In facilitating a loan for Boris Johnson while he was vying for the position, BBC chairman Richard Sharp committed "significant errors of judgment," according to MPs.
A cross-party committee claimed he hadn't given them the "full facts" when they were evaluating his eligibility for the BBC position two years ago.
It said he should think about how this affected people's trust in him and the BBC.
If MPs felt they lacked the necessary information, Mr. Sharp apologized.
Since the Sunday Times first published the claims last month, his role in helping the then-Prime Minister Mr. Johnson obtain a £800,000 loan guarantee has come under scrutiny.
Businessman Sam Blyth, a distant relative of Mr. Johnson and a friend of Mr. Sharp, allegedly suggested serving as a loan guarantor for Mr. Johnson in 2020.
Mr. Sharp asserted this week that neither he nor Mr. Johnson received any financial advice from him when he appeared before members of the Commons Digital, Culture, Media and Sport (DCMS) Committee.
He was identified as the government's top choice for the BBC chairmanship in January 2021, and the DCMS Committee supported his appointment at the time.
On the advice of the culture secretary, who is in turn advised by a panel, the prime minister ultimately makes the government's selection.
In its report, which was released on Sunday, the DCMS Committee is harshly critical of Mr. Sharp for failing to disclose any involvement he may have had in the loan-related events when they were evaluating his qualifications for the position.
His choices to "become involved in the facilitation of a loan to the then-prime minister while at the same time applying for a job that was in that same person's gift" and failure to disclose this to the committee, according to the report, undermined confidence in the public appointment process.
In a statement to the committee earlier this week, Mr. Sharp said that he had met Cabinet Secretary Simon Case in December 2020 to obtain permission to provide Mr. Blyth's contact information to him.
However, he revealed to Mr. Case during the same meeting that he had applied for a position with the BBC, and the two agreed that he would have "no further participation" in order to avoid any potential conflicts of interest or perceptions of conflicts as a result of his application to the BBC.
MPs said Mr. Sharp had acknowledged the need for "openness and transparency" by bringing it to the cabinet secretary's attention, but "failed to apply the same standards of openness and candor in his decision not to divulge this information during the interview process or to this committee during the pre-appointment hearing [for the BBC job].".
"Mr Sharp's failure to disclose his actions to the panel and the committee, although he believed this to be entirely proper, constitute a breach of the standards expected of individuals applying for such public appointments," the report continued.
"Mr. Sharp should think about the effect his omissions will have on trust in him, the BBC, and the public appointment process," the report's conclusion stated.
According to a representative for Mr. Sharp, he did not arrange for Mr. Johnson and Mr. Blyth to meet, and he was not involved in their loan arrangement.
"Mr. Sharp acknowledges that the committee felt that certain information from his pre-appointment hearing should have been disclosed to it. He is sorry and expresses regret.
"Mr. Sharp acted in good faith in the manner he did because he was trying to follow the rules at the time and thought he had succeeded in doing so.
The spokesperson continued, "Mr. Sharp believed he had dealt with the issue by proactively informing the cabinet secretary that he was applying for the position of BBC chair, and so beyond connecting Mr. Blyth with Mr. Case, he recused himself from the matter.
The DCMS Committee report also criticized ministers who defended the choice to support Mr. Sharp in 2021 after the loan dispute broke out despite the fact that they were not informed of the circumstances.
"It is highly unsatisfactory that ministers have used this committee's original report on Mr. Sharp's appointment as a defense of the process was followed, when we were not fully in possession of all the facts that we should have had before us to reach our judgment," the report stated.
The BBC chairmanship was given to Mr. Sharp after two "transparent and rigorous" hiring processes, according to Prime Minister Rishi Sunak, who also noted that the appointment was made by his predecessor.
The Sunday Times claims that a leaked memo from Mr. Case advised Mr. Johnson to "no longer" seek financial advice from Mr. Sharp.
However, the MPs claimed in this latest report that there was still a "unresolved issue" regarding why the cabinet secretary had assumed Mr. Sharp had been providing financial advice to Mr. Johnson. They urged the Cabinet Office to "clear up the confusion relating to the advice given to the prime minister immediately" given that Mr. Sharp had claimed this was not the case.
Damian Green, MP, the acting chair of the DCMS Committee, stated: "The public appointment process can only work effectively if everyone is open and transparent, yet Richard Sharp chose not to inform the appointment panel or our committee about his involvement in the facilitation of a loan to Boris Johnson.
We don't comment on leaks, a Cabinet Office spokesperson said.
The memo sent to Boris Johnson by the Cabinet Office on December 22, 2020, is an intriguing development for those of us who are closely following this story.
The BBC is about to name Mr. Sharp to the post of chairman, which was created by the former prime minister. So, it is instructed to Boris Johnson that he "no longer ask him advice about your personal financial matters.".
Mr. Sharp claims that he never offered Mr. Johnson financial advice. The committee has asked the Cabinet Office to resolve the ambiguity immediately and has asked why the memo is worded that way.
The committee doesn't demand that Mr. Sharp step down, but when it says that he should think about how his actions have affected people's trust in him and the BBC, it almost sounds like it is suggesting that Mr. Sharp resign.
Even if he had disclosed this potential conflict of interest, it is by no means certain that someone else would have been chosen to lead the BBC.
However, the procedure is being investigated by the public appointments watchdog, which we are currently awaiting.
The BBC chairman's position was described as "increasingly untenable" by shadow culture secretary Lucy Powell, who added that it "throws into serious doubt the impartiality and independence that is so fundamental to trust in the BBC.".
The Liberal Democrats argued that Mr. Johnson should also provide answers as part of an impartial investigation.
The agency that monitors how public appointments are made is also investigating how Mr. Sharp was hired.
Following a letter to the DCMS stating that he had met Mr. Sharp on "previous occasions," William Shawcross, the Commissioner for Public Appointments, withdrew from leading that review last month.
Additionally, the BBC is conducting its own internal investigation into any potential conflicts of interest that Mr. Sharp might have in his position as BBC chairman.
Speaking on the importance of waiting for the watchdog's report, Foreign Office Minister Andrew Mitchell told the BBC's Sunday with Laura Kuenssberg program.
He said, "Richard Sharp included, we need to be fair to all parties in this.
Mr. Mitchell continued, "The BBC is not a silent participant in all of this; the BBC board will need to take into account what he has said and draw their own conclusions. I believe the government will respond to that in a suitable manner.
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