Poor judgment at Scotland Yard was to blame for the "imprudent" decision to give a News of the World boss a £1,000-a-day PR role, a watchdog has ruled.
Professional boundaries were blurred as chiefs recruited Neil Wallis as a consultant before his arrest on suspicion of phone hacking, the Independent Police Complaints Commission said. But nobody will be punished for failures to follow force policy after the only boss "with a case to answer" quit last month.
The resignation last month of former communications chief Dick Fedorcio "can be hugely damaging to public confidence", Deborah Glass, deputy chairman of the IPCC, said.
Former assistant commissioner John Yates was also criticised over his role in helping Mr Wallis's daughter get a job with the Metropolitan Police. Mr Yates forwarded her CV to an HR chief with a note observing that Mr Wallis was a "great friend" of the force, the report said.
Ms Glass said "senior people appear to have been oblivious to the perception of conflict" amid the phone hacking scandal.
No vetting check was carried out on Mr Wallis "prior to, or during, his employment" for communications advice between October 2009 and September 2010, the report said. Mr Fedorcio "effectively employed Mr Wallis prior to a written contract being prepared or agreed".
Expressing anger over Mr Fedorcio's resignation, Ms Glass added: "The IPCC cannot prevent a member of police staff leaving before facing misconduct proceedings. But I can and do observe that such a practice can be hugely damaging to public confidence."
Ms Glass said there was no evidence of corruption but "policies were breached".
"It is clear to me that professional boundaries became blurred, imprudent decisions taken and poor judgment shown by senior police personnel," she said.
Mr Wallis, whose company Chamy Media was paid a total of £24,000 by the Met, is still waiting to find out if he faces any charges after being arrested under Operation Weeting's phone-hacking probe last year.