Senior managers of Toronto's public housing agency repeatedly broke the rules for hiring and firing, a new report from the city's ombudsman says, creating a "climate of fear" among employees.

City of Toronto ombudsman Fiona Crean released her report into the human-resources practices at Canada's largest operator of social housing on Tuesday, after questions were repeatedly raised over the past year over its staffing policies.

Ms. Crean's report places the blame squarely on TCHC chief executive officer Eugene Jones, who she says "believed it was his prerogative to do as he wanted and that he had no responsibility for knowing the rules."

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Her report also raises questions about oversight from both the housing agency's board of directors and Mayor Rob Ford, who has been a consistent supporter of Mr. Jones.

The mayor's brother and campaign manager, Councillor Doug Ford, continued to express his support for the CEO Tuesday. "I believe in Gene Jones," Mr. Ford told reporters at City Hall. "I believe the CEO has the right to make changes that are required."

The report describes management at TCHC as "a shocking story about the abject failure of leadership from the top," and "an alarming tale of senior executives ignoring policy and running an organization as though it were their own personal fiefdom."

The report finds that:

Senior managers repeatedly broke TCHC’s recruitment rules, and that in many cases executives did not even seem to know the policies they were to follow.

There were instances where senior employees were promoted without competition or board approval. In another case, according to the report, a new vice-president was hired before the competition for the position had closed.

Ninety-six new staff were hired at the agency between June, 2012, when Mr. Jones arrived and October, 2013, including some of the organizations top positions. At the same time 88 staff left the agency, 45 were terminated, 32 resigned and 11 retired. The large turnover, especially in the top ranks “created chaos” the report finds.

Ms. Crean's report comes at a time when the housing agency has been trying to secure $2.6-billion from all levels of government to eliminate a repair backlog and fix up aging residential properties over the next decade. Staff have raised concerns about stewardship at the organization amid reports the publicly financed agency has dismissed too many employees, leading to costly severance packages, and not followed proper procedures for hiring new staff.

Ms. Crean says that managers at TCHC responded "wholly and professionally" to her investigation, "with one notable exception" – Mr. Jones. According to the report, Mr. Jones attended a meeting earlier this month to discuss a draft of her findings and stated he had not "looked at it thoroughly," before delegating responsibility to his vice-president of human resources. Ms. Crean wrote that she was "perplexed by his reaction and demeanour."

In February of this year, Mr. Jones was stripped of his bonus and ordered to take leadership training after an investigation into two personnel-related issues found that he "failed to exercise proper management oversight and follow board processes and procedures."

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And earlier this week, The Globe reported that the housing corporation was facing a wrongful-dismissal lawsuit after a former employee was fired in late 2013. The lawsuit has been settled for an undisclosed amount.

Such allegations have put Mr. Jones's leadership in question less than two years after he was brought in to cut the agency's costs and change its culture.

Bonnie Booth, a TCHC tenant for 32 years, said the agency's new CEO has made changes that were needed, getting rid of staff who were not responsive to residents' needs. "Mr. Jones has done a lot of good things and he's given us the impression that we're valued and he listens to us," she said following the release of the report.

Councillor Ceasar Palacio, a member of the TCHC board, said he was not aware of the large turnover at the housing agency, but said he will not make any conclusions until after a closed-door meeting Tuesday afternoon.

"We have to look at the whole picture," he said, noting he has been "bombarded" with calls from tenants praising the improvements made by Mr. Jones and suggesting there has been "pushback" from staff unhappy with the changes.

Mr. Jones continues to have his confidence, Mr. Palacio said.

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Councillor Shelley Carroll called the report "shocking," and said that Mr. Jones needs to respond to the allegations. "Mr. Jones arrived in town, probably from places where you play fast and loose. But we cannot do that in a housing corporation of this size," she said. "Mr. Jones came from a much smaller housing authority and came to one that, admittedly, had challenges, but you cannot meet those challenges if you throw the rulebook away."

But when asked whether the TCHC board should bear some of the blame, Ms. Crean said the board was not aggressive enough in overseeing the corporation, and asked "insufficient questions."

At least one other councillor questioned whether the mayor – who has been a champion of Mr. Jones' since his arrival in 2012 – is partly to blame. Even after Mr. Jones was sanctioned for improper personnel practices earlier this year, the mayor responded by saying he supports the CEO "100 per cent."

" I think what's questioned is his leadership at the corporate level, and somewhere he's got the impression that he didn't need to follow the rules," Councillor Paula Fletcher said of Mr. Jones. "And we know one person around here who says he doesn't need to follow the rules, so I hope the mayor hasn't given him that impression that you don't need to follow the rules in Toronto."

The report makes 12 recommendations for TCHC to improve its hiring practices, all of which have been accepted by the housing corporation.

With a report from Colin Freeze

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Editor's note: The original version of this story incorrectly said Toronto Community Housing is facing a wrongful-dismissal lawsuit. In fact, it has been settled for undisclosed terms. This online version has been corrected.