Public purse lost $1M on failed customs IT

| 07/10/2019 | 49 Comments
Cayman News Serivce
Public Accounts Committee, October 2019

(CNS): The financial secretary told the Public Accounts Committee last week that the customs department was forced to write off over CI$970,000 from last year’s budget after it invested in a technology system that didn’t work.

As he appeared before the committee Wednesday, Kenneth Jefferson explained what happened and tried to reassure the committee that such a costly mistake will not happen again.

Jefferson said that back in 2014 government wanted to introduce new customs codes to help it collect more specific data about all the things imported to Cayman. He admitted that at the time the analysis of what was needed was limited and the department took advice (he did not say where from) about a new system from the UK.

But the software had never been used by a customs department anywhere at that point. “It turned out to be not great,” Jefferson said. “It gave lots of problems and shut down frequently… That was awful for people queuing… and problematic for customs.”

Jefferson said there was also much concern surrounding the security of the system and importers were worried their details might be hacked. “It was was fraught with difficulties,” he noted.

But the financials secretary was candid about the source of the problem, which he said was a poor procurement process. He explained that the ministry, which was then directly responsible for the customs department, had gone to the Computer Services Department but they were not able to help as they did not have the resources or expertise. And so they turned to this untested programme.

But Jefferson said the lesson learned was that when acquiring a new product, it is not the best idea to get one that has never been used before. Pointing to the new procurement regime, which requires proper research and risk analysis before anything over $100,000 can be purchased, it would now be unlikely for any department to acquire a costly product that does not work because of the increase in scrutiny. Given that the system was so problematic, he said that, in line with best practice accounting, the government had to write off the loss.

In addition to answering to PAC about the hefty loss to the public purse, Jefferson and other witnesses were also grilled by the committee over the constant under-prediction over the last few years regarding the amount of money customs expects to collect.

Jefferson said revenue estimates are a collaboration, and although the communication between the departments, such as the ESO, and the revenue has not been well documented, the forecasts were not made in isolation.

The financial secretary and Charles Clifford, who was customs collector and now heads the new Customs and Border Control agency, both denied that there was any deliberate attempt to underestimate their earnings in order to avoid scrutiny and collect accolades, and every effort was being made to improve revenue forecasting.

PAC Chair Ezzard Miller pointed out that under-predicting would not help the customs department get the resources it needs. He asked the government officials how they could forecast around CI$156M in expected revenue for 2018 and end up with well over CI$181M, given that the original figure seemed to be based on revenue levels dating back to the recession.

Clifford said that his department was consulting with experts and based the forecasts on best guesstimates, but there was no deliberate under-budgeting.

He said it was a positive thing to collect more than expected but he accepted Miller’s point that it can be problematic when the forecast consistently fall short by so much.

Miller said it would lend more credibility to the department to make more accurate predictions about the money its collecting and given the importance of duty to the public purse of better assistance to government as a whole.


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Category: Government Administration, Government Finance, Politics

Comments (49)

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  1. Anon. says:

    There was no proper investigation in the product to determine if it could do what the Customs department wanted.
    There was no proper demo.
    There was no proper testing.
    There was no IT consultancy
    Yet they expected this to be implemented successfully. LOL!

    Those who were involved in this mess have since retired, resigned or transferred so the ones let behind are being branded as incompetent even though they didn’t have anything to do with it.

    Next write off will be the Port if Alden gets his way and get it built.

  2. Anonymous says:

    Mr. Jefferson should know there is no solution without dedication. And there’s no off the shelf solution for this as a country’s problems are far more complex than a territory. You chose complexity over simplicity and you failed. Anyway this is no surprise and should be written off but lessons should not be forgotten. Besides the money lost pails in comparison to the potential duty lost every year resulting from the mega millions given away in developer duty concessions. ‘‘Tis merely a drop in the bucket.

  3. Anonymous says:

    I wish it was people like you there , XXXX
    To you all caymanians not good for the job so must be expects is better , well once you faulted you have to leave your island of caymanian
    Cayman was a better place until you come to live where I think all r most of you should go back where you come from and improved your home island Instead to come here and dictate cayman land

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  4. Anonymous says:

    This story is almost unbelievable. The level of incompetence outlined in this article is astounding.

    The good thing about working for the CIG is that there is never any accountability.

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    • Anonymous says:

      Their lack of accountability is astounding. They delay goods requiring documents they have no authority to request. Then when a formal complaint is made to the Collector he refuses to answer. The officers are learning from the arrogant head. They seem to believe that they can interrupt business life with impunity. They are the epitome of a really bad civil service department. Maladministration is their function.

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    • Anonymous says:

      Like he land bought a few years ago by government in west bay for over 800,000 now worth 75,000.

