sox6
There's not necessarily any link between the British Midland B737 incident you mention and evidence (if what you say is correct) that "the CAA had just performed a check of the Quality Assurance department at British Midland, and though finding it wanting, had approved it because it believed the issues were being addressed."
Nor even, IMHO, if an audit of an organisation finds nothing needing to be addressed, which happens extremely rarely - if ever, in a large organisation.
However good a system in place, human beings still breach procedures/make mistakes. Human error is a fact of life. We take steps to minimise such mistakes, and put check systems in place in an attempt to detect any errors, but it is impossible to entirely prevent them because human beings make mistakes/fail to follow procedures.
Professional rules prevent me from saying anything about the specific incident because I advised British Midland at the time, but I can say that, although the consequences could have been disastrous (they weren't), the error which led to the B737 losing its oil (and consequently engines) was a human error which could IMHO have happened in any organisation.
Tudor Owen