By Ghaith Shennib
TRIPOLI (Reuters) - Two former top associates of Libya's Muammar Gaddafi were acquitted on Monday of wasting public money, but remained in jail as part of a bigger investigation involving his spy chief and one of his sons.
Ex-foreign minister Abdel-Ati al-Obeidi and Mohammed Zwai, former head of the legislature, were accused of wasting funds by facilitating a $2.7 billion compensation payment to families of those killed in the 1988 Lockerbie plane bombing.
It was the first trial verdict on officials close to Gaddafi, who was overthrown and then killed in a 2011 uprising.
Libya's new rulers are keen to try his family members and loyalists to draw a line under his 42-year dictatorship, but human rights activists fret a weak central government and shaky rule of law mean legal proceedings will not meet international standards.
"The court has acquitted the defendants of all charges against them," the judge said, without giving further details.
Obeidi and Zwai stood silently behind bars as the verdict was read, while their family members shouted "God is Greatest".
However, Al Sadiq al-Sour, an official from the prosecutor general's office, told a news conference soon afterwards that the two would remain in detention.
"This case was a side case, they will be detained for investigation in a wider case," he said referring to a probe of war crimes and other alleged abuses by officials including Gaddafi's son, Saif al-Islam, and intelligence chief Abdullah al-Senussi.
"This is a major case that relates to many crimes that were committed on Libyan soil - the ordering of mass killings, sabotage, abuse of public funds."
"ALL DEFENDANTS TOGETHER"
Sour said that a trial involving Saif al-Islam, Senussi and others would begin in the first half of August: "This will be a big trial involving all the defendants together. Trying them individually will weaken the case."
Obeidi and Zwai were arrested nearly two years ago and their trial began in September. They were accused of arranging compensation for the families of those killed in the Lockerbie bombing to try to get them to drop claims against Libya.
The 1988 bombing of a PanAm flight over Lockerbie in Scotland killed 270 people. Libyan Abdel Basset al-Megrahi, who always denied involvement in downing the jet, was convicted of the bombing. He was released from jail in 2009 amid huge controversy in Britain and died of cancer last year.
Most but not all of the compensation was paid out by Libya on condition that U.N. sanctions against it were cancelled and U.S. trade sanctions lifted.
Hanan Salah, Human Rights Watch researcher for Libya, said: "In order for Libya to move forward in its quest to instate the rule of law, people responsible for crimes of the past must answer to them and be held accountable. While the wheels of justice seem to be moving, they are slow, and the cases of Obeidi and Zwai showcase that."
Saif al-Islam, also wanted by the International Criminal Court, is currently on trial in the western town of Zintan, where he has been held since his capture in November 2011.
That trial relates to charges that he gave information to an ICC lawyer last year that could endanger national security.
It was not immediately clear how or when he would be taken to Tripoli for the trial cited by the prosecutor general's office. Senussi has been in a Tripoli jail since he was handed over from Mauritania, where he was arrested last year.
(Additional reporting and writing by Marie-Louise Gumuchian; Editing by Mark Trevelyan)