Martin Bashir cut a different figure on the stage of Celebrity X Factor. Under the gaze of Simon Cowell, the now disgraced journalist stumbled his way through a rendition of Nat King Cole's L-O-V-E. Putting a gloss on the performance, judge and former Pussycat Doll Nicole Sherzinger said: "I feel we got to see a whole other side of you we have never seen before."

That was two years ago. With the publication of Lord Dyson’s report, which found he deployed “deceitful behaviour” to secure his interview with Princess Diana, those words now take on a greater meaning.

Those explosive findings, and how the BBC brushed it under the carpet, have sent a ripple through Broadcasting House, leaving former and existing BBC executives scrambling to distance themselves from Bashir.

Questions now centre on how he was brought back into the fold as the BBC's religious affairs correspondent five years ago, as ministers weigh up a dramatic overhaul of its corporate governance.

The chastising of Bashir certainly marks a stark contrast to 2016. Back then, his return was announced with a gushing story on the BBC News website.

Among those waxing lyrical was Jonathan Munro, the then BBC head of newsgathering who joined the organisation in 2014 after 26 years at rival ITN. Munro - now the broadcaster's deputy director of BBC News and head of news content - praised Bashir's "track record in enterprising journalism" and for being "well known and respected in the industry".

But not everyone was as enthused. BBC Insiders said journalists at the broadcaster were "baffled" by the decision. "Nobody could understand why that decision was made. In a way that is what has stopped it being a 25-year-old story," one said.

Munro’s comments will have also sat uncomfortably with newspapers who published a story 20 years earlier alleging Bashir had used fake bank statements to secure the interview. So too with executives at the American cable channel MSNBC, where Bashir resigned three years earlier over controversial comments made about former Alaska governor Sarah Palin.

On Friday, James Harding - the director of BBC News between 2013 and 2018 - said the rehiring of Bashir "sits with me" and apologised for making it "more difficult for everyone" at the BBC.

Both the reappointment and praise has put a black spot on the legacy of Harding, who faces further questions as to why Bashir was promoted to religion editor a year later.

For Munro, the association with Bashir simply draws him into further controversy. The BBC was forced to pay out £210,000 in damages to Cliff Richard three years ago following Munro's involvement in a decision to fly a helicopter over the singer's house.

BBC in defence mode

The Bashir debacle is the latest in a line of scandals that have engulfed the BBC's news operation, which has been accused of reluctantly admitting mistakes and resisting change.

"The BBC thinks the criticism is usually wrong because they don't trust the motives of the editors at the newspapers," a BBC insider said. "The instant reflex is that there is an agenda and therefore they go into defence mode."

The abundance of BBC lifers at the expense of more executives with outside experience is understood to have perpetuated this cultural problem.

There are concerns that the organisation fails to tackle problems quickly because of a defensive mentality as executives succumb to groupthink rather than challenging the organisation's actions.

A key test for the BBC will come soon. At 63, Fran Unsworth, the current director of news and current affairs, is edging close to retirement age. Then it must decide whether to appoint a BBC insider, or a figurehead capable of overhauling systemic issues.

Munro would have been placed among the frontrunners after editorial director Kamal Ahmed was made redundant in February. But as pressure builds for sweeping cultural change, proving his worth over an outsider could be tough.

Meanwhile, for Lord Hall, questions are now building over the reasons for his departure. Despite previously signalling that he wanted to remain at the BBC until its centenary next year, he left in January, 2020, to take a position as chair of the National Gallery - a role he resigned from on Saturday.

That decision has only sought to stoke speculation in the media industry that he opted to exit the BBC early, rather than being pushed amid pressure over Bashir.

Resistance - or a failure - to change fast enough means the BBC must stomach structural and cultural reforms in one mouthful. The mettle of BBC journalists is already being tested by £408m worth of cuts to content and services over the next year, but now they are facing the prospect of sharper scrutiny.

Alongside the BBC's top brass, Lord Dyson's damning verdict has rattled ministers who believed they had brought the broadcaster's corporate governance to heel five years ago.

Concerns that the corporation's governance structure was failing prompted the BBC's regulator - the BBC Trust - to be axed in 2016, and instead regulatory oversight was handed to the communications regulator Ofcom. A corporate structure was also introduced with a non-executive chairman and directors to bring rigour to the decisions over the BBC's budget and strategic direction.

But while it was capable of holding management to account, an argument is gaining traction with ministers that the board is not equipped to tackle the BBC newsroom.

Lord Grade of Yarmouth, who is part of a panel reviewing public service broadcasters, is advocating for an overhaul of the BBC's editorial oversight by installing a new Court of Appeal style editorial board capable of tackling complaints levelled at the broadcaster's news stories.

It would be staffed with BBC outsiders, with former newspaper editors being mooted as possible candidates for the roles. Ofcom would provide the backstop.

"The parallel is Ofcom," a government source said. "The regulator has a board which oversees strategic direction, but then beneath that you have a content board.

"That is chaired by a member of the Ofcom board, but consists of different people who bring a degree of knowledge and expertise particular to content regulation."

David Elstein, the former BBC editor and chief executive of Channel 5, says there are shades of the Kremlin in the BBC's self-interested reviews and attempts by senior managers to distance themselves from scandal.

"This institutional self-preservation is absolutely built into the DNA of the BBC. And when Tim Davie says they need a culture change, they have already been through several. "They have to bite the bullet and [become regulated by Ofcom on all fronts]."

Reform on the horizon

Lord Grade's proposal is now expected to form part of the negotiations around the mid-term review of the BBC's charter starting next year. The question is whether it would be enough to bring about deeper cultural change - or whether ministers may take aim at the director general role.

The position carries the dual function of chief executive and editor-in-chief, but could be split in two to strengthen corporate governance.

While Lord Hall may have taken some of the criticism away from the current management, his legacy risks coming back to bite BBC director general Tim Davie.

"There is a belief that there is a command and control structure at the BBC, but one of the biggest problems is that very senior people don't know what is happening," a former BBC worker says.

"The first time they become aware of a problem is where it goes to air, or even further down the line. There is not a central nervous system that goes from the programme to director of BBC News."

Reforming the DG role would be a bitter pill for Davie to take. The former BBC Studios boss, who is understood to have had a strained relationship with Lord Hall in the past, would be punished for mistakes on his predecessor's watch.

Just as he gets to grips with easing pressure on licence fee income by burnishing the BBC's commercial credentials, his authority would be curtailed.

In the short term, however, he must steel himself for more bruising encounters with MPs and journalists.

Caroline Thomson, a former deputy director general of the BBC, has called for the corporation's top executives to open themselves up to more scrutiny in the wake of the scandal over Martin Bashir’s Diana interview.

Lord Hall vowed to learn from past mistakes when he became DG eight years ago in the wake of the Jimmy Savile scandal.

Turning those promises into reality now lies with Davie. A failure to do so, as Lord Grade warns, might risk bringing the whole house down.