Former archbishop Frank Little kept "secret files" detailing complaints about priests' sexual conduct with adults, the royal commission has heard.
Bishop Peter Connors testified that Little, who was archbishop of Melbourne from 1974 to 1996, once directed him to visit a woman who had fallen pregnant to a priest.
Little had already moved the priest to a different parish but wanted his deputy to convince the mother to give up her baby.
"He eventually said to me, 'I've got to move him to another state and will you go and meet the woman and get her to get the baby adopted.' And I said, 'She will not do that'."
Appearing before the child abuse royal commission on Friday, Bishop Connors, former vicar-general, said he failed to investigate allegations against paedophile priest Peter Searson because he "foolishly trusted" him.
His comments related to Searson's explanation about using a tape recorder and a kneeler in the confessional with children.
"I would have to say that I acted, in this particular matter like that, without proper diligence, a proper investigation," he said.
Earlier, former regional Catholic education consultant Allan Dooley admitted he failed to escalate concerns to his superiors about Searson posing a danger to children.
The failure to recommend the priest's removal from the parish left more than 400 children exposed to the paedophile, the commission heard.
Mr Dooley said he believed in the mid-1980s that Searson should not have access to children unless another adult was present.
"Because of his manner, because of the way he would deal with children ... the way he would intimidate and threaten," he told the commission.
Mr Dooley agreed that Searson should have been removed from Holy Family Primary School in Doveton and that it was his job to escalate complaints, but he had not done so.
As regional consultant for the Catholic Education Office, Mr Dooley oversaw more than 20 schools in Melbourne, including Holy Family.
The commission also heard that Mr Dooley did not support the then principal, Graeme Sleeman, who resigned after repeatedly raising concerns about Searson's behaviour.
At the time, Mr Dooley described Mr Sleeman as being "obsessed" with Searson and having allowed himself to become distracted from his duties as principal.
This was despite personally holding the belief that Searson posed a risk to children. Mr Dooley said on Friday that he believed Searson might have abused a child in 1985.
Reports about Searson's increasingly alarming behaviour included that he threatened people with a gun, killed a cat and showed children a dead body in a coffin.
He was described in a Catholic Education Office document as an "extremely devious and dangerous man".
Asked by commission chairman Peter McClellan why he did not recommend to his superiors that something be done about Searson, Mr Dooley said: "In hindsight it seems obvious and I can't recollect why I wouldn't have done it at the time."
A victim of Searson's testified on Friday that he felt trapped during years of abuse.
The 34-year-old, identified as BVC, said he started serving as an altar boy for Searson in grade 5 and also volunteered in his garden.
One day Searson invited him into the presbytery and raped him, he said. The abuse continued for the next four or five years.
"I remember how that at the time I just felt trapped," he said. "It was like I'd woken up in this place thinking 'How the hell did I get here'. I didn't understand what was happening really."
Searson died in 2009 before facing any child sex charges. The church has compensated three of his victims.
The hearing in Melbourne continues.
