Unanswered questions: Lockerbie's legacy: 270 dead, no one behind bars

When Pan AM Flight 103 exploded over the skies of Lockerbie on 21 December 1988, killing all 259 passengers and a further 11 people on the ground, Scotland's police forces were suddenly thrust into the centre of the largest terrorist investigation in Britain's history. As far as the investigators were concerned, the hunt for those responsible finished 13 years later with the successful conviction of Abdelbaset Ali al-Megrahi, a former Libyan intelligence officer whom a jury at a special court in the Netherlands decided was the man who placed the bomb on the plane.

But while Britain and America have firmly stood by Megrahi's conviction, many people – including a number of British families who lost loved ones in the tragedy and the UN-appointed observer at the trial – who were convinced the real culprits remained at large while an innocent man was jailed.

It took more than three years for western intelligence agencies to start blaming Libya and in that time a number of disparate terrorist groups had claimed responsibility, including Islamic Jihad, the little-known Guardians of the Islamic Revolution and even, allegedly, the Ulster Defence League.

But it was the Popular Front for the Liberation of Palestine – General Command (PFLP-GC), a small Palestinian terror network based in Lebanon and Syria with strong links to Iran, that investigators were most keen to concentrate on in the bombing's aftermath.

Two years before Lockerbie, PFLP-GC's Syrian leader Ahmed Jibril had called a press conference warning that there would be "no safety for any traveller on an Israeli or US airliner".

Intelligence agencies took this to mean that Tehran had given Jibril the go-ahead to carry out a revenge attack for the shooting down of an Iranian Airlines passenger jet by the US warship Vincennes. Iran Air Flight 655 had been carrying 290 pilgrims to Mecca for the hajj but the captain of the USS Vincennes, who later received a medal from the US government, fired upon it believing it was a hostile Iranian jet fighter.

Two years later the very threat that Jibril had promised to carry out had happened. The PFLP-GC hastily called a press conference in Beirut denying any involvement but many believed Jibril's organisation carried out the attack on behalf of Iran in revenge.

Those who do not believe the official verdict say Libya was placed in the frame three years later because the US could not afford to alienate Iran and Syria during the build up to the first Gulf War, which had been sparked by Iraq's invasion of Kuwait.

By November 1991 two Libyan intelligence officers, Megrahi and Al Amin Khalifa Fhimah, were indicted for the bombing. The announcement sparked nearly a decade of negotiations between Britain and Libya's leader Muammar Gaddafi, who finally agreed to have his subjects tried in Dutch court under Scottish law in return for the UN lifting crippling sanctions on his nation. American and British relatives of those who died would finally face the men their governments accused of responsibility for the murders. But as the trial progressed many of the families began having doubts.

The case against Megrahi and Fhimah was largely based on the testimony of a Maltese shopkeeper, Tony Gauci, who said he had sold clothes to Megrahi, fragments of which were found around the Samsonite suitcase which allegedly carried the bomb. Megrahi was found guilty and sentenced to 27 years in a Scottish prison. Fhimah was acquitted.

As the trial closed, fresh evidence emerged that suggested the bomb could have been placed directly on to Flight 103 at Heathrow rather than at Malta where Megrahi was head of security for Libyan Arab Airlines.

In September 2001 Ray Manley, a former security guard at Heathrow, said in a sworn affidavit that he had told anti-terror police that one of Pan Am's luggage rooms had been broken into on the night of the bombing. Manley was surprised his evidence had not been presented in court. He stated: "It would have been possible for an unauthorised person to obtain tags for a particular Pan Am flight then, having broken the lock, to have introduced a tagged bag into the baggage build-up area."

From his jail cell in Greenock prison, Megrahi continued to protest his innocence and launched appeal attempts. At first they were rejected out of hand but a four-year investigation by the Scottish Criminal Case Review Commission concluded last year that Gauci's evidence against Megrahi was questionable enough to warrant an appeal which would have gone ahead had Megrahi not dropped it this week. The SCCRC's 400-page dossier will now likely never see the light of day.

Those families who hoped Megrahi's appeal would have shed new light on who was behind the murder of their loved ones have called for a full public inquiry. Reverend John Mosey, who lost his daughter in the bombing, said yesterday: "We have been denied an inquiry by Conservative and Labour governments. Robin Cook, when Foreign Secretary, refused an inquiry saying it would jeopardise the criminal investigation. That investigation has now ground to an ignominious halt, having raised more questions than it answered."

From pariah to partner: The rehabilitation of Libya

Those of us assigned as reporters to stand on a dark night in a muddy field in the Dutch countryside, eyes skyward as the helicopter hoved into view, assumed that if the two men on board were convicted, it would be a very long time before they saw their homeland again. Abdelbaset Ali al-Megrahi and his co-accused were that night being delivered to Camp Zeist for the start of the PanAm trial.

But a great deal of water has tumbled under the diplomatic bridge since April 1999. Megrahi flew back yesterday to a Libya he will find transformed by the rewards of international respectability. Ten years ago Libya was as isolated as Iran or North Korea are today. It was a menace, a pariah, ruled over by "Mad Dog" Colonel Muammar Gaddafi who specialised in bankrolling terror groups. By this summer, the same Gaddafi was being welcomed by Gordon Brown and other leaders on the fringes of the G8 summit in Italy. Next month he will address the UN General Assembly in New York for the first time.

What happened in the interim? The extradition of the two suspects marked the restoration of diplomatic links between London and Tripoli. By 2003, Libya had cleaned up its act further, culminating in Gaddafi's decision to reveal to the Americans what he had by way of weapons of mass destruction.

Since then, Western leaders and oil companies like BP have beaten a path to his tent, lured by the promise of supplies to reduce reliance on Russia. For Libya, rehabilitation means the promise of much-needed investment and perhaps, one day, even tourism.

Katherine Butler