I can only speak with my background: non-union company , about 70 mariners in total employed, owner/ operator situation, all hiring/ firing done by port captain/port engineer.
You’ve had history with the individual, so if you think dementia is at play, at that age it is.
The big problem here IMO is blowback on the wiper for reporting the chief. So, if possible I would strive to keep their name out of it. Sometimes that’s not possible.
In my position as head of the vessel ops department, if this had been reported me I would first send a confidential email to all captains who have worked with the chief, asking them if they had heard of other similar situations with them, and if they thought the chief was competent.
If the answer was negative—that the chief was slipping— I would refer the situation to my opposite number, the port engineer. He would, at our company, gently tell the chief he was done here. I would the same.
If the captains did not report any negative situations I would then call the assistants the chief had sailed with and ask them. A touchy subject. I don’t like polling junior officers on their senior officer’s performance. But this would be one of the few cases where it would be warranted.
If several assistants reported similar behavior I would do the same as if several captains had reported the same behavior.
However, if no one else but the one wiper reported it then it’s time for talking with the chief. Which may be difficult, because in early dementia people will have good days and bad, and you may talk with them on a good day.
But usually by the time you investigate, several others will have noticed the behavior change.
And in somewhat analogous situations when I have confronted employees with health issues something like this it turns out that they welcomed it. They welcomed someone telling them that they had to move on. They were stuck in a groove and needed someone to push them out of it.
However, if talking with the chief disclosed no evidence of dementia, and no one else could corroborate it, I would also investigate the person who reported the incident if they were new to the company. It would not be the first time a new crew member was a villain trying to torpedo someone’s career.
I would avoid having a medical diagnosis made.
The legal issues around dismissing a senior officer can be overblown. When I’ve had to do it the cause for termination, if pressed, is that the officer no longer has the full trust of the company. In my state (WA) that’s enough.