June 28, 1951

C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION

LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Defence Production):

Mr. Speaker, I rise on a question of personal privilege. On Tuesday last, during my absence from Ottawa, the leader of the opposition (Mr. Drew) made certain statements on the radio, and on Wednesday a debate occurred in this house in which my name was mentioned. This same matter had been raised in the house some time ago. I made a very short statement then, but I think the house is entitled to a more complete statement at this time. I might add that I make this statement on my responsibility as a member of parliament and as a member of this government.

The paragraph to which I refer in the broadcast-this purports to be the script of that broadcast-reads:

We found out last week after considerable effort that Mr. Howe has arranged government contracts with his own family company, C. D. Howe Company Limited, which will give that company more than five hundred thousand dollars in fees. Those contracts were secretly arranged without tender and without competition.

I have stated in the house that I have had no connection with C. D. Howe Company Limited since 1935. The circumstances then were that I was asked to contest a seat in parliament; Mr. Mackenzie King pressed me to accept the nomination, and I told him I would do so if I could divest myself of my interest in C. D. Howe Company Limited. At that time I owned all the shares of the company. I called in the man 1 thought was capable of carrying on the work of the company, and talked over the matter with him. I may say it is not easy for a man to divest himself of an association that has continued for twenty years. I had gathered together a very competent staff, many of whom I had brought to Port Arthur, and many of whom had homes there. I also had a responsibility to a number of my clients, some in Canada and a few outside Canada, in that we were custodians of the plans of the various structures we had designed for them and it was our duty to keep those plans and calculations available for their use.

In any case I decided that I could not divest myself of the company unless I could arrange for the company to continue. I talked the matter over with this man, one of my senior engineers, and he thought he could carry on if he could use the company name. He said he would not undertake to carry on if he had to start afresh and operate the company under another name. I was rather reluctant to make that arrangement; however, I thought any personal objections I might have should be overlooked in the overriding interest of keeping the company in operation, and it was agreed that the name could be used. It was decided to form a group of competent men to take over the shares of the company. I sold all the shares in the company to that group. I sold them at a nominal price which represented the cash which was invested in the company at that moment. No one in that group had any connection with the Howe family; they were neither members of the family nor related in any way, directly or indirectly, to any member of the Howe family.

That arrangement was completed before nomination day in 1935. I allowed myself to be nominated knowing I was free from any connection with C. D. Howe Company Limited. None of us has enough foresight, but if I had known what was to happen subsequently I think I would not have allowed my name to be used. I am sure the company would not have wanted to use that name, because of the embarrassment it has caused the company subsequently.

I have given no business whatever to C. D. Howe Company, outside of the business that must flow to it anyway. They are the only firm in Canada that specializes in grain elevator work. They have been doing the work of the board of grain commissioners since the inception of the board. I noticed that in the years 1930 to 1935 the company collected $89,000 in fees for work performed for the board of grain commissioners. The company has continued to do work for the board of grain commissioners, even when that board has been my responsibility, as it has been for the last two or three years. I looked over the list of recent jobs, and they each represented work carrying a fee of less than $6,000, although in the aggregate the fees over the last sixteen years, while less than those collected in the five years of the Bennett regime, were still a substantial sum.

C. D. Howe Company Limited

However, during world war II, every engineering company of any standing had government contracts, with the one exception of C. D. Howe Company. The firm did not ask me for participation in government war contracts, nor did I call on the firm for work of that kind. That was one of the penalties that we both paid, and I suggest the government paid, in a way, from the fact the firm carries my name.

Now, I come to the family side. I might say I do not like to discuss my family in this House of Commons. I have always tried to separate my family affairs from public life. Members may have noticed that my wife does not appear on the political platform, and that my family are not active politically. However, in 1945 Captain Stedman returned from overseas. He came back, with a fine war record and a Military Cross, to resume his studies in the university of Toronto. He completed an engineering course which was interrupted by the war. While he was in the university of Toronto, he married my daughter. When he took his degree in mechanical engineering in 1947 he applied to the C. D. Howe Company Limited fox work. I might say it has been the practice of the company, ever since I started it, to take a few graduates each year from Canadian universities. In fact, practically all the engineers in the company came from that source. Stedman applied for work with the company. I do not know why. Perhaps my daughter liked the idea of going back to Port Arthur where she was born and brought up. His application was accepted, and he joined the firm at the usual beginner's salary. That was in 1947, four years ago.

