Former Dutch Prime Minister Ruud Lubbers revealed in early August 2005 that the Netherlands knew of Khan stealing nuclear secrets but let him go on two occasions after the CIA expressed their wish to continue monitoring his movements.
*cough*
Khan remains an extremely popular figure in Pakistan. He is known as an outspoken nationalist and for his belief that the West is inherently hostile to Islam; in Pakistan's strongly anti-American climate, tough action against him poses political risks for General Musharraf, who already faces accusations of being too pro-American. An additional complicating factor is that few believe that Khan acted alone and the affair risks gravely damaging the Pakistani army, which controlled the nuclear programme and of which Musharraf is still the commander-in-chief. The same investigation also exposed South African businessman Asher Karni as having sold nuclear devices to Khan's associates. Karni is currently in US prison, awaiting trial.
It is widely believed that the reason Khan was pardoned(and not executed as was the case with a previous Pakistani leader Zulfikar Ali Bhutto) was because he had information hidden overseas with people he could trust, that would undermine or embarrass the current leadership.
U.S. reaction to the pardon
The United States government decided to leave the fate of Khan in the hands of General Musharraf, imposing no penalties on the Pakistani government or on individuals.
Officials explained that in the War on Terrorism it was not their goal to denounce or imprison people, but "to get results."
The White House chose not to sanction Pakistan or to demand an independent investigation of the Pakistani military.
"It's just another case where you catch more flies with honey than with vinegar," an official explained.
However, in a speech to the National Defense University on February 11, 2004, U.S. President George W. Bush proposed to reform the International Atomic Energy Agency: "No state under investigation for proliferation violations should be allowed to serve on the IAEA Board of Governors -- or on the new special committee. And any state currently on the Board that comes under investigation should be suspended from the Board. The integrity and mission of the IAEA depends on this simple principle: Those actively breaking the rules should not be entrusted with enforcing the rules." <4>
http://en.wikipedia.org/wiki/Abdul_Qadeer_Khan