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SETTLEMENT of a libel action brought by international businessman Said Mohammed Ayas against the Independent on Sunday was announced in the High Court on Tuesday.

Mr Ayas accepted "very substantial" undisclosed libel damages over a "seriously defamatory" article in the Independent on Sunday. The report, published in November 1994 under the headline "Aitken friend in FBI probe", stated that a company belonging to Mr Ayas, a friend and associate of Jonathan Aitken, was investigated by the FBI when the Iran-Contra scandal broke in 1986.

It said it was one of two companies run by business associates of Mr Aitken which had allegedly been involved in arms deals investigated by the American authorities for possible violations of US criminal law.

The report stated that in December 1986 US government investigators asked Switzerland to freeze the bank accounts of a number of companies under investigation for possible links to the Iran-Contra diversion of funds.

The Independent on Sunday accepted there was no truth to the allegation whatsoever and that neither Mr Ayas nor any of the companies controlled by him had ever been involved in the illegal sale of arms. The company named was formed solely for the purpose of acquiring property in London. It never traded and had no bank account in Switzerland or elsewhere.

Neither the company nor Mr Ayas had any connection with the Iranian arms deal and they had not been investigated by the FBI. Similar allegations made in the international press in 1986 led to apologies being given by all of the newspapers concerned.

Miss Penelope Cooper, solicitor for Newspaper Publishing plc and journalists Peter Victor and Peter Koenig, said they apologised to Mr Ayas for publishing the allegations and to Mr Aitken for connecting him with them. They accepted that the allegations were wholly untrue and there was no justification for the attack on Mr Ayas's good reputation and integrity. They had agreed to pay Mr Ayas damages and his legal costs.