FEATURES/Boardroom | May 24, 2013 | 59789 views

The Phaneesh Murthy Saga: How the Cookie Crumbled

iGate employees allege that the relationship between Roiz and Phaneesh was hardly a secret. Several people in the company knew about it and they say that Roiz travelled with Phaneesh extensively and often
The Phaneesh Murthy Saga: How the Cookie Crumbled
Image: Mallikarjun Katakol for Forbes India
iGate employees claim Phaneesh's relationship with Araceli started souring some months back. According to her lawyers, Araceli found out that she was pregnant in March 2013

Mr.Bond, they have a saying in Chicago: "Once is happenstance. Twice is coincidence. The third time it's enemy action." -- Goldfinger

Phaneesh Murthy was able to invite the enemy action in the second occurrence itself.

Two cases of sexual misdemeanour in 11 years beg this question. How could a man as intelligent as Phaneesh Murthy end up making the same mistake twice? This question has been ringing out in the corporate corridors ever since the news of his indiscretion broke.

These were the same questions that were asked when Phaneesh was asked to go from Infosys. Educated at India’s premier institutes like IIT and IIM, Phaneesh had a wonderful career at Infosys and iGate. “He was a star, an outperformer, and sure shot CEO material” says Mohandas Pai, a former colleague at Infosys and now Chairman, Manipal Universal Learning.

His Infosys colleagues remember him as an extremely driven and ambitious man who had a natural knack for selling. In the early days of the IT industry, it was extremely difficult to sell offshoring as a service. Phaneesh would routinely pitch high prices for contracts and would often win these deals. He loved to win, and colleagues say that even in friendly matches of basketball or football in campus, he would put up a fierce fight for every point. But when the game was over, he would not carry any grudges.

When he joined Infosys it was a $2 mn company. When he left revenues had risen up to $750 mn. He wasn’t shy of taking credit for that growth. He would often repeat to journalists that he was responsible for a lot of Infosys’ success. But an ex-colleague at Infosys says that Phaneesh followed no processes. “The numbers were in his head”, he says. When he suddenly left Infosys, it took the company a long time to put in place stringent processes and reporting structures to reduce dependence on any one employee.

Phaneesh worked hard, colleagues described him as a workaholic, the first one in office and the last one to leave. Although he is wealthy (thanks to stock options in Infosys and iGate) he wasn’t flashy. “He is frugal, doesn’t smoke or drink (except an occasional glass of wine), is a vegetarian and wasn’t fond of splurging money on clothes or shoes” is how one associate describes him. People who have visited his home in Fremont, California, say that the Murthys lived a very simple lifestyle. “You could not tell it’s a CEOs house”, says one visitor.

But he had a tendency to push boundaries. An old colleague at Infosys remembered an incident about a sales offsite meet in New Orleans in the late '90s. At one point walking through the streets of New Orleans, the group ended up in a topless bar. Some of the sales managers had also brought along their spouses for the meet, and the women felt uncomfortable. “Phaneesh hadn’t led us to that place, but he didn’t stop us from going there either”, says the colleague. When the corporate HQs in Bangalore heard of it, they issued a warning to Phaneesh. As the group’s leader he had a moral responsibility to avert this situation they said.

Phaneesh is invariably described by those who have worked with him as very intelligent, even brilliant. "He is seen as aggressive, but it's not physical aggression - I haven't seen him abuse anyone or throw things around - it's intellectually aggressive", one of them said. Another person who has worked with him said "he might even start a discussion saying, truthfully, he doesn't know much about a subject but five minutes into listening he would have connected the dots, and in no time he would be talking as if he has been working on that problem all his life. He was supremely confident. And he would be right 95% of the time."

"Phaneesh was also very comfortable working in grey areas. He was comfortable using one criteria, one standard on one day, and a completely different standard another day," he said.

These two helped him well to thrive in the world of business. In business, being right 95% of the time, is in fact an achievement. But, in the world of ethics, the remaining 5% will pull one down. It’s easier to be ethical 100% of the time than 98% of the time, as Clayton Christensen points out in his book 'How will you measure your life'.
Similarly, his comfort with grey areas might have helped him to thrive in a sector where technological disruptions were common and their impact on businesses were huge. But, ethical standards - especially those expected of a CEO of a large listed company - are seen as either black or white, and seldom grey.

