discussed various ways of handling the administration of the scholarship portion of the Bequest. As your records will no doubt show, a Declaration of Trust was the medium preferred by the British Council. A draft was drawn up by yourselves in 1988 (copy enclosed for reference) but terms suitable to both parties and the original wishes of Sir S K Tang were never agreed upon.
In the meantime, Hong Kong Department have been involved in protracted discussions with various legal bodies in Hong Kong and at home in an attempt to find the correct legal way of proceeding. The path has not always been smooth and it has therefore taken us some time to reach a decision on how to take things forward. This is the main reason why we have not pursued the matter any further with you until now.
However, I am glad to say that, on the advice of the Treasury Solicitors, we are now in a position to start making concrete administrative arrangements for the Bequest, provided you are in agreement with our proposals. We wish to draw up the following legal documents with the caveat that all agreements reached between HMG and the British Council are subject to further advice from the Treasury Solicitors:
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A Sign Manual Direction allocating the funds according to the wishes of Sir S K Tang (the Sign Manual Direction would, under agreed terms, appoint two-thirds of the total fund to the British Council and one third of the total fund to the Institute of Cancer Research).
- A Declaration of Trust by the British Council agreeing the conditions under which the British Council will administer the two thirds of the Bequest devoted to scholarships.
The UK/Hong Kong Scholarships programme to which the two-thirds of the Sir S K Tang interest is currently applied is due to be reviewed in 1994/5. We would probably therefore see 1996 as the appropriate time to take the decision to bring the funds allocated to Hong Kong scholarships back to the UK to be administered under a new scheme by the British Council, under a Declaration of Trust. We would hope to keep
any Declaration of Trust as simple as operational requirements demand. We would also wish to keep the terms in line with Sir S K Tang's own wishes. To give you a flavour, we see the following elements as essential:
The principal sum is to be invested in the UK in such a way as to guarantee its safety while earning a good, acceptable rate of interest.
The interest (annual and accrued) is to be used for the sole purpose of funding scholarships for students from Hong Kong to study in the UK. The principal sum must never be
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