Mr Stone
Ms Marsden
HONG KONG: KUWAITI ASSET FREEZE
Reference
1. I attach a minute from the Bank of England regarding a problem facing the Hong Kong subsidiary (BIAAL) of the
Baring Asset Management Ltd. In essence, the BIAAL, who
have a discretionary investment management agreement with
the Kuwaiti Investment Authority (KIA), have applied for
permission of the Hong Kong Government to continue to manage
the portfolio on behalf of the Kuwait Investment Office,
London (KIO). Their application is based on a letter of authority purportedly signed by the Kuwait Minister of Finance and dated 2 August (the date of the Iraqi invasion
of Kuwait).
CODE 18-77
2.
There is some doubt about the legality of this document,
and the legal adviser to the Monetary Affairs Branch
(Gannon) has raised queries relating to the witnessing of
the Minister's signature and also the relationship between
the KIA and the KIO. As a result, the Bank of England have
rejected the document and recommended Barings refer the case
to HMG via the Hong Kong Government for decisions to be made
on the legality of the document, and the relationship.
3. I have referred the papers initially to MED having
spoken to Mr Heigl, who thought (before seeing the papers)
that confirmation of the document might be obtained from the
Kuwait Embassy, London, on a government-in-exile basis. He
thought that possibly DTI might need to be also consulted regarding exemption from licence requirements.
4. You will recall that a recent telegram from Hong Kong referred to a discretionary investment manager having
continued to trade on behalf of the KIO after the imposition
of the freeze. It is possible that this is the case which
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