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Resolution Evades this Settlement

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DQI Bureau
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What a mess! A settlement has been reached. The payment is due to be made.

All the three parties to the case are living their own lives. But the issue just

doesn’t seem to settle down elegantly.

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A year-and-a-half ago, Reka Maximovitch filed a sexual harassment case

against Infosys Technologies and its high-profile director (sales and marketing)

Phaneesh Murthy. Late this April, Infosys closed the case with a $3-million

out-of-court composite settlement. That means that in return for the money,

Maximovitch surrenders her right to sue either the company or Murthy.

TIMELINE
18

October 1999:
Reka Maximovitch joins Infosys as Phaneesh Murthy’s

assistant
December

2000:
Reka Maximovitch quits Infosys
January-June

2001:
Reka takes out two restraining orders against Phaneesh; of

which she alleges at least one was violated
17

December 2001:
Reka files a case against Phaneesh Murthy and

Infosys for "sexual harassment and wrongful termination"
January

2002:
Phaneesh warns Nilekani of the possibility of a sexual

harassment case against him and the organization. Says he is

innocent and the company is not at risk
23

July 2002:
Phaneesh quits
25

April 2003:
Case settled out of court for $3 mn, payable in a

month

And while Maximovitch moved out of the picture with the settlement, Phaneesh

Murthy and the company have been on a war of words–press releases to be exact–in

a case that’s getting unseemly after the resolution.

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Charge-counter charge



Announcing the settlement, Infosys chairman NR Narayana Murthy said under

the terms of the agreement, Infosys "reserved the right" to take

action against Phaneesh for non-participation in the settlement (not paying up

any part of $3 million) and for his conduct.

According to Narayana Murthy, Phaneesh did not inform the company about his

consensual relationship with Maximovitch, who was his executive assistant from

October 1999 to December 2000... nor did he tell the company about two

restraining orders she had obtained from the court after she left the company

(See box, Timeline). Finally, he informed chief executive officer Nandan

Nilekani there was a "possibility of a case being filed" a month after

the case had already been filed.

The company sees this as a serious breach of trust.

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"I

was not guilty, so I didn’t want



to participate financially in


the settlement"

Despite his relationship with Maximovitch going public, Phaneesh Murthy, on

the other hand, has repeatedly claimed innocence. Speaking to Dataquest on the

issue, he said: "I was not guilty, so I didn’t want to participate

financially in the settlement."

On the contrary, he says Infosys is speaking of a right to take action more

in retaliation than anything else. In a statement sent to the media the day

Narayana Murthy announced the settlement, Phaneesh said–"Regarding the

mention of rights of legal action against me, I feel this is in retaliation to

the fact that my lawyers have initiated action to retrieve my vested and

paid-for shares which Infosys is withholding, and as a result of which I have

suffered significant financial losses."

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REKA’S

COMPLAINT
Maximovitch

alleges:
n  "I

was subjected to verbal sexual harassment, to unwanted sexual

advances, and to visual sexual harassment."
n  The

organization failed "to take reasonable steps to keep

harassment from occurring and recurring".
PARA

IX OF THE COMPLAINT
"Murthy

repeatedly told the plaintiff that he was in complete charge of all

of Infosys’ US operations, that he answered to no one regarding

how he ran the US offices, and that no one in United States had the

authority to compel him to take, or not to take, any action

regarding Infosys or its employees. The plaintiff observed that

Murthy in fact had such authority, that he hired and fired employees

on whim, and that he took pride in his ability to control people’s

lives and careers in this way."

Infosys denied those charges in a press release sent the next day. Company

legal counsel R Nithyanandan said–"Infosys hasn’t received any notice

of demand in respect of these shares from Phaneesh and the company is unaware of

any lawsuit filed by him in this regard." He also said the company was not

singling Phaneesh out. (See box, Murthy v/s Murthy)

Besides, said the legal counsel–"If Phaneesh believed he was innocent

and wanted to clear his name, he should have stayed in the lawsuit by himself

and defended his position. We had given him this option. Instead of fighting to

clear his name, he elected to settle."

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And what’s Phaneesh Murthy’s reaction to that–"I agreed to settle

because I was not a financial party to the settlement."

Unanswered questions



In the end, the settlement notwithstanding, it’s a story that ends with a

lot of questions unanswered from all sides. For one, it isn’t clear why

Maximovitch waited a year after leaving the job to file a case. She did obtain

two restraining orders between January and July 2001 and said Phaneesh had

threatened her boyfriend even after she left the job. But there’re still no

clear answers to why she waited six months after the restraining orders to sue

the company and Phaneesh.

MURTHY

VS MURTHY
PHANEESH... INFOSYS...
n  "I

am innocent and do not believe I have to pay for a crime I

haven’t committed"
n  "Infosys

settled this case with Reka simply because



of the company’s upcoming ADR offering"
n  "The

settlement was not my preferred route and that is why I

refused to pay any part of it"
n  "The

company settled because it wanted to retaliate against me. I

have filed a case against them for holding on to my shares

without proper reason"
n  "The

case was settled as the charges were serious enough to affect

both the plaintiff and the company negatively if dragged to

court"
n  "The

company disclosed all its SEC filings as early as October

2002, with the risks of the case mentioned. Therefore, this

cannot affect the ADR offering"
n  "Infosys

had made clear that it was willing to settle with Reka by

itself. Phaneesh volunteered to sign the settlement and agreed

to every condition"
n  "Phaneesh’s

shares have been withheld as part of a tax indemnity signed in

1997. Shares of more than a 1,000 other employees have also

been similarly withheld and, therefore, there is no question

on him been singled out by the company..."
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On Phaneesh Murthy’s side–it isn’t clear why he agreed to settle,

though innocent... and then went on to threaten suit against the company that

might have helped him get out of what could have been a large financial

commitment.

As for Infosys itself–the company was among the first Indian IT companies

to declare it had a sexual harassment initiative to prevent just these kinds of

incidents. And yet quite obviously, those initiatives and HR practices failed

miserably... making it also the first IT company to have ever faced such a suit.

So what went wrong? Where was that gaping hole through which $3 million tumbled

out?

Some of these questions will never be answered. But the case itself made

history of sorts in corporate India. Its settlement comes close to making

history in corporate America, where most sexual harassment cases filed by a

single defendant are more often settled around $1.5 to $2 billion.

Like we said, what a mess. 

Sarita Rani in Bangalore 



(With inputs from Cyber News Service)

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