The Megrahi Affair: Blair, BP & the Libyan link

Alex Salmond has heaped pressure on Tony Blair over his alleged role in the controversial release of the Lockerbie bomber by claiming that the former prime minister should be forced to testify before a US Senate committee investigating the affair.

Amid growing concerns over the potential impact of the forthcoming foreign relations committee hearings, the Scottish First Minister advised senators to question Mr Blair over the infamous "deal in the desert" in 2007, when Mr Blair and the Libyan leader Colonel Gaddafi agreed plans to open the country up to foreign trade.

The call came as the Daily Mail claimed Mr Blair was flown to Libya for secret talks with Col Gaddafi last month, days after denying he was an adviser to the dictator.

The committee inquiry, led by Senator John Kerry, will investigate BP's alleged involvement in the release last August, on compassionate grounds, of Abdelbaset al-Megrahi, who was convicted of the 1988 bombing of Pan Am Flight 103. But it threatens to turn into an embarrassing episode for a series of senior British figures. Both David Cameron and Foreign Secretary, William Hague, have said the release was "a mistake". But officials in Washington have confirmed that they want to ask past and present UK ministers to give evidence about their handling of the case – casting a shadow over former justice secretary Jack Straw and the Scottish Justice Minister, Kenny MacAskill, the man who authorised the release.

But, in an attempt to deflect criticism from his own administration, Mr Salmond suggested that the senators look elsewhere. "It is important to understand that what the American senators want to inquire about is whether there was a deal in the desert with Col Gaddafi," Mr Salmond said. "The best [way] to answer that would be to call Mr Blair and ask him directly."

Mr Blair's name has already been evoked by Charles Schumer of New York, one of four senators who pushed for the hearings. "Back in 2007, BP and the Libyan government struck a $900m oil deal that the Prime Minister, Tony Blair, helped to co-ordinate, but the deal ran into roadblocks," he told reporters last week.

Megrahi served eight years of a life sentence for the Lockerbie bombing, which killed 270 people, most of them American. He was released last year by Scottish ministers on compassionate grounds, following medical advice that he had three months to live.

The then prime minister, Gordon Brown, denied giving any assurances to Libya's leaders that the bomber would be freed in exchange for oil contracts. BP acknowledged in a statement at the time that it "did bring to the attention of the UK government in late 2007 our concerns about the slow progress in concluding a prisoner-transfer agreement with Libya. Like many others, we were aware that delay might have negative consequences for UK commercial interests, including ratification of BP's exploration agreement". In the end, Megrahi was not released as a prisoner transfer, but on compassionate grounds because of his failing health.

Families of American victims of the atrocity were appalled by the decision – and by the hero's welcome Megrahi received on his return to Tripoli. The fact that Megrahi is about to mark a year of freedom has only intensified the resentment felt by many Americans over his release. Now, with BP linked to the controversy, the outrage is sure to continue.

The foreign relations committee will move quickly this week to identify witnesses to testify at hearings, set for 29 July, on BP's alleged involvement in the Megrahi release. No final list was ready this weekend – nor is it clear that any Britons asked to give evidence will oblige. The hearings are threatening to add serious new strains to the US-UK relationship just as Mr Cameron is due to pay his first visit to the White House on Tuesday. But there is no sign that the Obama administration means to distance itself from the Senate's initiative.

On the contrary, the US State Department hints that it is as sceptical as members of the Senate are that the release of Megrahi was justified. Hillary Clinton, the US Secretary of State, told Mr Hague on Friday that she expects the UK government to participate in the hearings. "We continue to express our concern and to say categorically that every day that Mr Megrahi spends as a free man in Libya is an affront to the families and victims of Pan Am 103," Philip Crowley, a State Department spokesman, said.

A day of unusual theatre is promised with the Senate seeking to probe the actions of a foreign government – and its closest ally. It is certain to ask top executives of BP to testify. It may also ask current and former UK government officials to appear, possibly including Sir Nigel Sheinwald, Britain's ambassador to Washington.

One Senate aide told the Daily Beast website that Sir Mark Allen, a former Foreign Office careerist who has served as special adviser to BP in its confidence-building with Libya, would be among the first to be asked to come to Washington. The company has already admitted that Sir Mark wrote to Mr Straw, when he was Justice Secretary, about the prisoner-transfer agreement. "If we get the chance to call in some of the BP officials to testify about Megrahi, Allen will be on the top of our list for testimony," a Senate aide told the site.

For Sir Nigel, appointed to Washington by the Labour government, to answer questions about government policy on Capitol Hill would be jarring. It might not be ruled out as a possibility, however, as London looks for ways to calm this new storm over the Libya affair. Last week, Sir Nigel released an open letter to the senators saying that the new UK leadership considers the Megrahi release a "mistake", but insisting that there were no grounds for thinking it happened to assist the commercial interests of BP.

When asked specifically whether UK officials might testify on 29 July, a Foreign Office spokesperson was circumspect. "We will continue to engage constructively with the US administration and Senate on these issues and are discussing details with them. British ministers and officials would not normally give evidence in the Senate." Equally non-committal was BP. "We are preparing our response to the committee and will let them know in due course," Andrew Gowers, the BP spokesman, told The Independent on Sunday. He declined to comment on the reports that Sir Mark Allen might testify.

The push for new hearings on the release of Megrahi began with a 7 July letter from four senators to Sir Nigel expressing alarm over reports that the compassionate reasons first given might have been based on a false diagnosis by a doctor possibly in Libya's pay. They made no mention of BP. However, on 12 July, a second letter from the senators to Senator Kerry implied that BP was behind the release and that hearings on the matter should be convened without delay. "Once Megrahi is released, all the roadblocks to that oil deal are removed," Senator Schumer said, in his version of what led to the Libyan going home. "If anyone thinks this is a coincidence, I have them a bridge to sell in Brooklyn."

Key players

Abdelbaset al-Megrahi Convicted of 1988 Lockerbie bombings and sentenced to life by a Scottish court in 2001. Released in 2009 after doctors gave him three months to live.

Colonel Gaddafi The leader of Libya called the Scottish government "courageous" for its decision to free Megrahi.

Saif al-Islam Gaddafi Gaddafi's son. Told Libyan TV at the time that "in all commercial contracts for oil and gas with Britain, [Megrahi] was always on the negotiating table".

Gordon Brown Said in 2009 that "there was no conspiracy, no cover-up, no double dealing, no deal on oil, no attempt to instruct Scottish ministers, no private assurances" involved in the court's decision to free Megrahi.

Frank Lautenberg Democrat senator who has called for investigation into BP's role in Megrahi's release. "It is shocking to even contemplate that BP is profiting from the release of a terrorist."

Jack Straw Contradicted Brown by claiming that a 2008 prisoner-transfer agreement with Libya was reached in part because of successful trade negotiations.

Tony Blair Has advised corporations on Libyan investment opportunities. His spokesman has said: "He has no role whatsoever with the Libyan government or the Libyan Investment Authority."

Tony Hayward CEO of BP. He took over on 1 May 2007, the month BP signed a $900m oil exploration agreement with Libya. The deal paving the way for Megrahi's release was signed later in the year.