Arvind Kumar, the former Special Chief Secretary of the Municipal Administration and Urban Development (MAUD) department, has been issued a memo for his alleged improper approvals in connection with the Formula E racing events which has resulted in the Telangana government facing a legal litigation. Recently, Formula E Operations (FEO), which conducts Formula E racing events, informed the government about its decision to sue them after the Congress government refused to conduct the second Formula E race in Hyderabad. The event was supposed to be held on February 10. FEO alleged a breach of contract by the MAUD.
On January 6, Telangana Chief Secretary Shanti Kumari issued the memo, directing Arvind Kumar to provide an explanation for committing “serious violations” by not following due process including the questionable payment of Rs 46 crore to FEO under the previous BRS government. The senior IAS officer who has now been transferred to Revenue department has been asked to reply within seven days failing which further action will be taken.
According to the memo issued, Arvind Kumar, who was the then Special Chief Secretary of the Municipal Administration and Urban Development (MAUD) department, working under former Minister K T Rama Rao, had paid Rs 46 crores, plus a tax amount of Rs 9 crores from the Hyderabad Metropolitan and Development Authority (HMDA) resources to FEO before even they entered into an agreement with the state government.
The memo read: “Why the huge financial expenditure of Rs 46cr plus the tax amount of Rs 9 Crores was paid from the HMDA resources, even before the Agreement was signed and without obtaining the concurrence of the HMDAS Board of Directors as well as that of Finance Department of the State Government.”
The memo sought to know why the payment was made without getting consent from the State Government's Finance Department and the Board of Directors of HMDA. Additionally, it was alleged that HMDA did not have the necessary consent from Competent Authorities, as required by Secretariat Business Rules, for it to be designated as the Nodal Agency to host and manage the event. According to the Congress government, no due diligence was carried out in order to safeguard the financial interests of HMDA/Government when taking on new responsibilities as the promoter for the Season-10 event.
“Why due permission was not taken, and the issue was not brought to the notice of the Competent Authority, when the tripartite agreement was terminated by the Formula E Operations, allowing the promoter, who was at gross default go free from any liability, while the additional burden of conducting the event besides hosting the same was passed on to the Government,” the Memo read.
Ace Nxt Gen, a Hyderabad-based private firm, partnered with Formula E and then entered a tripartite agreement with Telangana government for the Formula E Race in Hyderabad. The Congress government has raised questions about the handling of agreements and financial implications during the Formula E Season-9 and Season-10 racing events held in 2022 and 2023.
On January 5, the government announced the cancellation of Round 4 of Formula E Season 10 scheduled for February 10 this year. Subsequently, organisers released a statement expressing their disappointment and revealed that Formula E Operations (FEO) had no alternative but to formally notify MAUD of its breach of contract.
Issues raised in the Memo
Referring to Article 299 of the Constitution of India, which mandates that all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President or by the Governor of the State. The government asked, “Why no approval from Competent Authority was taken when a major policy decision involved huge financial commitment to conduct the event.”
The government also questioned why a revised agreement was signed with Formula E Operations (FEO) during the Model Code of Conduct (MCC) which was in force during state Assembly elections, without approval from Competent Authority. Telangana went for polls on November 30, 2023.
According to the memo the Competent Authority was not clearly explained about the consequences of cancellation of agreement about the consequences which caused additional burden to the government and allowed the defaulting promoter to evade liability.
“Removing the promoter from the Season-9 agreement was not thoroughly assessed, neglecting financial implications and steps were taken to claim damages from the defaulting promoter. The agreement for Season-10 was finalised without informing or obtaining permission from the competent authority and no efforts were made to explore alternative private players as promoters for Season-10,” the memo stated.
Responding to this development, BRS spokesperson Krishank Manne alleged political vendetta and grudge against officers from the previous government. He claimed that the Congress government's attempt to issue a memo against Arvind Kumar was a cover-up for their failure in losing the Formula E Grand Prix, which attracted investments to the state.