The furore over the return of the convicted Lockerbie bomber to Libya has scuppered any chance of doing business in the country for several years, company bosses have warned.

“It’s a grade-A ****-up,” the chief executive of a large UK manufacturer said.

Abdul Baset Ali al-Megrahi was released on compassionate grounds by the Scottish Executive last month and the British Government has been dogged by questions over its role in the bomber’s release ever since.

Jack Straw, the Justice Secretary, has acknowledged that his decision to lobby the Scottish Executive to return al-Megrahi to Libya was driven in part by the Government’s desire to open doors for British businesses in the country.

However, the chief executives of leading British exporters have said that the “whiff of scandal” surrounding the al-Megrahi affair will make doing business in Libya difficult.

The chief executive of a large UK company said: “Gordon Brown has really messed this up. I’ve spent two years working on a deal with the Libyans, but you can kiss that goodbye now.

“Neither the Libyan nor British political establishment will go near us because of the whiff of scandal surrounding al-Megrahi. What a waste of time.” It is understood that the contract that this chief executive, who spoke confidentially, was working on was worth about £250 million and would have helped to secure the jobs of hundreds of British workers.

It was al-Megrahi’s terminal prostate cancer that secured his return to Libya, but the Government’s handling of the case has been criticised by the victims of the Lockerbie attack, which killed 270 people in 1988, by the American Government and now also by business.

“Let’s just say that this is so toxic that I wouldn’t want to be winning any sort of contract from Libya any time soon, no matter what the value,” a senior executive of one of Europe’s largest companies said.

Al-Megrahi received a 150-strong delegation of African politicians in a Libyan hospital yesterday and coughed repeatedly during a ten-minute meeting. Seated in a wheelchair and wearing a mask, the 57-year-old appeared extremely ill.

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