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Following nearly 11 months of back and forth, Telangana Governor Jishnu Dev Verma on November 20 granted the state government permission to prosecute Bharat Rashtra Samiti (BRS) working president KT Rama Rao (KTR) in the Formula E case.
KTR has been accused of corruption while making arrangements for Formula E car races held in 2023 while the BRS was in power in the state.
The Congress government has alleged that funds worth nearly Rs 55 crore were transferred from Hyderabad Metropolitan Development Authority (HMDA) to the London-based Formula E Operations (FEO) Limited without the requisite approvals.
The case took several twists and turns until Governor Jishnu Dev cleared the state government’s file sent to him on September 9, seeking his permission to begin prosecution proceedings.
The Governor had in December 2024 granted permission to file a case against KTR after the state government held legal consultations with the Attorney General.
The state Cabinet had discussed and handed over the case to the Anti-Corruption Bureau (ACB), who filed their First Information Report (FIR) on December 19.
The ACB named KTR as accused one (A1), former Municipal Administration and Urban Development (MAUD) principal secretary Arvind Kumar as A2, a former Chief Engineer of the Hyderabad Metropolitan Development Authority (HMDA), BLN Reddy, as A3, sports consultant Guvvada Krishna Rao as A4 and co-founder of the Formula E championship Alberto Longo as A5.
In the eleven months following December 2024, the state government made several attempts to bring KTR to book but were met with legal and procedural hurdles. At one point, Chief Minister Revanth Reddy even expressed his frustrations over the Governor’s delay in granting necessary permissions.
Revanth told media persons that an amendment to the Prevention of Corruption Act in 2018 mandated the Governor's permission to even examine a Minister’s conduct. Permission from the Governor was also required to file the chargesheet against KTR.
“Two months have lapsed but the permission is yet to be given for prosecution,” the CM had said and accused the Bharatiya Janata Party (BJP) of trying to “save” KTR. "Even if he (KTR) is arrested without the Governor's permission, he can secure bail within ten minutes and go scot-free," Revanth had said.
What is the ACB’s case?
The case took root shortly after the Congress assumed power in Telangana in December 2023. The newly formed government allegedly detected payment of Rs 45 crore in two installments to the London-based Formula E Operations Limited (FEOL), which runs the Formula E championship races for single-seater electric cars on street circuits.
The ACB accused leaders in the former BRS government of transferring money in British pounds to Formula E, violating the Reserve Bank of India’s (RBI) rules. The RBI imposed a fine of Rs 8 crore on the then BRS-led government. The transfer allegedly took place without RBI permission even before a formal agreement was signed. Further, according to the ACB, the transfer was made when the Model Code of Conduct for Assembly elections was in force in October 2023.
When the agreement was finally signed, then Chief Minister K Chandrashekar Rao (KCR) was allegedly not involved in the matter. The money was released by HMDA on instructions from then MAUD principal secretary Arvind Kumar with KTR’s backing. The payment was confirmed by Arvind Kumar in his written reply to a notice served by the new Chief Secretary Shanti Kumar after the change of government.
KTR accused of violating protocol
According to the FIR, KTR who was then the Minister for MAUD, failed to take clearance from the Telangana Cabinet before authorising Arvind Kumar to pay Rs 45 crore to Formula E in foreign currency.
Several other alleged violations and financial irregularities regarding Formula E came to the fore during the state government’s probe into the RBI’s fine.
It was found that the idea to bring the ninth edition of the ABB FIA Formula E championship, run by FEOL, to Hyderabad for the 2022-23 season allegedly sprouted at a private conversation between KTR and his friends in November 2021.
ABB is a global technology company and the Fédération Internationale de l'Automobile or FIA is the world governing body for motorsport. Their partnership is most famously known as the ABB FIA Formula E World championship for fully electric international single-seater racing. Leading car manufacturers, including Mercedes, Porsche, Nissan and Mahindra, supply vehicles for the championship.
The championship is held in some of the world's leading cities every year. Round four of the 2022-23 season was allotted to Hyderabad, featuring the Greenko Group, a leading green energy company, as a partner. The other rounds in the same season were held at Sao Paulo, Diriyah near Riyadh in Saudi Arabia, Mexico city, Berlin, Monaco, Rome, London, Jakarta and Seoul.
Incidentally, Greenko was found to have donated at least Rs 13 crore to the BRS before signing the Formula E agreement with the previous government.
The conduct of the race was discussed by KTR unilaterally, though there was no such proposal before the government, according to the ACB’s investigation. An international sports consultant, Guvvada Krishna Rao (A4 in the ACB’s case), allegedly gave a powerpoint presentation to KTR at T-HUB in Hyderabad on November 18, 2021.
Krishna Rao had earlier consulted YSR Congress Party (YSRCP) leader Sunil Kumar Chalamalasetty for financial and business support for the race. Sunil is also the brother of Anil Kumar Chalamalasetty, the founder and CEO of Greenko.
KTR, Krishna Rao and other government officials participated in further talks with Sunil Chalamalasetty to take the project ahead, the ACB noted. “It was clear, therefore, that the Formula E conspiracy originated not from the government but from private individuals,” the investigation concluded.
Following his meeting with Sunil, KTR allegedly initiated measures to conduct the race in Hyderabad without involving the government. A Letter of Intent (LoI) was, however, signed by IAS officer Arvind Kumar, Sunil Kumar and Formula E co-founder Alberto Longo on January 17, 2022.