In 1948 my youngest son graduated from McGill as a civil engineer. He also applied to the C. D. Howe Company for a job, perhaps for the same reason. His application was accepted and he went to work with the C. D. Howe Company Limited at the usual starting salary. These men are still with the firm. I suppose the firm has at least fifty engineers, and some of them have seniority of at least twenty-five or thirty years. These boys have seniority in the firm consistent with their length of service with the firm. If that makes the C. D. Howe Company Limited a family company, my idea of a family company and that of the leader of the opposition are vastly different. That is the association of the family with the C. D. Howe Company Limited.

Certain statements were made in the debate that perhaps should receive comment. The leader of the opposition said he used the term "family company" advisedly, "because my son and son-in-law are actively engaged in

the company", and he said he understood that a son and son-in-law are members of the family. Then he mentioned the fact that when the matter was brought up in the house originally he talked of nepotism. Well, I got that reference, but it took a little time to penetrate. By that time the debate had moved on to something else. At the time I thought he was referring to another son of mine, William Howe. I might say that the name "William Howe" has been used in every French constituency in which a Conservative member has been the speaker, and has been freely used in the French language press. I might as well tell you about my son William Howe.

In 1940 my son William Howe, at the age of seventeen, enlisted as a midshipman in the Canadian navy. He has served continuously in the navy since that day, and is still serving in the Canadian navy. He has never at any time had any association or interest in the firm of C. D. Howe Company Limited.

Just to make the story complete, I have two other daughters whom I have not mentioned. One of them is married and lives in Montreal, and the other is a war widow living in Halifax. Neither of them has ever had any association with or interest in the firm of C. D. Howe Company Limited.

Now, we come to the two contracts that have been mentioned here. One was the contract for the Department of Public Works to design and supervise the construction of a dock at Seven Islands. I can say quite honestly that I never knew the company had that contract until after the agreement had been signed. I asked the deputy minister of public works why he gave the contract to the company, and he said the reason was that the company had a contract from a private firm to build a dock at Seven Islands, and so were working in that locality. For that reason he thought they were the logical firm to undertake the work. Then we have the contract with the national research council for the atomic pile at Chalk River. I knew about that contract. Dr. Mackenzie, president of the council, came to me and said he would like to give the work at Chalk River to the C. D. Howe Company Limited. I asked him why. He said that he had tried to place it with Defence Industries Limited, the firm that designed the original pile, but they had so much work in hand on projects of their own that they were unable to take the work. I said, "Who else is in the field?" He said, "We know of no Canadian engineering firm that has the experience in the structural, mechanical and electrical branches of engineering that are required on this job other than C. D.

Howe Company Limited." I said, "Why do you ask me about it? The national research council is an autonomous body; its charter provides that it shall place its own contracts, and no reference to the government is necessary. It has not been your practice to refer contracts to the government." He said, "Just for one reason, and that is that the firm bears your name. I shall not do it if it is going to be embarrassing to you." I said, "It is embarrassing, but is that the most important consideration? What will you do if you cannot get C. D. Howe Company Limited?" He said, "We shall have to go to the United States and get our engineering there." I thought the matter over and I said, "You need not worry about embarrassing C. D. Howe. I will take care of that. If the right thing to do is to give this job to the C. D. Howe Company Limited, give it to them." That is the last I heard of the matter, and the job was duly awarded.

Either the radio statement or the statement in the house mentioned that for these two jobs the company will receive fees of $500,000. I looked that up and found that the fee for the Chalk River pile is 1-07 per cent of $20 million, which is the agreed cost stated in the contract. This would give the company a little over $200,000. I do not know how big the dock job at Seven Islands is, but I suppose the fee on that would be five per cent gross, from which expenses have to be paid by the firm. That might be five per cent of $600,000, and if that is the amount, the fee would be $30,000. I would therefore judge that the statement that fees were $500,000 for those two jobs is at least double the amount represented by the actual situation.

