CONFIDENTIAL
discreet enquiries of local staff very much underlined what we had been told.
11. In addition to meeting with Civil Service management we also spent a day with senior staff of the Hong Kong Police. They all, from the Commissioner down, left us in no doubt of the importance of HMOCS in the control and direction of the Police Force and the consequences for law and order if significant numbers of them were to leave. Virtually all senior staff are HMOCS and possible local replacements simply do not exist.
12. HMG have no reserve powers over finance in Hong Kong and the only way
way in which we could force through a capitalisation arrangement would be
be to disband the Legislature and rule by decree. I do not believe that even the Treasury believe that option to be feasible. Sandra Brown will inform Treasury Ministers that capitalisation is financially feasible and recommend that this option be pursued as far as possible.
But I think she recognises that the politicians will need to decide to what extent this could be done.
13. One further possibility emerged which the Treasury feel just might be a runner and this would involve the use of a private sector financial intermediary. In response to the pressure for local officers for an assurance about pensions, the Hong Kong Government have contracted a consultant to examine the possibility of officers securing loans from a local bank against the commuted element of their accrued pension see terms of reference at Annex 3.
14. Our first reaction was that this might just be the answer, in that, for HMOCS officers, the lump sum realised could be paid over to HMG who would then make a commitment to pay pensions at a pre-determined rate. The need for a local bank to make a profit and to administer the arrangement, together with
with the
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