HYDERABAD: The Anti-Corruption Bureau is preparing to file a chargesheet in the Formula E race case against former minister KT Rama Rao, IAS officer Arvind Kumar, former HMDA chief engineer BLN Reddy and others in the coming week.
According to ACB sources, the event was proposed through private discussions among A4 Kiran Malleswara Rao, Dilbagh Gill of Mahindra Racing and KT Rama Rao, bypassing formal government channels. Investigators claim that the chief secretary, finance minister, chief minister and cabinet were not informed, which they say breached Business Rules and the Financial Code.
The agency has alleged that the arrangement involved electoral bonds valued at Rs 44 crore, reportedly paid to the BRS in April and October 2022, ahead of the tripartite agreement.
They state that Ace Nxt Gen was given the promoter role and later allowed to exit despite losses. The ACB alleges that Hyderabad Metropolitan Development Authority funds were diverted to support Season 9, despite HMDA not being a contracting party.
Records show HMDA spent Rs 20.99 crore on civic works and track preparation. Investigators further found that two instalments totalling about Rs 46 crore were paid to Formula E Operations Limited in October 2023, although HMDA was not legally bound to do so, the sources said.
The agency has obtained prosecution sanction from the Governor to proceed against Rama Rao under the Prevention of Corruption Act. Officials say prosecution sanction is not required for private individuals while a request was sent to the DoPT over 90 days ago. Permission is deemed given if a request is pending for 90 days.
Quid pro quo, rule violations & HMDA fund diversion to form crux of chargesheet
Anti-Corruption Bureau officials say they have completed evidence collection, including questioning of the named individuals and several private persons. The ACB maintains that the Formula E race was initiated through private discussions involving Kiran Malleswara Rao, Dilbagh Gill and Rama Rao, instead of through government protocol. They state that Rama Rao decided to host the race without Cabinet approval or mandatory departmental clearance.
Investigators claim a quid pro quo arrangement where Malleswara Rao allegedly convinced Greenko promoter Anil Kumar Chalamalasetty to purchase electoral bonds worth Rs 44 crore for the BRS in April and October 2022. In return, Ace Nxt Gen was appointed promoter and later permitted to exit after incurring losses.
HMDA funds ‘misused’
Officials of the Bureau say that HMDA was not party to the tripartite agreement, yet bore expenditure for Season 9 amounting to Rs 20.99 crore. For Season 10, Rs 46 crore was allegedly transferred to Formula E Operations Limited on October 5 and 11, 2023, despite no legal obligation. Total Season 10 payout was Rs 54.88 crore, with an additional Rs 8.06 crore tax burden due to incorrect compliance procedures, including use of RBI Master Circular 8 instead of 17 and failure to file Forms 15CA/CB.
Agreements termed invalid
Officials argue that the tripartite agreement of October 25, 2022, and the follow-up agreement of October 30, 2023, were invalid as Arvind Kumar signed them without authorisation, allegedly violating Articles 166(1) and 299 of the Constitution.
ACB sources say that financial rules were bypassed, including the requirement for Finance department concurrence on expenditure over Rs 10 crore.
Payments for Season 10 and the new agreement were executed after the Assembly election schedule was announced on October 9, 2023 and during the Model Code of Conduct, without the approval of the Election Commission.
The ACB sources said that the October 2023 agreement committed HMDA to an estimated Rs 600 crore liability for Seasons 10, 11 and 12. Officials say a note dated September 27, 2023 referenced only Season 10 to avoid mandatory Cabinet scrutiny for multi-year funds.
Nielsen report questioned
Investigators say that while Rama Rao referred to a Nielsen assessment claiming Rs 700 crore economic benefit, no government department submitted data for such evaluation, and Nielsen declined to join the investigation.