CONFIDENTIAL
Jardines
5. I am afraid the Jardines' delisting saga has taken a turn for the worse. Both the Hong Kong Stock Exchange and
the Securities and Futures Commission have circulated draft
reports examining the option of a secondary listing. Both have been criticised by their advisory boards for showing
too much favour to Jardines. Jardines are now warning that
they may decide at their September Board meeting to delist.
As a layman, I find it extraordinary that the Hong Kong
regulatory authorities cannot find a way of reconciling their concerns with those of the biggest company in Hong Kong. Delisting would be undesirable, but containable in Hong Kong where it has been anticipated.
But it would not do Hong Kong's international reputation
any good. Above all, we must work hard to persuade
Jardines that if they must delist they should not do so in
September. The timing could hardly be worse.
The Garrison
6. The good news on Gurkhas and patrol craft came through
during my stay. The Governor was most grateful for your intervention over patrol craft and for the Prime Minister's
decision. But we are not out of the woods yet. The
Governor has always maintained that LegCo will not vote
more funds than envisaged under the present Defence Costs
Agreement. I do not want to risk FCO resources elsewhere by including funds for the patrol craft in our PES bid. have suggested to the Governor that he use the breathing space we have won to talk this through with ExCo. He was adamant, and from other conversations I had I have no reason to doubt his view, that he cannot change LegCo's
position on the 65/35 split. (Part of Martin Lee's campaign is that Hong Kong bears an excessive cost
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CONFIDENTIAL
/already.)