This expression is used by many to indicate that an exception in some way confirms a rule. Others say that the exception tests the rule. In its original legal sense, it meant that a rule could sometimes be inferred from an exemption or exception. In general use, the first meaning predominates nowadays, much to the annoyance of some pedants.
This expression 'eye-wash' is generally used to cover up the anxiety of a person who is seeking a concrete reply or justification for an act or an event that had affected his personal image or caused him a loss. The affected person usually represents his case to the higher-ups and puts forth his demands for redressal. But the authority, in order to avoid embarassment to his organisation or to himself, is not in a position to expose the entire material or evidence which in turn tell upon the credibility of the organisation. In such circumstances, he will usually call for an investigation to satisfy the complainant, but will not be keen in disposing the case. The authority will drag on the issue, (at the same time pretending to be serious) until the seriousness of the issue dies down and no finality is reached. So, ' The investigation on the issue by the authority is an eye-wash'.