A company that got cash from a controversial provincial government business attraction program has failed.
6574262 Canada Inc. ceased operations in July, according to a letter on file at Newfoundland and Labrador’s registry of companies.
The numbered company, which operated under the name ICUS, had received $500,000 from the province’s business attraction fund less than two years earlier.
ICUS manufactured bio-pesticides and bio-fertilizers in a Mount Pearl industrial park.
The company has since gone into receivership.
The receiver attempted to dispose of ICUS’s lab equipment and other assets through a tender sale earlier this month, according to newspaper advertisements.
It’s not clear what happened with those efforts.
"The secured creditor(s) who appointed us do not wish to share details of the tender process," Ian Penney of receiver Janes Noseworthy wrote in an e-mail to CBC News.
According to documents filed with the Office of the Superintendent of Bankruptcy Canada, the receiver was appointed by the Business Development Bank of Canada.
The BDC was one of two secured creditors, owed $236,000 by ICUS.
The provincial government’s Business Investment Corporation was the other, for the full $500,000 loan announced in 2010. (The province provided ICUS with an additional $150,000 in training-related grants on top of that.)
In fact, most of the $1.5 million owed by ICUS to its creditors is taxpayer cash.
The Atlantic Canada Opportunities Agency is an unsecured creditor for $500,000.
The Canada Revenue Agency and City of Mount Pearl are owed about $10,000 combined.
The provincial government was not involved in the decision to send ICUS into receivership, but officials said they will make every effort to collect the money owed.
2nd fund recipient to shutter this year
ICUS is the second business attraction fund recipient to close up shop recently.
Last year, Eastern Star Group Canada received $500,000 to open a processing plant in Twillingate.
The plant, which processed shrimp shells into arthritis medicine, did not reopen this year.
The town’s mayor said in September that he believes the facility will be back in operation in 2013.
In a written statement provided at the time, the province said it doesn't believe the $500,000 loan to Eastern Star is in jeopardy.
Business attraction woes
The Progressive Conservatives made business attraction a key focus when they took office in 2003, setting up a separate department dedicated to the initiative.
But a CBC News investigation this year found modest results from those big plans.
As of March, the Newfoundland and Labrador government had funnelled more than $20 million into grants, loans and the direct costs of business attraction initiatives that provided a net benefit of fewer than 100 new jobs — a quarter of them seasonal.
Now-shuttered companies accounted for many of those new jobs — Eastern Star employed 22 seasonal and 1.5 full-time workers, while ICUS had five people on the payroll.
Another $16 million in tax dollars was spent for executive and support services in the now-defunct department whose main job was attracting outside investment to the province.
The costs spent on bureaucracy were high, eclipsing the amount actually spent on grants and loans used to lure businesses to Newfoundland and Labrador.
The government has defended its record.
In April, Innovation Minister Keith Hutchings said provincial officials were working to limit risky investments.
"I mean, there’s some projects we just don’t go with, because we think the risk is far too high," Hutchings said at the time.
As of this spring, just eight companies had been approved for assistance under the business attraction fund.
Three of those have since closed their doors.