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Lecter is dead. The old master would probably know his daughter's magic enough to detect her interference. Minerva needed to keep Sting (and possibly Rogue) in line and blackmailing him with the "return" of his friend is the only way she could do that based on the circumstances.
She could have returned Lecter there and then, proving herself really different from her father and earning Sting's gratitude. But she chose to be a jerk about it. Maybe it comes naturally to her family, or she believed that Sting would leave once he got Lecter, or that he wouldn't fight as hard if Lecter was safe (this one is supported by her words), or Lecter is dead.
Losing the two dragon slayers now would probably kill Sabretooth's chances in the tournament. Whether Lecter is alive or not, Minerva seems like the sort who'll keep him where he is so that Sting will keep doing what she says.
Or is that too cynical for Fairy Tail?