The Federal Government's counsel told the court that he was instructed by the Attorney-General of the Federation to withdraw charges against the suspect.
The government's lawyer also told the court that he was asked to withdraw the suit by the Nigeria's Attorney General, Mohammed Adoke.
The government had accused Mohammed of receiving stolen property worth N100.38 billion. The money is believed to have been stolen by the late dictator when he was the Nigerian head of state from 1993 to 1998.
The Office of the Attorney-General of the Federation, AGF, had on behalf of the Federal Government, filed a nine-count charge against Mohammed.
On Wednesday, the Federal Government's counsel, Daniel Enwelum, made an oral application asking the court to withdraw the criminal charges against the suspect. He also applied to discontinue the case.
Mr. Enwelum told the court that he was instructed by Mr. Adoke to withdraw the charges. He argued that the application became necessary in view of emerging facts and circumstances of the case. He did not list the circumstances and new facts that necessitated the withdrawal. The AGF's spokesperson, Ambrose Momoh, when contacted, explained that he was not in the office and it was only Mr. Adoke that could give such reasons.
The court, thereafter, discharged Mohammed. The judge also granted the application for discontinuation of trial, which was not opposed by the defense counsel, Abdullahi Haruna.
In the suit, the AGF alleged that Mohammed had received property worth N100.38 billion between 1995 and 1998, which was acquired unlawfully by the father.
Several billions of Naira stolen by the military dictator and kept in foreign countries have been recovered by the federal government. His son, Mohammed, played a major role in the Abacha administration and is believed to have helped his father launder a lot of the stolen funds.
The federal government recently asked the United States to return almost $500 million recently frozen by the U.S. as part of funds stolen by the late dictator.
Acting Assistant Attorney General Mythili Raman of the U.S. Justice Department's Criminal Division, and Assistant Director in Charge, Valerie Parlave, of the FBI's Washington Field Office made the announcement.
"General Abacha was one of the most notorious kleptocrats in memory, who embezzled billions from the people of Nigeria while millions lived in poverty," said Acting Assistant Attorney General Raman. "This is the largest civil forfeiture action to recover the proceeds of foreign official corruption ever brought by the department. Through our Kleptocracy Initiative, we are seizing the assets of foreign leaders who steal funds that properly belong to the citizens they serve. Today's action sends a clear message: we are determined and equipped to confiscate the ill-gotten riches of corrupt leaders who drain the resources of their countries."
After the U.S. announcement, Nigeria applied to the American court that the money be returned.
In the Asset Forfeiture action, the Federal Government through its counsel, Godson Nnaka and Jude Ezeala, asked the court to "enter a decree ordering the forfeiture of the defendant [Abacha] property to the Federal Republic of Nigeria."
The government also wants the court to "grant an order of forfeiture for liquidation of all forfeited/seized assets/defendant property and conversion of all proceeds to liquid fluids denominated in the United States dollar."
Further, the counsel asked the court to "enter an order directing the immediate return and transfer of the defendant property, in liquidated proceeds denominated in United States currency bank to Nigeria less Attorney fees, cost and expenses."
Quoting the World Bank, the counsel argued that 70 per cent of Nigeria's 170 million people are "extremely poor people."
"For the most part of its history, Nigeria has been ruled by a string of brutal military dictators who oppressed the citizens, suppressed all forms of dissent or opposition and systematically institutionalised graft and corruption in the country."
The federal government's description of late Mr. Abacha as a "brutal military dictator", came few weeks after the same government honoured him as an "Outstanding Promoter of Unity, Patriotism and National Development."
Mr. Abacha was among the 100 people honoured by the Nigerian government as part of the centenary celebrations.