ISLAMABAD, Pakistan — A murder case against an American CIA contractor that had threatened already troubled U.S.-Pakistani relations came to an abrupt end Wednesday after $1.4 million in "blood money" was paid to the families of the two men he was accused of killing.
A Pakistani court ordered Raymond Davis' acquittal after the families agreed to forgive him. Davis, who'd been in custody since January, immediately left Pakistan. The families of the dead men were secretly relocated inside Pakistan as part of the agreement, Pakistani officials said.
Under the court-ordered release, Davis neither admitted his guilt nor conceded that he didn't enjoy diplomatic immunity, a major point of contention between the U.S. and Pakistan, according to his lawyer and a senior Pakistani official.
The U.S., however, agreed as part of the settlement to notify Pakistan's Inter-Services Intelligence agency of all CIA personnel in the country. The ISI apparently was unaware of that Davis, officially an administrative officer at the U.S. consulate in Lahore, actually worked for the CIA when he killed the two men, whom he said were trying to rob him.
Davis, a former U.S. Special Forces soldier, was hired by the CIA to provide security for CIA officers involved in a top-secret operation in Lahore against Lashkar-e-Taiba, a Pakistani Islamic extremist organization that was behind the 2008 terrorist attack on Mumbai and has had close ties to the ISI in the past. Pakistan has said those ties were cut in 2002 when the organization was outlawed.
It was unclear where the money for the payment to the families came from. U.S. officials insisted that Washington didn't pay, which suggested that the Pakistani government had, initially anyway, picked up the tab.
Secretary of State Hillary Clinton told reporters in Cairo that "The United States did not pay any compensation." But an official with knowledge of the case said the U.S. would likely contribute at least something to the payment. "It stands to reason that the United States will man up and will contribute to the settlement," the official, who requested anonymity to speak freely, said.
Clinton thanked the families for agreeing to pardon Davis. "We are very grateful for their decision," she said.
The case had led to a tense standoff between Islamabad and Washington, important allies in the fight against Islamic extremism. Washington insisted that Davis was entitled to diplomatic immunity and couldn't be charged. Pakistan said he wasn't a diplomat.
The dispute deepened after it was learned that Davis was working for the CIA. The issue inflamed already anti-American public opinion in Pakistan, and there were small demonstrations Wednesday in several Pakistani cities over the outcome.
How the CIA will work with the new agreement was unclear. The CIA's operations in Pakistan are closely guarded, and it's hardly a secret that the CIA and ISI, which has ties to the Afghan Taliban, are deeply suspicious of one another.
The sharia, or Islamic law, concept of "bloody money" leading to a court acquittal is incorporated in Pakistan's penal code, Davis' counsel, Zahid Hussain Bokhari, told McClatchy. Washington is often highly critical of the application of sharia.
The deal came after complex talks that involved the CIA, ISI, the top military commands of the two countries, as well as the State Department, Senate Foreign Relations Committee Chairman John Kerry, D-Mass., and Pakistan's Ministry of Foreign Affairs.
"ISI and CIA are working on ensuring that their relationship remains on track and there are no future undeclared CIA operations in Pakistan that result in jeopardizing bilateral relations," said a senior Pakistani official, who spoke on the condition of anonymity because of the sensitivity of the issue.
The outcome seemed to be face-saving for all sides, with the Pakistani government able to say that the courts had let Davis off, while Washington didn't concede its stance on diplomatic immunity. The families have ended up wealthy by Pakistani standards.
Pakistan receives around $3.5 billion a year in civilian and military aid, an assistance program that some in Congress had demanded should be cut off until Davis was freed.
While Pakistan and the U.S. co-operate closely against al Qaida, the relationship is delicate as Washington has consistently accused Islamabad of providing support for the insurgents in Afghanistan.
The U.S. also is increasingly concerned about the activities of Lashkar-e-Taiba.
The ISI used the Davis issue to put pressure on Washington, insisting that Davis didn't have immunity and whipping up the Pakistani media, overriding President Asif Ali Zardari, who seemed prepared to accept that Davis was exempt from prosecution.
Washington hit back, even disinviting Pakistan from a summit in Washington last month that was supposed to be a tripartite meeting between the U.S., Pakistan and Afghanistan.
"We want to be treated as equal partners, as allies, with trust and respect," said a Pakistani security official, who couldn't be named, as he wasn't authorized to discuss the issue publicly.
Bokhari said that the families of the dead men came to the court hearing, which was held behind closed doors inside a jail in Lahore, and certified that they had received the money and were agreeing to the "compromise" of their own free will.
Each family received 60 million Pakistani rupees, about $700,000, he said.
"There was an agreement between the accused and the complainant," Bokhari said. "Who was behind the curtain, I can't say."
(Special correspondent Shah reported from Islamabad; Landay reported from Washington.)
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