THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, JULY 13, 1932. THE LENA GOLDFIELDS SCANDAL

New Zealand Herald, Volume LXIX, Issue 21233, 13 July 1932, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS. WEDNESDAY, JULY 13, 1932. THE LENA GOLDFIELDS SCANDAL

There has been raised again in the House of Commons the question of what is to be done about the Soviet Government's dishonourable treatment of the Lena Goldfields Company. At intervals the same question has been asked during the past eighteen months. Sir John Simon's answer now promises that an end will be put to the scandal, although nothing that Russia seems likely to do can ever efface the sordid memory. The facts af-e a revelation of Bolshevik perfidy. A foreign mining company entered into agreement with the Soviet Government to explore and work three large tracts of Russian territory. Its capital was mainly British. The rights acquired were exclusive. That was in 1925, when the "new economic policy," introduced *by Lenin to undo the admitted failure of the rabid State Socialism tried in the earliest years of the Bolshevik regime, opened Russia again to private enterprise. As the Government dictatorship had been unable to develop the country as it hoped, foreign capitalist companies were encouraged to come to the rescue. They were promised a fair opportunity, which it was in Russian interests to give. This particular company — Lena Goldfields, Limited —put' millions of money into its scheme, which was organised on a large scale to a high pitch of excellence, in keeping with the best mining practice. Even the early years of the undertaking saw success in the quantities of metal won. There were profits for the company, and a handsome yield in taxes and royalties for the Soviet Government. But the Five-Year Plan, begun in 1928, changed all that. Its aim was to make Russia one big Government concern, and to have so huge and incidentally, so successful a private enterprise within the Russian borders was not to be tolerated. Particularly objectionable was its foreign origin and character. To make the company's position untenable and Seize its assets became a studied purpose, and the result was a barefaced robbery difficult to match even in Soviet annals.

What happened is now proved beyond possibility of denial. At every point the company's operations were harassed. It had, for instance, a covenanted right to sell gold freely; this -was riot legally abrogated, but it was nullified by an edict forbidding any buyers save those acting for the Government to purchase from the company, and these buyers were empowered to offer only figures ridiculously low. Anyone defying the edict, its terms plainly said, would be shot. Not content with this form of robbery, the Government raided the company's premises, brought to trial many of its employees in frank observance of the Bolshevik principle that "law courts are organs for disposing of the enemies of the revolution," and took forcible possession of technical records inestimably valuable for the future working of the regions. By these scandalous means the company was forced out. A remedy was sought under the terms of the agreement, which provided for arbitration in the event of dispute. As thus bound, the Soviet Government participated in .the setting up of the tribunal, nominating its own assessor and agreeing to the appointment of the presiding arbiter. But it pursued obstructive tactics when the- investigation was begun, and after these had failed it withdrew its assessor. The court had no option, within the terms of the agreement, but to go on with the case, and its award was lenient to the non-represented litigant, for the Soviet Government also refused to plead. Concerning the expected representation of the Government, the finding said that "it might well have resulted in substantial additions being made to the amount awarded." The amount of compensation was fixed at a little under £13,000,000, understood to be, in the circumstances, a very moderate sum. For nearly two years the claim has remained unsettled.

For some time there was difficulty in getting information from the British Government as to how it was faring in its efforts to press for payment to the company of the amount awarded," but Mr. Henderson, as Foreign Minister, while asserting that he was doing his duty, always declined to give any particulars. In November last, however, after the British general elections, an announcement was made: the company was willing to accept £5,000,000, doubtless eager to get something where there was a risk of getting nothing, and the Soviet Government offered £BOO,OOO. This absurd offer was declined. Now Sir John Simon, in his capacity as Foreign Minister, has named an additional £1,000,000 as the lowest offer acceptable in the opinion of the British Government, and says that if the reasonable opportunity afforded Russia be not taken the full amount of the award will be claimed and steps' pursued to the claim. Whether the Soviet Government will take heed remains to be seen. It has •so long been accustomed to having its word foolishly believed that mendacity and default have become habitual, but the present Government in Britain will not be easily deterred from doing its duty to its nationals. This case reeks with Soviet dishonesty. There has been a dastardly disregard of ordinary decencies, and not a redeeming feature. It bewrays the spirit in which the Five-Year Plan has been projected and worked. Whatever be thought of evidence for its success or failure, the anti-foreign motive, the terrorism and the cunning are all declared. There may be difficulty in enforcing the payment of even the small amount to which the sum of the award has been reduced by British leniency, but there is not the slightest difficulty in judging the Soviet Government's conduct.