The Anti-Corruption Commission (ACC) would like to inform the public of the conclusion of its investigation into allegations related to the Economic Stimulus Program (ESP).
As indicated in the ACC’s earlier media release, while the appraisal and approval processes under the ESP appeared to have generally complied with the prescribed guidelines, further verification was required, particularly in relation to post disbursement utilization of loan proceeds and the veracity of documents relied upon by Participating Financial Institutions (PFIs).
The investigation has since been completed in accordance with the ACC’s Standard Operating Procedures, involving detailed examination of loan approval records, committee deliberations and decisions, disbursement and utilization patterns, field inspections, interviews, and verification of financial and remittance records with relevant authorities, including the Royal Monetary Authority (RMA).
In this regard, the investigation focused primarily on four medium scale ESP funded projects, with approved loan amounts ranging from Nu. 10 million to Nu. 100 million, namely:
- M/s Wangchuk Blocks,
- M/s Norwang Polyfab Private Limited,
- M/s T & K Concrete Products, and
- M/s Bhutan Biscuit and Gourmet.
These four projects were prioritized from among the approved applicants in the medium scale loan category, as the initial allegations specifically claimed that they had secured their loans through corrupt means.
Following a comprehensive review of loan appraisal records, approval processes, disbursement documents, and post disbursement monitoring reports, the matter did not warrant for criminal prosecution in relation to the approval or disbursement of ESP loans in any of the above four cases. However, the investigation revealed serious administrative lapses in the interpretation, application, and enforcement of the ESP Guidelines by certain PFIs, particularly in relation to eligibility criteria, loan conversion practices, committee governance, and post disbursement monitoring and supervision in three of the four projects. While the case of M/s Norwang Polyfab Private Limited did not warrant further action at this stage, following are the key findings and actions recommended against the three projects:
- M/s Bhutan Biscuit and Gourmet (Wangdue Phodrang): The investigation established that the ESP loan sanctioned to M/s Bhutan Biscuit and Gourmet by the T-Bank was used to liquidate an existing commercial loan, contrary to the fundamental intent of the ESP, which is limited to new or upscale businesses. Clarification sought from an official of RMA, further confirmed that loan conversion is not permissible. The ACC concluded that the concessional ESP facility was extended to service an existing defaulting exposure, thereby undermining the purpose of the scheme. Accordingly, the ACC has referred the matter to the ESP Steering Committee for recovery of the entire ESP loan amounting to Nu. 90 million. In addition, the ACC has recommended that the RMA impose administrative sanctions against T-Bank, as an institution, for failure to exercise due diligence in the approval of the ESP loan.
- M/s T & K Concrete Products (Chhukha): The investigation revealed that the ESP loan was sanctioned and disbursed without approval of the Credit Committee of the Bhutan Insurance Limited (BIL), in violation of internal governance requirements. It was further established that portions of the project financed, particularly ready-mix concrete services, were ineligible under the ESP Guidelines and similar projects were found to havebeen rejected by the ESP Unit. The investigation also confirmed irregular and excess disbursements, financing of pre-purchased assets, and discrepancies between sanctioned items and actual procurements. Consequently, the ACC has referred the case to the ESP Steering Committee for recovery of inadmissible disbursements amounting to Nu. 32.98 million and recommended cancellation of the remaining undisbursed balance of Nu. 15.97 million. Further, the ACC has referred the matter to the RMA to impose administrative sanctions against BIL and the concerned Credit Committee Members, in view of the procedural lapses identified.
- M/s Wangchuk Blocks (Punakha): In this case, the investigation substantiated clear diversion of ESP loan funds through the submission of unverifiable and misleading documents, as well as serious deficiencies in monitoring and supervision by the ESP Unit of the Bhutan Development Bank Limited (BDBL). Claims of substantial advance remittances for machinery imports were contradicted by verified records from the RMA and Bank of Bhutan Limited. Disbursed funds were instead utilized for personal expenditures unrelated to the approved project. The investigation further uncovered indications of a broader pattern of deception involving undisclosed partners, proxy applicants, and recycled project proposals. Based on these findings, the ACC has recommended to the ESP Steering Committee for the recovery of the first tranche amounting to Nu. 34.32 million and cancellation of the remaining loan balance of Nu. 45.96 million. In addition, the matter has been referred to the RMA to initiate administrative action against the concerned project appraising officer and the General Manager of the ESP Unit of BDBL for failure to exercise due diligence. With respect to the Executive Credit Committee Members, the RMA has been requested to assess and determine whether administrative action is warranted.
Accordingly, in accordance with Section 138 of the Anti-Corruption Act of Bhutan 2011, the ACC has directed the ESP Steering Committee under the Cabinet Secretariat and the RMA to submit Action Taken Reports to the ACC within one (1) month and three (3) months, respectively, from the date of receipt of the referrals. Further, the ACC has requested the RMA to conduct a comprehensive assessment of all loans approved under the medium scale ESP category to ascertain compliance with the ESP Guidelines.
The overall findings of the investigation reaffirm that while the policy intent and statutory objectives of the ESP were sound, the effectiveness of such national initiatives ultimately depends on rigorous implementation, vigilant regulatory oversight, and the proper discharge of due diligence and fiduciary responsibilities by institutional gatekeepers, including regulators and oversight committees. Although the investigation did not establish corruption offences beyond reasonable doubt in all cases, it clearly demonstrated that material lapses in due diligence, supervision, and enforcement at the implementation stage created avoidable regulatory vulnerabilities, contributing to public concern and undermining confidence in the program. The ACC therefore underscores that the absence of proven criminal culpability does not extinguish institutional accountability, and that relevant authorities remain obligated, within their respective mandates, to enforce applicable guidelines and controls strictly, exercise proactive supervision, and safeguard public resources, so that limited resources are applied strictly for their intended purposes and generate sustainable socio-economic outcomes while restoring public trust in such initiatives.
The ACC remains committed to its constitutional mandate of preventing and combating corruption resolutely, and will continue to advocate for stronger institutional accountability and governance frameworks to safeguard public resources and uphold public trust.
***