in these issues.  And we don't want to, you know, provoke any anxiety or infighting among them about it. "

Relatives of the victims of Libyan terrorism have been suing for years to get the remainder of the money promised them.  

Welch, a longtime specialist in Arab affairs, maintained that he did not know where the money came from, except that it was on Libya's behalf. 

"This initial deposit was - came from the Libyan side directly into the Account, 'A,' as we call it, for the American claimants," Welch said, adding that he was aware the Libyans had been asking oil companies to pony up.

"I don't know the provenance of it," he said of the deposit 

In response to a question Welch said, "Well, you know, the fund itself can receive contributions from anyplace. It's always been considered to be a voluntary fund."

He called the amount "a substantial indication of their commitment.... by today's standards .. a low risk mortgage down payment, if you understand what I mean."