Resolution Evades this Settlement

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.

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.

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.

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.

"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."

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."

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.

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)