OTTAWA - The head of the Canadian Security Intelligence Service secretly rejected a call from the spy agency's watchdog to apologize to an Ottawa-based charity for an "unsubstantiated statement" linking the organization to a terrorist group.

CSIS has been publicly silent for more than a year about the Security Intelligence Review Committee recommendation to make amends to Human Concern International with an apology and retraction.

However, a newly declassified letter shows CSIS director Jim Judd told Public Safety Minister Stockwell Day in late March 2007 that he had no intention of saying sorry.

"As a result of our review of the report, the methodology used by SIRC Counsel and a review of the information on HCI in the possession of the Service, I disagree with SIRC's findings and, as a result, do not intend to act on the recommendations made in the report."

A copy of the letter, marked secret, was obtained by The Canadian Press under the Access to Information Act. Portions were considered too sensitive to disclose.

Michel Drapeau, lawyer for the charitable organization, expressed frustration at CSIS's response. He said Day should direct the spy agency to apologize.

"That's where the decision is, it's at the minister level."

Melisa Leclerc, a spokeswoman for Day, did not respond to questions. As it did previously, CSIS referred inquiries about the case to Day's office.

The saga began in October 2005 when CSIS prepared a submission to Federal Court on behalf of the Public Safety and Immigration departments in the case of Mohamed Harkat, an Ottawa man the government wants to deport over alleged ties to Osama bin Laden's al-Qaida network.

In the submission, CSIS stated that Canadian Ahmed Said Khadr was the director of HCI, "which worked closely with al-Qaida in Afghanistan."

The statement was repeated in a December 2005 court ruling and subsequently in two newspapers that carried an account of the decision.

HCI is a registered charity that aims to "help alleviate human suffering" through emergency assistance and development programs. Its efforts have ranged from relief during the 1998 ice storm in central Canada to medical outreach in South America.

In January 2006, Drapeau complained to CSIS about the words linking HCI to al-Qaida, saying his client "objects strongly to this patently false and defamatory statement."

Dissatisfied with CSIS's reply, HCI took the complaint to the intelligence review committee, alleging the spy agency "misled the court" and "caused grief and injury to HCI" by impugning its reputation.

The charity said Khadr was a volunteer regional director of HCI in Pakistan in the mid-1990s but was never a member of the organization's board of directors. HCI said any dealings between Khadr and al-Qaida were the result of his own actions and in no way approved by the charity.

In 1995, Khadr was arrested by Pakistani police investigating a bombing of the Egyptian embassy in Islamabad.

A lawyer hired by HCI to conduct an independent review concluded neither the charity nor its personnel were involved in any way with the bombing, nor connected with the accusations made against Khadr.

HCI dismissed Khadr in April 1996, severing ties with him.

In defence of its actions, CSIS submitted classified materials to the review committee the spy agency said "more than adequately supported" the statement linking HCI and al-Qaida.

In his report, however, committee chairman Gary Filmon said investigations "reveal that to date, there is insufficient information to conclude that HCI has worked closely with al-Qaida."

Filmon, the former Conservative premier of Manitoba, said CSIS "should have taken care to avoid making an unsubstantiated statement which foreseeably could lead to injury or loss of support and funding suffered by HCI."

The committee recommended CSIS apologize to HCI and retract the statement by informing the ministers of Public Safety and Citizenship and Immigration, and the relevant newspaper publishers.

In April 2007, shortly after Judd quietly rejected the recommendation, federal lawyer James Mathieson wrote to Drapeau on behalf of CSIS: "At this time, I am not in a position to inform you as to the intentions of my client."

Marian McGrath, senior counsel for the review committee, said in an interview that if CSIS believes the committee was mistaken in its findings, "they could have taken us to court."

McGrath also noted the offending words about HCI were removed from an updated version of the submission filed earlier this year in the Harkat proceedings.

A draft briefing note prepared for Day in March 2007, in case the matter should arise in the Commons, advised him to say, "there are two sides to the story, both of which I am taking under advisement."