A critical report into the accounts of a major Indian financial group Tata Finance has been withdrawn after it was leaked to the media.

[The] standing and credibility of our firm are of utmost importance to us and we decided to withdraw the report and produce a new one

AF Ferguson

In mid-2001, Tata Finance, a subsidiary of the Tata Group, dismissed five executives, including managing director Dilip Pendse, for apparent accounting irregularities involving about 5bn rupees.

Tata Finance commissioned leading chartered accountancy firm AF Ferguson to produce a report on the affair.

In a statement, Ferguson said Tata Finance had in July questioned the preparation of the report, the conclusions drawn and its overall credibility.

"Our preliminary reading of the report led us to believe that the client's concerns seemed to be well placed and there were grounds for a detailed review of the report," Ferguson said in statement.

Extracts leaked to the Indian press appeared to give a damning criticism of corporate governance.

Credibility at stake

Ferguson said it has decided to withdraw its report and commission a new one from an independent team.

In a statement, the firm said the "standing and credibility of our firm are of utmost importance to us and we. in a letter on 2 August, decided to withdraw the report and produce a new one".

The company expressed concern about the leaking of the "strictly confidential" report and has returned its consultancy fees of 9.5m rupees to Tata.

"We now expect that there will be no further publication of its contents, nor any attribution of these to us," Ferguson said.