If he has been there for some time, and I assume has had an appraisal in that time, which shows he is competent at his job, then his HR manager might be nice to him and allow him to carry on.
I would own up, but be a real creep and tell them you (sorry, he) was so desperate to get the job you (sorry, he) lied about the qualification and if it causes a problem, you (sorry, he) would offer your resignation.
If you (sorry, he) resign, they cannot write you a "bad" reference!