That is the story. I think I have given all the facts. If the leader of the opposition wishes to carry the matter further, I think he should adopt the practice that has been standard in this parliament and in every British parliament for many years past, namely, that he should rise in his place, make a charge, and stake his seat on his ability to prove the charge. If he is willing to do that, it is immaterial to me whether the charge is investigated by the public accounts committee, by a special committee of this house, or by a royal commission. I would point out to him that I am staking my seat in parliament on the accuracy of the statement I have just made to this House of Commons.

This is not the first time that smear tactics have been used by the leader of the opposition against myself. Hon. members will recall the broadcast made in the last federal election campaign in which he accused me of

C. D. Howe Company Limited taking graft from Canadair, and also of having other improper relations with that company. His charge was denied by every director of Canadair individually and publicly; and incidentally some of the directors were his own supporters. Later the Canadair transaction was investigated by the public accounts committee of this house. The leader of the opposition himself was a member of that public accounts committee at the time. The public accounts committee brought in a unanimous report to this house. That report contained no criticism of the transaction so far as the government's interest was concerned. I suggest to hon. members that this is a further smear tactic against myself. While I do not worry too much about it, I suggest, Mr. Speaker, that I was entitled to make this statement of the position.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. George A. Drew (Leader of the Opposition):

Mr. Speaker, I might have had a good deal of sympathy with the position of the minister in what he said had he not closed his remarks in the way that he did.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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?

Some hon. Members:

Oh, oh.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

May I say at the outset that his statement that I charged him with taking graft from Canadair is a complete and unqualified falsehood, and he knows it.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

On a question of personal privilege, Mr. Speaker, may I say that I will endeavour to obtain a transcript of the national broadcast to which I refer, made by the leader of the opposition from Port Arthur, in which he made the charge, and I will leave it to the house to decide whether or not a charge was made.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

I repeat the statement exactly as I said it. I withdraw no statement that I made at that time. But when the Minister of Defence Production winds up with a repetition of loose charges of smear tactics which we heard in this house yesterday,-

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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?

Some hon. Members:

Oh, oh.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

-then it does become-

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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?

Some hon. Members:

Oh, oh.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order. I think the leader of the opposition should be heard.

Topic:   C. D. HOWE COMPANY LIMITED REFERENCE TO REMARKS OF THE LEADER OF THE OPPOSITION
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?

An hon. Member:

Let him talk.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

As I was saying, it becomes necessary to deal with what has been said and to point out at the very outset that the Minister of Defence Production has himself brought this matter before the house. When he talks about the necessity for inquiry, may

4810 HOUSE OF

C. D. Howe Company Limited I point out that there is no such necessity, because he has confirmed every fact that I stated,-

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LIB

James Joseph McCann (Minister of National Revenue)

Liberal

Mr. McCann:

You are backing up now.

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LIB

Elie Beauregard (Speaker of the Senate)

Liberal

Mr. Speaker:

Order.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

-except for one thing, and that is that he now says that the cost of the Chalk River project is $20 million.

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LIB

George James McIlraith (Parliamentary Assistant to the Minister of Defence Production; Parliamentary Assistant to the Minister of Trade and Commerce)

Liberal

Mr. Mcllraiih:

He did not say anything of the kind.

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PC

George Alexander Drew (Leader of the Official Opposition)

Progressive Conservative

Mr. Drew:

I have in my hands a release headed:

Atomic energy control board, Ottawa.

For release after 8 a.m. (E.S.T.) Tuesday, 2nd January, 1951.

Every hon. member of this house knows the extent to which the Minister of Defence Production has exercised full control over atomic matters, and has at no time in any way questioned the fact that he was exercising that measure of control.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe:

Mr. Speaker, on another question of privilege, in connection with the assertion that I made a statement about the cost of the work, I will now read the contract between the C. D. Howe Company Limited and the national research council. I am not sure whether it has been tabled in this house, but I think it has. In case it has not, however, I shall be glad to table it. It reads as follows:

Fee

The council agrees to pay to the consulting engineer for the services a fee calculated at the rate of 1-7/100 per centum on twenty million dollars ($20,000,000) which last-mentioned sum has been accepted by the council and the consulting engineer as a proper estimate of the cost of the work in relation to which the services are to be performed and on which the fee payable to the consulting engineer is to be based. The said sum ($20 million) does not include the cost of heavy water or uranium to be provided for the plant.

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June 28, 1951