CONFIDENTIAL
Pl. Ente
धू
91
Sens
Reasonable
enought
D A Walker Esq
HM Treasury
Dear David,
Foreign and Commonwealth Office
1
London S.W.1
2 August 1974
M Hayona
pia.
HONG KONG IMPLEMENTATION OF THE SIX MONTH GUARANTEE
-
Thank you for your letter 2F(RMSA)120/91/01 of 31 July. Tony Aust, who has just returned from leave, confirms that your understanding of how the 10 per cent déduction should be applied is correct.
common sense.
2. That being said, I can nevertheless see that the alternative way of looking at the matter does seem to be only I am sure this is the way it will be regarded in Hong Kong; and the tone of the telex we received from them on 29 July (which was enclosed with Stanley Payton's letter of
There seems little doubt 30 July to you) bears this out. therefore that Hong Kong will be very annoyed at our insistence on the letter of the law.
3.
I have considered whether, in the circumstances, we while making clear should not concede the point to Hong Kong, that under a strict interpretation of the documents they are not
A entitled to this extra £40,000 that we should be paying. concession could, in my view, be justified on the grounds that it is not worth having a row over such a small sum; that there has been here a genuine misunderstanding (more genuine I am convinced than Hong Kong's protests that led up to the modified settlement basis); and that we ourselves to some extent are to blame in not having foreseen this difficulty and alerted Hong Kong beforehand - which is much the same point as Stanley Payton makes in the third paragraph of his letter.
4. On the other hand, we have no doubt here about the rightness in legal terms of our case; and it is obviously a bad principle to depart from the law except when there are over- I would be inclined to suggest therefore riding circumstances! that we stand firm on our position for the time being; explain as fully and as reasonably as we can to the Hong Kong authorities just why the calculations have to be made in this way; and if
If however the that is the end of the matter, well and good. row escalates, then I should like to leave open the possibility that we might decide to concede the point.
Yous
John
S J G CAMBRIDGE
Financial Relations Department
cc: SW Payton Esa,
Bank of England
RB Crowson, Esq HKIOD
CONFIDENTIAL