An inquiry into the case of an Asian police officer wrongly accused of sending racist hate mail to colleagues today again raised the spectre of "institutional racism" in the Metropolitan Police.
The inquiry into the case of Sgt Gurpal Virdi, a Sikh, also identified a "blame culture" in the force.
Mr Virdi was suspended after he was alleged to have sent racist material through the internal mail system to himself and other ethnic minority officers and civilian staff.
The hate mail – which included the message 'Not wanted. Keep the police force white, leave or else' – was received on 24 December, 1997 and 19 January, 1998.
Today a 14–month inquiry into the treatment of Mr Virdi, who has since been exonerated, said it was possible to detect institutional racism in the force's disciplinary processes.
The report "recognised that the regulations used then and indeed the revised regulations applied mechanistically can, at best, result in bureaucracy, considerable workload and cost both personally and financially.
"At worst, institutional racism can be detected in its processes and procedures in disadvantaging ethnic minority groups."
The interim report said it was concerned that the force's disciplinary process needed to be "more flexible" in the light of the Stephen Lawrence inquiry's definition of institutional racism.
The inquiry, which was chaired by independent Metropolitan Police Authority member David Muir, added: "Unlike the report into the death of Stephen Lawrence, which focused on external trust and confidence, this inquiry has been concerned mostly with trust and confidence of the staff of the Metropolitan Police.
"This report highlights that there is little trust and confidence in relation to the internal handling of disciplinary and grievance matters.
"We highlight a perceived culture of blame, mechanistic compliance to regulations, a discouragement of admitting mistakes and of saying 'I'm sorry'.
"Whilst discipline is appropriate in cases of misconduct the organisation and the police service have to find a way to learn from its mistakes and where necessary pay the price, say 'sorry' and move on.
"A blame culture of slavish adherence to rules and where common sense is punished if things go wrong, does not make grievance resolution easy to accomplish.
"Poor treatment of staff in turn affects the way they treat people in the community."
Staff at Ealing Police Station who received the racist hate mail had been particularly affected by their experience and the person who sent it had still not been identified, the report said.
It added: "It seems that the original investigation appeared to have concluded that Sgt Virdi was responsible for the racist hate mail and then set about finding evidence to prove the case.
"Evidence was then obtained which purported to support this allegation."
Between 1998 and 2000 the Met has seen a 68% increase in the number of racial discrimination cases taken to employment tribunals compared with the national increase of 25%, the report said.
One chief inspector told the inquiry there had been a "reaction" since the 1999 publication of the MacPherson report into the Met's handling of the Stephen Lawrence inquiry.
He said: "Throughout my service I found a lack of understanding of direct and indirect racism, let alone institutional racism.
"In fact post McPherson there has been a reaction and I perceive that officers from minority groups are often over scrutinised."
A constable told the inquiry: "If an ethnic officer complains he is more likely to be ostracised by his colleagues. The supervising officers will try any method to discipline the ethnic officer. "Bad reports are written and cases withdrawn."
Mr Virdi was arrested on April 15, 1998 but the Crown Prosecution Service decided not to proceed with criminal charges.
But on February 7, 2000 he appeared before a police disciplinary tribunal and on March 3 was found guilty and dismissed from the force.
He took the Met to an employment tribunal and on August 23 that year it found that he had been racially discriminated against.
Mr Virdi then appealed against the decision of the Police Disciplinary Tribunal and on November 20, 2000 was reinstated.
Because of legal issues relating to the employment tribunal he has yet to return to work.
Mr Muir told BBC Radio 4's Today programme: "I think from all the evidence we heard there are ways in which racism creeps into the equation in ways that are unhelpful at this particular stage."
Mr Virdi said today: "This is another damming report into the Metropolitan Police Service. It shows racism is still rife in the force."
But he said the Metropolitan Police Authority had lost the opportunity to "name and shame" officers who had contributed to the debacle.
He had the names of 15 officers who he believed should have been named – five were possible suspects for the original hate mail campaign and 10 were alleged to have been involved in covering up.
He said: "I have prepared a written submission with the names of suspects I suspect and people involved in the investigation.
"Nothing has been done. It was an opportunity for the MPA to name and shame and I think they have lost that opportunity.
"Some officers are now retiring with full pensions, some people have been promoted to units they don't deserve while I sit at home.
"They shouldn't have been allowed to get away with it.
"Why are we still keeping racist officers in the force."
Today's report had also been "watered down" dramatically from a hard hitting draft he had seen last year, he claimed.
Mr Virdi said he was determined to return to work. "The only way to fight racism is on the inside, from the inside there is a chance and I am determined to go back and fight it."
Mr Virdi, who saw both his parents die shortly after he was falsely accused, said: "For both parents to see their son go through hell and not see him vindicated was not fair on them."
His 13–year–old daughter and 11–year–old son also felt alienated from the police after his home was searched for seven hours in April 1998, he said.
