CONFIDENTIAL
9. The second possibility would be for the Hong Kong Government to extend the scope of their Limited Compensation Scheme to cover all members of HMOCS. The justification for this could be that expatriates will be barred from holding the most senior positions after 1997. This acts as a significant limitation on the career of HMOCS officers and even those with no expectation of senior office could expect to be adversely affected by the non-promotion of others. The additional benefit of this arrangement would be that the compensation costs would not fall to HMG.
10. The first possibility is probably the most practical. The appropriate action could be taken under existing regulations with reference to ExCo, but not to LegCo. Under the second possibility, there would be major financial implications for the Hong Kong Government and LegCo approval would be required. It seems most unlikely that such approval would be forthcoming for a measure designed to help expatriates alone.
11.
I think that the next step should be to put the possibilities to Ministers and also to the new Governor, and perhaps to discuss with them the implications of each Option. If we are to pursue my preferred Option, Mr Patten's support would be essential. We know that the Chief Secretary is not necessarily set against early retirement for HMOCS officers. Despite Hong Kong's wealth and precedent elsewhere, the HK Government would not be funding the Compensation Scheme or the Sterling Safeguard. The HK Government took a conscious decision to continue to employ expatriates rather than take the path of replacing them with locals
them with locals as happened elsewhere. It does not seem unreasonable in these circumstances for HK Government to at least allow HMOCS officers to retire with pension prior to 30 June 1997.
12. Overall, Nigel Cox and I believe that we are at present heading in a direction which will risk the loss of significant numbers of key people before 1997 and which will mean that HMOCS officers as a group will be resentful and disillusioned at a time when their services will be absolutely crucial to stability. I have to say that I have serious doubts about the Governor's view of the situation. I would hope that we could persuade Mr Patten of the advantages of HK Government playing a full part in securing a sensible package for a group for which both Governments have responsibilities.
13.
You may care to discuss, although it is really for Hong Kong Department to decide how to take this forward.
D S FISH
Overseas Pensions Department
13 May 1992
5