Insurance
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 have 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 to 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. 
 
As Moneylife 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 large 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.
 

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COMMENTS

MOHAN SIROYA

2 years ago

Kudos to Sucheta for calling spade a spade. But let us think aloud. Yes, the Insurance companies will refuse to cover the serial sexual harassment offenders, provided a competent court has held such employee offender and guilty .The cases which are cited hereof settling and paying monetary compensation is of the Corporate companies abroad as employers. Nowhere it is on record that a particular individual Mr. P M or Mr. D M is found guilty and because of his guilt the company has paid as Vicarious liability.
Of Course, in such cases also the Insurance companies can either refuse to cover or charge extra for covering any financial liability called say a third party Insurance, on behalf of companies if SUCH AN SEXUAL HARASSEMENT IS MENTIONED AS ONE OF HE CAUSES FOR making the Insurance company liable to pay on behalf of the employer company , as it happens in case of a motor vehicle premium policy for a third party risk . But then such a factor has to be covered as a risk factor. Then that corporate as well as the person involved will both be held liable for either insurance cover refusal or an enhanced rate of premium.
Unfortunately, in India this 'Financial liability concept' is wholly missing for any SEXUAL HARASSMENT OR OFFENCE. It is a total Criminal act and the law is made for that , including an employer's obligation for an internal enquiry then an appeal to be followed by Police FIR. The involved women employees must refuse to resign come what may. And once an individual is declared guilty of such offence , he has to face the criminal consequences.
Now hats of to the gutsy woman who has been fighting out her lone battle against an onslaught on her modesty at KPMG. Let our sympathies strengthen the resolve of Moneylife to put a concerted fight against such protective shield of the shady employer companies. What Government has done to protect the women whether at job place or in the society , is not at all enough. Let us encourage and support all the women of this world to come out openly ;we are with them for a fight to finish. We did for Nirbhaya, we will do for others too.

raj ahluwalia

4 years ago

Not all 'office' relationships begin as imposed by the boss on the subordinate. Most begin as consensual. it is only when parting of the ways happen, that harassment claims surface.

Also the proposition that woman can say NO at any stage of the encounter, leads to many a rape claim. It does put 'man' at an disadvantage....

it is almost like car accidents involving a pedestrian.. .the car driver is always wrong n pursued.

Of course the old advice is valid even today:

DONT MESS AROUND IN YOUR OWN BACKYARD...

Hemlata Mohan

4 years ago

This article is good- but I would say that insurance should also be denied to women who knowingly enter into such sinful relationships.
The term "sexual harassment" refers to a state when one party is not willing to enter into the kind of state that is sought for- but when a woman has gone around, collected all the bonuses/ promotions etc, can it be sexual harassment only when it doesn't suit her?
Having been in Corporate life for over 3 decades , I can say that I know any number of young girls who are willing to do anything just to get that out of turn promotion or a foreign posting....

Ubaldo C DSouza

4 years ago

Why only sexual harassment? Insurance and any kind of support should be denied to habitual offenders of any genre - fraud, sexual, etc. "Rehabilitating" them only means they are being let loose on fresh pastures. Not to say that the victims are totally blameless - their calculations regarding compensation, marriage, et al, went wrong that is why the hue and cry. Offenders should be blacklisted, primarily across the industry and generally in the job market. Infosys did the wrong thing by letting him go without taking off his pants! And if some 'pacifiers' want to say give him a chance, take him to your house or have him committed to an appropriate institution for 'rehabilitation'.

Naresh Nayak

4 years ago

It is interesting to see that Phaneesh did not pay a single dime in settlements. This was not expected of Infosys. Obviously his past experience emboldened his behavior. Why did the courts not disgorge Phaneesh's personal assets and instead took an aim on Infosys. Infosys on the other hand which calls itself holding the cornerstone of ethics thought paying 800,000 as chump change to save the golden goose's neck which would continue to lay golden eggs for time to come. Phaneesh used this weakness against Infosys to wriggle out without paying each time and it emboldened him. I hold Infosys responsible for not thinking through its actions the first time it happened.

Like the wise say Good Girls don't chase a man with a ring on his finger. Maybe she got amnesia each time she slept with him until he gets pregnent and then says, Ok Phaneesh now this is YOUR fault and Phaneesh says look I don't want the baby and she simply calls the lawyer and waits for a settlement which the iGate shareholders have to pay for a romp that wasn't done in the iGate campus.

