Government has written off $970,000 from its financial books for the failed Customs Total Revenue Integrated Processing (TRIPS) codes system, Financial Secretary Kenneth Jefferson told the Public Accounts Committee Tuesday.

The system, introduced in 2014, was implemented to record Customs’ revenue collection and support the implementation of harmonised eight-digit tariffs codes under the Customs Tariffs Law. Its aim was to give the government a better sense of what was being imported.

Bodden Town West MLA Chris Saunders raised the write-off as he questioned the financial secretary about the decision to remove the expenditure.

It had been flagged by the Office of the Auditor General in its 2017 ‘Customs in the Cayman Islands’ report.

He acknowledged that it was a “pretty substantial” sum, but he told the committee the decision was taken to have the expense removed from the Finance Ministry books at the end of 2018.

Jefferson said he believed it was the “sensible thing to do”.

“The accounting standards and rules would require that if you have any asset that is useless, and its value is negligible, you wouldn’t continue carrying it over in your books. With a value of $970,000, you should write it off if it is no use for you. We actually did that and it was noted in the auditor general‘s report as being a substantial write off,” he said.

Jefferson told the committee from the start, the TRIPS system should have raised an alert.

“To be brutally frank, the amount of, I would say, procurement analysis and shopping around was limited. It was decided at the time that the best system to obtain was a system from Crown Agents in the UK; that turned out to be not great at all,” he told the PAC.

He said it was the first time TRIPS had been used anywhere and it showed.

“It was very problematic for Customs and members of the general public. … It wasn’t a very secure system at all and that was fear that hacking was certainly real, even within the Cayman Islands or outside the Cayman Islands,” Jefferson explained.

It has since been abandoned and a new system is currently in place at Customs.

Chief Officer for the Ministry of Human Resources and Immigration Wesley Howell also addressed the issue during his testimony during the PAC.

He said the TRIPS system was acquired without proper technical consultation from the government’s IT department, because that department at the time was developing its own system, in competition with the private sector company.

“So, the negotiations, the implications of what was bought and not being properly fit for purpose, didn’t get to have the technical expertise applied to it,” Howell said.

Saunders asked what was being done to make sure cases like those are not repeated, given the lessons learned from the TRIPS situation, as well as the CarePay scandal at the Health Services Authority.

Jefferson said changes have been made, including the introduction of the new Procurement Law which has brought checks and balances to the public sector.

He pointed out that business cases are now required for projects in excess of $100,000 and they face a two-tier process of scrutiny from the entity procurement committee and the public procurement committee.

“We are certainly hopeful the new procurement regime would frustrate that from happening again in the future,” he said.