HYDERABAD: In two major developments in Telangana on Thursday, BRS working president KT Rama Rao (KTR) was named Accused-1 (A-1) in the Formula E race case by the Anti-Corruption Bureau (ACB), and Chief Minister A Revanth Reddy announced the formation of a Special Investigation Team (SIT) to probe alleged irregularities in the Outer Ring Road (ORR) lease tenders.
Formula E race case
While the ACB has named KTR, who was the former municipal administration minister, as Accused-1 in the Formula E race case, the then municipal administration special chief secretary Arvind Kumar has been listed as A-2, and former Hyderabad Metropolitan Development Authority (HMDA) chief engineer BLN Reddy as A-3.
A day after the Chief Secretary wrote a formal letter to the ACB, the investigating agency registered cases on Thursday. Earlier, Governor Jishnu Dev Varma granted his consent to prosecute KTR and others.
The allegations involve the HMDA transferring Rs 54.88 crore to a private firm without state government approval. The government contends that the transfer violated the Reserve Bank of India's (RBI) rules.
Accordingly, the ACB filed charges under Section 13(1)(A) read with 13(2) of the Prevention of Corruption Act, and Sections 409 and 120(B) of the IPC for the alleged misuse of government funds.
It may be recalled that after Arvind Kumar’s transfer, IAS officer Dana Kishore, who assumed charge as principal secretary of the municipal administration department, lodged a formal complaint with the ACB in December 2024.
According to the complaint, a tripartite agreement was signed on October 25, 2022, between Formula E Operations Limited (FEO), a company registered under UK laws, the Municipal Administration and Urban Development (MAUD) department, and Ace Nxt Gen Private Limited (Sponsor), to conduct Formula E races for Seasons 9, 10, 11, and 12 in Hyderabad. Under this agreement, the government’s role was limited to building the track and providing civic amenities.
Key developments
Season 9 was conducted on February 11, 2023, and HMDA incurred an expenditure of Rs 12 crore for the event, with fees and other payments covered by the sponsor. However, the sponsor later backed out of Season 10.
Subsequently, discussions were held between MAUD officials and FEO representatives on the possibility of the state government taking up the role of sponsor and paying the fee.
On September 9, 2023, HMDA submitted a file to the then MAUD Minister KTR seeking approval for several matters after the sponsor's exit. HMDA received invoices for Rs 22.69 lakh and Rs 23.01 crore in September 2023 as installments for the Season 10 promoter’s fee, which were sanctioned by then Chief Engineer BLN Reddy in October 2023. The amounts were transferred to FEO UK.
However, the payments were made without formal approvals from regulatory authorities, resulting in a tax burden of Rs 8.06 crore for HMDA. Additionally, HMDA paid Rs 1.10 crore to the Federation of Motor Sports Clubs of India for FIA inscription and permit fees.
All these payments, amounting to Rs 54.88 crore, were made from HMDA’s general funds. Established procedures require administrative sanction from the state government, in concurrence with the Finance Department, for expenditures exceeding Rs 10 crore.
After the payments, a new agreement was signed on October 30, 2023, between FEO and the MAUD Department, with the state government committing to sponsor fees of Rs 90 crore. Notably, this was done while the Model Code of Conduct (MCC) was in force ahead of the Assembly elections, without prior approval from the Election Commission of India (ECI).
Reactions and allegations
KT Rama Rao, addressing reporters, denied any corruption in the Formula E case. He argued that if a case is registered against him for undue advantage, a similar case should also be filed against Formula E for receiving the funds.
Meanwhile, BJP state general secretary Kasam Venkateswarlu urged the government to act as per the law if evidence exists against KTR but cautioned against unnecessary harassment. He emphasized the need for a proper investigation.
SIT formation
The chief minister announced the formation of a Special Investigation Team (SIT) to probe alleged irregularities in the lease and tendering process of the Outer Ring Road (ORR) during the BRS regime.
The decision to initiate the probe came after a request from former Finance Minister T Harish Rao, under whose tenure the ORR lease was finalised.
During a discussion on "Outstanding Liabilities of the State" in the Legislative Assembly, the Chief Minister stated: "As Harish Rao wholeheartedly requested an inquiry, supported by his allies, I am ordering an SIT investigation. The terms of reference will be finalised by the Cabinet."
He further mentioned that the Cabinet would decide the guidelines for the investigation. The ORR lease had been awarded for 30 years for an amount of Rs 7,380 crore on a 'toll operate and transfer' (ToT) basis during the BRS government’s tenure.
However, Harish Rao denied requesting an SIT probe, clarifying that he had only called for the cancellation of tenders if irregularities were proven. Despite this, he welcomed the investigation.
The Chief Minister alleged that the previous BRS government had hastily awarded the ORR lease tenders, bypassing procedures to benefit select individuals
"Knowing they were likely to lose the elections, they sold off assets like the ORR. This was a desperate attempt to monetise resources," he said.
Highlighting the Congress's role in Hyderabad’s development, including the construction of the ORR under Dr Y.S. Rajasekhar Reddy’s leadership, the Chief Minister also criticised the BRS government for "selling" the debt-free infrastructure, initially built with a JICA loan of approximately Rs 6,500 crores.
What is the ORR Lease?
In April 2023, the BRS government awarded the operation and toll collection rights for the ORR to IRB Infrastructure Developers Limited for Rs 7,380 crore on a 30-year 'toll-operate-transfer' (ToT) basis.
The Hyderabad Metropolitan Development Authority (HMDA), under Municipal Administration Minister K.T. Rama Rao, managed the tendering process. Allegations suggest that the deal grossly undervalued the ORR's revenue potential.