At the original employment tribunal Mr Virdi was awarded £150,000 for race discrimination. He brought a second tribunal hearing for unfair dismissal by three commanders, but he and the Met agreed to settle out of court.
He was initially offered £75,000 for loss of career and £125,000 for injury to feelings, but the amount is still being discussed, Mr Virdi said.
He said: "Money has never been the issue here, the issue was an apology."
Mr Virdi's wife, Sathat, said: "The easy option would have been to take the money and go away and spend it. This is the hard option – we want to fight to make sure this doesn't happen to other people."
Mr Virdi said he was already supporting 15 other cases of ethnic minority officers going through disciplinary procedures.
Met Deputy Commissioner Ian Blair said: "I apologise to Mr & Mrs Virdi for what happened to them, what clearly went wrong, the damage done."
He said Commissioner John Stevens would issue a further written apology following discussion of the issue at an MPA meeting at the end of this month.
Today's report was a "significant milestone" in our organisational learning and the way we are developing. In that context it stood alongside the Macpherson report on the handling of the Stephen Lawrence murder, he said.
Mr Blair said: "It has been a tragedy for Gurpal. We are determined to learn from it and we are determined to welcome him back into the organisation."
He said the Met had ignored legal advice to appeal against Mr Virdi's employment tribunal success. Sometimes it's worth saying enough is enough and at that point I decided if there was a shred of doubt around the initial disciplinary proceedings, and an employment tribunal is more than a shred of doubt, it was time to bring the matter to an end."
A re–investigation of the initial investigation is still going on, he said.
Report author David Muir was unable to estimate the overall cost of the Gurpal Virdi case over the last four years, but said it was a "considerable waste of resources."
Mr Virdi estimated the cost at a couple of million pounds.
Mr Muir denied that his report had been watered down, saying "nuances" had been changed for legal reasons.
The Commission for Racial Equality said the report "must now provide both the momentum and the framework for much needed change."
It said in a statement: "The recommendations clearly mark out just how firmly the Metropolitan Police needs to tackle its internal systems so that Gurpal Virdi's experience is never repeated.
"It is more than four years since Gurpal Virdi was wrongly accused of sending racist literature to colleagues.
"Since that time his personal integrity and reputation have been tarnished and his family life profoundly affected.
"He has fought his case with dignity throughout the long months of criminal investigation and then civil litigation as he sought to clear his name and prove that he was the victim of racial discrimination and not the perpetrator of crimes against his colleagues.
"Mr Virdi approached the CRE in 1999 for assistance with what turned out to be an extremely complex case.
"We took it up and went to considerable expense and extraordinary lengths to secure vital computer evidence and to give high quality legal support.
"We won the first set of proceedings over allegations that Mr Virdi had sent racist hate mail – and won against many people's expectations.
"The employment tribunal clearly recognised the significance of Mr Virdi's experience in reaching its findings.
"There remains a second set of tribunal proceedings and our priority is to ensure that Mr Virdi gets an outcome which is in his best interests.
"Our negotiations with the Metropolitan Police Authority and the Metropolitan Police Service continue to that end.
"Mr Virdi has continued to express his thanks for the support the CRE has given him and the way we have treated his case over the last two years.
"The most important result from today should be that the Metropolitan Police makes the changes needed to its culture and systems, and does so with openness and accountability."
The interim report recommended that on completion of the re–investigation into Mr Virdi's case any officers deemed to have acted inappropriately should face disciplinary action.
The re–investigation is being carried out by the West Midlands force under the supervision of the independent Police Complaints Authority.
The report also recommended the Met provide progress reports to the MPA on Mr Virdi's return to duties.
It said an overhaul of the system by which staff report grievances was needed to allow them to be resolved early before a full–blown employment tribunal.
Regulations governing the disciplinary process should be interpreted with "common sense and reasonableness" to eliminate unnecessary bureaucracy and unjustified costs, it said.
Bureaucracy was blamed for the two year time period it took to bring the disciplinary tribunal at which Mr Virdi was dismissed from the force in March 2000.
The tribunal heard a total of 51 witnesses over four weeks and the chairman had to take 400 pages of long hand notes.
The report described the search carried out at Mr Virdi's home as "excessive".
It criticised the CRE, which took up Mr Virdi's case, saying it should review its management of "caseload, auditing and delivery of an effective and professional service."
But Mr Virdi defended the CRE, saying: "I am not pleased by criticism of the CRE – the CRE should be praised for taking on such a test to bring this out in the open."
Mr Virdi criticised the Police Federation, which had no representative at the publication of today's report.
"A significant number of black staff do not have faith in the Federation and my case will be further discouragement," he said.
"This may account for the growing number of referrals to the CRE because the Federation are not doing their job fully, especially when it comes to black related issues."
The Black Police Association described the report as "another crushing blow" for the Met.