A SYDNEY charity that admitted channelling aid through an Islamic organisation banned in Australia for its alleged terror links was yesterday raided by the federal police.

It was also attacked by one of its directors for failing to scrap a fundraising appeal that has been under investigation.

AFP and NSW Police counter-terrorism agents seized computer files and financial records from Muslim Aid Australia’s headquarters in Lakemba, Sydney’s Muslim heartland, during a seven-hour raid.

The police action was prompted by The Australian’s revelations this month about the charity’s connection to Interpal, a humanitarian network proscribed by Australia and the US.

British-based Interpal, also known as the Palestinian Relief and Development Fund, has been cleared by the British Charity Commission of terror links, but failed three years ago to have its proscribed status revoked by the Department of Foreign Affairs and Trade.

MAA executive director Mohammed Taha Alsalami, who was interviewed by the AFP, said last night he was shocked that his organisation had failed to pull from its website a fundraising appeal that links its charity work to Interpal.

When told by The Australian of the “Gaza Crisis” appeal banner still bearing the logo of MAA and Interpal, Dr Alsalami said it was wrong to persist with the fundraiser.

“It’s a shock that it’s still there,” said the former member of the Howard government’s Muslim reference group.

“It shouldn’t have been there in the first place. This whole matter is very sensitive now.”

Dr Alsalami said he expected MAA staff – including executive director Iman Partoredjo, who is believed to be in Saudi Arabia on a pilgrimage – to co-operate with the authorities.

He confirmed the AFP had already interviewed many of MAA’s staff members.

“We have to abide by the law, and there’s no question about that,” he said.

“If there was any wrongdoing it should appear.”

Dr Alsalami, one of five MAA board members, maintained he had little to do with the day-to-day operations of his group. He refused to say whether he was considering stepping down from his role.

In a series of reports this month, The Australian revealed that MAA had admitted distributing aid in the Palestinian Territories through Interpal, which was banned by then foreign minister Alexander Downer in 2003, three months after it was proscribed by the US for being “part of a web of charities”.

It was suspected of raising funds and co-ordinating fundraisers on behalf of the Palestinian organisation Hamas.

Mr Downer added Interpal on the Department of Foreign Affairs and Trade’s Consolidated List, which names banned groups and people.

It is a criminal offence under the Charter of the United Nations Act for Australian individuals or organisations to deal with groups identified by DFAT’s Consolidated List.

Breaching the act can result in a maximum 10-year prison sentence and fines of more than $275,000 for individuals andmore than $1.1 million for organisations.

The Australian Council for International Development, the charity-industry body, launched an investigation into MAA after Mr Partoredjo, retracted an earlier admission to The Australian about working with Interpal.

ACFID’s executive director Paul O’Callaghan said last night that his body was still investigating MAA.

The NSW Government, through its Office of Liquor, Gaming and Racing, is also investigating MAA.