I believe I already answered it in that PADI will cite that the certifying instructor believes that the diver met all performance requirements. They will do nothing. If there is litigation, it is the instructor who will be under the spotlight.
How else could it be? If the certifying instructor's judgment was that someone met standards and some unknown spectator has a different judgment, how could any agency act on that?
They will, however, act if specific standards are not met as determined by objective evidence, not a disagreement about judgment. For example, let's say you observed the instructor and student go to 80 feet during an OW training dive. They will act on something like that, because it is not judgment. They will, however, investigate the situation first.
Here are two stories from my experience that shows how the process works.
One: When I was still a fairly new diver, I was diving in a south Pacific resort area, and for two days one of the divers on our boat was a young man from the Netherlands. He was a very poor diver, and I felt that the DM should have paid more attention to him. On both dives the first day, he was low on air very quickly, and the DM sent him to the surface alone, which concerned me. On the second day, the same thing happened on the first dive, after which the diver overate during the surface interval and felt too sick to do the second dive. When we got back to the shop, I was shocked to see him greeted by an instructor. It turned out the four dives those two days, only 3 of which he did, were his OW certification dives. He had done no skills on those dives, and his instructor was not present. He was now a certified diver.
As soon as I got home, I sent a letter to PADI. I got a response back quickly, thanking me and telling me they would investigate the matter thoroughly. They told me I would not be told the results of the investigation. I later checked the PADI website and saw that the instructor had been expelled. In order to do that, they must have checked the dates I was there, determined who had been certified, contacted that individual, and decided that what I had told them was true. They would not have done it just on my say-so, and I would not expect them to.
Two: In my first two years as a professional, I was at first a DM and then an AI assisting in classes, and I assisted in a lot of OW dives in a local reservoir, usually with one specific instructor. All the classes were done with a PVC platform we installed for each class, with that platform suspended from 4 buoys. The CESAs were done very carefully and by the book. The instructor took the students up one of the lines to the buoy on the surface. After students are certified, most receive surveys from PADI, and one of those students (only one) had indicated that the instructor had not used an ascent line for the CESA, as is required. As a result, PADI had opened an investigation of the instructor. They eventually decided that the student was mistaken, probably because everyone else in the class remembered using a line.