The chief executive of South Devon Healthcare Foundation Trust, who was accused of “nepotism” by two whistleblowers, has been suspended with immediate effect.

Non-executive director David Allen said that the “situation has moved on considerably in the last week” and that the suspension of Dr Vasco-Knight was “in the best interest of all parties whilst a formal process is underway to investigate concerns raised by the recent employment tribunal”.

He added that the suspension was a “neutral act and has no bearing on the outcome of the process”.

A tribunal in Exeter last month found the trust had covered up the nepotism claims against Dr Vasco-Knight, who also held the role of NHS England national lead on equality and diversity. However, it did not uphold claims of wrongful dismissal against two members of staff who blew the whistle on the claim.

South Devon’s actions were last week criticised by Robert Francis, who wrote last year’s seminal report into poor care at Mid Staffordshire Foundation Trust.

Speaking at a Nuffield Trust event to mark the anniversary of his report Mr Francis said: “It is important that no tolerance is afforded to oppressive managerial behaviour of the sort identified only last week by an employment tribunal in the South West, which victimises staff who raise honestly held concerns.

“Every such case is hugely damaging to the confidence of other staff who are contemplating raising concerns. It is clear that there is much to do in this area.”

A tribunal found the trust hid nepotism claims against Dr Vasco-Knight after two whistleblowers accused her of giving a job to her daughter’s boyfriend, Nick Schenk, who they felt to be under-qualified for the position.

When Clare Sardari and Penelope Gates reported their concerns over Mr Schenk’s appointment they were subsequently told they would not be able to continue working for South Devon.

In an email to Anthony Farnsworth, then chief executive of Torbay and Southern Devon Health and Care Trust which was in the process of being acquired by South Devon, Dr Vasco-Knight wrote: “I want to be really clear the behaviour and false accusations of these two employees…broke trust policy and trust.”

She added: “It is within the gift of South Devon Healthcare Foundation Trust to not wish to continue a partnership with staff who have behaved in such a way.”

When giving evidence at the tribunal Dr Vasco-Knight claimed that the trust did not consider the whistleblowers’ complaints to be “malicious” and said they had not returned to work because they had insisted that their line manager Adrienne Murphy and herself be removed from their posts first.

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

The claim of wrongful dismissal was not supported by the tribunal however because Ms Sardari and Ms Gates were employees of Torbay and Southern Devon Health and Care Trust and the tribunal ruled that the trust had done everything in its power to try and reinstate the two women.

Following the tribunal’s findings South Devon chairman Peter Hildrew resigned with immediate effect. Topsy Murray stepped in as acting chairman but she also resigned just eight days later citing health grounds.

The trust is now conducting an internal investigation into Dr Vasco-Knight which will be completed “as quickly as possible”.