Read McCaffrey of Rasco Klock represented families of Pan Am Flight 103 victims in litigation against Libya. (Photo by David Handschuh/NYLJ)
Crash investigators inspect the nose section of the crashed Pan Am Flight 103, a Boeing 747 airliner in a field near Lockerbie, Scotland, Dec. 23, 1988. The plane crashed two days before, killing more than 270 people. (AP Photo/Dave Caulkin)
This December 1988 photo shows wrecked houses and a deep gash in the ground in the village of Lockerbie, Scotland - damage caused by the crash of Pan Am Flight 103 on Dec. 21, 1988. Investigators combed hundreds of square miles looking for wreckage, bodies and clues. The two fragments that proved to be crucial in tracking down the bombers were smaller than fingernails. (AP Photo/Martin Cleaver)
Florence Bissett weeps as her son’s name is read during ceremonies outside United Nations headquarters in New York on Dec. 21, 1992, marking the fourth anniversary of the bombing of Pan Am Flight 103 over Lockerbee, Scotland. She holds portraits of her son and his friend Luann Rodgers who also died in the tragedy. (AP Photo/Andrew Savulich)
Family members of victims in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, react to the guilty verdict against Pam Am outside Brooklyn Federal Court on July 11, 1992. After the verdict, U.S. District Judge Thomas C. Platt renewed an order barring lawyers in the case from talking to reporters and urged the families not to speak about the case. (AP Photo/Bebeto Matthew)

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These wanted posters, in English and Arabic, released on Oct. 30, 1995 by the State Department and the FBI show the two suspects, Abdel Basset Ali Al-Megrahi, left, and Lamen Khalifa Fhimah, wanted in the bombing of Pan Am Flight 103 that crashed in Lockerbie, Scotland on Dec. 21, 1988. (AP Photo/State Department/FBI)
This frame grab from Libyan TV shows Pan Am Flight 103 bombing suspects Abdel Basset Ali al-Megrahi, center, waves while standing in front of Lamen Khalifa Fhimah, left, as they board an aircraft in Tripoli, Libya, on April 5, 1999, on their way to the Netherlands. (AP Photo/Libyan TV)

 

Editor’s note: It is thirty years today since Pan Am 103 was shot down over Lockerbie. In this first-person account, Read McCaffrey, who represented the families of the crew members and was part of the committee that negotiated a settlement with Libya, reveals what was happening behind the scenes. 

The shooting down of Iran Air Flight 655 on July 3, 1988, by the crew of the U.S.S. Vincennes, while maneuvering in the Strait of Hormuz, was a serious blunder.  When the forward section of Pan Am Flight 103 plowed into a field at Tundergarth on the outskirts of Lockerbie, Scotland, on Dec. 21, 1988, the world press was convinced it was retaliation for the senseless destruction of the Iranian AirBus earlier that year and the killing of its 290 passengers and crew.

The Iranians allegedly approached international terrorist Ahmed Jubril to bring down a U.S. airliner.  Jubril had ‘set up shop’ in Germany.  There was a raid by the German State Police and a compromised Jubril turned to Libyan intelligence agents to actually plant the bomb requisitioned by the Iranians. Reportedly the ‘handoff’ was welcomed by the Libyans who were seeking their own revenge against the U.S. for the April 15, 1986 attack on Mumar Khadafi’s home by U.S. Navy warplanes ordered by President Reagan as retaliation for the bombing of a West German nightclub, the LaBelle, and the deaths of U.S. servicemen.

The court appointed plaintiff’s committee’s investigation of the Lockerbie disaster revealed that all airlines with routes from Europe to New York were given photographs of a Toshiba cassette recorder and told that a bomb within the device would be smuggled on board a flight bound for New York sometime between November 1988 and January 1989 – warnings picked up by the German police. All security screeners were given the message except the screeners for Pan Am. The head of security for Pan Am at Frankfurt airport, a company ironically named Alert Management Systems, placed the warning in a sadly neglected basket of incoming messages where it sat until the morning of the disaster.

In the post-bombing investigation of the Lockerbie tragedy, Scottish forensic specialists proved a connection to a Libyan who had purchased shirts in a shop in Malta.  Fragments of the shirts were found stuffed around remnants of the Toshiba radio cassette recorder bomb, which had been smuggled on board an Air Malta flight at Luga Airport in a brown Samsonite suitcase.  A shopkeeper in Malta named Tony Gauci had positively identified a photograph of Abdel Basset, one of the Libyan intelligence agents.

