The organizers really showed their lack of professionalism not catching that mess before it got public, but really, the author concerned by this had one elegant, professional and sensical thing to do - which would have saved everyone's face: ask for or accept offered apologies and announce she is withdrawing her book from the competition to avoid everyone, incl. herself, any further embarassament. She should have refused right away to be artificially added to the short list (which fooled no one), and if it didn't occur to her for some reason, she should have withdrawn her book the minute the chairman privately made it obvious it's what he expected her to do. The whole story would have vanished the next day - mistakes do happen all the time. This only harms the reputation of an award she cares for enough to have entered, and it makes her look stupid for having accepted to be on that list when her book doesn't belong there. And it only publicizes her book isn't worthy of consideration for this award (though this may get her a whole bunch of pity readers and make her book sell much better than expected).