ZCZC
SPECAN 0665
SECRET
DEYOU COMMERCIAL IN CONFIDENCE
M HONG KONG
TO DESKBY 041100Z F C O
TELNO 665
OF 040940Z MARCH 92
STRICTLY PERSONAL FOR BURNS, AUSS FROM GOVERNOR
YOUR TELNO 389:
1.
GALLEY/QUARTERDECK
I AM GLAD THAT THE SECRETARY OF STATE HAS AGREED TO SEE PURVES. WE HAVE PASSED THIS MESSAGE ON. I WILL BE COMMENTING IN THE NORMAL SERIES ON THE BRIEF THAT YOU PROPOSE TO GIVE THE SECRETARY OF STATE.
2. IT WAS USEFUL, BUT ALSO WORRYING, TO GET YOUR ASSESSMENT OF ATTITUDES TO PURVES IN THE BANK OF ENGLAND AND THE TREASURY. I FULLY UNDERSTAND THE TIMING DIFFICULTIES, AND I CAN SEE THAT PEOPLE AT YOUR END MAY WELL FEEL THAT PURVES DOES NOT REALISE HOW DIFFICULT IT IS TO GET RAPID DECISIONS AT SUCH A MOMENT IN THE POLITICAL CALENDAR. THAT MAY BE THE CASE. HE IS BEING DRIVEN BY A DIFFERENT, COMMERCIAL TIMETABLE. HE SEES A COMMERCIAL OPPORTUNITY WITH QUARTERDECK WHICH HAS ITS OWN TIMESCALE AND WHERE HIS POTENTIAL OPPORTUNITIES ARE THREATENED BY A RIVAL BID OVER WHICH HE HAS NO CONTROL. THIS SENSE OF THREAT IS HEIGHTENED BY HIS SUSPICIONS ABOUT THE BANK OF ENGLAND'S OWN MOTIVES AND OBJECTIVES.
3. I SHOULD BE VERY SURPRISED IF PURVES HAD CALCULATED THE TIMING OF HIS BID TO COINCIDE WITH THE IMMEDIATE PRE-ELECTION PERIOD. THAT IS NOT HIS STYLE. I KNOW THAT IN PREVIOUS YEARS THE BANK WERE, TO DEGREE RIGHTLY, SUSPICIOUS OF PURVES' PREDECESSOR SANDBERG. BUT PURVES IS A VERY DIFFERENT TYPE. AS FAR AS I CAN TELL, FROM NEARLY FIVE YEARS OF CLOSE ACQUAINTANCE, HE IS DIRECT
(IN DEED PERHAPS OVER-DIRECT) AND IS NOT/NOT DEVIOUS. SECONDLY, ALTHOUGH THIS MAY SEEM ODD FROM YOUR END, THE IMMEDIACY OF A GENERAL ELECTION DOES NOT AFFECT THINKING HERE IN THE WAY IT DOES IN THE U.K. I DOUBT IF MANY PEOPLE IN HONG KONG HAVE ANY REAL SENSE OF HOW MUCH IT DOMINATES POLITICAL THINKING IN THE U.K. AND HOW MUCH MINISTERS MINDS WILL BE FOCUSED ON IT.
4. ON PURVES' ROLE IN THE GALLEY BOARD MY ASSESSMENT, WHICH MUST INEVITABLY BE RATHER UNINFORMED, IS THAT PURVES IS THE DOMINANT FIGURE, ALTHOUGH PERHAPS NO SO UNIQUELY SO AS PREVIOUSLY. THE MOST INFLUENTIAL OTHER MEMBERS ARE PROBABLY LYDIA DUNN AND LI KA-SHING. BOTH ARE ON THE SMALL SUB-COMMITTEE OF THE BOARD WHICH HAS BEEN STEERING THE QUARTERDECK NEGOTIATIONS. I WOULD EXPECT THE BOARD TO BE SOLIDLY BEHIND PURVES ON AN ISSUES SUCH AS THIS.
5. I DO NOT THINK THAT THERE IS ANY STRONG RISK OF A LEAK TO THE PRESS, HONG KONG POLITICIANS OR THE BANKING COMMUNITY IN HONG KONG IF PURVES PROCEEDS TO BRIEF THE GALLEY BOARD ON 10 MARCH. THEY WERE FULLY IN THE PICTURE IN 1990 FOR SOME TIME BEFORE THE RE-STRUCTURING WAS ANNOUNCED, AND THERE WAS NO EVIDENCE OF A LEAK IN THESE QUARTERS. A. LEAK IS MORE LIKELY TO COME FROM THE LARGE NUMBER OF ADVISERS NOW ACTING FOR THE THREE BANKS CONCERNED. I HAVE BEEN GIVEN THE ESTIMATE THAT SOME 200 PEOPLE, MOSTLY IN LONDON, NOW KNOW SOMETHING OF WHAT IS GOING ON.
Hong Kong FLO Telmo 665