Simple...

Sounds to me like some one (fed observer) was covering his button at the degradation of the other indoc student (both in the
Wrong). Action taken to a higher level incase the instructor reported both behaviors.

CYA folks, they are on the clock & getting paid.

FEDS MINDSET: I'm not actively observing you, but I am aware of you. Indirectly... because I'm the Fed getting paid on the Fed's dime, and want you comfortable, and to be yourselves. My job is not to observe you, but I can't help it because I'm the fed.

Folks... Any Federal offical who is off duty that observes a reportable activity has the obligation to call it in. It's his duty both on or off duty! You observe & give your opinions, because your an Aviation Legend. Like Geico... "It's what you do."