The embarrassing reversal means that the US has virtually no evidence to support its claim that the missile attack was a strike against terrorism. Most of those who have investigated the case have concluded that the US acted on faulty intelligence and that key procedures were overriden by officials in the White House. The affair is already the subject of congressional inquiries and may result in the departure of some senior White House officials.
America launched cruise missiles against targets in Afghanistan and Sudan in August last year after bomb attacks on its embassies in Nairobi and Dar es Salaam. It blamed the bombings on Osama bin Laden, the former Saudi who it accuses of backing many attacks on US targets. It said that the pharmaceutical plant in Khartoum was linked to Mr bin Laden and was used to produce chemical weapons.
The US was forced to admit within hours that the plant was not a Sudanese government facility, but a private factory belonging to Salah Idris, a Saudi businessman. But it then said that Mr Idris was himself linked to terrorism and to Mr bin Laden. It froze all of his bank accounts, including money held at Bank of America in London. Yesterday, with no public announcement or fanfare, it unfroze the accounts, admitting that no evidence existed to accuse Mr Idris.
Mr Idris hired Akin, Gump Strauss, Hauer & Feld, a top Washington law firm, to press his case. He sued Bank of America and the US government, and hired Kroll Associates, the top private investigators, to clear him. Kroll found no evidence of any links between Mr Idris and Mr bin Laden. Yesterday, the US was due to reply to Mr Idris's law suits, but instead chose to retreat and unfreeze the accounts. "Today's order lifting all restrictions on the Bank of America accounts also effectively removes any suggestion that Mr Idris has, at any time, maintained a relationship with Osama bin Laden or any terrorist group or organisation," said Akin, Gump in a statement.
Spokesmen for Mr Idris said they were "jubilant" but that there could still be a law suit to recover compensation.
"I am grateful that the United States has taken the honourable course and has corrected, in part, the serious harm that has been done to my family and our good name," said Mr Idris yesterday from Sudan. "While I understand that the United States must wage a vigorous fight against terrorism, in this case a grave error has been made."
Britain never supported the idea that Mr Idris had links to Mr bin Laden, and he was permitted to enter and leave London (where he maintains a flat) freely.
The widespread view outside the US was that the White House had insufficient evidence for the attack.