A £4m police inquiry into one of its own senior officers was "seriously flawed", the Independent Police Complaints Commission (IPCC) has ruled.
Mr Dizaei is one of the most senior ethnic minority officers in the Met
It found the four-year investigation of Supt Ali Dizaei, one of Britain's top ethnic minority officers, was mishandled "from start to finish".
It said Mr Dizaei, who was cleared of two dishonesty charges last year, should not face disciplinary action.
But he should not be considered for promotion for 12 months, it ruled.
Mr Dizaei was at the centre of what is thought to be the most expensive police inquiry into a single officer - Operation Helios.
Code of conduct
He was eventually tried over claims he made about racist damage to his car and was cleared. A charge relating to mileage expenses was dropped.
The former Police Complaints Authority (PCA) had recommended he face a police tribunal over nine alleged breaches of the police code of conduct.
While the IPCC found it was not in the public interest to take disciplinary action against Mr Dizaei, it found the charges against him were "capable of proof".
But the chances of his conduct being repeated were low and he had already "paid penance".
Mr Dizaei has accepted two areas of his conduct fell far below the standards expected of a police officer and is to receive advice from his chief officer.
In its report, the IPCC criticised a private and confidential deal made with Mr Dizaei and the delay in disclosing it to the PCA.
IPCC chairman Nick Hardwick said: "We feel that there were grievous errors of judgment in the handling of his case and the people who made them were the Met.
"They are responsible for this mess and they need to learn from it to make sure that it does not happen again."
It outlined several areas where the Met needed to improve - including a reform of its disciplinary system.
The Met welcomed the decision not to proceed with disciplinary proceedings against Mr Dizaei, from Henley-on-Thames, Oxfordshire.
But the force rejected criticism it had confused promoting a diversity recruitment plan with its duty to uphold the police discipline system.
A spokesman said: "The strategy to recruit and retain more people from black and minority ethnic groups and working in partnership with our staff associations to achieve this, were carefully weighed in terms of their significance in relation to this case and we make no apologies for that.
"We reject the criticism that putting criminal matters before those of
misconduct amounted to a lack of strategic direction.
"This is a misunderstanding of the law as it stands. We are currently
prevented from dealing with matters of misconduct until all criminal matters are
The National Black Police Association welcomed the ruling that Mr Dizaei would not face disciplinary charges.