Bharat Rashtra Samithi leader and former Telangana minister KT Rama Rao has been summoned by the Enforcement Directorate on January 7 in a money laundering case concerning alleged irregularities in conducting a Formula E motorsport race in Hyderabad in February 2023, The Indian Express reported on Saturday.
The central agency has also asked Aravind Kumar, the former principal secretary of the state’s urban development department, to appear before it on January 2.
BLN Reddy, who was the chief engineer of the Hyderabad Metropolitan Development Authority at the time, has been directed to appear before the agency on January 3.
The Enforcement Directorate is investigating possible violations of the Prevention of Money Laundering Act on the basis of a first information report filed by the Telangana Police’s Anti-Corruption Bureau in connection with the sporting event.
The agency is also investigating possible violations of the Foreign Exchange Management Act violations.
The FIR alleges that Rs 54.88 crore was paid to Formula E Operations Limited and others in “gross violation of established procedures” while Rao was the Municipal Administration and Urban Development minister.
Rao, the son of former Chief Minister K Chandrashekar Rao, has denied irregularities in the payments made for the events.
According to the FIR, the Municipal Administration and Urban Development department signed an agreement with Formula E Operations Limited, based in the United Kingdom, and Ace Nxt Gen Private Limited, based in India, to conduct the Formula E races for seasons 9, 10, 11, and 12 in Hyderabad.
Ace Nxt Gen Private Limited was the sponsor for the event.
Season 9 of the event was conducted on February 11, 2023, for which the Telangana government incurred an expenditure of Rs 12 crore.
However, Ace Nxt Gen Private Limited backed out of the agreement before season 10, following which discussions were held for the state government to take up the role of the sponsor.
Formula E Operations Limited subsequently furnished two invoices before the government – one for Rs 22.69 crore on September 25, 2023, and the second for Rs 23.01 crore on September 29, 2023.
The chief engineer of the Hyderabad Metropolitan Development Authority at the time approved the transfer of the amounts on October 3, 2023, and October 11, 2023, claimed the FIR.
These transfers, in British pounds, are said to be in violation of Reserve Bank of India regulations, prompting the central bank to impose a fine of Rs 8 crore on the Telangana government that was headed by K Chandrashekar Rao at the time, according to The Indian Express.
The fine was paid by the Congress government that had been elected in December 2023, the FIR states, leading the new government to investigate the cause of the fine. This led to the discovery of the alleged violations and financial irregularities, which in turn led to the Anti-Corruption Bureau’s investigation.
The Anti-Corruption Bureau has also alleged that requisite approval was not sought from relevant authorities before the amount was transferred.
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