The £1m mistake - Treasury boss explains “perfect storm”

Wednesday 20 July 2016

Treasury Minister Alan Maclean has lifted the lid on the £1m blunder which led to Jersey’s Government over-paying a creditor with a seven-figure sum.

Senator Maclean explained that although the duplicate payment was made - the creditor was paid twice for the same invoice - the £1m was recovered within days.

In fact, Senator Maclean said during his tenure as Treasury Minister, going back to late 2014, not a single penny paid out in duplicate payments had failed to be recovered. 

He said: “In a nutshell, the individual who was processing a payment did so electronically and manually on the same day from another States department, not the Treasury. 

“The payment was processed through two systems on the same day. It was effectively the perfect storm because it all happened on the same day. The pre-checking systems did not work on that occasion, but the post-check ones did, because the following day it was picked up and within a couple of days the full amount was returned. The post-checks did work.” 

Senator Maclean says the amount the States spend every year is colossal and as such mistakes have to be put into context. 

He said: “We spend around half a billion pounds every year and in 2013 we had £71,000 in duplicate payments, while in 2014 it was £53,000. In 2015, when this occurred, it was obviously far more significant than those figures, but the important point is that we have always recovered every penny in duplicate payments.

“Duplicate payments have happened in the past for a number of different reasons and we are always trying to improve our systems for keeping them to a bare minimum. Obviously, you can never say never when it comes to duplicate payments and it would be foolish to suggest mistakes can never be made regardless of what system you put in.”

Senator Maclean, who did not wish to name the department where the £1m error happened, only that it was not from the Treasury, said the processes for paying creditors will be changed in the next few months - when States payments will be fully automated. 

He said: “The processes we employ have been tightened up to identify more clearly where payments are made from and to whom. 

“On this occasion it is hard to say only one person was involved because the payment went from their department to the Treasury for ratification and then back to the department. It was only when it was picked up the next day that the error was identified which means you cannot blame just one person and as I say, the reason why it wasn’t picked up earlier was because it all happened on the same day. 

“The States are not yet fully automated when it comes to processing payments and when that comes in it will make the risk of mistakes less likely. It will mean mistakes like this happening again are lessened, but again, I have to point out that no system is entirely infallible. A fully operating automated system will certainly help though.” 

He added: "It is fair to say other authorities have experienced similar duplicate payments and we have had a 100% recovery record in recent years."