A judge branded the three-year police probe "seriously flawed" as he halted the first of three court martials amid problems of missing evidence and claims that witnesses were forced to make statements.
There are also fears that the Royal Military Police may have mishandled other cases, such as Operation Northmoor - the inquiry into alleged abuses by British soldiers in Afghanistan - and there are now calls for senior RMP officers to be investigated.
It was alleged that 16 instructors - all sergeants or corporals - ill-treated 28 school leavers while posted to the Army Foundation College in Harrogate, North Yorkshire.
The recruits told the court martial in Bulford, Wiltshire, that the instructors would get them fired up by making them play British Bulldog, by putting on "war faces" and getting them running between two hills - known as "heaven" and "hell" - ahead of bayonet training during a battle camp at Kirkcudbright, Dumfries and Galloway, in the summer of 2014.
It was then claimed that the teenagers, who were aged 16 or 17, were slapped or punched in the face, spat at, grabbed by the throat, were "clotheslined", had their faces submerged in mud or were ordered to eat animal manure.
But after eight days, the prosecution offered no evidence in 24 of the 31 charges the first 10 defendants faced - meaning five were acquitted and walked free from court.
The trial of the remaining five instructors continued for another day until Assistant Judge Advocate General Alan Large stayed proceedings, ruling they could not get a fair trial.
Following his ruling - in which he condemned the Royal Military Police for a "seriously flawed" and "totally blinkered approach" to the investigation - the prosecution indicated it would offer no evidence against a further six instructors.
Restrictions remained in force until the conclusion of the final court martial featuring two of the defendants from the first trial but at the 11th hour it was also dropped.
Now with all criminal proceedings over, it can now be revealed that the Royal Military Police botched the investigation by taking a "policy decision" not to secure evidence that might "undermine the prosecution's case".
It was split into 10 separate inquiries investigating complaints from 40 recruits against 30 instructors, which resulted in the failed prosecution of 16 defendants in three court martials.
Ten went on trial in February facing 31 charges, two from the first court martial were due to face trial in March accused of eight offences, with a further six instructors being tried in April on 24 charges.
The officer leading the investigation, Captain Teresa Spanton, did not question eyewitnesses - including a major, several captains and a warrant officer - because she believed they would lie in their witness statements - a decision described by the judge as "frankly, startling".
Handwritten accounts made by some recruits shortly after the alleged abuse have never been found and neither have up to 500 photographs of the training taken by an officer.
It also took two years to interview under caution the accused soldiers and another 12 months before they knew they were being charged.
Lewis Cherry, a Northern Ireland-based solicitor specialising in military law and who represented soldiers in all three court martials, said in a statement: "The three linked trials of instructors from AFC Harrogate over allegations made in 2014 have been stopped because of the grave irregularities uncovered in the police investigation.
"I represented soldiers in each of the trials and they and their families are relieved that the nightmare of these false allegations hanging over them for many years is over. It was clear from the outset there were disclosure problems, it was then found that this was because the Royal Military Police had made a policy decision from the outset not to properly investigate the allegations.
"This deliberate policy decision breached the Attorney General's guidelines and the Codes of Practice and then was concealed from the defence lawyers. Fortunately photographs taken and retained by an officer present showed that allegations made by some witnesses in the first trial were not true.
"A captain then gave evidence during the first trial about this policy decision and it seems this was approved at a higher level and sanctioned without comment during all RMP internal management checks from 2014 to 2018. These astonishing admissions resulted in the further trials being stopped.
"The current disclosure problems reported in the civilian courts are also occurring in the military courts. But these three cases expose a great worry - what other cases have been similarly affected? This policy decision was not taken by a lowly captain alone, those managing the RMP investigations over those years must themselves now be investigated."
A UK pacifist network said the case should have been investigated by the civilian police and tried in civilian courts.
The Peace Pledge Union said the collapse of the Harrogate inquiry was further evidence that the armed forces should not be allowed to police themselves and to try alleged abusers in their own courts.
Symon Hill, the group co-ordinator, has followed the Harrogate case closely.
He said: "This is outrageous. The Royal Military Police say they were delayed because of 'more urgent enquiries'. It is sickening to think that they do not regard investigating the alleged abuse of 16-year-olds as a priority.
"The Military Police and military courts have a clear conflict of interest. The armed forces are the only organisations allowed to maintain their own police force, to conduct their own criminal trials and to decide whether alleged abusers among their employees should be charged.
"Imagine if teachers accused of abusing 16-year-old pupils were investigated by their school's own police force and tried by a jury of teachers. In a democracy, every organisation must be open to public scrutiny, but the armed forces continue to behave as if they are above the law.
"We urgently need major changes to ensure that members of the armed forces are subject to the same laws, and share the same rights and responsibilities, as the rest of us."
Colonel Marcus Simson, deputy assistant chief of staff, personnel services in the Army Personnel Services Group, read a statement outside the court, saying: "We care about our soldiers above all else and do everything we can to ensure they live and train in a safe and secure environment.
"That's why as soon as these allegations were made in 2014 we asked the Royal Military Police to investigate.
"While there have been no criminal convictions we will consider carefully whether any internal actions or sanctions are required.
"Bullying is not tolerated and tough action is taken against those who fall short of our high standards.
"We care about our soldiers above all else and the Army works hard to prepare our instructors both to lead and look after their recruits."
Emma Norton, from human rights campaign group Liberty, said: "The collapse of this trial - and the catalogue of serious Royal Military Police failures that caused it - must be a wake-up call for the Ministry of Defence.
"The men and women who serve in our armed forces deserve better than this shoddy second-rate justice system.
"When someone commits a crime on British soil - whether soldier or civilian - that crime should be investigated by civilian police.
"As this scathing ruling shows, military police do not have the resources, expertise or impartiality to conduct proper, fair investigations - and, when they fail, soldiers and their families have no independent oversight body to turn to for help."
An Army spokeswoman said: "Despite the outcome, we will consider carefully whether any internal disciplinary action is necessary.
"Given this ruling, the Service Prosecuting Authority and the Royal Military Police will be conducting a review to ensure that lessons are learned."