Five-figure payout for al-Qa'ida libel

The BBC confirmed last night that it had paid a five-figure sum to a director of an Omani diamond firm after it had falsely linked him with Osama bin Laden's al-Qa'ida terrorist organisation.

The corporation said that an out-of-court settlement had been reached with Kamal Khalfan after he was wrongly branded a "convicted terrorist" and a "front man for [Osama] bin Laden".

The libel was the result of a confusion over two men with similar names, one of whom was a convicted terrorist.

Lawyers from Mischon de Reya, acting for the diamond company Oryx, are carrying on with a separate £6m libel action launched on behalf of the firm against the BBC and David Shukman, the reporter who broadcast the story.

The BBC issued a statement last night which said: "Kamal Mahfoodh Khalfan al-Obaidani and the BBC have settled the court proceedings between them relating to the broadcasts of a special news report in October 2001 about alleged links between Osama bin Laden and the diamond trade.

"The BBC has already apologised unreservedly to Mr Khalfan for errors contained in the report. A five-figure sum has been paid to Mr Khalfan to compensate him for any damage that he suffered as a result."

On 31 October last year, Shukman alleged in a report that Mr Khalfan, 62, was in jail for involvement in the 1998 bombings of two United States embassies in Africa. The report also implied that cash from the diamond firm was being channelled into Osama bin Laden's terrorist network.

But the reporter had confused the names of two men. The real culprit was 28-year-old Mohammed Khalfan, who is now serving a life sentence in the USA and who has no links with Oryx.