The Magpies have been looking at FC Twente defender Douglas for a number of months, and were hoping to seal his arrival this summer on a free transfer.
Having painstakingly edged towards an agreement, Kinnear, now responsible for all transfer activity after being hired as director of football, pulled the plug, having never heard of the player.
Douglas, 25, has been involved in the Champions League and been selected in the Netherlands squad (though he has yet to make his debut).
But the Mirror claims that Kinnear had to sound out former Twente manager Steve McClaren because he did not know of the defender.
Llambias, having put the call in to tell Douglas the move was off, has now tendered his resignation, while it is believed that chief scout Graham Carr, who must also report to Kinnear in the new regime, is also considering his position.
Carr has been acknowledged as having found some fine players for relatively small fees, including the likes of Yohan Cabaye and Papiss Cisse, during his time at St James' Park.