Lucy Adams and Ian Ferguson in Tripoli

Colonel Muammar Gaddafi's son today reveals the inside story of how - and why - the man convicted of the Lockerbie bombing was released.

Speaking exclusively to The Herald at his home near Tripoli, Saif al Islam al Gaddafi disclosed the original prisoner transfer deal with the UK government was directly linked to talks on trade and oil.

However, he denied this had anything to do with the eventual release of Abdelbaset Ali Mohmed al Megrahi and said the mercy shown by the Scottish Government had transformed the traditional Arabic view of Britain as "crusaders" against Islam.

Mr al Gaddafi praised Kenny MacAskill, the Scottish Justice Secretary, who last week freed Megrahi on compassionate grounds, as "a great man", and said his decision had opened the way for future business.

In his first full interview since the international storm surrounding the release, Mr al Gaddafi apologised for any perception that the Libyan government had not done its best to contain the jubilant scenes that accompanied Megrahi's arrival in Libya, but said they could have been far more extensive and were emphatically not a "hero's welcome".

He also revealed that Megrahi, who was convicted of the murder of 270 people in the bombing of Pan Am flight 103 over Lockerbie, will not be taking part in the 40th anniversary celebrations of Colonel Gaddafi coming to power next week.

In what he said was his most important message, Mr al Gaddafi said: "Lockerbie is history. The next step is fruitful and productive business with Edinburgh and London. Libya is a promising, rich market and so let's talk about the future. There is no reason for people to be angry. Why be so angry? This is an innocent man who is dying."

His remarks are likely to increase the pressure on Gordon Brown to explain both the UK Government's role in the negotiations and his personal views on Megrahi's release.

Mr al Gaddafi said that the infamous "deal in the desert", which saw an agreement signed between Tony Blair and Libya allowing prisoner transfers, specifically targeted Megrahi - although his name was never mentioned.

He said: "For the last seven to eight years we have been trying very hard to transfer Mr Megrahi to Libya to serve his sentence here, and we have tried many times in the past to sign the PTA (prisoner transfer agreement) without mentioning Mr Megrahi, but it was obvious we were targeting Mr Megrahi and the PTA was on the table all the time.

"It was part of the bargaining deal with the UK. When Tony Blair came here we signed the agreement. It is not a secret. But I want to be very clear to your readers that we didn't mention Mr Megrahi. People should not get angry because we were talking about commerce or oil. We signed an oil deal at the same time. The commerce and politics and deals were all with the PTA."

Mr al Gaddafi, who is convinced of Megrahi's innocence, has led the negotiations for the Libyan Government with the UK and Scotland and was waiting to greet Megrahi on the Afriqiyah Airbus at Glasgow airport that flew him home.

On the flight to Tripoli, Mr al Gaddafi spoke briefly on camera and was later criticised for suggesting that, in all commercial contracts for oil and gas with the UK, Megrahi's transfer was on the "negotiating table". However, Mr al Gaddafi told The Herald there had been no quid pro quo and that his comments had been misunderstood partly because people do not understand the difference between the PTA and compassionate release.

"This the PTA was one animal and the other was the compassionate release," he said. "They are two completely different animals. The Scottish authorities rejected the PTA. It did not work at all, therefore it was meaningless. He was released for completely different reasons."

Ultimately, however, he said the work to secure prisoner transfer of Megrahi failed as it was rejected by Mr MacAskill. Instead, the minister chose to release Megrahi from Greenock prison early on compassionate grounds because he is terminally ill and medical reports suggested he had less than three months to live.

Megrahi, 57, was serving a 27-year sentence at HMP Greenock for the bombing of Pan Am 103 in December 1988. He has consistently pleaded his innocence and his second appeal began in April, but his diagnosis with terminal prostate cancer meant he was unlikely to live to see its conclusion.

Mr al Gaddafi said: "It was a shock and surprise for Libyan society that he was freed on compassionate grounds and it showed the Libyans that the British and Scottish are civilised people because the perception here is that they are crusaders and they hate us and Islam and hate Arabs and they are not tolerant at all of us. But this act has touched the minds of many people and shown that they are merciful and more civilised than people had thought.

"That is why, for the first time in our history, that Libyan citizens have been out in the streets waving a different flag - the Scottish flag. This is a unique event for us. This act changed the minds of many people."

Mr Brown this week spoke of his "revulsion" at what the media described as a "hero's welcome" when Megrahi was met by his family and hundreds of Libyans waving flags, including Saltires.

Local news reports said there were thousands of people present but Mr al Gaddafi said the Libyans had not organised an official welcome party for Megrahi and that there were only a couple of hundred of his friends and family. He also expressed regret at the response from the US and UK to Megrahi's release and how he was met when he arrived in Tripoli.

Mr al Gaddafi said: "There was no official celebration, no guards of honour, no fireworks and no parade. We could have arranged a much better reception.

"The US knew a long time ago that Mr Megrahi would probably be released and asked us to keep the reception low-key. For the last three or four weeks it has become obvious that he might have been released, so it was not a complete surprise for them.

"Most of the families of the victims in Scotland have written to us to say they are pro the decision and more than 20% of the American families say they have no objection. Even some of the families are in favour but different parties - politicians - may be trying to use it to their own advantage." TO READ THE FULL STORY ONLINE - CLICK HERE...