Evening star., 1925-05-29
Oil Leases Held Fraudulent.

After more than six months de-
liberation, Federal Judge Mccormick
of Los Angeles has rendered his de-
cision in the Elk Hills naval oil
reservation case growing out of an in
vestigation conducted by a Senate
committee during the Winter of 1924.
Judge Mccormick orders the cancella-
ton of the lease given to the Doheny
oil interests, and also the cancellation
Of contracts for the construction Of oil
storage facilities at Pearl Harbor,
Hawaii He holds that the leases and
the contracts are void for two reasons,
first, owing to fraud upon the United
ment of money to the then Secretary
Of the Interior, and second, because the
order Of President Harding transfer
ring discretionary authority in the
matter of oil leases from the Navy
to the Interior Department was in ex-
cess of his power as President.
This is the first affirmative legal
decision in what have been generally
called the oil cases. A criminal indict-
ment found in this city based upon the
same transaction has been set aside on
the ground of an improperly in the
proceedings before the grand jury and
new indictment has been found. Spe-
c.al counsel for the United States have
conducted other suits than that just
decided at Los Angeles, but no de-
cisions have been rendered.
Appeal will, Of course, be taken from
this decision, first to the Circuit Court
OF Appeals and then to the Supreme
Court. Unless expedition is shown in
the handling of these cases several
years will probably elapse before d
final judgment is rendered upon the
civil issues.
In addition to rendering judgment
upon the validity of these leases and
contracts based upon collusion and
fraud and Of an exceeding Of presi-
Dental authority in transferring
jurisdiction, Judge Mccormick made
certain findings Of fact. One is that
former Secretary Fall did not make
any false representations of fact to the
President for the purpose Of inducing
the making Of the executive order
transferring jurisdiction. Another is
that the responsibility for the conduct
OF lease negotiations rested solely upon
Secretary Fall. Again the court finds
that former Secretary DENLY was
passive throughout the negotiations,
and that he signed the contracts and
leases under Misrepresentation and
without full knowledge Of the contents
of the documents. Finally, the court
holds that the proposed contract for
the work in Hawaii was kept secret,
not for military reasons, but in order
that Congress and the public should
not know what was being done.
While this was an equity proceeding
and the decision of the court has no
direct bearing upon any criminal pro-
cedure, its finding nevertheless has a
distinct significance with regard to the
criminal charges of bribery and cor
ruption that have been brought. For
the leases and contracts are voided be-
cause in the judgment Of the court
they were based on fraud, and that the
principals did conspire and confed.
crate for the making of certain con-
tracts and agreements Of great benefit
and advantage to the Pan-American
Petroleum and Transport Co." In the
conduct of the criminal proceedings, Of
course, no cognizance can be taken of
this judgment, which may itself be
overturned by an appellate court.