South Devon Healthcare Foundation Trust attempted to cover up a report that contained accusations of “nepotism” against its chief executive, who also holds a major NHS England role, a tribunal has found.

Paula Vasco-Knight, the health service’s national lead on equality and diversity, was accused of giving her daughter’s boyfriend a job by two former employees of a trust which neighbours South Devon.

The judgement has already led to the resignation of the trust’s chairman. It will hold an emergency board meeting tomorrow after which it is expected to give a full response to the ruling.

Two former employees of Torbay and Southern Devon Health and Care Trust – which is being acquired by South Devon Healthcare Foundation Trust – reported their concerns to the trusts’ director of workforce and organisational development Adrienne Murphy. They had become suspicious over the circumstances of the appointment of Nick Schenk to the role of equality diversity manager at the latter trust in July 2012.

Clare Sardari, the trust’s management development lead, and Penelope Gates, its assistant director of education and development, told the tribunal that they were encouraged to keep quiet at risk of losing their jobs. The two women subsequently left their jobs.

An allegation of unfair dismissal was dismissed because Torbay and Southern Devon did everything possible to encourage the women to return to their roles.

However, a transcript of the tribunal’s reserve judgement, published this afternoon, found that there was a “concerted effort by the trust to manipulate the investigation, accuse the claimants of malice, suppress the report…with the apparent aim of protecting Dr Vasco-Knight and Mrs Murphy”.

The tribunal, in Exeter, ruled that South Devon concealed the findings of a joint inquiry between the two trusts and misled Torbay and Southern Devon by suggesting that Dr Vasco-Knight had been exonerated.

The tribunal found that “much of Dr Vasco-Knight’s evidence was inconsistent with many of the contemporaneous documents”.

South Devon’s chair Peter Hildrew announced his immediate resignation following the tribunal’s findings. The tribunal report said that Mr Hildrew’s evidence - in which he said there was no joint investigation between the two trusts - was “quite simply incredible, and plainly wrong”.

The tribunal found that there was “a degree of antipathy between [the] two [providers]”. The judgement added that “there may well have been a degree of concern at senior level within both organisations as to who would retain the senior positions following the prospective merger”.

Ms Sardari told the tribunal that she was not involved in the shortlisting of candidates for the equality manager job, a fact which concerned her because she would be the post holder’s line manager. She said that four shortlisted candidates were put forward for the role and she was told that Dr Vasco-Knight had a preferred candidate.

When it came to the interview stage she told the tribunal that it was clear Mr Schenk was the preferred candidate because of “a change in Dr Vasco-Knight’s body language”. She said that Mr Schenk gave the best performance at interview but she was suspicious that he had a prior knowledge of the questions being asked.

A few weeks after Mr Schenk started at the trust he took time off to attend his girlfriend’s graduation in Leeds. He told Ms Sardari that he had met his girlfriend in December 2011. Later that month at a manager’s meeting Dr Vasco-Knight explained that she had been away for a few days to attend her daughter’s graduation in Leeds. Ms Sardari said that at this point “the penny dropped”.

She took her concerns to her line manager, Ms Gates, and they consulted with Ms Murphy on the issue. Both claimants told the tribunal that Ms Murphy said she already knew about the relationship between Dr Vasco-Knight and Mr Schenk and that the matter should not be taken any further.  

For three months the claimants remained concerned but kept quiet. Ms Sardari became concerned that Mr Schenk was not “sufficiently experienced” for his post and felt that Dr Vasco-Knight had an “unusually close involvement” in his day-to-day duties.

Ms Gates told her employer, the then chief executive of Torbay and Southern Devon Anthony Farnsworth, about her concerns. He called for a joint investigation into the claims by the two trusts.

In a letter to Mr Hildrew, Ms Murphy tried to dissuade him from investigating the claims. She said Mr Farnsworth could have been acting out of “personal malice” towards Dr Vasco-Knight. She suggested that any investigation might also compromise the acquisition process.

A joint preliminary investigation was undertaken by both providers and six people were to be interviewed. However, Mr Hildew removed Mr Schenk from the list without telling Torbay and Southern Devon.

Following this, Mr Schenk wrote a letter which claimed that he only started a relationship with Dr Vasco Knight’s daughter after his job interview at the trust. He said that he saw the job advertised on NHS Jobs and his girlfriend told her mother that he was interested, at which point Dr Vasco-Knight said he “sounded like a strong candidate and suggested I look at the job description”. Dr Vasco-Knight’s daughter said that before the interview the only contact Mr Schenk had with her mother was through her.

The tribunal panel took the unanimous view that Dr Vasco-Knight should have disclosed her daughter’s connection to Mr Schenk to the interview panel.

A spokeswoman for South Devon Healthcare said that the trust is now “considering the judgement with our legal advisers”. A board meeting has been called for tomorrow to discuss the report’s findings and “decide what action is necessary”, after which the trust will comment in more detail.