The Office for Standards in Education is investigating how a former headteacher, who left his job after a staff revolt against his leadership, was allowed to become an inspector.
Ofsted's own subsequent inspection report on St Martin's special school in Derby said staff and pupils suffered assaults and standards were put at risk during Geoff Jepson's time as head.
Almost the entire teaching staff signed a statement in 2001 saying they had "no confidence in either the integrity of the head - or his ability to manage the school in the best interests of either staff or pupils". But before Derby city council finished investigating the staff complaints against Mr Jepson, he left by agreement with the local authority.
Just a few months later he began training as an inspector.
Last year's Ofsted report on St Martin's praised Philip Ormerod, the new head, and staff for turning the school around after Mr Jepson left. But it said: "Following the last inspection in 1997, the school went into decline.
Little was done to remedy the issues highlighted in the report, resulting in standards being put at risk.
"Behaviour was poor and there were a number of assaults on staff and other pupils." The report also criticised "out of date or non-existent documentation", "chaotic finances" and "weak leadership and poor management" while Mr Jepson was head.
A spokeswoman for Ofsted said it had been unaware of Mr Jepson's record, outlined in the 2003 Ofsted report, when he was registered as an inspector in January. She said: "Only individuals who are fit, proper, competent and effective may remain an inspector.
"In respect of the allegations made against Mr Jepson, we will begin an investigation to determine whether or not he remains a fit and proper person to carry out inspections." It is unlikely that any inspections by Mr Jepson will be repeated, however.
Ofsted said he had taken part in 11 inspections - which would have earned him some pound;5,000 - but was never a lead inspector, with overall legal responsibility for the final report.
St Martin's staff were unable to comment, because of a confidentiality agreement between Mr Jepson and the council. But a source said: "It seems like he's gone on to bigger and better things when he didn't seem a suitable person to lead a school, let alone pass judgement on other people."
Ofsted's new inspection regime, which is being piloted, will name only the lead inspector involved, making it even harder to scrutinise inspectors' qualifications and experience.
Mr Jepson was unavailable for comment. He is believed to deny any wrongdoing or poor management of the school.