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Comments (22)
Lon Aug 26, 2013
Phaneesh man
u broke the most cardinal rules in having affairs..
which is
never get your money and your honey at the same place..
Vikasbahar Jun 4, 2013
All through the 4 pages of the article, i was expected more details of the case as the heading "How the Cookie Crumbled" indicated but it seems the author has no idea of what "Cookie Crumbling" means.
God save Forbes India...
Ramkumar May 30, 2013
Very well written piece Mitu. People in senior positions have custodial responsibilities. It is not a question of moral education. It is pure issue of propriety. Even if these are consensual relationship, they have no place if the two are in custodial equation. In my experience most organisations are blind. They are unable to deal with these early and in an clnical manner especially when the person involved is senior. The more conservative the board and the boss they doubt the woman's version and foolishly go with the man's version without enquiring. A few even try to mediate and settle thinking that they are running a school or a panchayat. All these end up in misery for the organisation. In my experience over 12 years 30 to 40% of the cases are genuine. Most others end up being cases like that of Pahneesh where the complaint is preffered after the relationship turns sour. These are the difficult ones to deal. There are about 30% cases where the lady who knows she is going to be terminated or is not pulling her weight in the organisation prefers a alse complaint, hoping that she can later take the defence of retaliation against the organisation and claim back employment or benefits. I know that this is a controversial point which some will attach. But the truth is all the 3 exist. Real cases of harrassment, Complaint of harrassment afetr relationship turns sour and grossly false complaint. That is why it is important for senior people in any organisation not to get into relationship with people for whom they are responsible. Equally it is important for the boards to not take side and be clinical in demanding a policy and process to enquire all complaints of harrssment with out any delay. It is preferable to get the pricess in motion within a fortnight and close it within a month. This helps evidence to be current and no chance for after thoughts. Any organisation which want women in significant numbers to work for them, cannot achieve it without reassuiring their ladies that the policies and procedures and not just statements willprovide them a safe work place.
Newshog May 29, 2013
I don't think the writer of this article really knows what "how the cookie crumbled" means or when to use it. This article has nothing to do with how the story unfolded or what happened, it is just describing the person.
Nakul May 28, 2013
Guys, please do your research correctly. Its not 2, its 3. You may have probably forgotten Jennifer Griffiths who came and went between Rita Maximovitch and Araceli Roiz. So the theory of 3 dots make a trend is valid.
Sachi Mohanty May 28, 2013
Loved the background info on Mr. Phaneesh Murthy. Clearly a crazy smart guy.

Sadly, the reactions in India have been so predictable — you know, just 'follow the herd' of American Puritanical morality.

Europeans have moved on but sadly Indians are unable to move beyond aping Americans.

The reactions have been so crazily same in terms of vilifying Phaneesh Murthy that it's almost hilarious but this is a sad incident so hilarity is clearly not something which is called for here.

I mean, is THIS the only SOLUTION that we can think of !?!?

They had a relationship for a year or more, right?

They were ADULTS, is not it?

How long are we going to cling on to the linear narrative of the 'powerless female' *preyed upon* by a "predatory" boss as even the article seems to imply?

This is Fremont, California and not a B-class town in India. How old was she btw?

Do people want or expect corporate CEOs or other executives in their 30s, 40s, and 50s to be 'virile' like Manmohan Singh?

Frankly, I think the reactions of folks to this incident will reveal a lot about them.

The women might be uniformly against Phaneesh The Predator and I understand that. Indian women belonging to the professional working class anyhow have a crazily mixed up personality that combines both a heritage of doing Karva Chauth and watching some Hollywood movies starring George Clooney or Brad Pitt and so on ...

The males's reactions will be more intriguing.

I presume most males will severely and unequivocally condemn Phaneesh ... I mean, there's clearly no harm in taking the side of the majority.

Those who realize that "Wait a minute! This is not about 'sexual harassment' but a relationship gone wrong ... as human relationships often and usually go wrong" will probably keep quiet.


Anyways, before 'critics' pile on my comments, here's how I would have loved to see this pan out:

Since nobody got raped in a company closet or bathroom or executive dining room (let along 10 or 100 such incidents), once the relationship got 'out of hand' after the pregnancy as seems to have happened, a way should have been found to settle the matter between them!

That process could have involved iGate's lawyers, Phaneesh and the lady's lawyers, whatever ... some settlement should have been worked out.

Sure, this is the CEO. So, may be do things publicly because if you try to keep things private, then it may leak and then the damage may be more. Of course, as a side note, there SHOULD NOT ideally be damage from someone having sex with someone else.

And finally let the Board decide what punishment to mete out to the CEO. May be it would have been enough punishment for Phaneesh to have to make a multi-million dollar pay to the female employee out of his salary or stocks or whatever.

And then make all that public. Let him decide if he can continue in the company with that knowledge 'public.'

