Cash-strapped CyberNB forced to shut down

CyberNB, the province's marquee industry organization set up to promote its growing cybersecurity sector, has run out of money and is shutting down.

Acting CEO Jeremy Depow confirmed Monday that the association won't be able to meet its payroll this Thursday.

That follows a decision by Opportunities New Brunswick, the government's economic development agency, to withhold the last instalment of a two-year transitional funding package for the newly independent non-profit.

"That certainly sped up the process of having to cease operations," Depow said.

All of CyberNB's employees are now looking for work, he added.

"It doesn't appear that CyberNB is able to meet its financial obligations, including to its staff, and therefore is in the process of ceasing operations," he said in an interview.

Depow said staff learned of the cash crunch in the wake of the abrupt departure of CEO Tyson Johnson in December. Johnson gave notice days after CyberNB moved into Fredericton's Cyber Centre, a new building designed to house companies in the sector.

Depow said the shutdown is imminent because the organization can't pay its monthly rent, due Tuesday, to the Cyber Centre.

"Most of the employees are no longer in the building." 

He said the impact "will be substantial in terms of its ripple effect.

"It is going to be a big hit to investor confidence in the province when we continually express ourselves as an organization that works together to to attract business and mitigate cybersecurity attacks."

CyberNB was set up by the Liberal government of Brian Gallant in 2016 as a subsidiary of Opportunities New Brunswick. 

Two years later, its first managing director, Allen Dillon, and three other senior leaders were pushed out. Dillon was eventually replaced by Johnson.

In 2019, the Higgs Progressive Conservative government decided to turn it into an independent non-profit.

Before being thrust into the role of acting CEO in December, Depow was CyberNB's director of policy and stakeholder relations.

It was only after Johnson's departure and "financial and business reviews" that senior staff and a new board of directors discovered the money problems, Depow said. 

Asked who was ultimately responsible for CyberNB's demise, Depow said he did not want to point fingers.

"These things are always systematic, especially when you've got government funds," he said.

"It's a combination of a lack of oversight of the organization. It's a lack of governance. And a lack of the proper management to ensure that the organization is transparent and is working within its means. So responsibility is usually never with one."

He would not discuss former CEO Johnson except to say that "it's clear that the organization has not been successful within just a couple of months after his departure."

Johnson did not respond to an interview request Monday. He now works for Uni, the Caraquet-based credit union.

Depow said it was "not optimal" that the province provided only two years of transition funding to CyberNB during a global pandemic. 

With extra support, the organization might have been able to restructure and survive, he said.

ONB said in a statement that Cyber NB had come up with a business plan to end its reliance on provincial money but "the execution of the plan has failed to meet expectations."

The statement said ONB's transition funding hinged on the organization being financially viable and a financial review showed it was "not meeting key milestones on their path to self-sufficiency."

Liberal MLA and economic development critic Gilles Lepage said it shows the Higgs government has adopted "a completely different strategy of economic development and is not supporting the associations and organizations in New Brunswick put up by government to do that job."

Besides promoting and representing the cybersecurity sector, part of CyberNB's mandate is to advise smaller organizations such as municipalities that can't afford to hire major cybersecurity consultants. 

Education and Early Childhood Development Minister Dominic Cardy is listed as a member of CyberNB's board. 

Cardy said in an email that he joined the board "late last year" and attended a couple of meetings.

"When the financial issues arose and there were to be discussions between CyberNB and GNB, I recused myself from further meetings until those issues were resolved and haven't participated since," he said.

David MaGee, the current chair of Cyber NB's board of directors and the vice-president of research at the University of New Brunswick, refused an interview request Monday and referred questions back to Depow.

Knowledge Park CEO Larry Shaw also could not be reached for comment Monday. It is the owner of the new $37 million Cyber Centre building. 

Cybersecurity still important to ONB

Opportunities New Brunswick appeared at the legislature's public accounts committee last week. CEO Sadie Perron said the province had given CyberNB $1.3 million in the last two fiscal years to support its transition to becoming an independent non-profit. 

That was out of a budgeted $1.5 million. Depow confirmed the $200,000 gap was the final payment that ONB withheld.

Depow said that would have allowed CyberNB to wind down the organization properly, with paid notice to employees and some creditors being paid. 

Twelve employees including Depow are listed on the Cyber NB website.

"I'm concerned about the lack of recognition or empathy towards employees that were caught in the middle of a situation that was not in their control," he said.

Perron wasn't asked directly about CyberNB's financial health at the committee meeting Friday but said the spinning off of the organization didn't mean ONB wasn't interested in growing the sector.

"At no time has ONB lost its focus on the cyber sector," she said. "We continue to have internal resources dedicated to company and industry growth in this space."

She noted ONB attracted two new cybersecurity companies to the province this fiscal year, creating about 100 jobs with average salaries of $75,000 a year.