Large orgs always have stories like this. Management and accountability are hard to scale and the problem is as true for the private sector as it is for public.
Customs is a straw man for the argument at large, but nevertheless the statement works: I prefer small government because I've seen the collassal fuckups they are capable of at scale.
(My favorite government entity is the USGS)
@fictioncircle: no reply available, so I'll address your question here: no, we should not ban large business. We should provide basic structure to support competition. Since government is not something we can frame competitively (we can't pick which government to use once one is established without substantial "frictions"), we should just keep them small and out of the way.