Formula E Case: Trouble mounts for KTR; ED steps in, seeks FIR documents

Hyderabad: A day after Anti Corruption Bureau registered a criminal case against BRS working president K T Rama Rao in a Formula E race funding misuse case, the Enforcement Directorate stepped in and sought documents related to the FIR.

“We have sought documents related to the FIR registered by the ACB,” a senior ED officer confirmed to NewsMeter.

ED jumping into the ring has raised many political eyebrows, though this is a standard procedure in many cases. So far ED has neither registered any case nor initiated the ECIR. The agency will look into violations under Foreign Exchange Management ACT.

Pertinently, Congress has done extensive homework before they proceeded in this case. The first step was to seek the approval of the Governor for investigation. A series of discussions were held in the cabinet meeting held on December 16 before directing the chief secretary to write to the ACB.

Later, ACB registered a case under section 13(1)(A) and 13(2) of the Prevention of Corruption Act, along with sections 409 and 120(B) of the IPC. It is alleged that ₹45 crore was paid by HMDA to the foreign company FEO in contravention of RBI guidelines. ACB FIR has named KTR as accused no 1, IAS officer Arvind Kumar as accused number 2, and former HMDA Chief Engineer B L N Reddy as accused number 3.

NewsMeter has learnt that on the day ACB registered a case against KTR, the top brass in the BRS (referring to the Rao Family) held a series of discussions to finalize the lawyer who could appear for the accused. The name of former Attorney General of India Mukul Rohatgi is making rounds.

If sources are to be believed., the arrest of KTR seems inevitable.

Amid these developments, the BRS is also looking possible leader who could fill the KTR’s shoes and lead from the front. Will K Kavitha lead or former finance minister T Harish Rao don the mantle?

Allegations against KTR, Arvind Kumar and BLN Reddy - Agreement- Formula E Race

A tripartite agreement was signed on October 25, 2022, between Formula E Operations Limited (FEO), a company registered in the United Kingdom, Telangana MA&UD Department, and Ace Nxt Gen Private Limited, a company registered under the laws of India for conducting Formula E races for Seasons 9, 10, 1 and 12 in Hyderabad. Ace Nxt Gen was the sponsor.

Under this agreement, the role of the government was limited to the extent of building the track for the event and providing other civic amenities. The event was conducted on February 11, 2023. HMDA incurred an expenditure of Rs 12 crore for the event. The fee and other payments were paid by the sponsor.

While the tripartite agreement was in force, differences seemed to have cropped up between FEO and the sponsor, resulting in the latter backing out from the conduct of the racing events for Season 10. As per the agreement, part fee payment was overdue by May 2023. Subsequently, discussions were held between the senior officials of the MA&UD Department/HMDA, and FEO representatives about the possibility of the state government taking up the role of the private sponsor and paying the fee.

The then Special CS holding full additional charge of Metropolitan Commissioner, HMDA had put up an HMDA file to the then Minister, MA&UD on September 27, 2023, seeking administrative approvals/sanctions for payment of fee and tax to the tune of Rs 50 crore.

This was approved by Minister KTR

The total amount paid from HMDA was 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. In this case, it is noticed that this procedure was not followed, said the FIR.

Alleged misuse of government funds

The HMDA was not a party to the agreement, but HMDA made the payments. The payments were made even before the agreement dated October 30, 2023, was signed by the parties. A part payment was made when the Model code of conduct was in force without obtaining any approval from

Payments were made in foreign currency in violation of existing rules and regulations related to foreign exchange remittances. The investigation also found that public servants were involved.

“Officials were well aware of the mandatory requirements such as obtaining Finance Department consent, prior approval of the competent authority of government as well as the existence of Model Code of Conduct. However, they seemed to have caused wrongful loss to the exchequer and consequential wrongful gain to third parties. Further, the ACB found that the alleged acts on the part of the public servant concerned attract the provisions of offense of criminal conspiracy to commit criminal breach of trust, criminal misconduct, misappropriation, and wrongful loss to the exchequer. It was also found that the public servants concerned seemed to have dishonestly and fraudulently misappropriated the property of the government entrusted to them as public servants and allowed others to do so,” said the FIR.

“This attracts the provisions of section 13(1)(a) of the Prevention of Corruption Act, 1988 (as amended in 2018) and is punishable under section 13(2) of the Prevention of Corruption Act, 1988 (as amended in 2018) r/w Sec 120-B of the IPC. Further, the alleged acts of the public servants also constituted an offense under Section of 409 Indian Penal Code, 1860 as in their capacity of being public servants, being entrusted with government property, and having dominion over the said property, they have committed criminal breach of trust in respect of the said property,” the FIR added.