Beauharnois Scandal became public between June 1931 and April 1932 when committees of the House of Commons and Senate investigated allegations that the Beauharnois Light, Heat and Power Co had made substantial contributions to the Liberal Party in return for permission to divert the St Lawrence River 30 km west of Montréal to generate hydroelectricity. Company director R.O. SWEEZEY testified that Liberal senators W.L. McDougald and Andrew Haydon had personally received Beauharnois funds, and that the company had paid approximately $700 000 into the campaign fund of the federal and Québec Liberal parties.
Although no connection was established between the donations and the power policy of the Mackenzie King government, McDougald was forced to resign from the Senate and Haydon was dismissed in disgrace from his role as campaign treasurer. Mackenzie King, then Opposition leader, denied any knowledge of the affair but said in Parliament that the scandal had thrust the Liberals into "the valley of humiliation."
The Beauharnois Scandal caused no long-term political damage to the Liberal Party, which won a large majority in the 1935 federal election. Fear of another such scandal prompted the creation in 1932 of the National Liberal Federation, which formally separated fundraising from the parliamentary leadership.