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Ferguson says it lost faith in Kale

BS Markets Bureau in Mumbai

A F Ferguson & Co today said all its partners had lost faith in Y M Kale and had expressed the opinion that he should cease to be a partner in the firm.

"Accordingly, Kale has now ceased to be a partner in the firm with effect from August 7, 2002," a Ferguson statement stated. The statement underlined the extent to which the firm had lost faith in Kale by pointing out Ferguson would "normally always stand by its partners."

Giving a detailed account of what led to Kale's departure, Ferguson stated its managing partner, Ashok Mahindra, had conducted an internal inquiry on Kale after the Tata Finance chairman Ishaat Hussain met him on July 9 and July 10 to point out the inaccuracies in the special report submitted by the firm on April 24.

There, Hussain had also told the managing partner the Tatas had lost confidence in Kale, who authored the special report on Tata Finance.

Ferguson conducted the internal inquiry through a series of meetings with the senior partners and former partners of the firm, including those under whom Kale had worked.

Kale too was given an opportunity to present his views. "In the course of these meetings, a number of issues relating to Kale's past conduct emerged," the statement said.

On July 20, an emergency meeting of 14 senior and former partners was held, in which Kale also presented his views. (Another two rounds of emergency meetings were held on August 5 and August 6, where Kale presented his views again.

Ferguson denied it had been coerced by the Tatas into asking for Kale's resignation. "His exit was the result of a decision that was unanimously taken by the partners of the firm consequent to a detailed internal inquiry," Ferguson said.

Justifying the decision to withdraw the report on the grounds of good corporate governance, Ferguson stated a new independent team from within the firm would review the report and produce a new one. The new team will be headed by a senior partner.

Ferguson also clarified the fees for audit and other work done by Ferguson for the Tata group were around Rs 25 million last year, which were insignificant compared to its gross annual fees and way below the limit set by the Institute of Chartered Accountants of India's self-regulatory code of ethics.

It further pointed out only one of its employees working on the Tata Finance special audit had resigned in February 2002 after giving prior notice, but added the resignation had nothing to do with the current imbroglio. The remaining members of the core team continue with the company.

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