In April 1996, President Clinton signed legislation creating new exceptions to The Foreign Sovereign Immunity Act including terrorism and murder, and by June 1996 Lee Kreindler’s firm was among the first to file a new action against Libya and its terrorists under the new law.  A new plaintiffs’ committee was formed and officially appointed by Judge Platt and included Lee Kreindler as chair, his son Jim Kreindler, their partner and official liaison counsel, Steve Pounian, Mitch Baumeister, Jerry Skinner, Frank Granito and his son Frank Granito III, and me.

We discovered that on that fateful night, Dec. 21, 1988, probably because of winds, Captain James MacQuarrie had delayed his turn of Pan Am flight 103 to the northwest.  A normal flight pattern would have taken the 747 out over the deep waters of the North Atlantic, and, after the bomb exploded, Pan Am Flight 103 and its 259 passengers and crew never would have been found.  Instead, the bomb ignited 31,000 feet above the town of Lockerbie, Scotland. Because of the location of the bomb, beneath the entrance to the first class cabin, the cockpit and ‘nose’ of the 747 were rocketed into a field outside of town. The fuselage, engulfed in a fireball came spinning toward the earth, passengers being thrown into the frigid wintry air from every opening and all eventually striking the town of Lockerbie, creating a crater and strewing carnage in a grand circle of mangled and distorted death that extended for miles.

The civil litigation in New York by the Pan Am 103 victims’ families against the Libyan defendants progressed to a point where the lawyers representing Libya filed a motion to dismiss the case, arguing, among other things, that the new exceptions to the Foreign Sovereign Immunities Act signed into law in 1996 were unconstitutional and that the president was executing foreign policy through the courts and the Congress by being able to create a ‘list’ of terrorist countries.

Libya’s motion and legal memorandum in support were eventually denied by Judge Platt in March 1998. Libya’s counsel lost no time in asking for a review by the Second Circuit Court of Appeals.  The Second Circuit, in December of 1998, affirmed Judge Platt’s well-reasoned ruling and allowed the cases against Libya to proceed.

Khadafi obviously was concerned about his long-term ability to maintain his political position with the sanctions in place and so some movement was inevitable.    Eventually, Khadafi successfully negotiated a permanent suspension of the UN sanctions against Libya by turning over the two suspects for trial in the Netherlands.  United States sanctions remained in place.

In April 2001, we received word from a reliable source that the Libyans might want to discuss a settlement of the Pan Am 103 civil suit pending against them in federal court in New York. The motivation was not complicated – as long as the sanctions remained in place various accounts belonging to international banks in which Libya had any interest whatsoever were subject to ‘freezing’ and possibly confiscation. And hundreds of millions of dollars of assets had met such a fate.

A first meeting to discuss settlement was arranged and because of discord in Libya, while a date, July 10, 2001, and a place, Paris, were agreed to, the players for the Libyan ‘team’ remained undecided until the last minute.  Libya’s Paris counsel was present along with a Libyan government official involved in the litigation.  The meeting was, overall, not fruitful. It was followed by a second meeting in London, on Aug. 10, 2001, which was encouraging.

The events of September 11, 2001, became a barrier to any further discussions and so we waited.  Our State Department had been kept informed of the details of all of our discussions and following September 11 the State Department and the Central Intelligence Agency met with our committee and urged caution and patience. The United States government had to be completely confident that the events of 9/11 had no Libyan ‘fingerprints’ whatsoever.

Our meetings eventually continued.  In the summer of 2001, we had demanded $20 million for each of the 270 families.   Of more significance, however, had been the committee’s agreement at the August 2001 London meeting to a concept which would allow the lifting of sanctions to operate as conditions precedent or ‘trigger events’ for the payment of settlement moneys in stages.  This completely changed the tone and mood of the discussions and caused a complete change in the selection of the Libyan ‘team’ for the next round.

The U.N. resolution concerning sanctions had four ‘prongs:’ turn over the suspects, cooperate with the investigation, admit responsibility and compensate the victims’ families.  ‘Prongs’ one and two had more or less been satisfied, ‘prong’ three involved tri-lateral meetings of representatives of the governments of the United States, the United Kingdom and Libya, and ‘prong’ four was us.

In 1999, following the surrender of the two Libyan agents for trial, our committee had been invited to meet with representatives of the State Department and other agencies. The purpose of the meeting was to explore the role of the plaintiffs’ committee in accomplishing the ‘compensation of the victims’ families’ requirement of the U.N. resolution also being mirrored by the U.S. government as requirements to be met prior to any consideration of the lifting of U.S. sanctions.  It was agreed that our committee, with years of Pan Am 103 experience and its imprimatur of appointment by a well-respected federal judge, would be charged with the task of securing compensation for all of the victims’ families.  And perhaps scale Everest in our spare time. The diplomats would separately handle the acceptance of responsibility issues.

