The Victorian government spent billions of dollars supporting small businesses affected by the lockdowns during the pandemic.
A report by the state's integrity watchdog on Thursday found an estimated $257 million went to 9000 ineligible businesses.
Rather than report the losses, the probe found two senior bureaucrats withheld the suspected costs from their superiors.
Mr Carroll, who is now the premier, said on Thursday he was disappointed by the conduct exposed by the watchdog, which he had been briefed on the day prior.
"I've always acted ... very professionally and always tried to bring the best out in our public service," he told reporters.
"We need to make sure that every public servant knows their job is to provide frank and fearless advice."
The watchdog made no adverse findings or comments against Mr Carroll, who served a period as minister for industry support and recovery.
The IBAC investigation commenced in August 2022 following whistleblower allegations of corrupt conduct among senior public officials within the since-revamped Department of Jobs, Precincts and Regions.
It concerned their response to revelations the department had used a flawed metric when assessing eligibility for COVID-19 era Business Cost Assistance Program grants.
The assessment relied on GST registrations to determine whether businesses were operational prior to lockdowns.
But it failed to recognise businesses can lawfully backdate their registrations, meaning some may give a false impression of having been disrupted.
IBAC Commissioner Victoria Elliott said the ensuing cover-up by select senior bureaucrats fell short of the public's expectations.
"This was not a one-off event, nor was it due to an oversight," the Independent Broad-based Anti-corruption Commission report reads.
"Decisions were made to withhold information about the magnitude of the loss and misleading information was subsequently created and disseminated over an extended period of time."
Commissioner Elliot praised the "bravery" of the whistleblowers whose allegations triggered the investigation.
Opposition Leader Jess Wilson on Thursday told reporters the findings were concerning.
"We have a report from IBAC identifying more corruption and more misuse of taxpayer money," she said.
"It's just more evidence of a government that has mismanaged taxpayer money and more evidence that corruption is rife."
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