I mean, just look at the BOTTOM-LINE of this story:

"What? Oh, this guy had SEX with a female?? How sad, bad, and utterly mad! How can anyone have SEX with someone else? That too, a SUBORDINATE!"

Now, remember that, if you are the frigging CEO, most everyone in the company is a 'subordinate' to you. And being a workaholic CEO, you probably spend 14 hours at the office and the rest of the 10 hours, your mind is essentially filled with thoughts about 'issues' at the company.

It's not like you can go for a drink to the bar in the evening daily or visit the dating websites ...

Oh yes, yes, I can hear the howling —> "He was MARRIED!" Well, I do not consider that a factor. He was not DEAD yet.

So, to continue the 'BOTTOM-LINE' of this story:

"Therefore, let's fire, FIRE, FIRREEE him!! It's just a CEO! They're a dime a dozen! We'll find one more. After all, look at HP and the game of musical chairs that happened there before Meg Whitman. Look at the same thing at Yahoo before Marissa Mayer.

We must, MUST make it clear — in this company, we SHALL NOT TOLERATE *mere* humans indulging in *predatory* practices such as having sex! No Sirreee! You are NOT humans ... you are RESOURCES."

What a sorry state of affairs.

Anyways, I will stop here.

What I have said probably sounds 'sexist' or 'misogynistic' and worse to readers.
Response to Sachi Mohanty:
Au May 28, 2013
One point that no one has mentioned - why would any sane woman get into a relationship with a man with Murthy's background? Either she's a 'blonde' or just very intelligent.
Response to Sachi Mohanty:
Surya Kuamr May 28, 2013
That was great and I beleive that there is more to this that what meets the eye. I was surprised when the article pointed out that he was a crazy smart guy who had sex!!!. come on!!. Btw loved that point on Human beings vs Resources.
Response to Sachi Mohanty:
Ganesh May 28, 2013
Your bang on mate!!
Response to Sachi Mohanty:
Dee Jun 5, 2013
Bang on Sachi Mohanty! Completely agree with you. Being a female employee and an ex-iGator, I somehow am still with Murthy. Agree what he has done is unethical. But that's his personal problem. So Vijay Mallya can be the playboy as he is (was) wealthy. But a CEO cannot have sex with someone else? Having seen him in action, he has unmatched brilliance which created millions or billions for the IT industry. And being the simplest and modest man he is, there is definitely two sides of the truth. An affair is always two sided, otherwise it becomes rape. Tell me who does not have an affair.. bollywood stars, politicians, musicians are all tolerated and even glorified for their extramarital affairs. But cant a CEO have one? Even Steve Jobs had one! Given his personality and wits it not surprising that anyone would fall for him, when they work close enough. I still respect this man for his ability to turn around things and his sheer brilliance. THe media and the board went overboard on this issue for sure.
Response to Dee:
Sachi Mohanty Jun 5, 2013
Ahhhh ... that's a breath of fresh air ... when I get an email saying 'Your comment has received a response' ... I click on the link with a certain amount of wariness ...

Much to my surprise, the 'reactions' here to my comment have been uniformly positive. Do not know why that is so ... may be the readers here are able to look at the 'nuances' which is quite unlike the near-avalanche of articles that I have read elsewhere ... obviously not THIS one.

I can easily recall a couple of articles on a couple of different mainstream papers online (I do not wish to name them here) where Mr. Murthy's firing was 'hailed' by the writers as something which is a step in the right direction to stem this 'apparent' or 'veritable' *tide* of "sexual harassment' which is ongoing in the Indian workplace.

Clearly, my point is not that sexual harassment is not there. But at the same time, I wish Indians would get out of their 19th century mindsets and acquire some sort of an European attitude towards these sort of issues.

But no! Indians will faithfully ape the mainstream conservative American Puritanical values! I wish to ask these writers though ... what about Mr. Bill Clinton??

Anyways, about sexual harassment ...

I think if we talk about the IT industry, one can generalize about the 2 million odd employees out of which may be 1/4th would be females.

The industry mainly has a bulk of workers in the fresher to 5 years experience or so category meaning folks in the age group of 23 to 30.

It's sort of rare to find folks older than 35 ... let alone a 50 year old person. Which is quite unlike the scenario in the U.S.

So ...

What happens is either the females are married or unmarried. If they are married, then mostly they are left alone ...

If they are unmarried, well, in a span of two or three years, they eventually get married! Same thing with males of course.

In some rare instances, an office 'romance' *blossoms* which is sort of known to one and all as the 'boy' and 'girl' will keep together.

This "fantasy" though of predatory bosses indulging in serial sexual harassment however has GOT TO BE just the product of the wild imagination of the obviously well-educated writers in the media who are obviously quite 'well-versed' with Hollywood movie plots ... not to mention American sex scandals.

