Maybe the direct correlation will be observed between insulin resistance and free fatty acids. The latter induce insulin resistance, that is why such correlation may be observed.

But how can hypelipidemia interlinked with diabetes excluding gluconeogenesis.

Why only gluconeogenesis? The whole insulin signalling cascade is affected (the proposed mechanism of FFA-induced alteration of IRS-1 tyrosine phosphorylation) leading to increased glycogenolysis, decreased glycogen synthesis, impaired glucose oxidation etc. Activation of PKC by diacylglycerols also leads to impaired insulin signalling.

The critical review of possible mechanism is published:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2995547/