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Infosys settles sex suit, scalds Phaneesh

Bangalore, May 11: Software leader Infosys has settled the sexual harassment suit filed against a top executive who resigned after the scandal broke, but there are indications that the last may not have been heard of the case.

Infosys chairman and chief mentor, .R. Narayana Murthy, announced today that in an out-of-court settlement, the company paid $3 million to Reka Maximovitch, who had filed a case against Phaneesh Murthy, former director and worldwide sales head.

Maximovitch, who was Phaneesh Murthy’s executive assistant in the company’s office in California, had alleged in her suit filed in November 2001, that she had been subjected “to verbal sexual harassment, to unwanted sexual advances, and to visual sexual harassment”.

Phaneesh Murthy had denied the charge. Today, he said settlement might not have been the solution he would have sought.

“From my personal point of view, settlement might not have been the route I would have liked to take, and hence I’m not financially a party to this settlement,” he said in a statement issued from Fremont, California.

Infosys refused to respond. “Our reacting to statements from Phaneesh Murthy will cause him acute embarrassment,” it said.

After resigning from Infosys in wake of the controversy, Phaneesh Murthy set up his own information technology business as a consultant.

Narayana Murthy said in Bangalore: “Phaneesh has consented to the agreement, though there is no contribution from him to the $3-million payment to be made to the plaintiff.”

Infosys is paying $1.5 million and insurance companies the rest to settle the case that was filed in Oakland, California, by the 30-year-old Maximovitch, an American of Bulgarian descent. The settlement was reached on April 25.

The company has retained the right to take legal action against its former executive, which means the controversy could linger on, though Narayana Murthy said: “It is a complete settlement. We want to put the case behind us.”

Phaneesh Murthy said the mention of rights of legal action is retaliatory. “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 did not make any mention of this, but disclosed that it had paid $570,000 to Phaneesh Murthy as complete settlement when he resigned last July.

The former Infosys top gun, who used to take home a salary that was higher even than that of Narayana Murthy, saw the impending share issue of the company in the American market as the motive for settling the case.

“From an Infosys point of view, there may be arguments to close this chapter early, particularly when they are going for an ADR (American depositary receipts) issue with considerable sums at stake,” he said.

Narayana Murthy did not believe the case would have any impact on Infosys’ second foray into the US capital market.

As reason for the settlement, he cited the compensation demand made by Maximovitch, which was several times more than the amount agreed.

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