He skimmed it and saw the offensive word and approved, but how didn't he see that it was the guy whose name was ******** out? That's negligent oversight at minimum
That is pretty much it - it's a little unusual, the person being racist reported the innocent person, so race hate language was in the chat but it was not from the person the report was about - that said it is not an excuse - but that does look like what has happened, on seeing the hate text the offence was applied without noticing that the suspect was the player on the innocent side of the conversation and the hate chat was from the reporter.