CO537-4847 — Page 49

SECRET

K.M.T. Assets (continued)

the question of collabora- tion legislation in Hong Kong after the War as a precedent. They may ask for legislation to be passed in order to get hold of the assets of such "War Criminal s",

(c) C.N.A.C. is a special case, and the Commun- ists may be expected to make a very deter- mined effort to get hold of C.N.A.C. assets.

(d) There have already been

in Hong Kong left-wing newspapers a few articles saying that such and such a firm really represents Chinese National Government interests, and is being used to conceal K.M.T. assets. The se cases may be expected to multiply when the Communists have taken Kwangtung.

entirely different, since in the case of the Japanese collaborators the common enemy was being fought. There will moreover be a large element of blackmail in the Comunist methods and in the ir campaigns against war crimin- als. In their anxiety to get hold of assets they may well trump up charges of aiding the K.M. T. and hence being "War Criminals" against any rich Chinese who has not openly taker side with them. It will be necessary to watch this situa- tion carefully and deal with such attem- pts at blackmail. It will be even more difficult since a number of rich Chinese may well succumb to such threats out of cowardly feer of self-preserva- tion. It may well be advisable to deal severely with such spurious efforts to get hold of such private property or fortunes in order to deter the Coman- ists and to encourage rich Chinese to hold out. In order to prevent victimisa- tion and intimidation by the Communiste of rich Chinese who may be accused of war time collaboration with the Japanese, or of being closely associated with Chiang Kai-shek as "Civil War criminals' the Hong Kong Government may have to consider whether a public statement should be issued or other similar action taken to allay public fears and encour- age any persons so threatened to come forward to the Police and make knownL cases of intimidation or victimisation.

In the case of C.N.A.C. this even- tuality has been foreseen, and efforts are being made now to reduce the C.N.A.C. interest at Kai Tak. In the event of strong Communist demands for surrender to them, or take-over by them, of C.N.A.C. assets in Hong Kong it is recommended that C.N.A.C. should be asked to remove as much as possible to Taiwan. Otherwise, since 80% of C.N.A.C. is owned by the Ministry of Communications of the Chinese National Government it will be difficult to resist a demand for surrender.

It is recommended that in all such cases which come to light preliminary enquiries should be made by the Hong- Kong authorities to ascertain the financial standing and the source of the funds of such concerns.. The early compilation of a reasonably comprehen- sive list of K.M.T.-controlled assets, both Governmental and privately-owned, should be undertaken.