CO537-4841 — Page 24

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INWARD TELEGRAM

This document must be paraphrased if the communication of its contents to any person outside Government Service is authorised.

TO THE SECRETARY OF STATE FOR THE COLONIES

FROM HONG KONG (Sir A. Grantham)

D. 30th December, 1949 R. 30th

If

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12.45 hrs.

No. 1397 Secret

C.N.A.C. and C.A.T.C.

Your telegram No. 1922.

Your paragraph 1.

Detailed comment is difficult without knowledge of complaint and allegations of partiality. Nevertheless they are groundless.

follows.

Your paragraph 2. Summary of the position is as

On 24th November three actions commenced in Supreme Court. Respective plaintiffs were C.N.A.C., C.A.T.C. and the National Resources Commission. In each case defendants are persons apparantly in possession of property in Hong Kong elaimed by plaintiffs and also claimed by defendants as being servanta of the Central Peoples Government. In all three cases interim injunctions have been in force approximately from date named preventing either side from dealing with property 39 issue, Proceedings were resumed on 21st December before Chef Justice such being concentrated on action No. 519 of 1949 in which National Resources Commission were the plaintiffa, In sach proceedings application was made to discharge interim Injunctions. By reserved judgment delivered today Justice ordered injunctions to remain in force, each side having liberty to apply. Application by Chenault and Willauer mentioned in paragraph 1 of my telegram No. 1366 were heard on 22nd Deceber. In action 517 the application was withdrawn and In action 518 refused. Persons named have now commenced action with Republican Government and C.N.A.C. as defendants. Pleadings aot yet filed,

the Chief

3. Your paragraph 3. Paragraph received corrupt but appears to read "Government had recently cancelled C.A.T. rights". Allegation may relate to refusal to permit C.A.T. hwing private wireless telegraph circuit to Taipeh and Taiwan,

No other grounds for complaint by C.A.T. is known.

##

4

Reference paragraph 3 of my telegram No. 1366. V.S, Consul General brought Heppner and Willauer to see me on 29th. Willauer handed me memo of which summary of contents are

By agreement 12th December Chinese Government sold all interests (including assets in Hong Kong) in C.N.A.C. and C.A.T.C. to Chenault and Willauer. Chinese Government have informed Foreign Office in terms mentioned in your telegram No. 1896. They believe Foreign Office has accepted validity of the sale which validity has been accepted by the U.S. Government, On 18th Decumber persons named assigned all above assets to Civil Air Transport incorporated in Delaware State and now are about to be rogistered as foreign company in this Colony. Application has now been made by C.A.T. to register aircraft assets under

/U.S.