Hyderabad Formula E case: Centre grants sanction to prosecute Arvind Kumar
HYDERABAD: The Central government has granted prosecution sanction against senior IAS officer Arvind Kumar, former Special Chief Secretary of the Municipal Administration & Urban Development Department, enabling the Anti-Corruption Bureau to file its chargesheet in the Formula E race irregularities case.
This follows Telangana Governor Jishnu Dev Varma’s recent approval to prosecute K.T. Rama Rao, former Minister and working president of the Bharat Rashtra Samithi, the prime accused in alleged financial irregularities of approximately Rs 55 crore.
With prosecution sanctions granted for all three accused, KTR, Arvind Kumar, and former HMDA Chief Engineer B.L.N. Reddy, the ACB is prepared to file its chargesheet, according to official sources.
The ACB registered an FIR on December 19, 2024, against KTR, Arvind Kumar, and B.L.N. Reddy under Section 13(1)(a) r/w 13(2) of the Prevention of Corruption Act, 1988, and Sections 409 (criminal breach of trust by public servant) and 120-B (criminal conspiracy) of the Indian Penal Code.
The FIR states the accused allegedly conspired to cause wrongful loss to the state exchequer by transferring Rs 54.88 crore to UK-based Formula E Operations Limited and other entities, violating established financial procedures.
The case originates from a tripartite agreement signed on October 25, 2022, between the MA&UD Department, FEO, and sponsor Ace Nxt Gen Private Limited to conduct Formula E races in Hyderabad for Seasons 9 to 12. The government’s role was limited to constructing the track and providing civic amenities, while the sponsor was responsible for fees.
The inaugural event took place on February 11, 2023, with HMDA spending Rs 12 crore on track and civic amenities, and the sponsor covering FEO’s fees. Disputes between FEO and the sponsor led Ace Nxt Gen to withdraw from Season 10, resulting in overdue payments by May 2023.
Investigations found that on September 27, 2023, Arvind Kumar, then acting as Metropolitan Commissioner, HMDA, submitted a proposal to Minister KTR for HMDA to assume the role of promoter and host. The proposal included a financial commitment of about Rs 160 crore, comprising GBP 9 million (about Rs 110 crore) in fees and Rs 50 crore for ancillary works.
KTR approved the proposal. HMDA then received two invoices from FEO: one dated September 25, 2023, for GBP 2,250,000 (Rs 22.69 crore) as the first installment, and another dated September 29, 2023, for GBP 2,250,000 (Rs 23.01 crore) as the second installment of the Season 10 promoter’s fee.
On October 3, 2023, B.L.N. Reddy authorized the first installment, followed by approval of the second installment on October 11, 2023. The funds were transferred to FEO, UK, via Indian Overseas Bank on the respective dates.
The ACB investigation found several serious irregularities. HMDA bypassed the required administrative sanction for expenditures over Rs 10 crore, which must include Finance Department concurrence. HMDA, not a party to the first agreement, made payments before the new agreement was signed on October 30, 2023. Part of the payment occurred during the Model Code of Conduct period, without approval from the Election Commission of India.
Further probe found payments in foreign currency were made without formal regulatory approvals. HMDA paid Rs 8.06 crore in withholding tax to the Income Tax Department for the two installments and Rs 1.10 crore in fees to the Federation of Motor Sports Clubs of India. The total amount paid from HMDA’s general funds was Rs 54.88 crore.
On November 27, 2023, FEO terminated the October 25, 2022 agreement, stating that the MA&UD Department had decided not to fulfill the Host City Agreement signed on October 30, 2023. FEO issued a notice of breach of contract.
After taking office, the Congress government reviewed the case and found that FEO had not obtained consent from all parties before terminating the agreement. It also noted that payments were made despite no obligation under the agreement.
