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C> MUCH OF HIS TIME WOULD BE SPENT IN THE UK, RATHER THAN IN HONG KONG. BUT WHEN IN THE TERRITORY, HE WOULD OPERATE OUT OF THE BTC, AND WOULD REPORT BACK THROUGH BTC CHANNELS, KEEPING IN THE CLOSEST POSSIBLE TOUCH WITH YOURSELF AND JAMES SMITH-LAITTEN:

D) THE CONTRACT WOULD BE LET IN PHASES, THEREBY ENABLING THE DTI TO ABORT THE EXERCISE IF AT A LATER STAGE IT SEEMED THAT IT WAS NOT WORKING, OR WAS COUNTER PRODUCTIVE:

4. THE CONTRACT HAS ALREADY BEEN SIGNED AND I HAVE FAXED TO YOU THESE AGREED TERMS OF REFERENCE. THE INDIVIDUAL CONCERNED (D A STAINES, MANAGING DIRECTOR OF GLYCED PRODUCT MANAGEMENT LIMITED) WILL BE VISITING HONG KONG, ACCOMPANIED BY JIM BROAD, FROM AROUND 27 FEBRUARY TO 7 MARCH. THAT WILL GIVE YOU AN OPPORTUNITY TO ASSESS FOR YOURSELF THE VALUE OF THIS IDEA. 5. WE THINK IT VERY IMPORTANT, INCIDENTALLY, THAT THE GOVERNOR SHOULD BE INFORMED OF THIS INITIATIVE. WE SHOULD BE GRATEFUL IF YOU COULD TAKE AN EARLY OPPORTUNITY TO SPEAK TO HIM, DRAWING AS APPROPRIATE ON THE ASSURANCES SET OUT IN PARA 3 ABOVE.

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MR MCLAREN

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FM HONG KONG

TO DESKBY 151000Z FCO

TELNO 482

OF 150251Z FEBRUARY 91

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