There was no permission from the government for Arvind Kumar to sign the LoI, according to the ACB. Sunil Kumar, on the other hand, floated Ace NextGen Private Limited as a special purpose vehicle (SPV) for the race while Krishna Rao handled other responsibilities. Krishna Rao, by a separate agreement with Ace NextGen, was found to have claimed an annual remuneration of Rs 1.9 crore.
All this was done with Arvind Kumar at the helm and oral instructions of KTR, the ACB stated.
Post the signing of the Letter of Intent
Sources said that the ACB investigation has revealed that Ace NextGen suffered a loss of Rs 165 crore in the first season of championship held in Hyderabad on February 11, 2023. The agreement was made for conduct of the ninth (2023) to twelfth (2026) editions of the championship.
Thereafter, Ace NextGen withdrew its sponsorship from the tenth (2024) season owing to reported differences with Formula E, leaving the Telangana government to either raise its own funds or find another sponsor.
The FEOL then removed Hyderabad as the venue for the tenth edition after the Telangana government failed to meet the May 2023 deadline for payment of initial fee. The city was also deleted from the list of centres to host the tenth edition by June.
In this background, it was disclosed that Arvind Kumar and BLN Reddy, Chief Engineer of HMDA, prepared a note file on September 27 ensuring the Telangana government as the promoter which will take the responsibility of hosting the tenth edition.
Arvind Kumar also issued administrative sanction for release of Rs 160 crore, including Rs 110 crore (about 90 lakh British pounds) towards fee and Rs 50 crore for other expenditure, for the conduct of the tenth edition in Hyderabad. But, ACB found that the file was neither sent to the government nor the Cabinet for approval. Also, the MAUD, finance department, law department and even the Chief Secretary were kept in the dark which was against business rules of the Secretariat, ACB alleged.
The net loss incurred by the BRS led government allegedly amounted to Rs 54.88 crore. Following the change in government in December 2023, one of the Congress’ first decisions was to withdraw from the championship in toto.
Sources added that the investigation estimated the possibility of a loss of Rs 600 crore if the BRS had gone ahead with the remaining three editions from 2024 to 2026.
Concealing the potential loss, KTR and Arvind Kumar allegedly colluded to project a loss for just one edition in 2023. Arvind Kumar, with KTR’s backing, allegedly went to the extent of assuring Formula E co-founder Alberto Longo that the government would sponsor the subsequent editions. The payments were also made speedily to take Formula E into confidence, according to ACB.
The ACB initially suspected a quid pro quo between KTR and Ace NextGen in consideration for letting it withdraw as sponsor without financial burden, as the company purchased electoral bonds worth Rs 44 crore for the BRS. The sponsorship was earlier finalised as part of a tripartite agreement between Ace NextGen, MAUD and HMDA on October 15, 2022. It was cancelled on October 27, 2023 with Ace NextGen pulling out and a fresh agreement was made between the government represented by MAUD and HMDA and the company on October 30, 2023. But, the HMDA had already released the money for the 2024 season to Formula E by then.
With Ace Nextgen reportedly suffering a loss of Rs 165 crore for the ninth edition held on February 11, 2023, differences are said to have cropped up between the sponsor and Formula E. Ace Nextgen then refused to pay the fee for the tenth edition, resulting in the government having to take responsibility for the subsequent editions. The same was conveyed to KTR as MAUD Minister by Arvind Kumar in his capacity as HMDA Commissioner. KTR approved the proposal.
A new agreement was made on October 30, 2023, with the government taking up the responsibility of organising the tenth edition, laying the track and extending logistics support besides making the payment in British pounds.
The booking of case by ACB on a complaint given by Arvind Kumar's successor as principal secretary of MAUD, M Dana Kishore, led the Enforcement Directorate to enter the scene. The ED registered its own Enforcement Case Information Report (ECIR, which is similar to the FIR of police) to investigate the case under the Prevention of Money Laundering Act. The ED also investigated the case for Foreign Exchange Management Act (FEMA) violations as the money was paid to a foreign company without the permission of the RBI.
KTR moved the High Court seeking quashing of the case registered by ACB but this was struck down by the court. However, the court restrained the ACB from arresting KTR.
The ACB invoked provisions of Mutual Legal Assistance In Criminal Matters with the United Kingdom through a Letter Rogatory to question Albeto Longo by video conferencing. It issued summons to KTR to depose for examination on January 6 this year even as his quash petition was pending in court. But, he returned from the ACB office without presenting himself before officials as he was not allowed to go with his lawyers.
After his plea was struck down by court, KTR appeared before ACB twice in January and June with the permission of court allowing his lawyers to watch the proceedings from a distance. The investigating agency collected all the required evidence by September and requested the government to seek the Governor's approval for KTR’s prosecution. On the other hand, the government has also sought the permission of the Department of Personnel and Training (DoPT) of the Union government to prosecute Arvind Kumar since he was an IAS officer.
Meanwhile, the ED also questioned KTR, Arvind Kumar and BLN Reddy on transfer of HMDA funds from its account in the Himayatnagar branch of Indian Overseas Bank to the FEOL account at London without RBI approval.
At a media conference on Friday, November 21, KTR reacted to the Governor's permission to prosecute him saying "law will take its own course". He said he did nothing wrong and was prepared to face a lie detector. The Congress denied political vendetta on its part as alleged by the BRS.