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PRETORIA, South Africa (CNN) -- A report by a British newspaper that South Africa had made an arms-for-oil deal with Libya was false and an attempt to sabotage the fledgling democracy, President Nelson Mandela said on Monday.

London's Sunday Telegraph reported that South Africa had concluded a secret $495 million deal to supply Libya with weapons and spare parts for its aging Mirage jet fighter and attack helicopters, in return for cut-price oil.

The newspaper said the deal was approved by Mandela himself.

"What is utterly disgusting about this article is that it is a pure fabrication invented by the newspaper and its unnamed sources," Mandela's office said in a statement.

The newspaper had reported that the alleged deal raised fears that Libya's Moammar Gadhafi may acquire details of South African chemical and biological weapons built during apartheid.

Mandela considers Gadhafi a loyal friend for his many years of opposition to South Africa's era of white-minority rule.

'A massive disinformation campaign'

Mandela's office said the newspaper's journalists had not sought comment from South African government officials before publishing the report.

"We are therefore compelled to conclude that those who elected to peddle these untruths are either part of a massive disinformation campaign against our new democracy, or they have allowed themselves to be used in such a campaign," the statement said.

Mandela's office denied he or any agencies of the government have entered into any discussions -- let alone concluded any deals -- with Libya on any arms-for-oil transactions.

The Sunday Telegraph did not give a date for the deal, which it said was negotiated by South African secret service officials.

Deal would violate U.N. sanctions

Any such deal would violate United Nations sanctions, imposed to pressure Libya into surrendering two Libyan suspects in the 1988 bombing of a Pan American jet over Lockerbie, Scotland, in which 270 people were killed.

Sanctions bar flights to Libya and arms sales to the North African nation.

While Mandela's office said South Africa abides by U.N. decisions regarding Libya, the Organization of African Unity agreed at a summit earlier this month that African countries would ignore the sanctions.

South Africa is a member of the OAU, which criticized Britain and the United States for refusing a deal under which the suspects would be tried in a third country.

"South Africa abides by decisions of the United Nations on the issue of Libya," the government said. "At the same time we are part of the resolutions of the OAU on how this matter should be resolved."

The Associated Press and Reuters contributed to this report.