New Delhi: Telangana’s Anti-Corruption Bureau (ACB) has filed an FIR against Bharat Rashtra Samithi (BRS) working president and former minister K.T. Rama Rao and two others over alleged irregularities flagged by the state’s Department of Municipal Administration and Urban Development in connection with the Formula E car racing event in Hyderabad.
These include payment of two installments of 22,50,000 British Pounds each (approximately Rs 45 crore) to British firm Formula E Operations Limited last year by the Hyderabad Metropolitan Development Authority, even during the period of Model Code of Conduct in the state, and without prior sanction from the competent authority. The agreement was also allegedly forged after payment.
The matter pertains to the previous BRS-led government allegedly transferring the sum to the company to continue holding the Formula E event in Hyderabad.
Additionally, the principal secretary of the MA&UD department has flagged the loss of an additional Rs 10 crore for the state exchequer due to lack of sanction and violation of procedures.
On Thursday, ACB booked Rama Rao or KTR, who headed MA&UD department as minister at the time, former special chief secretary Arvind Kumar, and the then HMDA chief engineer B.L.N Reddy, who has now retired, under Sections 409 (criminal breach of trust) read with 120-B (criminal conspiracy) of Prevention of Corruption Act, 1988.
The Enforcement Directorate has also recorded an Enforcement Complaint Information Report (ECIR) against the three based on ACB’s FIR after the latter shared the case files and details with the agency, ThePrint has learnt.
It was initially a tripartite contract involving the Telangana government, Formula E Operations and sponsor company Ace Nxt Gen Private Limited. The state government had the limited role of building tracks for the event and providing civic facilities for rounds of its four seasons, with the first one in 2023. After the sponsor company pulled out, the state government was asked to chip in as a private sponsor.
However, in January this year, Formula E Operations pulled the event out of Hyderabad and cancelled the contract.
“The cancellation comes following a decision by the Municipal Administration and Urban Development Department (MA&UD), under the control of the Government of Telangana, not to fulfil the Host City Agreement signed on 30 October, 2023. Formula E Operations (FEO) has been left with no choice other than to formally give notice to MA&UD that it is in breach of contract. FEO is considering its position and what steps it may take under the Host City Agreement and applicable laws. All of FEO’s rights in that regard are reserved,” the firm had said in a statement.
Hours after the registration of the FIR against him, KTR, son of former chief minister K. Chandrashekar Rao, released an open letter, challenging Telangana Chief Minister A. Revanth Reddy to debate the matter during the ongoing session of the legislative assembly.
“Once again, I reiterate that there were no irregularities or corruption in the Formula-E race issue. This event, which brought goodwill to the state and Hyderabad city, was sacrificed purely due to your political vendetta. A detailed discussion in the Assembly will reveal the truth to everyone,” he wrote.
KTR also moved the Telangana High Court, seeking dismissal of the ACB’s case against him. The court has issued a notice to the government to file a reply and grant him protection from arrest till 30 December.
‘Grave lapses’
In the letter by the state’s MA&UD department to the ACB, the principal secretary explained that the department had signed the agreement in October 2022 to organise four seasons of the event, starting with a round of the overall 9th season of the tournament in 2023.
According to this agreement, the role of the state government and authorities was limited to building race tracks and providing civic facilities, which cost them Rs 12 crore during the first of the four planned seasons held on 11 February, 2023.
However, the role of the state government expanded as soon as the sponsor company pulled out of the contract for the next season scheduled for February this year. The withdrawal of the sponsor company prompted discussions between the state government departments—MA&UD and HMDA—and Formula E Operations to explore a possibility where the government would chip in as a private sponsor with the sponsorship money.
Kumar, who was then the chief secretary of MA&UD and held the additional charge of the metropolitan commissioner of HMDA, put up a file in September, seeking KTR’s approval for setting up new contract and payment terms.
According to the new draft agreement allegedly approved by KTR, the HMDA was both the promoter and the host of the event with the expenditure of approximately Rs 160 crore, including the fees and work to be carried out for hosting the event.
HMDA received two invoices from Formula E Operations, of approximately Rs 45 crore in total, on 25 September and 29 September last year, which were paid by the department on 3 October and 11 October, 2023, respectively.
“In both the instances, even though foreign remittances were made, no formal approvals of the relevant regulatory authorities were obtained before transferring the huge amounts. The foreign remittances resulted in additional tax burden to the HMDA, which was made to pay Rs 8,06,75,404 to the Income Tax Department towards withholding tax for two installments,” reads the FIR. “The HMDA had released a sum of Rs 1,10,51,014 to the Federation of Motor Sports Clubs of India towards FIA inscription, interstate championship calendar fee and permit fee.”
It adds, “The total amount thus far paid from HMDA is Rs 54,88,87,043. All these payments were made from the general funds of HMDA. As per the established procedure in HMDA, administrative sanction for works/expenditure of amounts exceeding Rs 10,00,00,000 should be obtained from the Government. The government accords such sanction in concurrence with the Finance Department. In this case, it is noticed that this procedure was not followed.”
However, the FIR further mentions that the new contract, for which the Rs 45 crore was already paid by the HMDA by 11 October, was forged only on 30 October. Under this contract, the government agreed to pay a sponsorship fee of nearly Rs 110 crore, inclusive of taxes, and spend around Rs 50 crore on providing logistical support to the event.
Payment of one instalment to the firm and forging of the contract were acts of violation of the Model Code of Conduct and a prior sanction from the Election Commission of India was necessary, the FIR says.
The state was under the Model Code of Conduct between 9 October and 3 December last year as assembly elections were held on 30 November, in which Congress overthrew the BRS government led by KCR.
The current dispensation at the HMDA allegedly informed the government of five “grave lapses” committed by the previous administration, such as the payment of huge sums of money without prior sanction of the competent authority as well the finance department, payment by HMDA despite not being party to the agreement, and even before the formalisation of the contract.
The HMDA has also flagged payment in foreign currency as a gross violation of the established procedure.
The FIR further says that the forging of the contract and payment was a violation of the Secretariat Business Rules, under which any plan or proposal concerning the state’s finances needs to be circulated to the finance department, while plans involving recurring expenditures have to be brought before the council of ministers. None of this was allegedly done in the case of the contract with Formula E Operations.
On the contrary, the department’s then chief secretary circulated an office note to the principal secretary to the chief minister, seeking his orders for conducting the overall 10th season of the Hyderabad E-Prix, for which the contract was already agreed upon by the department and payments of around Rs 46 crore were already made to the British firm, according to the FIR.
(Edited by Mannat Chugh)
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KCR, KTR, K Kavitha – a whole family of thieves and crooks who sucked Telengana dry.
Hope the family ends up in jail for the rest of their lives.