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Deputy Political Adviser

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CONFIDENTIAL

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1.19/8 Luke 29/8

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Eric Hotung

Eric Hotung called on Friday 13 August.

u. Odd!

Whether it

was the sinister date, or because of the burden of his tale, he

was more conspiratorial than ever. It was never clear what

exactly his purpose was. And he insisted that what he was

saying was entirely off the record, between the two of us, not

for me to pass on etc. But at the end of his call, I had no

idea precisely what he was proposing (except to invite me to a

dinner to meet a US Senator).

19/8

2.

He

He told me that he had indeed had an hour with the

Governor in late July (I have seen no record from our side).

He had subsequently spoken to "Them" at a very high level.

had not been to Peking but had telephoned from a third country

"so that no-one in Hong Kong could overhear". He refused to divulge to me (only to the Governor) who his interlocutor had been but said, when asked, that he was much higher than Liu Huaqiu. The man, who was a power-broker in the Party, a

committed and incorruptible Party man, had been known to him

ten years ago in the US where he had been "masquerading in a

religious seminary until unmasked and expelled from the US" (I

quote to illustrate the high degree of cloak-and-dagger).

Hotung said he had told Mr. X that the Chinese should get used

to the notion that the Governor was here to stay until 1997,

that he had survived all the brickbats the Chinese had thrown

at him, that he had influence in the world which could benefit

or disbenefit China and that they should be ready to do

business with him.

CONFIDENTIAL

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