Bottomline: When the profits are up, the flesh becomes weak and when the settlement potential is high the bad girl's memory becomes amnesia prone. I hope Phaneesh pays for this whole thing and the poor soul who is yet to be born is shielded from this sordid saga.

REPLY

nagesh kini

In Reply to Naresh Nayak 4 years ago

I entirely agree with Naresh.
In the first place Infosys blundered by paying up. This really triggered the subsequent misdemenours! There may be many more in the offing too!

ashwin bahl

In Reply to nagesh kini 4 years ago

Spot on brother, what ethics is Infosys talking about always ? Come and see how the Scandinavian countries handle such cases !

nagesh kini

4 years ago

The laws relating to sexual harassment are ineffective in the Indian context - we have any number of cases. In the CA profession besides the one in Delhi there was also one here in Mumbai that made headlines. They don't go any further. Our media also is lax, because the accused and the companies bring a lot of pressure to hush up the matters, including notices from high profile law firms.
D&O insurance only serves as unlimited license to indulge in indiscreet activities and sexual harassment and get away by calling upon the insurers to pay up. The premium for such covers ought to be recovered from the accused. The insurers should insist on full disclosure of the entire past history of all those sought to be covered and also insist on a sufficient hike in the premium by way of a load in covering serial offenders esp. for those known to be prone to sexual misconduct and should rescind the cover for non-disclosure.

prat mahesh

4 years ago

It conveys good amount of meaning to those who have to decide to raise their voice and suffer retaliation or leave in silence. These are choices to be made just as a company chooses to take a calculated risk when they hire such serial offenders. India has gone global - but are these issues handled in an uniform and impartial manner regardless of the jurisdiction ?

anantha ramdas

4 years ago

Thanks for raising this issue, Ms Dalal.

What I think we need is an employee undertaking in his/her contract that s/he will not do anything that would be legally considered as "sexual harrassement" and if he/she is found to be involved in such an act, he/she will alone be responsible for the same, and not the company.

Of course, such an undertaking should be legally worded to cover all aspects so that the company is not held liable.

Such an act whether it is inside or outside the company premises will have to be covered so that there is protection.

R S Murthy

4 years ago

Why one should such articles? Do they convey any mening or take us any where.

REPLY

Sucheta Dalal

In Reply to R S Murthy 4 years ago

They dont? For women who have suffered by raising their voice or having to change jobs - it conveys a lot of meaning. While a few women may take advantage of guys like Phaneesh to move up the corporate ladder, the majority struggle with this reality everyday!

R S Murthy

4 years ago

Why one should such articles? Do they convey any mening or take us any where.

SuchindranathAiyerS

4 years ago

I seriously doubt these "sex offender" stories. And with very good reason and personal experience to back me. What senior executives need to do is ensure, with present day technology, that there is always cctv coverage of themselves 24*7

Government nod for quadricycles to ply on city roads
Quadricycles will be recommended for registration under the commercial transport category for intra-city movement within the municipal limits only and these vehicles will be permitted to be driven only by licensed driver after due registration
 
The government on Wednesday allowed a new type of four-wheelers called ‘quadricycles’ to ply on roads as public transport within city limits.
 
Quadricycles are safer than the three-wheeler as they have fully enclosed body structure with hard top and doors. But their maximum speed limit and engine capacity are lower than that of a small car.
 
A meeting under the chairmanship of Road Secretary Vijay Chhibber was held yesterday to discuss the issue of amendment to the Central Motor Vehicles Rules (CMVR) to include quadricycle as an additional category vehicle to be manufactured and registered in India.
 
“A separate category has been proposed for notification to include quadricyle with specifications adopting present norms notified in the three-wheeler category of the Central Motor Vehicles Rules (CMVR) or the European Union quadricycle, whichever is more stringent,” a road ministry statement said.
 
The development is seen as good news for auto major Bajaj Auto which last year had unveiled the quadricycle codenamed RE60, powered by a 200 cc petrol engine with a top speed of 70 kilometre per hour (kmph) and with a mileage of 35 kilometre per litre (kmpl).
 
As an identification symbol ‘Q’ will be prominently displayed on the body of these quadricyles.
 
Quadricycles will be recommended for registration under the commercial transport category for intra-city movement within the municipal limits only and these vehicles will be permitted to be driven only by licensed driver after due registration.
 
