Outsourcing company iGate Corp said it had sacked its Chief Executive Phaneesh Murthy for not disclosing a relationship with a subordinate after investigating one of India's best-known IT executives for sexual harassment.
The 50-year-old IIT-Madras and IIM-Ahmedabad alumnus was replaced with immediate effect by interim CEO Gerhard Watzinger, iGate said.
Murthy denied all the charges, stating in a conference call that they "are completely false" and that he had "not violated company policy".
He alleged extortion and said, "This is without doubt a case of extortion. The same lawyer who had represented the woman (Rekha Maximovitch) in 2002 is representing the woman (iGate subordinate Araceli Roiz) this time as well. You can spot the difference."
He also claimed that he had informed iGate about his relationship with Roiz.
"I had informed the chairman about my relationship with this woman," Murthy was reported as saying. "There is no parallel between the 2002 sexual harassment case and this one."
Murthy had earlier been forced to quit India's second biggest software exporter Infosys Ltd in 2002 following a sexual harassment lawsuit, which was settled out of court.
He would have continued as the Infosys poster boy, but for a sexual harassment case that was slapped against him by former executive assistant Rekha Maximovitch then.
While the issue was settled for $3 million, the episode brought Murthy’s career at Infosys Technologies to an abrupt end.
He had also settled a sexual harassment lawsuit filed against him by a former Infosys employee Jennifer Griffith, under which $800000 have been paid in in October 2004. While Phaneesh paid $400000, the rest was paid by his insurers.
Infosys chairman and chief mentor NR Narayana Murthy said: "Infosys has learnt that the sexual harassment lawsuit filed by Jennifer Griffith, a former employee, against the company and Phaneesh Murthy, a former director, has been settled by Phaneesh Murthy and Griffith, shortly before October 29, 2004, the trial date set for the lawsuit. Infosys has now learnt that the settlement agreement was recently signed by the parties to the settlement agreement - Phaneesh Murthy and Griffith."
Murthy was then at the peak of his career - the highest-paid Infosys executive (he was also appointed chairman of Progeon - now Infosys BPO) with an annual take-home pay of $400000 (then, around Rs 2 crore), including bonus.
When he resigned, Infosys chairman and chief mentor NR Narayana Murthy admitted that Phaneesh was "an integral part of Infosys' growth... and performed outstandingly in sales and marketing..."
iGate and other smaller IT outsourcers compete with Indian heavyweights such as Tata Consultancy Services, Wipro and Infosys on price to win market share.
"The board's decision was made as a result of an investigation by outside legal counsel, engaged by the board, of the facts and circumstances surrounding a relationship Mr Murthy had with a subordinate employee and a claim of sexual harassment," US-listed iGate said in a statement dated May 20.
The investigation showed that Murthy had violated iGate's policy by failing to report his relationship with the employee, the statement said. Murthy did not violate iGate's harassment policy, it added.
Most iGate's employees are in India. The company is based in Fremont, California.
After leaving Infosys, Murthy founded a company that was bought by iGate.
In 2011, he teamed up with buyout firm Apax Partners to conduct iGate's $1.2 billion purchase of much-bigger Indian rival Patni Computer Systems.
Murthy recently came out with a strategy to challenge the outsourcing sector's billing model by charging for results instead of basing fees on the time and labour put in by the armies of staff working for India's big firms.
The strategy is meant to appeal to clients with less-certain budgets in a tough economy.
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