Phaneesh Murthy saga: Why insurers should refuse to cover serial offenders of sexual harassment
If you work in risky jobs or have a medical condition, you pay a higher premium. Some people are even denied insurance. Shouldn’t insurers refuse to cover serial offenders of sexual-harassment too? This may help women get a fairer treatment in companies
When iGate hired and helped rehabilitate Phaneesh Murthy, the disgraced marketing whiz kid, this is what Ashok Trivedi, its founder, had to say. “For us, this deal is like getting Babe Ruth and the whole Yankees team at the same time. Not only do we get Phaneesh and the crackerjack team of Quintant but we also get to add their expertise in the BSP domain to our fast growing BPO business”. Of course, he did not have a word to say about Murthy’s serial misbehaviour with women employees, while he was a star, the blue-eyed boy at Infosys, and how iGate planned to contain a similar damage to itself.
Ten years later, iGate may have sacked its “Babe Ruth” but it still faces the prospect of an expensive lawsuit or settlement with its former employee, on account of Murthy’s uncontrolled peccadilloes. And while iGate may ha
ve celebrated its entry into the billion dollar IT club by gifting Phaneesh Murthy a Ferrari, it is now left to handle the assimilation of Patni Computers merger, without its star player.
What we are keen on watching is how insurance companies react to this. Consider this. If you declare that you have diabetes or an angioplasty in your medical insurance form, your insurance cover shoots up. Airline and shipping companies pay a significantly higher premium because they operate in risky professions. Shouldn’t the same hold true when companies hire senior executives accused of sexual harassment or try and brush the problem under the carpet by sacking the women who complained?
Let’s take a look at all the things iGate ignored when it hired Phaneesh Murthy with much fanfare.
The last time around, Murthy accused Reka Maximovitch of being a “gold digger” but it turned out that she had to take a restraining order against him that Infosys was blissfully unaware of. This time he is accusing his former girlfriend of ‘extortion’, but media reports say she is pregnant with his child and he was forcing her to abort it and quietly leave the company. Her action was probably provoked by this fact and is bound t
o cost iGate. It is incredible that the board had no clue what was going on after having hired a CEO with a reputation for sexual harassment.
• In 2003, Phaneesh Murthy made nasty innuendos about having sent Infosys a legal notice about vested stock options; he also suggested he wanted to fight the case but had his lies nailed with a point-by-point rebuttal by Infosys. He agreed to a $3million settlement in the Rexa Maximovitch.
• Not only this, there is another $800,000 paid by Infosys and the insurance company to another ex-Infosys employee, Jennifer Griffith, in a similar settlement. Murthy reportedly got away without paying anything.
This brings us to the issue of the Directors & Officers liability cover that companies take to protect themselves from charges against key employees. The question is simple: Will insurers cover top executives who are hired despite having paid/settled sexual harassment charges? If insurers do not impose conditions about serial offenders like Phaneesh Murthy, then their shareholders ought to be asking some tough questions.
In the US, companies tend to settle, rather than avoid expensive lawsuits which are also extremely damaging to their reputation as employers. After all, no good employer wants to be seen protecting those accused of sexual harassment. In India it is still the opposite. In fact, consulting companies that preach good governance and offer consultancy for a fat fee are among the worst offenders.
A lot of people are fully aware of the dogged fight that a smart chartered accountant has been fighting for a decade against KPMG. The company let go of the accused senior partner only in the past few months after the Delhi gang-rape and the Justice Varma committee report made it clear that middle-class India, which forms the bulk of employees in information technology companies, is no longer tolerant about sexual harassment in the workplace or outside.
reported yesterday, the demand for Directors & Officers
liability policies is still low in India and these policies are don’t necessarily cover sexual harassment explicitly. So far, companies are careful about their liability only when it comes to international operations. It is routine in India to sack women employees who dare to speak up. Even in the few cases where action is initiated against senior employees, the victim gets nothing and organisations go out of their way to protect the employee by hiding details about their sacking.
Worse, companies usually give such employees the option to resign which leave no negative record and allows the employee to seek employment elsewhere. Indian companies are big beneficiaries of the slow legal system and their clout. The chartered accountant who dared to speak out against her boss, had her reputation dragged through the mud, faced vile posts on the internet and had faced every dirty trick in the book that delayed and blocked investigation. At the same time, the company forked out larg
e sums of money to buy out lawyers or hire the most expensive legal brains in the country to harass the victim.
In fact, this global consulting company’s tactics have become a shining example of why smart women, who are concerned about career progress, would prefer to switch jobs rather than complain about sexual harassment. Unfortunately for Indian women, the legal system has let down career women so far. If complaining about sexual harassment puts an end to your career and leads to several decades of humiliating legal battles, it is no choice at all. Worse, sexual harassment remains rampant and unspoken in the three places that ought to lead the battle against sexual harassment—the Supreme Court, the media and politics. There is a conspiracy of silence when it comes to the transgression of senior politicians, editors, advocates and lawyers—how can women expect justice in this scenario? At least, if insurance for these situations is really costly, or if there is no insurance available for serial offenders of sexual harassment, it will check the malaise while we still wait for a systemic cure.