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Bhutan's Drive for Improved Governance

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Bhutan's Drive for Improved Governance 20th by 2020 Bhutan’s Drive for Improved Governance Bhutan has made impressive gains in social, economic, and political development over the years. Its unique approach in this regard—encapsulated in the philosophy of Gross National Happiness— serves as an anchor for sustained efforts at holistic development. The drive for good governance in the country has been a consistent, and well-supported, development objective of the government; the commendable work of the Royal Audit Authority and the Anti-Corruption Commission is testimony to this commitment. This book, in the main, tells the story of the work of these two organizations. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to approximately two-thirds of the world’s poor: 1.6 billion people who live on less than $2 a day, with 733 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. 20TH by 2020 BHUTAn’s Drive fOR IMPROVED GOVERNANCE ISBN ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org 20TH by 2020 BHUTan’s Drive fOR IMPROVED GOVERNANCE © 2014 Asian Development Bank. All rights reserved. Published 2014. Printed in the Philippines. ISBN 978-92-9254-620-5 (PrINT), 978-92-9254-621-2 (e-ISBN) Publication Stock No. BKK146766-2 Cataloging-In-Publication Data Asian Development Bank. 20th by 2020—Bhutan's drive for improved governance. Mandaluyong City, Philippines: Asian Development Bank, 2014. 1. Governance. 2. Social development. 3. Bhutan. I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Note: In this publication, “$” refers to US dollars. 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Public Information Center Fax +63 2 636 2584 [email protected] Printed on recycled paper Contents Tables, Figures, and Boxes iv Abbreviations vi Preface vii Message from the Honorable Prime Minister ix Foreword from the Director General x Executive Summary xi 1. Bhutan’s Impressive Transformation 1 Economic Progress 2 Social Development 4 Political Reforms 10 2. Two Relevant Issues 15 Good Governance 16 “Control of Corruption” 18 3. The Institutions at the Vanguard 25 Anti-Corruption Commission 26 Royal Audit Authority 35 Joint Responsibility 43 4. The Future: Getting to 20th 47 Areas to Focus on 49 Conclusion 59 Annex: From the Frontline—Experiences & Opinions 61 Bhutan: 20th by 2020 iii Tables, Figures, and Boxes TABLES 1. Bhutan’s Social Progress over the Years (Selected Indicators) 5 2. Enterprise Perceptions, Bhutan 20 3. Categories of Irregularities in Audits 21 4. Number of Audit Clearance Certificates Issued by the Royal Audit Authority, 2008–2013 39 5. The Royal Audit Authority’s Recommendations to the Government based on Audit Findings 40 6. Reports of Suspected Cases from the Royal Audit Authority to the Anti-Corruption Commission, 2008–2013 41 7. Results of Audits on “Violation of Procurement Norms” (2009–2013) 54 8. Status of Work on the Four Pillars of Public Procurement 55 9. Areas Impacting the Independence of the ACC 56 10. Staff Size at the Royal Audit Authority, (2014) 58 11. Proposed versus Recommended Budgets for RAA and ACC 59 FIGURES 1. Growth Rate of GDP and Per Capita GDP (2009–2013) 2 2a. Revenues from Tourism (2008–2013) 5 2b. Growth Rate in Revenues from Tourist Arrivals (2009–2013) 5 3. Bhutan - Trends in Governance Indicators (2002–2012) 18 4. Corruption Perception Index Trends in Six Countries of South Asia (2001–2013) 19 5. Bhutan - Movements in “Control of Corruption” (2002–2012) 20 6. Bhutan - Level of Irregularities and Share (LG) (2008–2013) 21 7. Bhutan - Fraud, Corruption, and Embezzlement in Local Governments (LG) (2008–2013) 22 8. Complaints Received by the Anti-Corruption Commission, 2008–2013 31 9. Complaints Lodged with the Anti-Corruption Commission (By Mode of Transmission, April 2013–April 2014) 31 10. Compliance Rate with Asset Declarations to the Anti-Corruption Commission, 2008–2013 32 11. Core Areas to Enhance Social Accountability 49 12. Bhutan - Ranking in Ease of Doing Business (2006–2014; reverse scale) 52 iv Bhutan: 20th by 2020 BOXES 1. Snapshots of Recent Changes in Bhutan 10 2. Components of Good Governance in Gross National Happiness 16 3. Six Dimensions of Good Governance 18 4. Transparency International's Corruption Perception Index 19 5. Bhutan's Position in Asia 