The Enforcement Directorate is set to focus its investigation into alleged irregularities involving ₹55 crore in foreign exchange transfers.
Published Dec 21, 2024 | 11:33 PM ⚊ Updated Dec 21, 2024 | 11:34 PM
BRS working president KTR. (X)
The Enforcement Directorate, which has registered an Enforcement Case Information Report (ECIR) against former Telangana Municipal Administration Minister KT Rama Rao, is expected to begin its investigation into the alleged irregularities in the Formula E case soon.
The ED, on Friday, 20 December, registered the case against Rao, special chief secretary Arvind Kumar, and the former Hyderabad Metropolitan Development Authority (HMDA) chief engineer, BLN Reddy.
The charges against them allege they illegally facilitated the transfer of ₹55 crore to the UK-based Formula E Organisation (FEO) in foreign exchange for the organisation of the Formula E Races in Hyderabad.
The ED acted swiftly, filing the case, just a day after the Anti-Corruption Bureau (ACB) registered a case on similar charges against the trio.
The ACB booked its case under the Prevention of Corruption Act. Soon after, the ED wrote to the probe agency, requesting details of its case against Rao and the other two officials.
It is likely that the ED will issue notices to Dana Kishore, the incumbent special chief secretary of the Municipal Administration, who is the complainant to the ACB.
According to sources, the ED is expected to investigate potential violations of the Foreign Exchange Management Act (FEMA) and the Prevention of Money Laundering Act (PMLA) in connection with the ₹55 crore transferred to the FEO by the HMDA from its account held at the Himayathnagar branch of Indian Overseas Bank (IOB).
The ED officials are understood to be adopting a calibrated approach to the investigation, given that one of the accused, KT Rama Rao, has approached the Telangana High Court seeking to quash the FIR registered against him by the ACB.
Although the court did not grant the petitioner’s request, it directed the probe agency not to arrest him until 30 December while allowing the investigation to continue.
The ACB’s case against Rao and the other two accused alleges numerous procedural lapses in processing the payments. The amount was transferred on 3 and 11 October, 2023 in two tranches to the company by the HMDA, even before an agreement was signed, which occurred on 30 October 2023.
The rules stipulate that for the HMDA to make payments exceeding ₹10 crore, clearance must be obtained from the state government.
The government, in turn, must seek clearance from the Reserve Bank of India (RBI) for transferring funds abroad in pounds sterling.
Furthermore, the payment was made during the enforcement of the model code of conduct for the Assembly elections (from 9 October to 4 December 2023) without approval from the Election Commission of India (ECI).
Additionally, the agreement, which committed the state to cover additional costs, was signed without proper authorisation from the government and outside established procedures. The agreement included a financial commitment of ₹600 crore by the state government.
It is also reported that the state government, while making the payment to the FEO, failed to deduct Income Tax, which resulted in an additional tax burden of approximately ₹8 crore.
Advocate General A Sudarshan Reddy, appearing for the ACB during arguments in the Telangana High Court on a petition filed by Rao to quash the case, stated that further investigation would reveal whether the state government suffered any loss and, if so, the extent of the loss, and whether there was any illegal gratification involved.
KTR was the MA&UD minister during the Formula E fiasco.
The case concerns the proposal to fund one of the four seasons of the Formula E races in Hyderabad. To conduct the ninth, tenth, eleventh, and twelfth seasons of the Formula E races, the Municipal Administration Department, under the former BRS government, signed a tripartite agreement with Formula E Organisers (FEO) and Ace Nxt Gen Pvt Limited in 2022.
The ninth season of the event took place in Hyderabad on 10 and 11 February 2023.
The promoter, Ace Nxt Gen, originally responsible for financing all four seasons of the Formula E Races, unilaterally withdrew after the first event, citing financial losses.
When the FEO expressed its willingness to organise the second event, the then special chief secretary of the Municipal Administration Department, Arvind Kumar, acting on the advice of the then Municipal Minister, KT Rama Rao, transferred ₹55 crore to facilitate its organisation.
The HMDA subsequently replaced Ace Nxt Gen as the promoter.
(Edited by Dese Gowda)