Our settlement discussions resumed in February 2002.  The new Libyan team was refreshingly different.  There were three not including their U.S. and French counsel.  Its head was a Libyan businessman named Mohammed Abdul Jawad.  If he were to calculate the cost to the Libyan economy of the sanctions for a period of five years and reduce that number to a present value, then he could recommend a settlement that would cost the Libyans, now, less than they would suffer over a five-year period. The economics of his approach were starkly simple and coldly detached from the horrors of December 21, 1988.

In May 2002, we had settled on $2.7 billion, or $10 million per family – the largest settlement in the history of American mass disaster torts.  Meetings in the summer of 2002, all in Paris, dotted various ‘i’s’ and crossed ‘t’s’, mostly concerning timing and sequence, and on Oct. 23, 2002 we had a signed agreement.

We believed that once there was a publication of the ‘acceptance of responsibility’ followed by the deposit of $2.7 billion, per the Oct. 23, 2002 agreement, that the current permanently suspended United Nations sanctions would be lifted by resolution.  All four ‘prongs’ would have been satisfied — all conditions of United Nations Security Council Resolutions Nos. 731, 748 and 883 would have been met – and each Pam Am 103 victim’s family would receive a first payment of $4 million.

The United States had adopted the same four ‘prongs’ as conditions for the lifting of its sanctions against Libya and added a few subjective demands such as Libya’s renunciation of terrorism and weapons of mass destruction.

Throughout our dialogue with our Libyan counterparts, they vehemently denied any involvement in the Lockerbie bombing. They pointed out that in 1990 and 1991 it was more politically expedient to blame Libya for Lockerbie as the United States needed the cooperation of Syria and Iran to execute the liberation of Kuwait during the first Desert Storm operation.

We learned from our sources that a meeting of the three governments would take place in London on the morning of March 10, 2003, to once again attempt to reach accord on acceptable language concerning Libya’s acceptance of responsibility.  Representatives of the governments of the U.K., Libya and the United States, whose delegation included Under Secretary of State Burns, began their meeting at 10 a.m. and by 4 p.m., it was being reported that very significant progress had been made.

We now know that an agreement concerning the language of an acceptance of responsibility had been reached that day but their success was being kept under wraps.  I surmised that it was a matter of timing – but I wasn’t sure whose timing concerns were holding up an announcement.  For us, a formal acceptance of responsibility would be followed by the fairly inevitable lifting of United Nations sanctions and thereafter the sum of $4 million would be paid to each victim’s family.

We assumed that Libya was paying attention to the April 2003 U.S. invasion and bombing of Baghdad.

Jawad called to advise that he and his two colleagues with whom we had been meeting for many months were bowing out of the process and that our written signed agreement was running into some opposition in Tripoli.  The news was not good.  The deal was alive – but in trouble.  During a subsequent call, we learned that a new Libyan delegation, led by two high-ranking ambassadors, was inviting us to meet in London on May 22, 2003, to discuss both compensation and acceptance of responsibility.

In a flurry of activity in the Summer of 2003, the Libyans reverted to and reaffirmed the Oct. 23, 2002 ‘deal’ but advised that while the language of the ‘acceptance of responsibility’ had been resolved, it would not be sent to the Security Council until the details of the escrow agreement, the all-important document setting forth when and how money would be transferred to the plaintiff’s committee’s settlement trust account in New York, had been finalized.  The summer of 2003 was consumed by an exchange of drafts, which culminated in the scheduling of an August meeting allegedly to pick some final nits and sign the document.  The final meeting began at 10 a.m. on Aug. 13, 2003.  Finally, at 8:05 p.m. on Aug.13, 2003, the escrow agreement was signed.

Jim Kreindler had pointed out that the trial against Pan Am in the Spring and Summer of 1992 had lasted 13 weeks, that the bag housing the bomb had been bag number 13 to be screened at Frankfurt, and here we were, finalizing the settlement on Aug. 13.  I directed Jim’s attention to the fact that there were 13 members of the Libyan ‘team’ seated across from us and now rising to exchange congratulations.

On Aug. 23, 2003, the European Bank we had selected reported that $2.7 billion had been deposited in the escrow account.  The acceptance of responsibility official letter reached the United Nations at about the same time and the U.K. introduced a resolution that the United Nations lift the sanctions imposed against Libya.

Beginning early on Monday, Sept. 22, while the committee appeared before Judge Platt, the transfer of $4 million per decedent to the committee’s New York trust account began – an initial deposit of $1.068 billion.

For me, the settlement became a reality only after the money was actually transferred to New York – only then did I truly believe that the negotiations which began in 2001 had actually borne fruit.  Eventually 269 families agreed to the settlement, and through an arduous but completely necessary procedure of affidavits, letters testamentary, due diligence and further orders from Judge Platt concerning the payment and distribution of settlement funds, by mid-January 2004 the vast majority of the 269 families had received their portion of the initial $4 million settlement.

