'They would invite women for parties, we knew they weren't just friends but something else, ' said an anonymous former employee.
He said the department acknowledged that hundreds of Oxfam staff had done nothing wrong, "but the handling by the senior team about this investigation and their openness with us and the charity commission showed a lack of judgement".
Penny Mordaunt condemned the "horrific behaviour" of some Oxfam staff members and on Sunday accused the charity of lying "failing in its moral leadership".
"There is not a single organisation in which there has not been sexual abuse and exploitation and Oxfam is certainly no worse than most other worldwide organisations and actually has tried in many ways to be better", he said.
A spokesperson for Oxfam said the organisation was deeply shocked by the new allegations, admitting the problem was "sector-wide".
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He said: "Oxfam must now respond with complete transparency and openness and explain exactly what happened, what actions were taken and when they were taken and how they have sought to put these bad issues behind them".
Oxfam has denied any cover-up and has said the behaviour of some of its staff in Haiti had been "totally unacceptable".
Caroline Thomson, Oxfam's chairwoman of trustees in the United Kingdom, said the charity was "ashamed" of what had happened in Haiti, adding that it prides itself on "being a transparent organisation".
He said: "We were very open with the public that we were ashamed of the behaviour of our staff".
Oxfam chief executive Mark Goldring apologised on Saturday, saying he was "deeply ashamed of Oxfam's behaviour".
The move follows growing pressure on the charity after an investigation by The Times found young sex workers were hired by senior staff in Haiti after the 2010 natural disaster which devastated the island and left up to 300,000 people dead. "They still have information they should be giving to the authorities", she told the BBC's Andrew Marr show.
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'Our approach to this matter would have been different had the full details that have been reported been disclosed to us at the time, ' it said in a statement.
International Development Secretary Penny Mordaunt had requested a meeting with Oxfam's senior team "at the earliest opportunity", the spokesman said.
Marr said: "That was a lie, wasn't it?"
Ms Mordaunt replied: 'Well, quite'.
Mordaunt expected charities to "co-operate fully with. authorities, and we will cease to fund any organisation that does not".
Ms Mordaunt said: "I am writing to all United Kingdom charities which receive United Kingdom aid, insisting that they spell out the steps they are taking to ensure their safeguarding policies are fully in place and work properly, declare all safeguarding concerns they are aware of, and confirm they have referred all concerns they have about specific cases and individuals to the relevant authorities".
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Individuals closely implicated in the scandal went on to take leadership roles in other charities, which were not informed of the reasons they left Oxfam and even given glowing references, the investigation added.