The elders are given vaugue instructions such as "the person being used for privleges must be exemplary" the problem is the word exemplary. What the hell does that even mean in JW terms anyway??
I remember elders meetings being dragged out for hours discussing if baptized brothers are exemplary enough to hold microphones, pray, read for the Bible Study... but not the WT Study, etc. etc. It is completely ridiculous. The problem is manifested in your dilema, different elders have different idea's of what exemplary is. In your case, that elder is rogue which means that he is being allowed to do these things and is not necessarily being sanctioned by the entire body of elders.
The COBE clearly has lost control no doubt because this rogue is connected in some way to the CO, the rest of the body, or the branch. Good luck with that!