Save the Children “let down” its staff and the wider public over its handling of alleged sexual harassment and inappropriate behaviour by senior managers, according to a fiercely critical report published on Thursday.

The Charity Commission said the organisation’s handling of complaints against its former chief executive, Justin Forsyth, and Brendan Cox, its former policy director, amounted to mismanagement and had a “corrosive effect” on the organisation’s culture. The charity must work hard to rebuild its reputation, said the commission.

Kevin Watkins, who was a trustee at the time of the 2015 allegations and went on to become CEO, said he accepted the findings of the report in full and has apologised to the women concerned. He has resisted calls to resign.

The inquiry, which began in 2018, highlighted “serious weaknesses” and “serious failures” in the reporting and investigation of the allegations.

The commission criticised the charity’s failure to inform them that Forsyth was the subject of allegations about “inappropriate behaviour” when it filed a “serious incident report” in 2015. This amounted to omission of “material facts” and “mismanagement”, the commission said. The decision to investigate complaints against Forsyth informally was against the charity’s own disciplinary procedures.

When the claims became public in 2018, the charity was “unduly defensive”, the inquiry found, and issued statements that were “not wholly correct”. This “appeared to diminish the seriousness” of some of the allegations and caused upset to those involved, it said.

Inconsistencies between the information given to the commission and public statements led to a warning from the watchdog.

Although three complaints were made about Forsyth’s behaviour at Save the Children in 2012 and in 2015, his next employer, the UN children’s agency, Unicef, was not informed.

Watkins, who was a trustee at the time of the 2015 allegations and went on to become CEO, has said the organisation has since reformed its process for providing staff references. He has expressed regret about talking to headhunters involved in Forsyth’s recruitment to Unicef.

Watkins has been criticised by MPs for spending £114,000 on lawyers in an effort to stop reports of inappropriate behaviour coming out in the media, after the full story emerged in 2018.

The report found that trustees were “poorly served” by the charity. The trustee body was not informed of allegations against Forsyth in 2012 and did not receive a full copy of the 2015 external review on corporate culture. The inquiry said the findings of a 2015 review, undertaken by law firm Lewis Silkin, should have been widely circulated.

“Trustees are under a duty to take steps to protect the charity from undue risk of harm, including its assets and people, but that does not equate to protecting its reputation from and avoiding adverse criticism at all costs,” said the report’s authors.

The inquiry recognised that “significant progress” had been made since 2015, but warned that any evidence that the required improvements had not been met will be regarded as indicative of misconduct or mismanagement.

Watkins said: “Its absolutely clear that there was indefensible behaviour in our organisation. There was hurt and offence caused to women and that hurt and offence was compounded by failures in the organisation.

“I unreservedly apologise to the women affected by the behaviour of these two senior executives. The harm they suffered was compounded by a failure to respond appropriately to complaints and then by our defensive handling of media inquiries about the cases.”

He accepted that the charity’s response to media inquiries in 2018 was “too defensive” and that the organisation “lost sight of the big picture”.

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Watkins said that culture changes over the past three years have ensured “nothing like this will ever happen again” and that driving through necessary changes was his priority.

The Tory MP Pauline Latham, a member of the international development committee who questioned Watkins in parliament in 2018, said he should resign.

“Save the Children never took these claims seriously. Now is the time to realise you can’t do that. Kevin Watkins was a trustee. He was on the inside track, he must have known the right people to get the job he got. He was wrong to spend money that should have gone to children on lawyers to try and stop reports of this coming out. Anyone tarnished with this reputation should go,” she said.

Shaista Aziz, a former Oxfam worker and co-founder of the NGO Safe Space, set up in response to the safeguarding scandal in the aid sector, said: “The job of a trustee is to hold organisations to account and Kevin Watkins was a trustee when these allegations surfaced. The core issue was a massive abuse of power. Save the Children now have an opportunity to show accountability. He needs to go. ”

The investigation did not consider whether the allegations of inappropriate behaviour were justified, but the inquiry found that trust was undermined by a failure to implement the proper procedures fully. As a result, those who reported concerns felt let down, while there was evidence the wider workforce lacked confidence that concerns would be taken seriously.

Helen Stephenson, the chief executive of the commission, said the case raised important lessons for all charities. In pointed comments about the charity’s leadership, she said heads of well-known charities are “powerful and highly respected” figures, who should be required to “model the highest standards of behaviour and conduct, and who are held to account properly and consistently when they fall short”.

“Save the Children UK let complainants and the public down,” said Stephenson. “It must work hard now to rebuild its reputation.”