    • Anonymous says:

      Used to be i must say they are cleaning house really good these days

  5. Anonymous says:

    I worked in IT for decades before i came here to hide my money.
    There is no better customer than a governmental institute.
    Nobody takes responsibility, and the money tap is always open.
    Trust me, this is how it business is done.

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  6. Anonymous says:

    Did CIG find a missing billion?

    1 billion unaccounted for.
    http://archive.caymannewsservice.com/2014/10/21/1billion-unaccounted-for/

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  7. Anonymous says:

    Lets leave Mr.Clifford out of this….they already determined it was the ministry’s decision…as usual…..Mr. Clifford should be working with Mr. Miller, as a politician, to help run this country…

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  8. Anonymous says:

    someone should be held accountable for this…..why throw away money…

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  9. Anonymous says:

    If this wasn’t so serious it would be laughable. We have CAYMANIANS who can’t feed their families, can’t lay their rent or utilities and government p…es away $1 million, just like that!! Snap of a finger. Can’t we find people with some common sense???

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  10. Elvis says:

    I would like to sell my custom designed ashtrays for police motor cycles please. One million will do it please and thanks

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  11. Anonymous says:

    I dont get it. They paid a million bucks for software that didn’t work? They didn’t pay on successful implementation? Where do we find these people? I mean come on. This is really basic stuff. How dumb do you hace to be to pay up front?

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    • Anonymous says:

      Exactly installation and testing should be a requirement before so much money is handed over. I guess they heard the work “U.K.” , and that sealed the deal.

  12. Anonymous says:

    I would like to know who is really using all the Harmonised Code data that CIG forces everyone to provide. The requirement to code all imports in excruciating detail is yet another factor driving up the cost of living. I doubt this data is of any use to anyone. Who cares how many tons of product containing tungsten steel was imported in a given year?
    Just because big countries do it doesn’t mean we have to follow suit. A little common sense in CIG would save us a lot of $$$.

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    • Anonymous says:

      Better take a deep look at those picking their friends with limited or no IT knowledge to run things. There are too many portals with custom software that costed too much that do not work half as good as cheap over the counter solutions. Friends awarding contracts to friends at ridiculous high prices!!!

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    • Anonymous says:

      Why buy a cheap proven product others are using with success when you can buy an expensive one from your friends? Monky business!!!

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    • Anonymous says:

      Seems our government is hung up on mega stuff. Mega dock, mega cruise ship, mega tunnels, mega tower on top of mega tunnel, mega Clifton Hunter complex, mega landfill, mega egos. Cayman is cozy and quaint, mega is over- rated on our Beloved 2×4 Verdant Isles.

  13. Anonymous says:

    it goes much further back than the current government. getting Cayman onto the same tariff codes as the rest of civilisation was planned well before Ivan. Then some plonker decided that Cayman-only codes were needed for this new system, thus undoing all the work done before. Jobsworths, the lot of them.

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  14. Anonymous says:

    Clifford should be fired, and his govt pension withdrawn, to help pay some of this money back.

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  15. Anonymous says:

    In other words, the equivalent of the entire token effort for a mental health facility. Forgiveness for unrelenting incompetence seems boundless, even when elsewhere, career professionals of this caliber would proverbially have their heads fashioned to spikes. Here, they get promoted. Not a healthy way to run/ruin things.

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  16. Anonymous says:

    That’s about $1.2m of real money that they might as well have burned in an incinerator. Actually that would have been better because the importers wouldn’t have had to waste so much time trying to use the new system. If I made a $1.2m mistake losing my job would be the least of my concerns.

    I’d love to know whether any testing was done before the roll out of the new system. And what the cost of going back to the old system was, and the extra staffing required and lost revenue. I better it adds up to 3 or 4 times the sticker price of the failed system.

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  17. Anonymous says:

    Ministry….ministry….micro-managing as usual…Prison…Fire….Immigration….its not hard to figure where the problem lies….” World Class”

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  18. Karen says:

    World Class.

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  19. Anonymous says:

    Dont worry though, even though every single capital project CIG has ever touched has gone to sh!t, they know exactly what’s required to build a port and make it the greatest success the island has ever seen…. LOL!

    CIG can’t even test an IT system for $&!%! sakes…

    Perhaps we should finance the port by buying Nigerian Lottery tickets?

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    • Anonymous says:

      The Government Administration Building was a well-managed project that, except for some last minute political shenanigans, came in on budget. Prospect Primary school wasn’t too bad either. There have also been some smaller projects that have been well managed. However, you are quite right about every other major capital project over the past 30 years.

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  20. Anonymous says:

    Horrible traffic and terrible public transport, terrible waste of public purse, ruining seven mile beach, ignoring the people, okay how much does it take to vote no confidence?

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  21. Anonymous says:

    Geez, in the private sector someone would have gotten the sack for this

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    • Anonymous says:

      It would have been really tough for this time have happened in the private sector. At the first hiccup there would have been a demand to fix the problem or refund the money for a bad system.

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