Chapter Five

The Phone Call That Moves the File

3 minute read · 4 paradoxes

There is a category of state that ranks at the top of global corruption indices and feels, to the citizens who live inside it, as if accountability has gone missing. Bhutan is in that category.

Bhutan’s score on the most recent Transparency International Corruption Perceptions Index places it at the top of South Asia and ahead of much of Southeast Asia. By the Anti-Corruption Commission’s own National Integrity Assessment, the country scored 8.01 out of 10 in 2022 — classified as ‘Good’ on the ACC’s scale. Direct bribery is, by international comparison, vanishingly rare. A Bhutanese citizen can walk into a government office, file a form, and not be asked for money. This is genuinely unusual in the region.

And yet.

In the same National Integrity Assessment, when respondents were asked whether knowing the right person speeds up routine government services, 58.89 percent said yes. Six in ten Bhutanese, by the country’s own anti-corruption agency’s own measurement, believe that favouritism — not bribery, favouritism — moves files.

Both findings are true at the same time.

How can a country have one of the world’s cleanest direct-bribery scores and one of the developing world’s most pronounced felt-favouritism problems, simultaneously? The answer is at the centre of this chapter. It is also one of the most important institutional questions the country has to answer in the next decade.

To see what favouritism looks like at the ground level, consider a single morning at the Department of Industry.

Two women arrive at the registration desk at nine in the morning. Both want to register a small consulting business. Both have completed the same online application. Both have brought the same supporting documents — proof of address, citizenship card, bank reference, lease agreement for office space. Both pay the same fee.

The first woman, Choden, is the wife of a director-general in the Ministry of Industry, Commerce and Employment. The second, Tashi, is a returning Bhutanese-Australian who left a corporate job in Brisbane to start a consultancy in Thimphu. She does not know anyone in the ministry.

Choden’s application is processed within three working days. Her registration certificate is hand-delivered to her home by an office assistant whose superior had a casual conversation with Choden’s husband at the weekly inter-ministerial meeting. The conversation was not corrupt. It went something like this: ‘My wife is registering a consultancy. Just routine. The application is in the system if you can look out for it.’ The colleague said, ‘Of course.’ The application got looked out for.

Tashi’s application takes six weeks. Nothing is wrong with the application. Nothing is being held up deliberately. The application is in the queue. The queue moves at the queue’s pace. Tashi calls the office twice to ask about the status. She is told it is ‘in process.’ She does not have a director-general husband to mention her case at an inter-ministerial meeting.

No money changed hands. No rule was bent. No document was falsified. Tashi’s registration was, in the end, granted on identical terms to Choden’s. The difference was only in the time it took.

But the time mattered. Tashi had committed to a consulting contract with a Thimphu-based client that required her business to be registered before she could invoice. The six-week delay cost her the contract. She took a different one. The first one went to a competitor with a registered company.

This is what the 58.89 percent finding measures. Not bribery. Not rule-breaking. The systematic acceleration of public-service delivery for citizens who are connected, and the systematic non-acceleration for citizens who are not.

In FY 2024-25, the Financial Intelligence Department of the Royal Monetary Authority levied a regulatory fine against one of Bhutan’s major commercial banks for anti-money-laundering compliance failures. The fine, after appeals and final settlement, came to roughly Nu 200 million.

The bank in question had reported annual net profits of Nu 220 million in FY 2023-24. The 2024-25 fine consumed approximately ninety percent of the prior year’s profit.

The bank did not name the fine in any public communication. The fine was disclosed indirectly through the RMA’s annual supervisory report, which named no banks. The figure was picked up by The Bhutanese through cross-referencing the supervisory report against subsequent bank annual reports.

Two things are worth noticing. The first is that the RMA, the country’s supervisory authority, is willing to levy fines large enough to wipe out a major bank’s annual profit. This is a sign of regulatory capacity that compares favourably with many regional peers.

The second is that the public does not know about it. The named bank, its customers, its shareholders, and the broader market did not learn through official disclosure that the bank had failed AML compliance at scale. They learned through journalism. The information ecosystem that should have surfaced the supervisory finding to the citizens whose deposits sit in the bank did not surface it at the speed it should have.

Both observations are part of the same story. The regulator regulates. The public learns slowly. Whether the gap closes depends partly on the press density measured in a sidebar later in this chapter.

Why does favouritism persist when bribery does not?