But then India is not America.

Folks here do not go for a beer after work. Unmarried folks even in their 30s live with their parents! Folks in their 30s often (or is it invariably?) leave it to their parents to find a bride or groom for them ...

So ...

Clearly, India has got some distance to go before it becomes a mirror image of America.

Till then what is the 'reality' is this absurd sight of 'newly married' ladies in North India with about 100 bangles on their hands!

Indians, in summary, are a strange mixture of 19th century mindsets and 21st century workplaces and obviously a 21st century 'world.'

I often wonder if Indians are really even suited to live in the present century.

Lastly, having been a VERY small time failed entrepreneur, I have an infinite amount of regard for folks like Mr. Narayana Murthy or Phaneesh Murthy ... though again, the lazy way the media has portrayed Mr. Murthy's 'return' to Infosys as being like Steve Jobs' return to Apple dismays me ... without taking anything away from the founder of Infosys of course ...

P.S. On a related note, Indians have quite a strangely perverted sort of 'morality' ... which makes these possible:

A) Indians have become so habituated to child labor in our homes and on our streets that we do not even NOTICE it let alone be ENRAGED about it.

B) What do get ENRAGED about? Oh, of course, about young cricketers getting 'greedy' about money and a few cricket 'administrators' and their shenanigans ... the less said about which the better.

C) Mind you, Indians are more 'forgiving' of monetary scandals involving cricketers or politicians but would react with much outrage when the 'scandals' are of a sexual nature.

Anyways, it's basically a lost cause ...

So, enjoy the alcohol!

Response to Dee:
Arun Sangwan Jan 19, 2015
Dee, you have made a sad comment. Do you compensate for an alleged brilliant performance with being a predator of women who report to you ? Would Phaneesh feel the same if someone did the same to his daughter? In any case, Phaneesh left the job with poor record to show, the company is down in the dumps.
Response to Sachi Mohanty:
Arun Sangwan Jan 19, 2015
Sachi , would you still say the same if it was your daughter (or wife) with Phaneesh instead of someone else's ? It seems you identify well with Phaneesh.
Rajan May 27, 2013
Why the author of the article is giving reference to Phanish's past glory? Why should anyone care about how good he is? Is the author trying to win hearts for Phanish?

Wondering if Phanish stopped with two or are there many? I think many harrasment did not come to the surface.
Response to Rajan:
Gopal Chakravarthy May 28, 2013
The issue is the fiscal responsibility and doing it on the company time and resource. Everybody is equal in eyes of law in US.
Reputational damage to company is enormous. No issues if Phaneesh divorced his wife and disclosed his new relationship. T

If he is morally corrupt, what else corruption he is hiding. HP CEO was fired also for falsifying business expense. Same is true of Phaneesh in fact to greater extent.
Steve May 27, 2013
This is very common in all Indian IT companies. Very morally and ethically challenged people.
Response to Steve:
Gun May 27, 2013
You are generalizing the issue.
Your arrogance is quite sad, that the morality and ethics of these few people alone is being questioned.
We too saw many Lawyer-Client movies from Hollywood , just like you.
The memories of Monica Lewensky is still fresh in the mind.
Gun May 25, 2013
Virtue and Vice!
Sexual Harassment? Or accpeted prostitution? Will the women keep quiet or accept the so called R A P E, if it is compensated?
Murty is just one example of fall from grace, but how many Office affairs are unearthed like this?
You should be double careful especially when you are at the helm of affairs.
Hiroo Mirchandani May 24, 2013
It is the 3 media-reported case of sexual harrassment by ex-CEO Praneesh Murthy.Out of court settlements have already been done with Reka and Jennifer.High time that sexual harassment in the workplace be treated more seriously!
Cynic May 24, 2013
How much will the media milk this issue? Great traffic? Huh...
A S May 24, 2013
I cannot believe how sexist and morally blind this article is. Let's start with your tagline - "How could a man as intelligent as Phaneesh Murthy end up making the same mistake twice?" Seriously? Intelligence and sexual harassment are not related. One is a metric of your analytical acumen and the other is a crime. Being an intelligent person, or even a star at top institutes (like IIT and IIM) and companies does not in any way influence how you mistreat your female subordinates.
Maybe the tagline should have been "How could a man with a history of sexual harassment like Phaneesh Murthy been put in a position to repeat his crime again". Honestly, Forbes, i am disgusted that you would even publish an article focusing on his academic and business laurels and positioning his crime as a surprising contradiction.
Response to A S:
Pg May 30, 2013
Thank you.
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