Phoenix or Dodo – the dubious legacy of Phaneesh Murthy

A career doomed by sexual escapades.

By Rajiv Theodore

NEW DELHI: The razor sharp George Bernard Shaw once said— If history repeats itself and the unexpected always happens, how incapable must man be of learning from experience. It’s a pity that Phaneesh Murthy overlooked simple home truths.

Try to fathom this—about slightly more than 10 years or so ago, Murthy began his meteoric rise at Infosys. He was also the blue-eyed boy of Narayana Murthy, its co-founder. Armed with a board seat, Murthy was set for amazing heights but for the sexual escapades that cost him his job in 2002. The romp left him high and dry, jobless, a not so enviable reputation and put the clock back on his career by several years—a damage he was determined to rectify with a vengeance.

Proving all prophets of doom wrong, Murthy started fresh with California –based iGate where he devised out-of the box strategies to combat his rivals – particularly the one that challenged the traditional outsourcing industry model of charging clients for the number of hours put in by engineers on projects. Instead, he said iGate will charge only for discrete business outcomes agreed upon with clients.

Murthy’s claims were, however, dismissed by rivals as mere rhetoric; but the model itself has become popular and analysts now argue very soon everybody will be forced to follow suit.

The phoenix-like Murthy also helped iGate break into the billion dollar club with its ambitious 2011 acquisition of Patni for $1.2 billion. After losing his job at Infosys for carrying on a sexual relationship with his secretary Reka Maximovitch – a Bulgarian American – Murthy started an IT company Quintant Systems, which was acquired by iGate in 2004.  Murthy made iGate big from a little-known, loss-making company to one that is in the reckoning among the big boys.

Those were the steps to redemption, steps to stride back into the big league where he belonged.

Now the 49-year-old Murthy is making headlines again for all the wrong reasons. This ‘mistake’ has not only cost his job, but most likely his career too. Not only Murthy, this time Nasdaq-listed iGate is also set to be sued by  Roiz, the employee who earlier this week sent the company a legal notice alleging sexual harassment by its CEO, Phaneesh Murthy, which triggered the sacking of Murthy on Tuesday. To make matters worse he is also liable to lose his severance package of $1 million. This is the amount Murthy was entitled to get ‘upon termination other than for cause’.

Aiman-Smith & Marcy, the California-based law firm representing Roiz, said it was contemplating legal action against Murthy, as well as iGate, which is liable for any action of its CEO during his stint in the company. The firm said that Roiz was pregnant with Murthy’s child and when Murthy discovered this, he pressured Roiz to have an abortion. “When she refused, he told her to leave the company, quietly, to protect his position as CEO,” the law firm said.

 

Ina press release statement, the law firm says that the only reason Murthy was able to engage in “these abusive and harassing actions” was because he was Roiz’s employer. “The CEO of any company, as Mr. Murthy was here, has tremendous economic and personal power over his subordinates. Thus, Ms. Roiz was dependent on her continued employment for her basic living expenses and, further, Mr. Murthy conditioned her further employment and career advancement opportunities on her entering into a relationship with him which, eventually and reluctantly, she did. When she tried to extricate herself from the relationship, he reduced her responsibilities, threatened her continued employment, and pressured her to continue the relationship,” the release said.

It would be taking court action against iGate too, the firm said. “Under California law, because Mr. Murthy was an officer and director of iGate, his actions were the actions of iGate, and iGate, too, is liable for the acts of Mr Murthy. There remains the question of whether, given Mr. Murthy’s history of predatory actions toward female employees, iGate did all that it should have done to oversee and control Mr. Murthy and to provide some method for women at iGate to report his actions,” it said.

“After one dramatic incident which had a very bad impact on him and his family, he’s tried it again. It was extremely foolish of him to do this,” said TV Mohandas Pai, a former director of Infosy.

So, are Indian multinationals putting in place measures to prevent sexual harassment cases in their offices?

Private bank ICICI is among a few companies that are pre-emptive in dealing with a problem that is real and exists across corporate India.

Most Indian companies have an ostrich-like approach to the problem and would rather not talk about the problem, although they recognize that there should be zero tolerance for undue advantage taken in a boss-subordinate relationship.

It’s common knowledge in the country that women do face a lot of harassment at work which could be in the form of innuendoes or more, but companies feel this does not mean that women are always in the right, as care should be taken to guard against manipulation.

Companies such as Hindustan Unilever, P&G and Coca-Cola deal with harassment of any kind with zero tolerance. Coca-Cola has a host of policies, including a code to prevent sexual harassment, applicable to both sexes.

Scandals and scams have become the new norm in India. Many of them have been swept under the carpet and may not surface for a long time but many rear their heads by accidents. Companies in India though have become conscious of taking action and putting rules of conduct in place to enforce the code of sexual harassment in the workspace, even if that means seeing off a star performer like the iGate CEO.

To contact the author, e-mail: editor@americanbazaaronline.com

2 Comments

  1. This is a high profile case. Indian companies routinely browbeat female employees when they bring up such behavior by senior managers.

    They have beautiful anti harassment documents signed by everyone. When there is a real case, it all comes to some bigger manager “counseling” the female employee.

    They tell them not to go to the ethics or harassment committee. They make the manager in question issue some apology and that’s the end of the matter.

    Not so for the complainant. She’s then harassed by HR on various petty matters. They (the women) all quit within 6-12 months of complaining of sexual harassment.

    • HR puts the female employee on bench. Meaning no project work. This continues 2-3 months.

      Then hr calls them and says your performance is under par.

      She’ll plead, “I’ve not had a project”.
      Hr says, “That’s not my concern. Here’s 2 months pay as your severance. You may leave now”.

      HR threatens them verbally (nothing by email) that if they don’t take this offer then they’d be fired with no experience letter.

      I know 3 such cases. There are thousands.

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