Where a verb takes a clause as its object, the passive can promote either the clause or its subject.

'It is believed that…' promotes the whole clause; 'he is believed to be…' promotes the clause's subject and turns its verb into an infinitive. Both are standard and the paper sets both.

People believe he is honest. → It is believed that he is honest, or He is believed to be honest.

two correct passives

He is believed that he is honest.

the two forms combined

Where it bites

Mixing the frames. If the sentence starts with 'it', a 'that' clause must follow; if it starts with a person, an infinitive must.