“It is expected to be a substantial upgrade over the three-wheeler auto which currently provides for the last mile connectivity in most urban areas of the country,” the statement said.
 
The meeting was attended by representatives of ministry of heavy industries, ARAI (Automotive Research Association of India) and iCAT (International Centre for Automotive Technology).
 
“This is a wonderful day for Indian automotive innovation. The RE60 will soon be joined by many more similarly small, light and low speed vehicles that will make for a cleaner, safer, quieter world. As an anti-car company we are just delighted,” Bajaj Auto managing director Rajiv Bajaj said.
 

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COMMENTS

Gunda

4 years ago

Which City? Why is this being allowed?

Chit Funds: Not just new laws; implementation is the key
While there are enough provisions in existing Acts like the PCMCS Act, it has become difficult to curb dubious chit funds and MLM companies so far, thanks to multiple regulation and lack of coordination between authorities
 
The Standing Committee on Finance chaired by Yashwant Sinha is likely to recommend scrapping the Chit Fund Act, 1982, following the fallout of Saradha chit fund scam in West Bengal. If the Act is scrapped, then the government would be able to label all chit fund companies as 'illegal' and may initiate legal proceedings. The question, however, is not about this Act or any other act. What the government needs to do is use the existing Act for taking immediate action and prosecuting the culprits. But can the government show the necessary will at the Centre and the states?
 
Chit funds are often misused by its promoters and there are many instances of the founders running what is basically a chain-money scheme and absconding with the investors’ money. Almost all promoters of such schemes promise to “double-your-money” within a short period.
 
According to All Kerala Kuri Foremen's Association, the state has around 5,000 chit fund  companies, with Thrissur district accounting for the maximum of 3,000. These chit companies provide employment to about 35,000 persons directly and an equal number indirectly. Much of this is legitimate business. What is dubious is chain-money schemes that have expanded rapidly in poorer states like West Bengal, Orissa and northeast India. In order to establish themselves as ‘authentic’ and legitimate business, these companies are found to be expanding into several other ventures, mostly real estate and plantation.
 
While people are demanding scrapping chit funds and MLMs, there are legal hurdles. While the Prize Chits and Money Circulation Schemes (Banning) Act or PCMCS Act, 1978, has provisions to control such schemes, it is administered by the Department of Financial Services under the ministry of finance, but is supposed to be implemented by the state governments.
 
“Section 3 of the PCMCS Act prohibits any entity from promoting, conducting any prize chit or money circulation scheme, enrolling any member of any such chit or scheme, or participating in it otherwise, or from receiving or remitting any money in pursuance of such chit or scheme. This is the provision we used to ban Japan Life, Amway and GoldQuest,” says a police officer.
 
Many of these MLM companies are not registered under the Companies Act. Even those registered evade regulation. Those booked regroup under different names and continue to cheat the people. There are several laws, central as well as state, which govern these operators. Kerala has its own Kerala Chitties Act 1975, then there is Tamil Nadu Chit Funds Act, 1961, the Chit Funds (Karnataka) Rules, 1983, The Andhra Pradesh Chit Funds Act, 1971, for Delhi, there are two, the Chit Funds Act, 1982 and Delhi Chit Funds Rules, 2007 while Maharashtra has its own Chit Fund Act, 1975.
 
The major hurdle in curbing the chit fund and MLM menace is multiple regulation and lack of coordination between the Union and state governments. 
 
The Union government is also looking to revamp through amendments, the PCMCS Act.  Interestingly, the PCMCS Act, 1978, was promulgated only after large-scale loot by these dubious companies and a report by the James Raj Committee (1974) called for a total ban on such schemes arguing that they were prejudicial to public interest. It is clear the Act has failed in the 35 years thereafter, barring sporadic action by exceptional officers like VC Sajjanar, the deputy inspector general (DIG) of Police in Andhra Pradesh.
 
In India, AP was the first state to enact a law to ban money circulation schemes in 1965. Both the Supreme Court and several high courts have passed landmark judgements against the operation of these schemes as they violate the law of the land and are detrimental to the interests of the public. There are ongoing cases against Speak Asia and Amway, to cite two examples.
 
The question, therefore, is will the governments show enough will power to stop the menace of chit funds and MLMs by using the existing Act and rules instead of spinning an argument about a new law and new regulator? Even if there is a new law what will ensure that governments actually act as per the law?
 

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