A federal appeals court ruled yesterday that an Islamic charity was not libeled by news organizations that reported it was under investigation as a possible source of funds for terrorists.

The Chicago-based 7th Circuit Court of Appeals said a libel suit brought by the Global Relief Foundation against ABC, the Associated Press, the New York Times, the New York Daily News, and others, had no merit because the news accounts in question were basically correct.

“All of the reports were either true or substantially true recitations of the government’s suspicions about and actions against GRF,” Judge Ilana Rovner wrote. She observed that the news organizations never claimed that Global Relief was actually supporting terrorists. The news stories, which were published between September and November 2001, simply indicated that federal authorities had the group under active investigation.

The reports relied on unnamed sources to point the finger of suspicion at Global Relief. When the group filed its lawsuit in mid-November 2001, it appeared that the news organizations might have to expose their sources in order to defend themselves. However, one month later, the federal government raided Global Relief’s headquarters in Bridgeview, Ill., and seized all of the charity’s assets.

In 2002, the Treasury Department listed the group as a “specially-designated global terrorist.”

Lawyers for Global Relief, which is now defunct, have challenged the government’s actions in court. So far, they have been unsuccessful, though the litigation is continuing.

In its ruling yesterday, the appeals court said that Global Relief was wrong to suggest that the press should have remained silent about the inquiry until it had enough facts to prove that the charity was supporting terror.

“Whether the government was justified in its investigation or correct in its ultimate conclusion is irrelevant,” Judge Rovner wrote. Judges Terence Evans and Ann Williams joined in her opinion.

An attorney for Global Relief, Ashraf Nubani, said the ruling was not a surprise but that the press should not view it as a vindication.

“It doesn’t mean that the media didn’t go overboard,” he said. “They also participated in sort of crucifying this organization needlessly.”

The court noted that the FBI has asserted links between Global Relief and a former personal secretary to Osama bin Laden, Wadih el-Hage.

The FBI also claimed that an Arabic language newsletter published by the group said that donations were used for “equipping the raiders” and also “for the purchase of ammunition and food.”

In an interview yesterday, Mr. Nubani insisted that Global Relief’s purpose was strictly humanitarian. He said that before the American government put the group out of business, it was operating freely in Israel.

“If the Israelis had a problem with it, they wouldn’t have waited for the Americans to shut it down,” the attorney said. “It’s all political.”

Federal prosecutors have complained that the night before the 2001 raid on Global Relief’s offices, a reporter for the New York Times, Philip Shenon, tipped off the group to the planned search. The newspaper says the reporter was just following standard procedure to seek comment for a story.

In September, the Times filed a lawsuit against the Justice Department to prevent it from obtaining telephone records that could identify Mr. Shenon’s sources in the government. Prosecutors have asked a federal judge to dismiss the case, but they have agreed not to seek phone records until the judge rules.