Where I work in healthcare honestly and owning up is encouraged and unless there is major negligence not often punished. They just want to try learn why the mistake happened and look for ways to prevent it going forward. My buddy said for his company if an accident happens WorkSafe is not out to punish as long as they are very forward and honest. Again they want to learn how to avoid it happening again. Punishment only scares others to try hide mistakes.

I think they missed a big opportunity to instead of firing the guy sit him down and stress how not okay this was and that it harms the credibility and he needs to understand that and make a proper apology. They could make him do some education like ethical reporting responsibilities or whatever.

Then like you say not just hide the article but point out the mistakes and corrections. Describe the mistake and how credible reporting is their priority and the author will be given further education to avoid this happening again. They could also make new policies like going forward all articles that use AI for search results must attempt to find a source for that information. This would build trust not harm it in my opinion.