Bangalore: Araceli Roiz, head of investor relations at iGATE Corp., has alleged that the software service firm’s sacked chief executive Phaneesh Murthy asked her to quit the company after discovering that she was pregnant by him.
Murthy asked Roiz to terminate the pregnancy to protect his position as CEO, California-based law firm Aiman-Smith and Marcy said in a statement on Thursday morning. Attorneys at Aiman-Smith and Marcy have handled sex harassment lawsuits against Murthy in the past, representing Reka Maximovitch and Jennifer Griffith. Roiz is on medical leave.
“When Ms Roiz refused to have an abortion, Mr Murthy attempted to get her to leave the company and keep their relationship a secret. It was not until after Ms Roiz refused to do so and informed him that she would be seeking legal representation and her lawyers contacted Mr Murthy’s counsel that he reluctantly informed the board of the relationship, just before the board would have learned on its own from other sources,” the law firm said in a statement.
“There are always two sides to the truth and now that the matter is definitely heading to court, I can’t comment anymore,” Murthy said of the latest allegations. On Tuesday, Murthy had said that the charges were “completely false” and that he would contest the case if it went to court.
Araceli Roiz’s lawyer Randall Aiman-Smith said: “iGate has only recently brought in counsel to talk to me about the case. We’re still discussing where we might go at this point. We’re exploring to see if it’s possible to work out a resolution short of litigating the case. I’ve also been in touch with Mr Murthy’s former counsel—he’s just changing lawyers right now. I’ve been in touch with his counsel and we’ve also been trying to do that... An employer has an obligation to try to work out disputes without using public resources and record. We’re all trying to do that. If we can’t do it, then we’ll all proceed to litigation.”
Some iGATE investors, such as Apax Partners, said Murthy’s departure does not change anything for them.
“We have faith and confidence in the team and the company’s leadership. The aim is to have a full time CEO and move on,” said Shashank Singh, partner and head of the India office, Apax Partners. Apax invested in the firm about two years ago and is in no hurry to exit, he said. “The company’s attention is on revenue growth and there is no change in that focus,” Singh said.
In a conference call with reporters, Murthy had said the allegations were made against him a few days ago by an iGATE employee. Murthy said he had informed the board chairman about a relationship with her before she made her complaint.
“The charges are completely false, but it is pursuant to a relationship I had with her. Based on that, the company decided that I had violated the policies and terminated my employment. I also don’t believe that I have violated any company policy,” Murthy said on the call.
On Thursday, iGATE confirmed in a company statement that it learned about the relationship between Murthy and Roiz when the sacked chief executive informed the board about the incident three weeks ago. The company said it is “committed to fully comply with the legal process for the logical conclusion of the matter”.
“Ms Roiz did not inform the company about the issue first... Immediately after being informed of the relationship, iGATE’s Board of Directors reacted swiftly and appropriately. iGATE acted quickly and sought to ascertain the facts, protect shareholder value and ensure we identified and completed all appropriate actions. Following an independent investigation carried out by a third party, the Board decided to terminate the employment of Mr Murthy. The termination was ‘for cause’,” iGATE said.
iGATE also said that Murthy would not be entitled to any severance pay under the terms of his employment contract.
“Mr Murthy was terminated for cause, for a violation of iGATE’s policy. He is not entitled to severance under the terms of his employment agreement. The parties are in discussions regarding potential compensation for transition-related services,” the company said.
Murthy is expected to lose about $1 million in severance benefits. “Upon termination other than for cause, Murthy would receive a lump sum payment of twelve (12) months’ severance at $1,000,000,” the company had said in the March regulatory filing.
Murthy said the employee had not filed a case in court and he would contest the matter if it went to court, adding that the claims of sexual harassment were clearly “a case of extortion” on the part of Roiz and her lawyers.
Roiz and her attorneys denied any attempts to engage in extortion as Murthy had alleged on Tuesday.
“Mr Murthy’s comments are defamatory and a despicable attempt to ‘blame the victim’, who only wants to somehow continue her career and support her child. Mr Murthy has, astonishingly, attempted to gain sympathy based on his own prior bad actions. Ms Roiz selected the law firm, Aiman-Smith and Marcy, based upon the firm’s excellent reputation as vigorous advocates for victims of employment discrimination and its prior success in getting compensation for some of Mr Murthy’s previous victims,” the law firm said.
At Infosys Ltd, where he served as global head of sales, Murthy faced sexual harassment allegations by his personal secretary Reka Maximovitch that were settled by the company for $3 million in May 2003 and led to his departure from the company.
“In his role as Ms Roiz’s supervisor, Mr Murthy, as he had with his previous victims, insinuated himself into Ms Roiz’s personal life using the pretext of business necessity. In this way, Mr Murthy was able to induce Ms Roiz into behaviour and action that she would have found unthinkable at the beginning of her employment. The only reason Mr Murthy was able to engage in these abusive and harassing actions is because he was Ms Roiz’s employer,” the law firm said in a statement.
While the iGATE board maintained that it sacked Murthy after an investigation by outside legal counsel engaged by the board, the law firm said the employer is liable, too.
“Under California law, because Mr Murthy was an officer and director of iGATE, his actions were the actions of iGATE, and iGATE, too, is liable for the acts of Mr Murthy. There remains the question of whether, given Mr Murthy’s history of predatory actions toward female employees, iGATE did all that it should have done to oversee and control Mr Murthy and to provide some method for women at iGATE to report his actions,” the law firm said.
Deepti Chaudhary in Mumbai contributed to the story.