Whether or not those U.S. sanctions set forth in our settlement agreement would be lifted within eight months from the escrow deposit date of Aug. 23, 2003, thereby triggering the second payment of $4 million per family, remained unknown.

Many envisioned a lifting of U.S. sanctions only with intense monitoring of the government of Libya and especially its soon to be abandoned weapons programs.  I assumed that Khadafi understood that U.S. sanctions may be re-imposed as quickly as they may be lifted.

On Dec. 22, 2003, Assistant Secretary of State Burns advised the victims’ families that Libya, following nine months of secret negotiations, was inviting weapons inspectors into the country and abandoning its nuclear weapons development effort.  Details of a U.S. ‘mission’ in Libya were being discussed.

The plaintiffs’ committee’s agreement with the Libyan government required the lifting of six specific sanctions to ‘trigger’ the second $4 million per family payment. Four of those sanctions were lifted by executive order in February 2004, well prior to our April 22, 2004 escrow termination date. The two remaining sanctions were the ‘unfreezing’ of Libyan assets, (estimated to be $ 1.2 billion), held by OFAC and the lifting of restrictions on commercial airline traffic between Libya and the United States.

However, the four sanctions that were lifted had allowed U.S. oil companies and other supporting businesses to resume operations within Libya and it was reported that ‘business is booming.’ Despite Khadafi’s regrettable comments about terrorism while in Belgium, coarse remarks upon the death of President Reagan and alleged involvement in a plan to assassinate members of the Saudi royal family, the sanctions remained lifted.

As the April 22, 2004 date approached, the committee resumed a dialogue with Libyan Ambassador Obadi concerning an extension as called for which extension must be mutual. Four members of the Plaintiffs’ Committee flew to Tripoli and, on Sunday, April 18, 2004, negotiated a ninety-day extension to July 22, 2004.

Without a second trip to Tripoli, the committee and the Libyan delegation, over the July 17-18, 2004 weekend, confirmed the details of what we believed was a final extension of the escrow agreement to Sept. 22, 2004 – exactly 13 months from the ‘trigger’ date of Aug, 23, 2003.

On Friday, Sept. 17, the plaintiffs’ committee learned that sometime on Monday, Sept, 20 or Tuesday, Sept. 21, the administration would formally announce the lifting of the two remaining important sanctions, which would satisfy the trigger two requirements – and early on Monday, Sept. 20 it was announced that effective at 12:01 a.m. on Sept. 21, 2004, the sanctions involving frozen Libyan assets and commercial air travel would be lifted by Executive Order.

Per our agreement with the Libyan defendants, the next order of business was a mutual notification to BIS in Switzerland that, by agreement, the second trigger event had indeed occurred.   This was accomplished fairly quickly and by Oct. 7, 2004, the second deposit of $1.076 billion had been transferred to the settlement account in New York and was quickly being deposited in the 269 separate accounts.

The third trigger event was the removal of Libya from the State Department List of Countries Which Sponsor Terrorism, (the ‘List’) – a list which had included the Republic of Iraq until Oct. 23, 2004 – a list whose ‘elite’ membership was a tar pit from which extraction was extremely difficult.

It was learned on December 20, 2004, that the plaintiffs’ committee and the Central Bank of Libya, along with the Bank for International Settlements in Switzerland had all executed amended agreement #6 extending the expiration of the escrow agreement to Jan,17.

Regrettably, because necessary steps that we were required to remove Libya from “the list” were not taken, the often extended escrow agreement expired and $540 million (the final payment of $2 million per family) was returned to Libya’s Central Bank – the third and final ‘trigger’ was a missed opportunity and simply did not occur.

Finally, at the end of July 2008, in one fell swoop, the United States Congress unanimously passed what began as Senate bill 3370 “The Libyan Claims Resolution Act,” which provided for the settlement of all remaining claims against Libya for a sum certain in exchange for a restoration of the protection of Libya and Libyan assets originally afforded by the Foreign Sovereign Immunities Act. Payments under this act were finalized in early November 2008 – nearly 20 years since the terrorist bombing of Pan Am flight 103 over Lockerbie Scotland on Dec. 21, 1988. Each of the families received $10 million.

In the Fall of 2008, after all the settlement money was finally paid, I received what was to be a final letter from one of the families. “You persevered for us. We believe you are ‘one of the good guys’. God bless you.”.Needless to say it was I who had been blessed with the litigation experience of a lifetime.

Read McCaffrey is a fellow of the American College of Trial Lawyers and is senior counsel at Rasco Klock Perez & Nieto.