U.S. News & World Report, 03-09-1992, pp p. 44.

On a bright, clear day in Washington in the spring of 1990, just weeks after investigators established that Libyan agents had planted the bomb that blew up Pan Am Flight 103 over Scotland, a well-dressed woman sat down in a secure government office with a handful of high- ranking U.S. officials and raised a subject her hosts wanted absolutely nothing to do with. The woman, the U.S. liaison for Britain's MI-5 security service, spoke the king's English and was not inclined to offend. Her question could hardly have been more unwelcome, however: The woman wanted to know whether Frank Terpil, a former CIA agent- cum-explosives expert and one of America's most sought-after fugitives, could have helped the Libyan agents build the bomb that blew up the plane that killed 270 people. ``Talk about the proverbial skunk at the garden party,'' says one U.S. official. ``Golly.''

Traveling man. Today, with the United Nations Security Council prepared to impose sanctions on Libya unless Col. Muammar Qadhafi turns over the two agents who have been indicted for the bombing, there are more questions than answers about the possibility of Frank Terpil's involvement in the Lockerbie murders. British and American officials have told U.S. News that there is circumstantial evidence that could link Terpil to the Pan Am bombing, but Terpil is not currently a target of the investigation. A low-level courier and communications expert with the Central Intelligence Agency from 1965 to 1972, Terpil was charged in 1980 along with Edwin Wilson, a freewheeling CIA undercover agent, with selling thousands of pounds of C-4 plastic explosive to Libya. Malleable, C-4 has long been a favorite of terrorists. The Wilson- Terpil affair was one of the CIA's blackest scandals.

Frank Terpil had developed the Libya connection through Ahmed Gaddaf Addam, Muammar Qadhafi's first cousin who is now the Libyan ambassador to Egypt. Though Terpil had fallen out of favor in Libya in the mid- 1980s, he is believed to have traveled there since then, and some U.S. officials say that the self-taught explosives expert may have helped Qadhafi's agents, not known for their great technical expertise, confect the complex bomb that blew up the Pan Am jet. British authorities say they would like to pursue that line of inquiry, but U.S. officials maintain--as they have since the MI-5 liaison officer first brought the matter up nearly two years ago--that without more hard evidence there is no reason to reopen the Terpil file. ``It was a real messy business,'' says one U.S. official. ``No one is eager to get back into it.''

The Terpil connection is particularly interesting now given the pressure being applied to Libya by the United Nations. Virtually no one expects Qadhafi to release the two Libyan agents, Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, to American authorities, as the U.N. is demanding. Both men could implicate higher-ups in the Pan Am bombing, bringing still more pressure on Qadhafi. If the Libyan leader were able to deliver Terpil, however, U.S. officials say, it would ease the diplomatic pressure on him considerably.

So where is Frank Terpil? It has been widely reported that he has spent much of his time as a fugitive living with his wife in Cuba. But according to law-enforcement records examined by U.S. News and interviews with American intelligence and police officials, the former CIA man has traveled the globe with impunity. Besides his frequent visits to Libya and Cuba, bank records and wire transfers show that Terpil had extensive business interests throughout Southeast Asia, extending through the Philippines, Malaysia and Thailand. Other evidence indicates that he lived for extended periods of time in Singapore and Kuala Lumpur. A wealthy man thanks to the sale of C-4 explosives to Libya, Terpil continued to earn large sums of money as a fugitive, U.S. officials believe, by trafficking in weapons and explosives.

In 1987 and 1988, police records and interviews show, Terpil moved regularly through Eastern Europe, traveling on diplomatic passports provided by the communist governments of Czechoslovakia and Romania. The presumption, says a U.S. official who has been closely involved with the Terpil investigation, is that ``Frank was doing dirty deals' ' for both governments.

In recent years, the trail has gone cold. With the collapse of the communist regimes of Eastern Europe, Frank Terpil has fewer and fewer places to hide. ``My guess is he's in Cuba,'' says a senior U.S. official. ``But if it's Libya, my God, it gives Qadhafi a hell of an interesting card to play, doesn't it?''