Aisha Gaddafi, 37, who gave birth to a daughter just days after fleeing to Algeria in 2011, has been granted asylum in Oman along with some other family members, The Telegraph reported.
Aisha has an arrest warrant against her name after fleeing Libya when her father was deposed and then killed two years ago after 42 years in power.
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She was accorded a presidential residence in the south of the country.
Algeria's ambassador to Libya confirmed last month that Col Gaddafi's widow and three of his children including Aisha, had left Algeria "a long time ago" without giving further details, the report said.
It has now emerged that Algerian authorities lost patience with Aisha, a onetime UN Goodwill Ambassador, after she kept vandalising furniture and attacking guards out of rage over her father's fate.
"She ended up blaming Algeria for many of her problems, and also began starting fires in the house," the paper quoted a government source in Algiers as saying.
She started fires inside the presidential palace she was given, attacked her army bodyguards and destroyed a portrait of the Algerian President, Abdul Aziz Bouteflika, the local newspaper Ennahar reported.
Aisha, Gaddafi's widow, Safia, and sons Mohammad and Hannibal, as well as their children, have all been living there since October 2012, the report said.
They have been granted sanctuary on "humanitarian grounds" and their expenses are reportedly covered entirely by the Omani government, it said.
Aisha is Gaddafi's only biological daughter, and his outspoken supporter throughout the civil war. "He is my remedy against pain and my fortress against grief," she had said.
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