A damning report that laid bare the North Wales child abuse scandal might have aired the issue of sex attacks on children in care nearly half a decade before an official judicial inquiry in 2000.

Instead copies of the report were ordered to be destroyed because the council that commissioned it feared it might be sued, The Independent on Sunday can reveal. Only a handful remain, including one obtained by this newspaper.

The suppressed report, by a panel of experts led by former social services chief John Jillings, outlined the widespread abuse of children in care, some as young as 10, years before the tribunal chaired by High Court judge Sir Ronald Waterhouse reported.

The copy held by The IoS shows:

* The then newly appointed North Wales chief constable, who was uncontactable yesterday, refused to meet them or help with access to the police major-incident database. "We were disappointed at the apparent impossibility of obtaining a breakdown of data. We are unable to identify the overall extent of the allegations received by the police in the many witness statements which they took.''

* Some 130 boxes of material handed over by the council to the police were not made available to the panel.

* The council did not allow the inquiry to place a notice in the local press seeking information. "This was considered to be unacceptable to the insurers,'' says the report.

While the report went unpublished, coverage of the scandal by this newspaper eventually helped to set up the Waterhouse review, which reported in 2000. Mr Jillings, a respected independent social services expert, was succinct yesterday about what he had found out back then: "What we found was horrific and on a significant scale. If the events in children's homes in North Wales were to be translated into a film, Oliver Twist would seem relatively benign." The scale of what happened, and how it was allowed, he said, "are a disgrace, and stain on the history of child care in this country."

Some 300 pages were compiled in the face of fierce opposition and obstruction: Mr Jillings and his team – Professor Jane Tunstall and Gerrilyn Smith – were so frustrated they almost quit. The results were pulped: one of the few remaining copies has now been sent to the Children's Commissioner for Wales, Keith Towler. According to the report, the insurers – Municipal Mutual – suggested the chair of the council's social services committee, Malcolm King, be sacked if he spoke out: "Draconian as it may seem, you may have to consider with the elected members whether they wish to remove him from office if he insists on having the freedom to speak."

Mr King yesterday described the report's suppression as the destruction of an effective weapon against abuse: "Because it was suppressed, the lessons of the Jillings report were not learned. It was the exchange of financial safety for the safety of real people. It was one of the most shameful parts of recent history."

Mr Jillings's report paints an alarming picture of a system in which physical and sexual violence were common, from beatings and bullying, to indecent assault and rape. Some staff linked to abuse may have been allowed to resign or retire early.

Children's carers were recruited without proper references, without application forms, and, in one case, with a rugby club acting as a contact point for vacancies. Children who complained of abuse were not believed, or worse, punished for making false allegations.

The report also revealed that its members had considered quitting: "As the constraints emerged, the panel considered whether it could continue or abandon its investigations," it said. "We determined to continue despite the very considerable constraints placed upon us.'' From the outset there was difficulty and confusion over access to files.

Despite such obstructions they stuck to their brief to investigate child care in Clwyd in the wake of a number of allegations and court cases involving carers. Most of the allegations covered the period 1980 to 1988, and a four-year police inquiry saw 2,600 statements taken and 300 cases sent to the Crown Prosecution Service. Eventually eight men were charged, and six convicted. The panel was tasked with looking at what had gone wrong, reviewing practices, and making recommendations for change.

After reviewing internal reports and interviewing more than 70 witnesses, the picture that emerged was one of dysfunctional homes where children were abused sexually and physically. "It is the opinion of the panel that extensive and widespread abuse has occurred within Clwyd residential establishments for children and young people," they concluded. How many were abused is not clear, but estimates range up to 200. In the 1990s, around 150 had already sought compensation.

"The most striking fact to emerge is that five men who shared in common their employment as residential care workers at the Bryn Estyn home were convicted of serious offences involving at least 25 young people. Twenty of the victims were boys, five were girls. The age range was 10 to 16. Many of the allegations involving these men consisted of specimen charges; many others were left on the file,'' they reported.

There were allegations of widespread physical abuse, sometimes with care workers inflicting gratuitous violence, others involving other boys being used to attack victims. The report also says it was common practice for staff to take residents home for the weekend.

Staff recruitment was frequently chaotic. "In some cases references were provided which were barely adequate as recommendations for employment. There appears to have been no application forms in a disturbing number of cases. More than one staff member described the recruitment process as taking people off the street.''

There was also a culture of silence. "At Bryn Estyn, professional misgivings were discouraged and complaints viewed as disloyal. As a consequence, abusive and dangerous practices escalated out of control and unchecked.'' The report denounced those who should have stopped the abuse, saying: "Our findings show that time and again, the response to indications that children may have been abused has been too little and too late."

A key issue in North Wales has been whether there was a paedophile ring at work. One internal Clwyd council report from the time – like Jillings, unpublished – said: "There remain worrying current instances of conviction and prosecution for sexual offences of persons who are known to have worked together in child care establishments both in the county [Clwyd] and in other parts of the north-west,'' it said.

"These suggest, that abuse could have been happening unabated for many years and, that there could be operating a league or ring of paedophiles who help one another find sources and situations where abuse can be perpetrated and the addiction fed.''