Bhutanese society is organised around extended kinship networks, regional loyalties, and the dynamic of personal favour. This is the same texture of social life that produces the country’s high scores on community vitality, social trust, and personal safety. The country does not have the kind of anonymous, transactional, urban-pluralist social structure that some other developing countries have developed. It has, instead, a society where most adults in the formal economy know, or can quickly find someone who knows, someone in any government office a citizen might need to interact with.

That texture has good consequences. It is part of why direct bribery is so rare — the social cost of being known to demand a bribe is high in a community where everyone knows your family. It is part of why violent crime is low, why community institutions still function in many villages, and why the country can run universal services on a tax base that other developing countries would consider insufficient.

It also has the consequence that the same network that prevents bribery enables favouritism. A director-general who would never accept a payment to expedite a registration will, without thinking about it twice, mention his wife’s application to a colleague. The colleague will, without thinking about it twice, take a look. The application will move. Neither of them is being corrupt. They are being polite, helpful, and human.

The accumulated effect of millions of these small acts of politeness is that the formal queue runs at one speed for the connected and another speed for the unconnected. Six in ten Bhutanese, when surveyed, recognise this. The other four in ten either have not personally experienced it, do not interpret what they have experienced as favouritism, or have themselves had a recent reason to be on the favoured side of the queue.

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The Royal Audit Authority’s FY 2024-25 Annual Audit Report flagged Nu 9.987 billion in financial irregularities across the entire government. The figure was roughly twenty-five times the 2017 baseline of Nu 407 million.

Seventy-eight percent of the 2024-25 figure — roughly Nu 7.79 billion — was concentrated in a single project: Punatsangchhu-II hydropower.

The PHPA-II irregularities are themselves systemic. Finance and Revenue Management failures. Incorrect application of steel-price escalation indices, producing significant overpayments to construction firms. Procurement decisions taken outside standard tendering procedures. The list runs to dozens of items.

Strip out PHPA-II and the underlying 2024-25 figure is closer to Nu 2.2 billion — still roughly five times the 2017 baseline, but not twenty-five times.

The mega-project, in audit terms, accounts for most of the country’s audit-irregularity scale. This is not unique to Bhutan. Mega-projects in every country produce mega-irregularities. What is more unusual is how little of the PHPA-II audit finding has resulted in named accountability. The findings sit. The cases age. The supervisory follow-up is slow.

There is another set of numbers that tells the same structural story, from a different angle.

The Anti-Corruption Commission, in FY 2021-22, received and analysed 435 formal complaints from the public. The ACC’s mandate is anti-corruption: investigation, prosecution, prevention. So you might expect that most of the complaints would be about corruption.

They are not.

Of the 435 complaints, 66.44 percent concerned ‘accountability’ — citizens feeling that officials had not answered for decisions, that there was no recourse for arbitrary outcomes, that processes were unexplained. Another 17.01 percent concerned ‘transparency’ — information withheld, processes opaque, no public visibility. Only 9.20 percent of complaints were actually about corruption in the bribery sense.

The country’s most-empowered anti-corruption institution is, by complaint volume, functioning largely as a customer-service complaint desk for the broader administrative state.

The retired teacher in Trongsa whose late husband’s gratuity has gone in and out and back in over three years across four different officers — she files her complaint with the ACC because there is no other named institution to file it with. The young engineer in Phuentsholing who got three different answers about a building permit from three different officers — he files with the ACC. The landowner in Punakha whose neighbour’s land record seems to have been quietly revised — only he, of the three, has a complaint that fits the ACC’s actual mandate. The other two are filing because nothing else is set up to receive them.

In countries with stronger administrative-grievance mechanisms, the retired teacher and the young engineer would file with an ombudsman or a citizens’-charter desk or a service-level monitoring office. Sweden has had a parliamentary ombudsman since 1809. Finland has both a parliamentary ombudsman and a chancellor of justice. South Korea has a separate Anti-Corruption and Civil Rights Commission that distinguishes corruption work from administrative-grievance work. India has, on paper, the Lokpal and Lokayuktas. Bhutan, structurally, does not have a strong ombudsman institution. The ACC, by default, absorbs the overflow.

The 2022 National Integrity Assessment introduced, for the first time, a Parliamentarians Integrity Index — a measure of integrity perceptions specifically about elected representatives and the conduct of elections. The aggregate PII came in at 6.90, classified as ‘Satisfactory.’

Within the PII, the most striking sub-score was the one measuring electoral corruption — the perception that payments in cash or kind are made to gain voter support during election cycles. That sub-score was 2.40 out of 10. Classified as ‘Need Improvement.’ The lowest score in the entire National Integrity Assessment.

