HEALTH Secretary Jeremy Hunt will not compel the former head of NHS Croydon to explain a £28 million misreporting of the trust's finances.
Caroline Taylor repeatedly refused to give evidence to a committee of councillors investigating the scandal.
They wrote to Mr Hunt in May and asked him to compel her, and other key figures, to answer their questions.
Mr Hunt, who replied to the letter this week, said it was "not possible" for him to intervene because he did not have the authority.
He said primary care trust (PCT) chief executives answered to Sir David Nicholson, the head of NHS England.
Mr Hunt did, however, say new guidelines would be adopted as a result of the Joint Health and Overview Scrutiny Committee's (JHOSC)report.
These would grant future committees extra powers to call witnesses currently employed by the NHS.
He rejected calls to extend those powers to former employees, which was a recommendation of the JHOSC report.
Committee chairman Jason Cummings said he was "frustrated" at the lack of action over Ms Taylor, but encouraged by aspects of Mr Hunt's response.
He said: "We're disappointed that she is not going to be compelled to answer questions with regard to what went on.
"That disappointment is tempered somewhat by the clarification he has agreed to in terms of official scrutiny guidelines.
"If those had been enacted prior to our investigation we would have had more opportunity to speak to different people from the PCT who would only put one person in front of us."
NHS Croydon posted a £5.54m surplus in 2010/11 when it was later revealed to have overspent by £23m.
NHS London's investigation blamed system errors and said health services had not been affected. It found no individual at fault.
But Dr Peter Brambleby, the former director of public health who resigned over his misgivings about the PCT, said the financial mismanagement had led to a screening programme for heart disease and stroke to be scaled back.
In response six local authorities set up a joint scrutiny committee to investigate, which concluded the misspending had been "deliberately hidden".
But its work was hampered after key players refused to take part, including Ms Taylor, who earned £145,000 a year as chief executive and went on to be administrator at the now dissolved South London Healthcare NHS Trust.
Finance director Stephen O'Brien and Mark Phillips, the interim deputy director of finance who made "unwarranted adjustments" to the agreement of balances while in charge of the trust's cash also declined to take part.
NHS London then fastidiously stuck to guidelines which meant they only needed to send one official to the hearings.
In a letter to the JHOSC, Mr Hunt said new advice would make it clear that non-executive directors and NHS employees "must cooperate fully with scrutiny, with complete openness to financial management".
He said he was "unable" to extend the guidelines to compelling former employees, such as Mr Phillips, to take part, because it was "essential" the responsibility lay with current staff.
Mr Hunt added: "I recognise the frustration of the committee in not being able to compel the former chief executive of Croydon PCT to attend its meetings and answer questions.
"It is essential that local government scrutiny functions can hold local NHS to account on behalf of their communities."
Referring to the report, he said: "Recommendation 9.4 proposes the Secretary of State should use his...powers to compel the former chief executive of the primary care trust to give an account of events in Croydon.
"This is not possible. PCT chiefs were accountable to Sir David Nicholson, as the NHS Chief Executive, and account officer for NHS expenditure.
"The Secretary of State does not have accounting officer powers.
"The permanent secretary of the Department of Health is an accounting officer, but there was no accountability line from a PCT chief executive to the Department of Health's permanent secretary."
A source told the Advertiser that members of the committee felt Mr Hunt had "passed the buck" and questioned why it had taken him six months to say it was not his responsibility.
Cllr Cummings said it was unlikely the council would pursue the matter with Mr Nicholson, but added: "I don't fully accept that he is responsible. Who did he report to?
"It's one thing to say perhaps we should have asked Mr Nicholson, but we've gone to his boss. There are lines that go all the way down from Jeremy Hunt."
Mr Hunt said new guidelines would be published shortly.
His letter draws to a close the work of a committee which, by Cllr Cummings'own admission, failed to hold those responsible for the scandal to account.
But the Heathfield councillor said the investigation had not been a total failure.
He said: "We may not have achieved all our goals but I believe the problems we shed light on are far less likely to occur again as a result of the committee's work."
