* Fallen Libyan leader, son interred in secret spot -- NTC
* Fugitive Saif al-Islam said to be near border crossing (Recasts with Gaddafi buried, changes dateline)
By Barry Malone
TRIPOLI, Oct 25 Ousted Libyan leader Muammar Gaddafi and his son Mo'tassim were buried on Tuesday in a secret desert location, a National Transitional Council (NTC) official said, ending a wrangle over their rotting corpses that led to fears for Libya's stability.
With their Western allies uneasy that Gaddafi was roughed up and shot after his capture on Thursday, NTC forces had put the body on show in a cold store while they argued over what to do with it, until its decay forced them to close the doors on Monday.
"Gaddafi and the son, Mo'tassim, were buried at dawn in a secret place with proper respects paid. We will release more details officially later," a senior interim government official told Reuters.
A military official from the town of Misrata, where the corpses had been on public display in a meat locker, confirmed the burials.
The killing of the 69-year-old in his home town of Sirte ended eight months of war, finally ending a nervous two-month hiatus since the NTC's motley forces overran the capital Tripoli.
But it also threatened to lay bare the regional and tribal rivalries that present the NTC with its biggest challenge.
NTC officials had said negotiations were going on with Gaddafi's tribal kinsmen from Sirte and within the interim leadership over where and how to dispose of the bodies, and on what the Misrata leaders in possession of the corpses might receive in return for cooperation.
"No agreement was reached for his tribe to take him," another NTC official told Reuters.
With the decay of the body forcing the NTC leadership's hand, it appeared to have decided that an anonymous grave would at least ensure the plot did not become a shrine.
An NTC official had told Reuters several days ago that there would be only four witnesses to the burial, and all would swear on the Koran never to reveal the location.
NTC fears that Gaddafi's sons might mount an insurgency have been largely allayed by the deaths of two of those who wielded the most power, military commander Khamis and Mo'tassim, the former national security adviser.
Mo'tassim was captured along with his father in Sirte and killed in similarly unclear circumstances. Khamis was killed in fighting earlier in the civil war.
SAIF AL-ISLAM "NEAR BORDER"
An NTC official said Gaddafi's long-time heir-apparent Saif al-Islam was in the remote southern desert and set to flee Libya, with the NTC powerless to stop him.
"He's on the triangle of Niger and Algeria. He's south of Ghat, the Ghat area. He was given a false Libyan passport from the area of Murzuq," the official added.
He said Muammar Gaddafi's former intelligence chief Abdullah al-Senussi who, like Saif al-Islam, is wanted by the International Criminal Court, was involved in the matter.
"The region is very, very difficult to monitor and encircle," he said. "The region is a desert region and it has ... many, many exit routes."
The death of the fallen strongman allowed the NTC to touch off mass rejoicing by declaring Libya's long-awaited "liberation" on Sunday in Benghazi, the seat of the revolt.
But it also highlighted a lack of central control over disparate armed groups, and the jockeying for power among local commanders as negotiations begin in earnest to form an interim government that can run free elections.
"Leaders from different regions, cities, want to negotiate over everything -- posts in government, budgets for cities, dissolving militias," said one senior NTC official in Tripoli, though he defended this as a healthy expression of freedom.
"Is that not democracy?" he asked. "It would be unusual if they did not (negotiate) after Muammar favoured only a few places for 40 years. There is no reason why it cannot be peaceful."
In Misrata, Libya's long-besieged third city, whose war leaders want a big role in the peace, fighters handing out surgical masks on Monday against the stench were still ushering hundreds of sightseers into the chilled room where the bodies of Gaddafi, his son Mo'tassim and his former army chief lay on the floor, their flesh darkening and leaking fluids.
Officials at one point declared the show was over, closed the gates and started turning people away. "That's enough," said one of the guards. "He's been causing us as much trouble dead as he did alive." But within an hour, there was a change of plan as dozens more sightseers arrived and were shown in.
The killings near Sirte, after mobile phone video footage was taken showing the captive Gaddafi being beaten and mocked by fighters apparently from Misrata, are also a matter of controversy -- at least outside Libya. The United Nations human rights arm has joined the Gaddafi family in seeking an inquiry.
NTC chairman Mustafa Abdel Jalil told a news conference on Monday that the NTC had formed a committee to investigate.
He also indicated that the interim authorities still held to an official line that Gaddafi may have been killed in "crossfire" with his own men, a view many NTC officials themselves seem ready to discount.
"Those who have an interest in killing him before prosecuting him are those who had an active role with him," said Abdel Jalil, who like many of the new leadership held positions of authority under Gaddafi.
Adding to concerns about Libya turning over a new leaf on respect for individuals, New York-based Human Rights Watch called on the NTC to probe an "apparent mass execution" of 53 people, apparently Gaddafi supporters, whom it found dead, some with their hands bound, at a hotel in Sirte.
Few Libyans seem troubled either about how Gaddafi and his entourage were killed or why their corpses were displayed for so long in what seemed a grim parody of the lying-in-state often reserved for national leaders.
"God made the pharaoh as an example to the others," said Salem Shaka, who was viewing the bodies in Misrata on Monday.
"If he had been a good man, we would have buried him. But he chose this destiny for himself." (Reporting by Taha Zargoun in Sirte, Barry Malone and Jessica Donati in Tripoli, Rania El Gamal and Tim Gaynor in Misrata, Christian Lowe, Jon Hemming and Andrew Hammond in Tunis, Hamid Ould Ahmed in Algiers, Samia Nakhoul in Dubai and Matt Falloon in London; Editing by Alistair Lyon; Writing by Alistair LyonAlastair Macdonald and Kevin Liffey; Editing by Mark Heinrich)