Cypher Co.
* Hong Zohir A. Grantham)
HONG
MKOM
COLONIZS,
156
(36) (45)
Sent 27th April, 1948, 19.45 hrs.
MOST IMMEDIATE
No. 498 Secret.
Your telegram No. 406 of 22nd April.
1. As you will now have seen from Caine's personal message in my telegram No. 494, it has never been the intention here that His Majesty's Government should assumə liability in connection with denial claims in Hong Kong, Attitude which His Majesty's Government have adopted towards similar claims elsewhere makes it impossible that they should accept this liability, except in so far as you may agree with representatives of United Kingdom Services Departments that they should accept liability for certain claims of a denial character when the denial was effected at their instance, Thus the position in Malaya is that the financing of a War Damage Compensation Scheme, including denial claims, has been agreed to be the responsibility of the Malay an Governments, but His Majesty's Government have agreed to assist those Governments in meeting this liability to the extent that they are unable to do so out of their own resources, Por your own information, any other attitude in respect of denial claims in Hong Kong would give rise to very serious repercussions in Burma. Moreover, His Majesty s Government consider that there is no case to modify this attitude in the case of Hong Kong, having regard
(a) to the considerable assistance which they are already giving that territory
(b) to the fact that they regard the meeting of war damage claims, including denial claims in Colonial territories as the initial responsibility of the local Government.
2. In these circumstances, I do not (repeat not) consider that you should make a spontaneous statement in Legislative Council or elsewhere on the subject of denial claims in particular, If, however, you are questioned on the subject, you should say that in so far as there is a legal liability in respect of denial claims, it will be met either by the Hong Kong Government, or, in cases where it may be agreed by them (see paragraph 1 above) that they should accept the liability, by the United Kingdom Service Departments. You could add that the examination of these claims will take some time and that the total liability is not yet kurwm, and you could point out that the United Kingdom have already contributed £1,000,000 to assist Hong Kong in resolving its financial problems where these arose from the war. If pressed, you could add that should Hong Kong, when the final position is clear in regard to tečċal war-time liabilities, be unable to meet them, His Majesty's Government are prepared to review the situation, in accordanco with the normal relationship between His Majesty's Government and Colonial Governments.
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