Former BBC director general Mark Thompson has been accused of misleading MPs over the failure of its £100 million Digital Media Initiative (DMI).
At a session of the House of Commons’ Public Accounts Committee questioning senior BBC figures on the doomed project, chair Margaret Hodge said that Thompson had told MPs that DMI was on track and being used to make programmes “and that just wasn't true”.
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Hodge said she was concerned that a letter from a BBC whistleblower to the chairman of BBC Trust, Lord Patten, written last year and detailing concerns about the scheme, had only recently emerged.
DMI was scrapped last month after five years with the BBC writing off £98.4 million after admitting the project had “struggled to keep pace with new developments”.
BBC trustee Anthony Fry told the committee: “From a personal point of view, this is the most seriously embarrassing thing I have ever seen.”
Fry added that BBC Future Media & Technology director Erik Huggers, who has now left the corporation, led a feeling that the BBC could “walk on water” following successes such as its Olympics coverage and iPlayer launch.
He told MPs: "One of things I think has been unfortunate about all of this is that on the back of the successful delivery of the iPlayer, on the back of what the BBC was doing, attempting to achieve and did achieve successfully in terms of delivering the Olympics, which was very high technology compared with everything else, I think there was a feeling, led by Mr Huggers, that actually the BBC could walk on water," he said.
"There was not enough technological expertise around either the trust table or, I might argue, the executive board table to actually go ahead with something of this scale or complexity."
PricewaterhouseCoopers is working on an internal report on DMI which should be published later this year.
This will focus on what it labelled a "complete catastrophe from the licence fee payers viewpoint”.
A BBC spokesman said: "The BBC takes seriously its responsibility to provide the NAO and Public Accounts Committee with the most accurate information at all times. As has been made clear, the BBC will now be doing all it can to assist the independent review of the DMI project.