- 3 -
3.
59
account in Hong Kong.
4.
In the event, Scott and English Limited were
frustrated by political events from fulfilling their con-
tract to deliver ramie to Japan, and no debit was in fact
received from S.C.A.P., although it later transpired that
S.C.A.P. had made an entry in his own version of the Hong
Kong Government account.
5.
Sterling was revalued in September, 1949, and. the immediate cost of replacing US$600,000 in the Hong Kong/
S.C.A.P. Account was raised in terms of Hong Kong dollars
by some 40%. The fact that S.C.A.P. had debited the Hong Kong account with the adjusted final balance of US$572,000
Scott and English Limited were then call-
was ascertained.
ed upon to pay in cash the full amount involved converted
at the new exchange rate of 5.76 to 1. Payment of the sum converted at the old rate of 4.02, plus commission of 1%
was accepted pending settlement of the exchange difference
resulting from revaluation. The difference on US$440,000
was set off against an equivalent exchange entitlement
earned by an associate firm by exports of iron ore to Japan. This entitlement had, by the time agreement was reached,
lapsed under normal rules for exchange utilisation, but the
question of lapsing was complicated, not only by the firm's
knowledge of the pending claim, but also by an obligation
assumed by themselves to use, and by the Hong Kong Govern- ment to permit the use of, 80% of the exchange proceeds of
the export contract for iron ore for the purchase of wool-
len textiles. S.C.A.P. had made this a condition of his
purchase of iron ore, but was finally persuaded by the
firm to release them and the Hong Kong Government from
the obligation.