Thirty-eight percent of public-hearing participants rated the conduct of elections low on integrity. The country’s national integrity is ‘Good.’ The country’s electoral integrity is ‘Need Improvement.’ The gap is 5.6 points on a 10-point scale, and the lower number sits at the most important crossroads of any democracy — the process by which citizens choose the people who write the laws they live under.

A village teacher in Lhuentse, mid-thirties, returns home in the week before a National Council election. Her uncle hosts a visit from a candidate’s representative. Tea is served. Conversation moves from harvest to elections. A wrapped package — clothing, alcohol, a sum of cash — is given as a ‘festival contribution’ to the household. The teacher’s uncle, who has hosted village gatherings for years, is not asked to commit anything in return. But the gesture is registered. On polling day, her uncle will remember the gesture. He will mention it to his sons. The household’s collective vote will tilt accordingly.

Multiply across hundreds of villages and thousands of households over a six-week election period. This is what the 2.40 score is measuring.

The 2.40 is striking because Bhutan’s democratic transition in 2008 was the visionary gift of His Majesty the Fourth King to the people — designed in stages over years, prepared by constitutional drafting and civic education programmes. The expectation, in many quarters, was that a democratic system launched from the throne with such care and foresight would produce democratic conduct of higher integrity than older democracies that grew up with corruption baked in.

The 2.40 says it has not. Not yet.

The same kinship networks that produce the favouritism finding produce the electoral finding. Candidates do not, in most cases, need to offer policy platforms to win. They need to be embedded in the village’s kin and favour network. The ‘festival contribution’ is, in that frame, a continuation of normal village reciprocity rather than a discrete bribe.

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Bhutan has fewer than ten active formal media outlets. Kuensel is the oldest national newspaper, government-affiliated. Bhutan Broadcasting Service is the state broadcaster. The Bhutanese is an independent paper that has produced some of the only investigative reporting on subjects like hydropower cost overruns and banking-sector concentration. Business Bhutan is small. Bhutan Times and Bhutan Today are print outlets with limited active circulation. A handful of online outlets fill out the rest.

The total full-time professional journalist count, across all outlets combined, is estimated at fewer than 150. One journalist per roughly 5,200 Bhutanese.

Healthy democracies run at one journalist per 1,000 to 2,000 citizens.

The economics are the binding constraint. The Bhutanese advertising market is small — well under USD 5 million a year across all outlets. Print circulation is weak. Subscription revenue is nascent. Public-interest journalism, the kind that takes weeks to investigate a single story, is economically unsustainable without subsidy.

A young reporter at one of the smaller papers, who receives a tip about possible irregularities in a public tender, has six colleagues covering the entire country. If she spends four weeks on the investigation, the rest of the country goes uncovered. She files the tip as a 600-word news item instead of the 4,000-word investigation it might warrant. The deeper questions go unasked. The audit-trail items accumulate. The integrity score holds steady.

This is the accountability infrastructure gap in concrete form. The institutions exist. The reports get published. What is missing is the connective tissue — the press that would convert the audit findings into public conversation, the ombudsman that would absorb the accountability complaints, the case-management system that would tell two women filing the same business-registration application that they will be served in the same order.

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A government spends one point four five billion ngultrum shielding citizens from the actual diesel price. The citizens, who pay only the cushioned price and never see the subsidy line on any receipt, conclude that the government has failed to manage the fuel crisis. Diesel is “too expensive.” The government should “do more.” The one point four five billion already spent — the country’s own scarce fiscal space, equal to almost one percent of GDP, equal to about ten percent of the annual Government of India grant — is not part of the conversation, because it is not part of any household receipt.

A fuel subsidy can be paid in two structurally different ways. The pump-subsidy mechanism, which Bhutan uses, routes money invisibly. The household never sees it. The political credit accrues nowhere. The political blame attaches to the visible pump price, which every household experiences directly. A cash-transfer mechanism, which Indonesia and India and Saudi Arabia have all converted to over the past decade, routes the same fiscal amount visibly — into every household’s bank account as a monthly deposit. The political credit accrues at the deposit. The blame at the pump is muted because the consumer can see the offset.

The fiscal cost is identical. The political result is opposite. Bhutan has chosen the first mechanism. The country has spent a year’s audit-recovery-budget-equivalent on a subsidy that no household experiences as a benefit.

