Infosys hits out at Phaneesh Murthy over sex suit
Tuesday, 13 May 2003, 19:30 IST
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BANGALORE: Indian IT major Infosys Technologies Monday hit out at former director Phaneesh Murthy, saying he should have proved his proclaimed innocence in a sexual harassment case by fighting it instead of opting to settle out of court. In a point-by-point response to Phaneesh's statement on the case, the Nasdaq-listed Indian bluechip fielded its counsel and head of its legal department, R. Nityanandan, to term all the charges made by Phaneesh as "blatantly false". "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 a statement issued late Monday. Infosys agreed to pay $3 million in an out of court settlement with Reka Maximovitch, who had brought sexual harassment charges against Phaneesh, then the company's director. The company also reserved its right to proceed against Phaneesh if "deemed necessary". The company statement said it was willing to settle with Maximovitch without Phaneesh. But the former director agreed to Infosys having the right to sue him for all his actions and lack of contribution, and that he would have no recourse to insurance if Infosys decided to sue him and the company would not be bound by confidentiality with respect to the settlement. Phaneesh was initially reluctant to sign the settlement, but "came back voluntarily and agreed to every condition that Infosys had set". In a statement from California, Phaneesh had gone on record Sunday to say that there was no financial contribution from him to the settlement with Maximovitch because a settlement was not his preferred route. Phaneesh also claimed Infosys had opted for the settlement because its American Depository Receipts (ADR) issue was coming up soon. Nithyanandan said: "As has been stated, Infosys settled this matter because it believed it was in the best interests of the company to do so. The company has disclosed in all its SEC (Securities and Exchange Commission) filings as early as October 2002 that the case with Reka may materially impact the earnings of the company." "As the company had already disclosed the risk in its filings there is no connection between the settlement and the proposed ADR offering. This case was settled on April 25, 2003, as the depositions were to start on the same day. A reading of the many public filings in this case would bring forth the grave nature of the allegations made against Phaneesh," the statement said. Infosys made it clear that it had not received any notice of demand from Phaneesh in respect of the vested and paid-for shares held by him. It was also unaware of any lawsuit filed by Phaneesh for the release of such shares. "The company has not singled out Phaneesh Murthy for this indemnity or withholding of shares. More than 1,000 employees, who received stock options under the 1994 ESOP (employee stock options) Plan, have signed the same indemnities and their shares are also being withheld under a similar tax indemnity," the statement said. Under the company's 1994 ESOP scheme, every employee is required to meet all liabilities, including taxes, on the grant of the options. The Infosys Employees Welfare Trust (EWT) is holding 25,600 shares belonging to Phaneesh as part of a tax indemnity he had signed on December 15, 1997. "The tax liability is not settled and is currently being agitated in the Karnataka High Court. "As a result, the EWT has retained this indemnity till the matter is resolved fully and finally. Signing such an indemnity is a condition for participation in the ESOP. Phaneesh has been aware of these facts since 1997 and his lawyers were again given this date in March 2003," the statement noted.
Source: IANS
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