Can someone interview their sibling? I just had a job interview (permanent lecturer position not connected to a grant) and, immediately afterwards, I found out that the person who is the group leader and responsible for recruiting is the sibling of one of the candidates.

I made sure that this is actually the case. It is not a suspicion; it is a fact.

Could this be justified under some circumstances? This seems ridiculous. Should I raise a complaint?

This in the UK.
Interviewing a family member is not permitted. Yes, you should raise a complaint. Do it politely, of course. But in the end, you have to ask yourself whether or not a work group that would even try to get away with this is one you want to get involved with.