Governor
File No.
SECRET PERSONAL
FMOCS
Page
209
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I trust this is
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As agreed, Mike Waters and I had an informal discussion with Michael Cartland on Monday, in his capacity as Chairman of the HMOCS Association. We agreed with him that we were talking off the record in order to keep him in the picture.
2.
We handed him our advance faxed copy of Mr. Goodlad's letter of 29 June which stressed the priority which was being attached to the issue in London but sought the Association's continuing patience for a while longer while outstanding issues were resolved. We explained to Mr. Cartland that this was not just a delaying tactic. There was a specific strategy in play. The FCO and HKG had been faced with a difficult decision prior to your recent visit to London. Should we try to bring the HMOCS issue to a head by seeking a final decision at OPD (K) during your visit? Or should we continue to see whether we could find common ground with Treasury officials on an acceptable and honourable package?
3.
The conclusion reached was that, in the absence of interdepartmental agreement at official level, there was a serious risk in going direct to OPD (K). We might achieve our preferred package intact. But the more likely political outcome would be a splitting of the difference between the FCO proposals and those proposed by the Treasury. This would result in a package which would be acceptable neither to the Governor nor the Association. We therefore decided that FCO officials should continue for a while longer with their negotiations with Treasury officials. We were encouraged in this approach by the arrival on the scene recently of new staff dealing with this issue in the Treasury. They had already shown more flexibility than their predecessors.
4.
Mr. Waters explained that there might be a prospect of gaining the bulk of what we wanted by accepting a lower factor than we had originally proposed for calculating the compensation payment (but one which was nevertheless consistent with HMOCS agreements in certain other dependent territories). But we made clear that there had been no bartering on any of the key indicators in the package (i.e. the 16:1 exchange rate; the £200,000 compensation cap; and an acceptable SPOS arrangement).
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