The Hindu Business Line : Infosys settles harassment suit for $3 m out-of-court

SOFTWARE major Infosys Technologies said on Sunday it has settled the sexual harassment lawsuit filed by Ms Reka Maximovitch, an ex-employee, against Mr Phaneesh Murthy, a former board member and head global sales, and the company, for $3 million out-of-court on April 25. The company said the settlement payout would not have any material impact on its earnings guidance for the quarter ending June 30, 2003 and for fiscal 2004.

Commenting on the settlement, the Infosys Chairman and Chief Mentor, Mr N.R. Narayana Murthy, said, "The litigation with the plaintiff is behind us. We have taken further steps to strengthen our internal processes and improve the checks and balances to handle similar situation."

Infosys will totally pay $1.68 million towards the settlement, which includes half the settlement and 20 per cent of the $90,00,00 in legal fees.

Its insurers under the Company's Director and Officer's Liability Insurance Cover will pay the remainder of the settlement and the legal fees, Mr Narayana Murthy said.

However, Mr Phaneesh Murthy will not be contributing towards the settlement, he added.

"Under the terms of settlement, Infosys has retained all the rights to proceed with legal action against Mr Phaneesh Murthy for his conduct and lack of contribution towards the settlement," Mr Narayana Murthy said.

However, Mr Phaneesh Murthy contested that he would have liked to fight the case till the end and was confident to emerge "clean".

"I have always been a fighter," he told Business Line from the Fremont, California.

"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.

It may be recalled that Mr Phaneesh Murthy had resigned in July last year after his former assistant Ms Maximovitch slapped a sexual harassment suit against him after being fired for refusing to continue a relationship with him.

She had also made the company a party in the suit for wrongful termination. Infosys had paid Mr Phaneesh Murthy $57,00,00 when he resigned as settlement for salary, leave encashment and bonus due to him.

Meanwhile, complimenting the company's top brass and the legal team for getting Infosys "out of such a mess," Mr Narayana Murthy said that the compensation demanded by Ms Maximovitch was "several multiples" of what was finally agreed upon. However, Mr Narayana Murthy declined to divulge the exact amount saying that the company has 35 days to make the payment, and within three days of that Ms Maximovitch will withdraw her lawsuit.

Explaining the reason for arriving at an out-of-court settlement, Mr Narayana Murthy said the allegations in the lawsuit were serious and the risk was that the company, under the California law, was also liable for the conduct of its former officer and board member. "There was also the problem of significant distraction of management time and attention if the legal case continued," he added. "Mr Phaneesh, as an important functionary, did not disclose to the company management, that he had a relationship with Ms Maximovitch and also of the fact that she had filed in the court for a restraining order against him," Mr Narayana Murthy added.

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