What caused the ATC to pass incorrect information to the flight crew was that they had no reason to mistrust their own instruments. The altitude information displayed to the controller was transmitted from the aircraft itself, and at the time the controller was no more aware of the issue on board the aircraft than the flight crew were.
The NTSB, although not the investigating authority did produce a short report which noted that:
Section 12-25-01 of the Boeing 757 Maintenance Manual contains the instruction for cleaning and
polishing the airplane. When preparing the airplane for cleaning and polishing, maintenance
personnel are instructed to prepare the airplane by taping moisture-resistant paper over the static
ports to prevent the entry of any contaminant
The safety advice which came from this was:
Immediately review and amend, as necessary, all airplane maintenance manuals
to require operators to use only standardized, highly conspicuous covers with
warning flags attached in any situation in which static ports would need to be
Ultimately the crash was caused by failure of the maintenance crew to remove the static port tape, failure of the flight crew to spot this defect on inspection. (The following quotes are from here).
It can be deduced from the investigation carried out that the maintenance staff did
not remove the protective adhesive tape from the static ports. This tape was not
detected during the various phases of the aircraft's release to the line mechanic, its
transfer to the passenger boarding apron and, lastly, the inspection by the crew
responsible for the flight (the walk-around or pre-flight check), which was carried
out by the pilot-in-command
Together with failure of the flight crew to respond appropriately to the ground proximity warning system.
The pilot-in-command [...] made a
personal error by not complying with the procedure for GPWS alarms and not
noticing the readings of the radio altimeters in order to discard everything which he
believed to be fictitious
The co-pilot [...] made a personal error by not
being more insistent, assertive and convincing in alerting the pilot-in-command
much more emphatically to the ground proximity alarms.