The Prime Minister’s May 2026 National Assembly disclosure of the one point four five billion ngultrum spent received standard newspaper coverage. It did not generate a viral moment. It did not become a Facebook meme. It did not enter taxi-stand chatter. The disclosure existed; the public absorption of the disclosure did not. The information channel by which a household learns about an invisible-mechanism fiscal effort does not exist in the country’s media environment — a media environment whose structural thinness this chapter has just described, with fewer than one journalist per five thousand citizens and an advertising market under five million US dollars across all outlets. The fiscal-disclosure event reaches the same six-reporter newsroom that the audit-trail event reaches. The story does not get told because there is no one with capacity to tell it.

The political-cycle incentive perversely rewards continuing the invisible subsidy. A government that lifts the pump subsidy and replaces it with a visible cash transfer absorbs a short-run political hit — the citizen sees the new high pump price before the offsetting deposit hits their bank account, and the perception of “the price went up” dominates the perception of “I received a transfer.” A government that maintains the invisible subsidy absorbs the same fiscal cost but defers the political reckoning to the next administration. Each electoral cycle, the rational political move is the deferral. The cycle compounds across electoral terms. Eventually the fiscal arithmetic forces a hand — at which point the government in office at the moment of removal takes the full political hit for a problem accumulated across multiple administrations.

This is the political-economy of every invisible fiscal mechanism the country has accumulated over the past fifty years. The hydropower export-tariff structure that subsidises Indian electricity buyers from the Bhutanese household electricity bill, described in Chapter Two. The cross-subsidy from the household ratepayer to the twenty-three large industrial customers who consume eighty-eight percent of the country’s electricity, described in Chapter Ten. The implicit subsidy embedded in the absence of a seigniorage claim against the Indian rupee Bhutan circulates as the ngultrum, also described in Chapter Two. The fee structure of the Sustainable Development Fee at one hundred US dollars per night — half of what it should be to internalise the actual per-tourist externality cost — described in Chapter Eight. The Punatsangchhu-II audit irregularities that constitute seventy-eight percent of the country’s annual flagged audit findings, described above. Each is structurally invisible at the household level. Each generates the same political pattern: the cost is borne by the system, the blame is borne by the system, no household feels the benefit.

Ecuador in 2019 attempted to lift its fuel subsidy without an offsetting cash transfer. Nationwide protests forced the government to reverse within eleven days. The failed reform is studied as the textbook case of what happens when an invisible subsidy is removed before the visible offset is in place. Bhutan’s risk path, if the current diesel subsidy continues until fiscal exhaustion forces a chaotic removal, is the Ecuador path. The forward design choice is the Indonesia and India path: convert visibility before lifting cost.

This chapter has been about accountability infrastructure: the audit findings that exist but do not become political consequence; the integrity score that moves while the audit trail expands. The fuel subsidy is the same pattern in a different dimension. Effort is being made. The making of the effort is not being seen. The accountability that would close the loop — the public seeing what the system is actually doing, and pricing that effort into its political assessment — has not been built. Until it is, every invisible fiscal effort the system makes will, structurally, produce blame for the system rather than credit for the work.

There is a way to read this chapter that draws the wrong conclusion. The wrong conclusion is that Bhutan has a corruption problem.

It does not. By international comparison, Bhutan’s corruption profile is genuinely good. Direct bribery is rare. State capture is limited. Public officials are, in the vast majority of cases, honest and professional. The ACC investigates and prosecutes when corruption does occur. The Royal Audit Authority audits and publishes. The supervisory institutions function.

What Bhutan has is an accountability problem. The accountability gap is not the same as a corruption gap. It is the gap between the institutions the country has built — courts, audit office, anti-corruption agency, supervisory regulators, parliament — and the connective tissue that would make those institutions feel accessible to ordinary citizens in real time. The ombudsman that absorbs the complaints. The press that translates the audit reports into public conversation. The case-management system that tracks unresolved findings and names the responsible officials.

None of these is missing because the country opposes them. They are missing because the institutional priority queue has, for fifty years, been on building the state itself. The next priority queue has to be on building the citizen-facing layer that lets the state’s own work become visible and accountable to the people it serves.

Six in ten Bhutanese believe the phone call moves the file. The number has been stable across National Integrity Assessment waves since 2009 — through four different governments, three different ACC commissioners, and the entire arc of Bhutanese democracy. The institutional design that would let it stop being true has not yet been built.

That design, like the diaspora-engagement framework of the previous chapter and the tariff renegotiation of the chapter before, is on the country’s next-decade to-do list. Whether it gets done is the question this chapter ends on, and the question the next chapter begins on — because the same accountability deficit that lets the phone call move the file is the deficit that lets sixty billion ngultrum sit at the central bank when Bhutanese businesses cannot raise capital.

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