Palestinian Charity Sues British Jewry Over Terror Slur.

The Board of Deputies report followed a U.S. decision published in August 2003 banning Interpal activity in the U.S. on grounds of suspicion of helping Hamas. The U.S. classified Interpal as a "specially designated global terror organization." The British commission responsible for nonprofit organizations opened an inquiry that led to a freeze on Interpal activity in Britain.

The case was closed in September 2003 and Interpal resumed activity after the commission reached the conclusion there was no evidence-linking Interpal to Hamas. The commission's report said the U.S. did not provide any evidence of the accusations leveled against Interpal.

Security sources told Ha'aretz the FBI had reservations about exposing classified intelligence material or handing over documents to the British commission, for fear it would be leaked to hostile elements.

Israel is furious about the decision to allow Interpal to continue operations, and Foreign Minister Silvan Shalom demanded at meetings with British officials that they shut down the fund. The British said they couldn 't take action because the commission is an independent agency, not subordinate to the government.