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I have discussed your minute of 17 May with Mr Edwards, and he has asked me to reply. I would also refer you to my exchange of minutes with Mr Edwards of 11 and 18 May below, and my marginal comments on the legal advice which was sent to us by facsimile.
2.
You ask for Legal Advisers' views on Hong Kong Telno 1453. As regards paragraph 2, my views on the legal position are as set out in my minute to Mr Edwards of 18 May mentioned above. As regards paragraph 3, it seems to me that this is a matter for the Bank of England and the Treasury. As regards paragraph 4, my view is again contained in my minute to Mr Edwards of
18 May; ultimately this is a matter of policy, but from a legal point of view the present situation seems to me to be unsatisfactory, in that, on an important financial matter, there is ambiguity about the proper interpretation of Hong Kong law, which could simply, although with some embarrassment to Hong Kong, be put right; the alternative appears to be that we allow what is clearly an unsatisfactory situation to continue, possibly with consequent damage to the Hong Kong Government's financial standing if the matter ever comes out.
HKC 105/1
CODE 18-77
1 June 1989
CA. Whomersley
CA Whomersley Legal Advisers K174 270 3075