TRIPOLI/LONDON, (Reuters) – Britain dismissed suggestions of a link between the Lockerbie bomber’s release and energy deals with Libya on Saturday, after Libyan leader Muammar Gaddafi embraced the man and thanked Britain for its help.

“The idea that the British government, the Libyan government, would sit down and somehow barter over the freedom or the life of this Libyan prisoner and make it all part of some business deal…it’s not only wrong, it’s completely implausible and actually quite offensive,” British Business Secretary Peter Mandelson said.

London and Washington have condemned the “hero’s welcome” given to the dying Abdel Basset al-Megrahi on his return home after being freed from a life sentence in a Scottish jail on compassionate grounds.

Prime Minister Gordon Brown’s office issued a copy of a letter he wrote to Gaddafi on Aug. 20 expressly asking him to refrain from a “high-profile” welcome.

Gaddafi met Megrahi on Friday, embracing him and getting a kiss on the hand in return. The Libyan leader expressed gratitude to Brown and Queen Elizabeth.

“This step is in the interest of relations between the two countries…and of the personal friendship between me and them and will be positively reflected for sure in all areas of cooperation between the two countries,” he told Libyan TV. His son Saif al-Islam went further, saying that whenever he had met British officials to discuss business, the issue of Megrahi’s release was a condition of any deal being struck.

Mandelson said he had met Gaddafi’s son twice in the past year and the issue of the Lockerbie bomber had been raised both times, but his release was not tied to business deals.

“It’s not only completely wrong to make any such suggestion or insinuation, it’s also quite offensive,” he told reporters.

Megrahi, 57, is the only person convicted of the bombing, in which a Pan Am jet carrying 259 passengers — most of them American — was blown up over Lockerbie in Scotland in December 1988, killing all those on board and 11 people on the ground.

After years of wrangling and sanctions, Libya handed the former intelligence agent over for trial and he was sentenced by a special Scottish court sitting in the Netherlands in 2001. He was freed on Thursday because of terminal prostate cancer.

“In all British interests regarding Libya, I always put you on the table,” Saif al-Islam’s newspaper quoted him as telling Megrahi on his return to Libya.

“All the visits of the ex-Prime Minister Blair and the big secret and public work that all the parties entered into was carried out in order to release you. The exploitation of British-Libyan political and trade interests was always done with the aim of releasing Abdel Basset al-Megrahi.”

European governments including Britain’s are lobbying hard for business in Libya as it emerges from years of sanctions. Oil companies such as BP and Shell are among several British firms hoping to make big profits in the desert country.

Britain’s Foreign Office flatly denied any link.

“No deal has been made between the UK government and Libya in relation to Megrahi and any commercial interests,” a spokesman said, adding the release was Scotland’s decision.

More than 1,000 Libyans gathered at an airport in Tripoli on Thursday to welcome Megrahi home, cheering and waving national flags, despite the fact relatives of the American victims said they had received assurances there would be no hero’s welcome.

In his letter to Gaddafi, addressed “Dear Muammar”, Brown said a “high-profile return would cause further unnecessary pain for the families of the Lockerbie victims. It would also undermine Libya’s growing international reputation”.

Megrahi said in an interview with Britain’s Times newspaper published on Saturday he would present new evidence before he died exonerating him of the bombing. He dismissed the international furore over his release, saying U.S. President Barack Obama should know he would not be doing anything apart from going to hospital and waiting to die. Doctors say he may have less than three months to live.

“My message to the British and Scottish communities is that I will put out the evidence (to exonerate me) and ask them to be the jury,” Megrahi said, without elaborating.

Gaddafi likened the shock of the Lockerbie relatives at Megrahi’s release to that felt by Libyans in 2007 when Bulgarian medics, condemned to death for infecting Libyan children with HIV, were sent back to Bulgaria to serve life terms there, only to be immediately released.

Libya handed the nurses over to Bulgaria under heavy pressure from the West, advancing the long-isolated north African country’s efforts to emerge from diplomatic isolation.

“The world was shocked and surprised that the condemned team were released before they descended from their plane at the airport in Bulgaria,” he said. “They received them as heroes.”