CANADIAN SCANDAL.

New Zealand Herald, Volume LXIX, Issue 21086, 21 January 1932, Page 9

CANADIAN SCANDAL.

BEAUHARNOIS PROJECT. FINANCIAL HITCH ARISES. NEW YORK, Jan. 18. The Montreal correspondent of the New Tork Herald-Tribune reports that banks which werft interested to the extent of £2,400,000 in the Beauharnois Power Corporation are withholding loans for that concern until the intention of the Government is known. The banks for months have been financing the corporation on the basis of a tacit guarantee by the Government, but further guarantees apparently are not forthcoming. It is understood that Messrs. W. L. McDougald and R. O. Sweezey are to retire from the board, but the membership of the new board is still undecided. A huge scandal occurred in Ottawa last July over the Beauharnois power project, the organisers of which were alleged to have bought their way through official and Government opposition three years before, hoping to sweep aside the present electric-power interests of the city of Montreal. The project threatened a diversion of the entire flow of the St. Lawrence River. It was suggested that two highly influential members of the Senate, Messrs. Wilfred Laurier McDougald and Andrew Haydon, pushed a plan through, in return for a promise of the Beauharnois Corporation to pay £200,000 for certain rights which the senators appeared to have acquired in the St. Lawrence Basin. A Parliamentary Committee inquired into the charges that the project, which cost £15,000,000, was carried out under a concession later alleged to be invalid, since it was authorised by the Governor-in-Council, instead of by Parliament. Only Parliament, it was claimed, was able to grant concessions involving the diversion of water from a navigable river. Then it was established that the project was not carried out in accordance with the plans on which the concession was granted, for the president of the company admitted that it sought to divert into the canal the whole river flow, instead of the 40,000 cubic feet a second allowed. Next it was alleged that politicians improperly used their influence to procure the concession, thev being financially interested in it. It was established that one member of the Senate who held an interest in the Beauharnois syndicate before the concession was granted made cash profits of £60,000 out of it and received more than £200,000 in Beauharnois shares alter the concession was granted. From this a series of threats, allegations and charges concerning political graft developed. On August 1 Parliament, without, a vote, adopted the report of the committee. The Prime Minister, Mr. R. B. Bennett, after denouncing the company for defying Parliament, said the report by its conclusions justified him in referring to the members of the Senate who were alleged to have taken part in the deal. Mr. Bennett stated that members of the House of Commons were not privileged to discuss the Senate or its members. He added: " We can leave that to the Senate and the country." The Prime Minister proposed that the Order-in-Council granting the Beauharnois Company's rights be cancelled and that Parliament should handle the water diversion as it might see fit for the country's benefit.