The Charity Commission has concluded that there is no evidence that the charity Iqra, whose trustees included two of the suicide bombers who carried out the London terrorist attacks on 7 July 2005, funded the attacks.
The commission opened an investigation into the charity in April 2009 to determine "whether the trustees had acted in accordance with their legal duties and responsibilities to the charity".
The charity’s main activity was running the Iqra Learning Centre, a bookshop and centre for religious learning in Leeds, which ceased to operate in 2005.
As a result of its investigation, the commission, which published its report yesterday, has removed the charity from its register because it is no longer operational.
The regulator has also taken control of its bank accounts and will allocate its remaining funds to another charity.
Iqra raised £94,000 between February 2003 and July 2005 but the report does not make it clear whether, or how, this money has been spent because the charity did not file accounts with the commission.
The commission decided to investigate after it was confirmed in 2005 that Mohammad Sidique Khan and Shehzad Tanweer, two of the suicide bombers, were former trustees of the charity.
In 2008, Khalid Khaliq, a former trustee, was convicted of possessing information likely to be useful in preparing an act of terrorism, and in 2009 another former trustee, Waheed Ali (also known as Shipon Ullah), was convicted of conspiracy to attend a place used for terrorist training.
The commission’s report says there was no evidence the charity’s money was used to fund the attacks.
It says a review of the literature that was removed from the charity’s premises after the attacks showed most of it was "appropriate for a charity with the object of advancing the Islamic faith", but about a fifth was "considered to be political, biased, propagandist or otherwise inappropriate for a charity advancing the Islamic faith".
The report found there was "mismanagement in the administration of the charity" by its trustees. They had failed to properly manage material available to the public at the charity’s premises and failed to "secure the proper application of the charity’s funds", it says.
The report also says the commission was unable to determine whether the charity’s premises had been used as a meeting place for the suicide bombers.
However, the property was used for non-charitable activities such as organising outdoor events. "The use of the charity’s premises and property for activities that did not further its charitable purpose is inappropriate," the report says.
The investigation of alleged criminal offences was the responsibility of the relevant law enforcement agency, it says.
"The commission considers whether matters and evidence arising in those separate investigations may indicate misconduct or mismanagement in the administration of the charity and/or raise issues about the suitability of trustees that are regulatory issues for the commission.
It also says: "The involvement of two former trustees in the 7/7 terrorist attacks raised serious regulatory concerns about their role in the charity, the connections, involvement, or use of the charity in the attacks, and the proper use and safeguarding of the charity’s funds moving forward.
"In addition to this, the conviction of two former trustees of the charity of terrorist related offences added to these concerns."