19 6. The Anti-Corruption Commission Logo 27 7. National Anti-Corruption Strategy Framework (2009) 30 8. The Anti-Corruption Commission Investigates the Ministry of Health 32 9. The ADB–Organisation of Economic Co-operation and Development Anti-Corruption Initiative for Asia and the Pacific 34 10. Objectives of the National Integrity and Anti-Corruption Strategy 34 11. The Logo of the Royal Audit Authority 35 12. The Core Values of the Royal Audit Authority 35 13. Working with the Courts 43 14. Parliament and the Anti-Corruption Commission 44 15. Relevant Variables in Determining the Corruption Perception Index Rating (2013) 48 16. Citizen Report Cards and Community Scorecards 50 17. Government-to-Citizen Services 51 18. What Makes an Anti-Corruption Commission Independent? 56 19. Key Challenges Facing the Royal Audit Authority 57 20. “Providing what is needed”—Budgets for the Anti-Corruption Commission and the Royal Audit Authority 59 Bhutan: 20th by 2020 v Abbreviations ACC Anti-Corruption Commission ADB Asian Development Bank AIMS Audit Information Management System CMP change management plan CPAR country procurement assessment review CPI Corruption Perception Index CSO civil society organization ECC Ethics and Credentials Committee FCE fraud, corruption, and embezzlement G2B government-to-business G2C government-to-citizen G2G government-to-government GGC Good Governance Committee ICT information and communication technology IDI INTOSAI Development Initiative INTOSAI International Organization of Supreme Audit Institutions ISSAI International Standards of Supreme Audit Institutions IT information technology MoH Ministry of Health NGO nongovernment organization NIA national integrity assessment NIACS National Integrity and Anti-Corruption Strategy OAG Office of the Attorney General OECD Organisation for Economic Co-operation and Development PAC Public Accounts Committee PPPD Public Procurement Policy Division PPRR project procurement-related review RAA Royal Audit Authority RCSC Royal Civil Service Commission RTI right to information SDC Swiss Agency for Development and Cooperation UN United Nations UNCAC United Nations Convention against Corruption UNDP United Nations Development Programme vi Preface A “national key result area” in governance in the 11th Five-Year Plan of the Government of Bhutan is that by 2020, the country will rank 20th or better in the Corruption Perception Index (CPI) annually prepared by the Berlin-based organization Transparency International. As of 2013, Bhutan stood 31st; back in 2009, it was 49th in the world. The questions that this publication tackles are: (a) why focus on Bhutan’s efforts at strengthening governance; (b) what is it about Bhutan’s performance in instituting good governance in general, and in tackling corruption in particular, that merits attention; and (c) what specific areas could the government focus on for further improvements? Bhutan is unique in so many ways, and its efforts at holistic development (i.e., encompassing economic, social, and cultural dimensions) make the country an interesting case. For an underdeveloped country with severe binding constraints such as harsh topography and being landlocked, to be able to perform as it has—for example, a forty-fold increase in per capita gross domestic product in five decades—is impressive. Also noteworthy are its efforts at instituting good governance, broadly defined. Its annual ranking in the CPI, tells a particular story about what the country has been able to achieve on this front. The story that this report focuses on is, in essence, about the operating environment of two institutions that are at the vanguard of work on good governance in Bhutan: the Anti-Corruption Commission (ACC) and the Royal Audit Authority (RAA). Both are widely respected for their independence and the quality of their work, and are arguably the most powerful of their kind in South Asia. Both also have fairly strong legal and institutional anchors, and even stronger leadership. Given their mandates, however, they are also understandably viewed with a certain degree of wariness by others in the public sector in the country. The government has accepted that whether the country attains the CPI rank that it seeks by 2020 will depend upon many variables, including the performance of those countries above it in the current ranking.
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