CO129-605-3 Chinese charitable funds and other deposit accounts 13-5-1948 - 3-9-1948 — Page 3

3. Gov.

tel. 487.

(Qrey, on 54126/6/48);

ao a a

20-5.48.

On the general question of responsibility for the loss of funds held by a person who holds

· them in a fiduciary capacity, I agree that in law a greater care cannot be imposed upon him than that of keeping them as he would his own. Certainly the safest way of keeping money is to lodge it with a banker, and in regard to the funds in this case, in whatever category they actually fall, the Government was doing the proper thing in lodging them with the Hong Kong & Shanghai Bank. But I fear the question of responsibility does not end there. In paying all these monies into the general Government account, the Government not only kept the money as they kept their own, but kept the money as their own,and we have to enquire whether, in the words used in paragraph 4 of the Governor's despatch there is"no distinction in principle between trust monies lost by robbery and trust funds lost by confiscation by the King's enemies" There is this distinction.

By international law an occupying power may certainly appropriate cash, funds and realisable securities belonging to the hostile State. This is made quite clear by Article 53 of the Hague Regulations. See Oppenheim's International Law, Fifth Edition, Volume II, Chapter III (V), paragraph 137, Manual of Military Law, Chapter XIV, paragraph 430. It would appear then that as a result of the payment of these privately owned funds into the general Government account, they were exposed not only to the risk but to the practical certainty of confiscation, since the effect of the deposit in this way was to represent the money as Government property.

Private funds are in international law protected from seizure. See Oppenheim's International Law, Fifth Edition, Volume II (VI), paragraph 143. It is, however, suggested in paragraph 10 of the Governor's despatch that there is no certainty that if the funds had been placed in separate accounts they would not have been confiscated, though the

I possibility exists that they would have escaped. think that we have no right to assume that in respect to these funds the Japanese would have ignored international law. In the same paragraph it is

/stated