SECRET
9. As the Hong Kong Government rightly say they were taking a legal short cut. However in the rather unlikely event of a legal challenge being mounted the matter could be regularised by legislative amendment, which could if necessary be retrospective. If the LEGCO refused to cooperate such legislation could be adopted
by Order in Council, under the powers reserved to the Crown by
Article IX of the Letters Patent.
10. The proposed transfer from the Exchange Fund to General Revenue Account does not appear to raise any legal or financial problems. provided it is carried out in accordance with the provisions of
Article 8 of the Exchange Fund Ordinance. The backing of the Exchange Fund will be reduced only to 186.7% compared with a minimum backing of 105% stipulated in the Exchange Fund Ordinance.
11. EXCO will meet on the morning of 12 October. The Governor is
proposing that the package of financial measures should be
implemented after markets close for a long weekend on the evening
of 13 October. If the Secretary of State's support needs to be
sought by the Governor, this will be during the day of 12 October.
It will probably be necessary, in any event, for the Secretary of State's approval for the transfer of funds to be given on 12
October. The Private Secretary may therefore wish to telegraph
this submission, minus the text of references, to the Secretary of
State in Athens.
12. The Department's Legal Counsellor and ERD concur.
11 October 1983
Dir
r
R D Clift
Hong Kong Department
/ This
This scheme
SECRET