Financial Fraud Under the Radar: Bhutan’s Hidden Criminal Landscape

Bhutan, a tiny Himalayan kingdom known for its impressive economic growth and commitment to sustainable development, hides beneath a facade of tranquility. Complex criminal networks are weaving a web of illicit activities, from human trafficking and environmental crimes to financial fraud, undetected by the public eye.

Children as Young Workers - Vulnerable to Exploitation

• Bhutan is both a source and destination country for human trafficking.
• The legal age for children to work in the country is 14, making them susceptible to domestic servitude, forced labor, and sexual exploitation.
• Human traffickers capitalize on these children, both domestically and abroad. In recent years, Bhutanese women have been sent to Iraq and Oman for forced labor.

Environment, Logging, and Wildlife Poaching

• Allegations of corruption and collusion between local tribes, India’s timber mafia, and Bhutanese officials bring large-scale illicit logging and tree smuggling to the forefront.
• Areas like Gelephu, Samtse, Paro, and the Manas National Park are notoriously affected, with the latter being critically understaffed.
• Bhutan also serves as a source and transit country for the lucrative caterpillar fungus trade.

Financial Crimes

• Financial fraud is a growing concern in Bhutan, fueled by digital platforms and the burgeoning tourism industry’s increasing cash flows.
• Public sector corruption has been limited to instances of favoritism in public procurement. However, financial corruption in the private sector is often characterized by nepotism and favoritism.
• Cyber-enabled financial crimes are also on the rise, with increased reports of phishing activities.

Organized Criminal Networks and State-Embedded Actors

• Criminal networks operating within Bhutan are involved in various illegal activities, including gold smuggling, drug trafficking, human trafficking, timber smuggling, and wildlife poaching. While most groups mainly focus on domestic activities, some networks extend beyond the borders.
• Loose criminal networks aren’t the only actors to watch out for. State-embedded actors—urban and elite, as well as traditional mafia-style groups among the Bhutanese nobility and aristocracy—have been implicated in organized crime.

Private Sector Involvement

• The private sector in Bhutan has relatively low levels of crime and corruption due to its nascent economy.
• However, it has been accused of corruption based on nepotism and favoritism. The potential for corruption in loans and profits related to infrastructure development, such as export hydropower sales, is also a concern.

Conclusion

Bhutan’s hidden criminal landscape presents a challenge for the government and international organizations dedicated to upholding the rule of law and ensuring transparency and accountability. With dedication and a unified effort, these issues can be addressed effectively to protect the kingdom’s citizens and reputation.