The National Gallery of Australia says its reputation has been damaged by claims it knowingly purchased a stolen statue, which had since been returned to its country of origin, India, by Prime Minister Tony Abbott.
The 900-year-old bronze statue, the Shiva Nataraja, or Dancing Shiva, was allegedly looted from a temple in India.
The NGA bought the statue for $5 million in 2008 from disgraced New York art dealer Subhash Kapoor.
The alleged smuggler is now facing criminal charges in India.
Earlier this year, the Indian Government made a formal request for the statue's return.
The Prime Minister agreed to the request and has presented it to Indian Prime Minister Narendra Modi, along with another stone sculpture.
In March, Four Corners reported claims that the sole expert with whom the NGA consulted when deciding on the purchase of Dancing Shiva had categorically denied giving the gallery advice.
In the report, George Brandis, the Attorney-General and Minister for the Arts, strongly criticised the NGA for its decision to buy the artefact.
'NGA would not purchase stolen, looted item': Radford
In a statement, NGA director Ron Radford said the gallery had fully co-operated with the authorities in its investigation of the matter.
"The National Gallery of Australia would never knowingly purchase a stolen or looted item," Dr Radford said.
"Accusations surrounding the gallery's acquisition of the Shiva have been damaging to the reputation of gallery."
Dr Radford defended the NGA's actions.
"Some have been quick to judge, suggesting the gallery rushed into the purchase relying only on Kapoor's reputation and reassurances," he said.
"They have ignored or glossed over the lengthy, comprehensive and independent research that the gallery undertook before acquisition.
Dr Radford said the NGA had independently researched the statue's origins, according to international best practice.
"Despite these efforts, court proceedings may yet confirm that the gallery has been a victim of a most audacious fraud.
"In the context of intergovernmental relations and the possible legal proceedings against Mr Kapoor, the gallery has been not in a position to fully defend its actions regarding this issue."