There is hardly any award for good corporate practices that Infosys Technologies has not won in the last few years. Forbes magazine has described it as ‘‘a model of transparency, not just for the rest of corporate India but for companies everywhere’’. Phaneesh Murthy, as the marketing whiz heading the all-important US operations, was one of its brightest stars. He is credited with the phenomenal growth of its business in that country, which quite justified his Rs 1.92 crore monthly paycheck — among the highest in India Inc and about 10 times more than that of the Infosys core team. But that was all before December 2001. That was when Phaneesh’s former executive assistant Reka Maximovitch sued him under the California Fair Employment and Housing Act, accusing him of sexual harassment, intimidation, stalking and wrongful termination of services due to which ‘‘she suffered a complete emotional breakdown and lapsed into a psychotic and delusional state’’. She also obtained restraining orders against Murthy in January and June 2001, and narrated a gory tale of persecution that promised to be acutely embarrassing in an open trial, no matter the counter-allegations or refutations Phaneesh came up with. Maximovitch’s charges were not against Infosys, but they hurt the company the most, indicating a gross violation of its high ethical standards and respect for individuals at the seniormost levels. It must have been clear right then that Maximovitch’s allegations were serious enough to lead to extended muckraking against Phaneesh and through him, Infosys. N Narayana Murthy’s mentoring of Infosys has been such that it would have been clear right away that Phaneesh would have to go. But typically, Murthy decided that the management would keep away from the decision, and left it to independent directors instead. In July 2002, Phaneesh left Infosys to ‘‘fight the lawsuit’’ against him. Soon afterwards, Infosys made it clear that Phaneesh would not return to Infosys, whatever the outcome of the case. The trial was yet to begin. But because there was little information available in India, it seemed as though Phaneesh had got away unscathed. Meanwhile, he reinvented himself as a global IT consultant. With loyal and supportive wife Jaya — a graduate of IIM Ahmedabad, like him — he set up Primentor, a consulting and advisory services firm based in Fremont, California. The media and the corporate world provided him an enthusiastic welcome. As if to demonstrate that the serious charges against him were completely irrelevant, a section of the press brought out adulatory articles about him, NASSCOM eagerly invited him to address prestigious events, and a technology company called Futuresoft co-opted him on its board. But the $3 million (excluding costs) that Infosys coughed up as settlement to Maximovitch on April 25 — the very day the deposition was to begin — has reminded everyone about the gravity of her charges. Clearly, neither Phaneesh nor Infosys were in a mood to fight the charges. But since Maximovitch is unknown in India, Phaneesh still tried to obfuscate the issue stating he ‘‘might not’’ have opted for the settlement route. He also suggested that Infosys’s decision may have been motivated by its plans for another ADR (American Depository Receipts) issue, and hinted that the action was in retaliation of his claim to recover 25,600 shares held back by Infosys (along with those of 1,000 other employees) as part of a tax indemnity he had signed in connection with an on-going tax litigation. This is where Infosys took Phaneesh by surprise, presenting a point-by-point rebuttal of his ‘‘blatant lies’’. Infosys pointed out that Phaneesh was very much a party to the settlement. ‘‘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,’’ the company said. In fact, Phaneesh agreed to the settlement even though Infosys retained the right to sue him to recover his contribution to the settlement and also stipulated that Infosys would not be bound by confidentiality terms with respect to this settlement or the case. Infosys’ retaliation has probably caused Phaneesh to retreat. He and his wife Jaya told CNBC television that they ‘‘wanted to move on’’ and put the case behind them. But the case raises several important questions for companies and their women employees. For starters, the settlement is path-breaking, in that it is the first ever cash-settlement in a sexual harassment case by an Indian company. This means that corporate India had better step up its gender-sensitivity training and watch how its officials behave around women. What if Indian courts decide that our women employees are entitled to as much restitution as Maximovitch? The second, disquieting point is that the accused has paid nothing and is ready to move on virtually unaffected by the case. Although Infosys has retained the right to sue Phaneesh, he has contributed nothing to the settlement. Infosys shelled out $1.5 million while the rest (of a total of $3.9 million including costs) was paid by the insurers. Does this mean that serious charges of intimidation and sexual harassment leading to an ‘‘emotional breakdown’’ of the victim can be settled in cash — that too paid mainly out of insurance money — while the accused walks away? Surely not. As always, Infosys’ handling of the case has won the approval of women’s groups, but expectations from Narayana Murthy and the company he mentors are always high. Naina Kapur, a leading activist-lawyer from Sakshi, a Delhi-based NGO, says Infosys’ decision to settle rather than fight is ‘‘a wonderful example of corporate courage’’. Rather than skirt an issue (which most have put on the back burner or live in denial about), Narayana Murthy came out as a person of values, who espouses values and turned sexual harassment into a ‘‘world class concern’’. Kapur says that most Indian companies are governed by the fear that ‘‘my company will look bad if I address this issue’’. The settlement, though, ‘‘makes Infosys look great!’’ She says, ‘‘The Phaneesh Murthys aren’t really the story; the corporate risk is. Phaneesh could never have paid the $3 million, but Infosys took an amazing leap in taking responsibility for settling the case and compensating the woman.’’ Others say that for a California court case, the company got away paying very little. But will Phaneesh get away without contributing to the settlement? That doesn’t seem fair either. So, Narayana Murthy and Infosys have to put aside their natural inclination to bury the issue and sue Phaneesh to ensure he contributes to the settlement. It is what one has come to expect from Infosys. A positive spin-off of the case lies in the sudden awareness of the many IT companies with large overseas operations of their vulnerability to similar suits. Already, companies such as Wipro and Mascot Systems have initiated gender sensitivity training for employees. An HR manager at a leading IT company, who prefers to remain anonymous, says it is a tough task. ‘‘Our software engineers are all young and many of them work on long stints abroad without their families, where colleagues of the opposite sex are often the only familiar faces they meet everyday. Love affairs and extra-marital relationships are not unusual in these circumstances, and that makes it all the more important that people are aware of their responsibilities, liabilities and the consequences,’’ she says. But Kapur indicates that such sensitivity is not the norm. Though the 1997 Vishaka judgment (see box) defined sexual harassment and redressal measures and stipulated a mandatory complaint committee on sexual harassment at all workplaces and institutions, a Sakshi survey of 2,400 men and women across different workplaces and hierarchies had an alarming 80 per cent of respondents admitting to the presence of sexual harassment at their workplace. Nearly half of them claimed to have personally encountered harassment. Encouragingly though, the judgment was assessed to have been ‘‘partly successful’’ in increasing awareness and bringing the issue out in the open in a variety of organisations, government departments, educations institutions and religions trusts. But, says Kapur, ‘‘there is very little response from the corporate sector’’. For most companies, it is simply not a priority area; many don’t even have a policy on gender issues, or a complaint-handling mechanism. Some even say that since they don’t employ too many women, the issue does not affect them. In such cases, the women are simply sacked. Maybe, the Phaneesh Murthy case will be a turning point. If companies have to fork out hefty compensations, they will be forced to become more sensitive to gender issues. Alternatively, insurance companies will hopefully mandate that they initiate gender-sensitivity training and put in place a redressal mechanism to deal with sexual harassment, before providing cover under the Directors & Officers (D&O) liability cover that helped to pay Maximovitch. SAKSHI SURVEY Size of settlement makes the differenceMONETARY compensation cannot really make up for sexual harassment but for Indian women, the size of the Infosys cash settlement is probably the biggest development after the 1997 Vishaka judgment. The fear of a hefty financial liability on account of employees insensitive to women co-workers could provoke action in quarters unmoved by stipulations of a Supreme Court judgment. The Vishaka judgment has already laid the ground. ‘‘It made justice more accessible to women by shifting the emphasis of redress from recourse to criminal justice (ie FIR, evidence, court and threat of imprisonment) to a more mature, democratic and rights-based process,’’ says activist-lawyer Naina Kapur. Yet, Sakshi’s survey of 2,400 men and women in a cross-section of workplaces and hierarchies to assess the impact of the Vishaka judgment came up with startling findings: • 80 per cent of respondents said sexual harassment existed at their workplace. • 49 per cent said they had encountered cases of sexual harassment. • 41 per cent said they had experienced or knew women who faced unwanted sexual behaviour at work. • 53 per cent said men and women did not have equal opportunities at work and that women were treated unfairly by their supervisor/employer/co-worker/fellow student. • Only 20 per cent of the respondents had even heard about the Vishaka judgment and compliance with the law was extremely low. • A majority of workplaces and institutions had no committees to deal with sexual harassment in the workplace. • Frequently, managements pressured the victim to withdraw the complaint. • Victims of harassment are reluctant to complain for fear of stigma and loss of reputation, or worse, recrimination and refusal to believe their complaint. Consequences: loss of productivity, ill health, depression and, in extreme cases, suicide. At the same time, the Vishaka judgment has certainly increased the reporting of sexual harassment at work. Many women’s groups believe there is a slow but steady increase in awareness for creating safe and healthy workplaces for employees. Apart from conducting gender sensitivity workshops, many organisations also deal with complaints more sensitively and often involve NGOs in the investigation and redressal process. However, a survey by the Lal Bahadur Shastri National Academy of Administration revealed last year that 21.4 per cent of women believed sexual harassment to be a growing problem. Also, says Kapur, the response of the corporate sector — and, surprisingly, media organisations — to the issue leaves much to be desired. Sakshi, for instance, hasn’t even managed to get the Confederation of Indian Industries to conduct gender awareness programmes. Maybe Phaneesh Murthy will make a positive difference yet.
