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.
9 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
1 decade 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:

Hemlata Mohan
1 decade 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
1 decade 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
1 decade 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.
nagesh kini
Replied to Naresh Nayak comment 1 decade 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
Replied to nagesh kini comment 1 decade ago
Spot on brother, what ethics is Infosys talking about always ? Come and see how the Scandinavian countries handle such cases !
nagesh kini
1 decade 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
1 decade 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
1 decade 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
1 decade ago
Why one should such articles? Do they convey any mening or take us any where.
Sucheta Dalal
Replied to R S Murthy comment 1 decade 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
1 decade ago
Why one should such articles? Do they convey any mening or take us any where.
1 decade 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
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