CO885-(15-16) — Page 182

PUBLIC RECORD OFFICE

Reference :-

EPERNIC.O. 885

15 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

COPYRIGHT PHOTOGRAPH-NOT TO

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Majesty's Government, having taken up certain shares belonging to the Govern ment of the late Republic, had virtually adopted the Concession. That it might, however, conceivably be argued that the Transvaal Government, while accepting liability for the debentures, had repudiated liability towards the shareholders, and that His Majesty's Government, even if they stood in the shoes of the late Govern- ment, could not by implication, and not in express words accept liability towards the shareholders by recognizing their liability towards the debenture holders.

That Mr. Bertram Cox was also to observe that the position in the case of the Selati Railway was further complicated by the claim made to the railway by the contractor, as set forth in Dr. Pumfrey's letter, a copy of which was enclosed. That representations from the English shareholders and from the Company received since the Concessions Commission's Report was published were also enclosed.

That Mr. Bertram Cox was to request that we would take these papers into our consideration and report,

1. Whether in our opinion His Majesty's Government were, by either Munici pal or International lak, under any obligation to recognize any, and if so, what, liability to the shareholders of the Company?

2. Whether His Majesty's Government were bound to accept liability for the debenture debt; and, if so, whether the conditions proposed by the Commission might fairly be attached to such recognition?

3. If not, whether it would be possible to hand the line over to the debenture holders and leave them and the contractor to settle their respective claims in any Court which might be found to have jurisdiction?

4. Whether, if we answered the first question in the negative and the second in the affirmative, His Majesty's Government could take steps, and if so, what steps, to move the Court to set aside the Order of the 20th January, and any similar order. and to obtain possession of the £350,000 without recognizing the Concession and incurring the liabilities attached to it?

5. If this were possible, what legislative measures or other steps would be necessary to secure immunity from obligations arising from the Concession?

6. Generally. What were the obligations, if any, of His Majesty's Government and of the Transvaal Government respectively with respect to the Concession made by the late South African Republic Government, and what should be the line of action which His Majesty's Government and the Transvaal Government respectively should

pursue with regard to the Company?

We have taken the matter into our consideration, and in obedience to your commands have the honour to

Report-

That, 1. The answer to this question is in the negative. As far back as 1895 the Government of the late South African Republic had repudiated liability on its guarantee to the Company in reference to the shares, and we agree with the con clusions of the Transvaal Concessions Commission contained in the 59th paragraph of their Report.

2. The assumption by His Majesty's Government of liability for the debenture debt is a matter of international usage. It is open to His Majesty's Government in accepting such liability to annex any reasonable terms and conditions having for their object that there should be realized in aid of the liability to be assumed by His Majesty's Government any rights which the debenture holders have over the fund in Court, or other assets.

3. We do not think such a course would be feasible or equitable, especially having regard to the findings of the Transvaal Concessions Commission (p. 55 of the Report).

4. The Order of 20th January, and similar Orders affect only the Company's interest in this fund. It would appear that this fund is no part of the general property of the Company, but was raised in order that it might be applied against

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the expense of further construction of the line, and on the joint order of the trustees representing the South African Republic and the Company. We think that the banks should be served with notice that any such Orders are inoperative owing to the special destination of the fund. We think that the fund may best be made available in relief of the liability on the debentures, on the application of the debenture holders, which no doubt they would be ready to make when an arrange- ment has been come to between them and His Majesty's Government on the basis of an admission of liability. We do not think that the position of His Majesty's Government in regard to this Company would be prejudiced by their claiming on any such application to be heard as entitled to exercise the control over the fund which was vested in a trustee on behalf of the late South African Republic, but we would suggest that the whole question of the details of procedure should be carefully considered in consultation with the Equity Counsel for the Treasury.

5. We do not see that any further obligations than those to the debenture holders are likely to arise.

6. We have nothing to add on this head to the observations in answer to Question 4.

The Right Honourable J. Chamberlain, M.P..

&c..

&c..

&c.

We have, &c.,

R. B. FINLAY EDWARD CARSON.

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