iGate Corporation, a US-listed IT company, on Tuesday sacked its India-born president & CEO Phaneesh Murthy for not disclosing to the management his relationship with a subordinate employee.
The firm is also investigating charges of sexual harassment by the employee. There were whispers that the charges and his abrupt ouster were motivated by a boardroom struggle, but this could not be independently confirmed and Murthy refused to comment on it.
This is the second time Phaneesh Murthy (49) has been forced to resign on this charge. In 2002, Murthy, then a rising star in Infosys, India's second-largest IT company, and head of the company's US sales team, had had to quit following accusations of sexual harassment by Reka Maximovitch, his secretary. The company settled out of court for $3 million in 2003.
In a conference call with the media on Tuesday morning, Murthy claimed the charge was actually an extortion attempt and that the same lawyer who had represented Maximovitch was involved.
"Recently, I learnt that a lady called Araceli Roiz, who is the investor relations head of iGate, has filed charges against me claiming sexual harassment. She has not filed any case in a court. She just sent a letter to the company, claiming sexual harassment. I do believe the charges are completely false. But it is pursuant to a relationship I had with her," he said.
iGate rules make it mandatory for employees to report any relationship with colleagues. Murthy claimed he had informed iGate co-chairman Sunil Wadhwani about his relationship and, hence, had not violated company policy.
In a statement iGate said its decision was based on a report by an outside legal counsel hired by it.
"The investigation, which is ongoing, has reached the finding that Murthy's failure to report this relationship violated iGATE's policy, as well as Mr. Murthy's employment contract," said the company statement.
"The investigation has not uncovered any violation of iGATE's harassment policy." IGate's share price was down 12% to $ 14.42 per share on Nasdaq at the time of going to press.