His call comes after an Industrial Tribunal ruled that religious discrimination was used in the appointment of the post of chairman of Northern Ireland Water (NIW) under Conor Murphy's reign.
Mr Dallat said: "The finding of this Industrial Tribunal is disturbing and by necessity will have serious repercussions beyond this one incident.
"It is now essential that an independent inquiry is held into all appointments and dismissals by NIW while Conor Murphy was Minister. I believe such an inquiry would allow a probe into other appointments which merit such a measure.
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"This certainly applies to the controversial sacking of the four non-executive Directors of NIW, including that of Declan Gormley. There is an absolute need to re-open that case and to re-examine the investigation by the Audit Office and the Report from the Public Accounts Committee which clearly demonstrates serious discrepancies in the evidence given by some participants including the Permanent Secretary Paul Priestly who was subsequently suspended.
"As a result of this conflict in submitted evidence, the characters of four people, who I believe to be completely innocent, were deliberately tarnished.
"The volatile leadership within NIW, under Conor Murphy’s Ministry reeks of injustice. It is the tax payer who is left to pick up the tab for this injustice, in more ways than one.
"In the last three years alone NIW has spent £4.8m on legal fees. I have asked for a breakdown of this horrendous legal bill to establish how much of it was spent defending the indefensible in bad decisions."
(CD)
