A former Victorian school principal ran his college as a "personal fiefdom", hiring and promoting family members and using public funds to support their companies, the ombudsman has found.

In a scathing report tabled in parliament on Wednesday, Ombudsman Deborah Glass said former Bendigo South East College principal Ernest Fleming's actions were a "case study in nepotism".

Glass said Fleming abused his position by hiring and promoting his wife and son and enabling for benefits to flow to companies owned by another son.

She also took aim at the failure of the education department's regional office to act earlier, despite receiving at least 21 complaints about Fleming’s conduct between August 2014 and February 2016.

The probe found Fleming employed his wife as his personal assistant, despite no record of her applying for the job.

He also hired one of his sons as an athlete development program manager, over a more qualified candidate for the role.

“For many years, Ernest Fleming ran the college as a personal fiefdom, employing and promoting family members, providing substantial benefits to his son’s business partner and companies owned by his son, and using public funds as he saw fit without consultation or approval from the college council,” Glass said.

The probe found Fleming hired a man - who had worked for Bendigo Coachlines before buying the company with Fleming's son - as the school bus coordinator. 

That man's wife later took on that role, allowing the couple to give college business to Bendigo Coachlines, at the expense of other local bus firms.

The conduct was authorised and facilitated by Fleming, whose family and associates obtained "substantial private benefits out of public funds, including at the expense of bus operators in the Bendigo region not connected to the family”.

Glass said his actions showed little regard for policies, laws and obligations to avoid conflicts of interest, use his power for authorised purposes and uphold integrity and financial probity standards.

Fleming resigned as principal in May after the education department terminated his employment, following an internal investigation.

Glass said although Fleming spent many years as an educator and enjoyed an excellent reputation with many in the community, his conduct impacted the school's culture and the careers of numerous past and current teachers and staff.

“It is important that the department reflect on the conduct identified by the investigation and the regional office’s failure to respond to it appropriately, to ensure such conduct is not allowed to flourish in future,” she said.