NSW police who interviewed children reporting sexual abuse allowed a man identified later as one of their abusers to sit in on the interview.
The police also sent the children back to the foster home run by the abuser Burt Gordon and his son-in-law where they were again beaten and raped.
Peter Yeomans, a detective inspector with the NSW Child Abuse Squad told a royal commission inquiry that police in Brewarrina did not follow procedures in 1980 when the children came forward.
He said allowing adult witnesses to sit in on the interviews and sending the girls back to the foster home should never have happened and breached regulations even by the standards in 1980.
By the time police spoke to the girls again eight days later they had changed their story.
Neither police or the NSW Department of Social Services (DoCs) acted on those complaints or others in 1983 and 1984 even though local welfare officers recorded concerns about the home, called Bethcar.
Det Insp Yeomans said Gordon's presence at one of the interviews was "a real problem".
Gordon and his wife Edith ran Bethcar from 1969 to 1989 and physically and sexually abused children, as did their son-in-law Colin Gibson.
The Gordons are now dead but Gibson is in jail until 2021 on two sentences of having raped and assaulted children at Bethcar.
When former Bethcar residents came forward in 2006 police prepared criminal cases against both Gordon and Gibson. Gordon died before his case went to court.
Det Insp Yeomans said what happened at Bethcar could not happen under the present system, where "the children's welfare, in all these types of matters, is the paramount consideration."
There was no police documentation on the Bethcar interviews, he said.
The Royal Commission into Institutional Responses to Child Sexual Abuse is looking at not only what happened at Bethcar but how the Crown Solicitors Office (CSO) acting for DoCs handled a civil claim for compensation by 15 former Bethcar residents in 2008.
On Wednesday barrister Paul Arblaster, who was employed to defend the claim by the CSO, was asked about the omission of crucial evidence by the state when it argued in 2012 to have the case struck out because crucial witnesses were dead or not available.
He defended the strategy of not telling a court about relevant witnesses tracked down for the CSO by private investigator Peter Maxwell.
Mr Maxwell swore affidavits which supported the argument the state would not get a fair trial because so much time had lapsed that witnesses could not found.
When pressed Mr Arblaster agreed the omissions were deliberate but argued the strategy was not "sinister".
The hearing continues on Thursday with Mr Saidi in the witness stand.
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