Bad Powder II spreads the sabotaged gunpowder to the Templars themselves. It is the last upgrade of the Ringleader sabotage line.
Bad Powder II is entry 17 of 17 in the Ringleader branch, one of the three branches (Ringleader, Insider and Swindler) on the Rooks' 39-upgrade board. It is bought with money and materials, not skill points: £6,000, 100 Metal, 80 Chemicals. Before Bad Powder II unlocks you need Bad Powder I.