Trade and oil played a part in the decision to include the Lockerbie bomber in a prisoner transfer deal, Jack Straw has admitted.
Speaking to the Daily Telegraph, the UK justice secretary said trade was "a very big part" of the 2007 talks that led to the prisoner deal with Libya.
However, Mr Straw's spokesman accused the press of "outrageous" innuendo.
Scotland's Justice Secretary granted Abdelbaset Ali al-Megrahi compassionate release because he was terminally ill.
£550m oil deal
The 57-year-old was serving life in Greenock prison for the 1988 bombing of PanAm flight 103 over Lockerbie, which killed 270 people.
On Wednesday, Prime Minister Gordon Brown insisted there was "no conspiracy, no cover-up, no double dealing, no deal on oil" over his release.
But officials admit the prisoner transfer agreement (PTA) was part of a wider set of negotiations aimed at bringing Libya in from the international cold, and improving British trade prospects with the country.
"Libya was a rogue state," Mr Straw told the paper.
"We wanted to bring it back into the fold.