Phaneesh Murthy: How iGate rewarded sexual misconduct

Everyone is shocked at Murthy's lack of judgement, but why is no one questioning iGate's poor decision to hire a CEO with a dubious record?

Lakshmi Chaudhry May 22, 2013 14:46:06 IST
Phaneesh Murthy: How iGate rewarded sexual misconduct

"One would have thought that Phaneesh Murthy would have learnt not to do such things again, and to steer away and rebuild his career. But unfortunately he seems to have succumbed again," rues former Infosys honcho Mohandas Pai in the Bangalore Mirror.The big executives of the IT industry are shocked by former iGate CEO Phaneesh Murthy's lack of judgement.

The reaction of Murthy's peers is similar to that delivered by Bill Clinton supporters in the wake of the Monica Lewinsky scandal. Then Labour Secretary Robert Reich was horrified not by the fact of the affair but the sheer idiocy it represented: "He would not be so stupid as to jeopardise his whole presidency, I felt. That was not the man I knew."

An unnamed communications head of a rival IT company said the same of Murthy, although in less generous terms: "He was one of a kind in the industry in his position, holding both an IIM and an IIT degree. After the Infosys episode, he should have realised how vulnerable he was and should have been more careful."

Phaneesh Murthy How iGate rewarded sexual misconduct

Phaneesh Murthy in this file photo. Reuters

Murthy was just plain stupid. A fool who allowed his libido to destroy an enormously successful career.

No one, however, is questioning the judgement of the iGate board.

The IT consultancy arm of the company, iGateGlobal Solutions, made Murthy its CEO as part of a Rs 86.9 crore deal to acquire his company Quintant Services back in 2003. At the time, iGateCorporation President Ashok Trivedi laudedPhaneesh's vision, leadership and management capabilities."

There was no mention of Murthy's glaring liability: an established record of sexual misconduct. Barely a year before his iGatehire, Murthy had been sacked from Infosys after his executive secretary Reka Maximovitch complained of sexual harassment and wrongful termination of employment. "Phaneesh did not disclose to the company management, as an important functionary, that he had a relationship with Maximovitch and also of the fact that she had filed in the court for a restraining order against him," said Infy chairman NR Narayanamurthy in a 2002 press conference. The company extricated itself from the mess with a $3 million settlement.

But none of this detered the iGateboard members. After all, what's a wee charge of sexualharassmentcompared to the lucrative potential of a corporate genius credited for taking Infosys' US revenues from $7 million to $700 million in a decade. Nor did the company think it fit to revisit its decision in 2004, when Phaneesh Murthy personallysettleda second sexual harassment claim of another Infosys employee, Jennifer Griffith, this time for $800,000.

"You know, every time people ask me about this, I tell them I trust Phaneesh more than I trust myself... In fact, we have bonded better as a family. We're stronger than ever before," Jaya Murthy told the Economic Times in the aftermath of the Infosys scandal. "When Phaneesh was with Infosys, we hardly got to see him. He loved his job so much that he was always there, 24 hours a day. It's finally good to have my husband back from Infosys."

Where other wives may at least have acknowledged the betrayal, Mrs Murthy went one step further to pretend her spouse had done nothing wrong, allowing ET to exonerate him outright:

The verdict on the sexual harassment suit against Phaneesh Murthy, the former marketing whizkid of Infosys, is finally out. He's been acquitted. The acquittal comes not from the Alameda County Superior Court in Oakland, where the suit against him is filed, but from his wife of ten years, Jaya Murthy.

She helped reinforce Murthy's claim that his ouster was merely an unexpected but welcome "break" - a fiction cemented by iGate's decision to anoint him CEO a year later. The two collaborated - each for their own reason -to create the alluring myth of the "comeback kid," and reaffirmed his sense of golden immunity. It was almost inevitable that he would re-offend.

"High performers do come with a large ego. I think people like this enjoy the risk that comes with this, the risk of being caught," a former Infy executive tells the Mirror. iGate just assumed that Murthy's job performance would outweigh the risks posed by that outsized ego and concomittant sexual appetite. The assumption was not just sexist but also outdated and false.

We no longer live in a Mad Men world where inappropriate misbehaviour behind executive office doors is a minor indiscretion, or worse, an established perk of power. Such misconduct in the 21st century has real consequences both for the offender and the company that hired him. In iGate's case, the damage can be measured in the 10 percent tumble in its stock price. Murthy established "iGate as a leader in the IT industry," as the company's statement claims, but he has also now left it saddled with a debt of over $1 billion incurred by Murthy's bold decision to acquire Patni Computer Systems.

The board that agreed to a deal that made Murthy CEO of iGate Global showed poor judgement. It was every bit as stupid as Murthy himself, more so because it tacitly rewarded him for illegal behaviour - and thereby enhanced his misplaced sense of immunity. Asked by The Telegraph in 2011 about the Infosys scandal, Murthy was loftily dismissive:"The whole incident was disappointing. We all reacted badly because none of us knew how to react to such a case."

Men like Murthy are far too egotistical to ever take responsibility for errors of judgement, leave alone admit committing a wrong. In Tuesday's press conference, he once again played the victim of vengeful ex-lovers intent on extortion. "When you figure out women, let me know. I will take lessons from you," he snapped at a reporter who wondered why his supposed office romances seemed to end in legal action.

Firstpost contributor Abhilasha Khaitan argues that Murthy's arrogance is rooted in the realities of the corporate world: [W]hile the present may be troubled for Murthy, the future holds enough potential. His considerable accomplishments have earned him entry into the old boy's club of tycoons and honchos. And they seem to protect their own."

That may be so for companies that maintain an India-only profile, but unlikely in the IT industry which relies on a global presence. Sexual harassment laws may be lax in India but they are more strictly imposed in the United States. iGate was foolish to play by Indian rules in picking its US-based CEO. Other IT firms would be equally foolish to repeat its mistake.

It's why Murthy's peers like Pai don't sound quite as forgiving this time around: "This should be a message to all leaders in business, any transgression of your obligations, you will be punished and punishment will be severe." And so it should be because hiring tainted CEOs is not just bad gender politics, but just plain bad for business. Thanks to the stock market, sexism may soon become a luxury the 'old boys club' can no longer afford.

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