Detroit Mayor Coleman A. Young has sharply criticized the city's news media after charges were dropped in one of two investigations that have dogged his administration.

A Wayne County judge dismissed misdemeanor charges against two former city officials and a former Washington businessman accused of conspiring to arrange an illegal loan of $1 million in public funds.

Young said the judge's ruling "amounts to a verdict of guilty against the news media who have given such enthusiastic and willing coverage to every allegation, no matter how flimsy or unsubstantiated....It is time to ask whether sensational headlines and increased circulation are to be sought regardless of who gets hurt in the process."

The indictment alleged that two officials had improperly arranged a secret loan to Magnum Oil Co., a minority firm that had an exclusive contract to provide bus fuel.

Charges were dropped against James L. Denson, president of Magnum Oil and a former president of the D.C. Chamber of Commerce; former mayoral aide Alexander N. Luvall Jr. and former Detroit finance director Paul R. Thompson Jr.

"I'm certain the charges were political," Denson said last week. "A lot of it had to do with racism." The press "never told the true story or the full story about me," he said.

Denson said the so-called loan was only a contractual advance during the Christmas holidays. He also denied allegations that his firm had overcharged the city for bus fuel.

In an unrelated case, a former city official and a friend of Young await trial on charges that $16,000 was paid to influence the award of a contract to haul sludge.