CO129-607-1 Enquiry into loss of public money 22-5-1948 - 26-10-1948 — Page 14

HONG KONG

Copy

53652/48

14/3

Colonial Office,

The Church House,

Great Smith Street,

24th September, 1948.

Sir,

I have the honour to refer to my telegram No. 611 of the 1st June, 1948, on the subject of the relaxation of control by His Majesty's Treasury over Hong Kong finances.

2. At recent discussions in which Mr. Follows participated the general financial policy of Hong Kong was reviewed. Observations arising from these discussions have been conveyed to you in my despatches Nos. 209 of the 13th July, 1948, and 303 of 24th September, 1948. As a result of these discussions it has been agreed, subject to any comments you may wish to make, that the former Treasury control of Họng Kong finances should sease and that arrangements as indicated below should be considered as in operation from the 1st April, 1948. These arrangements should be subject to review at the 1st April, 1949. (In this connection see my Confidential Circular Despatch of the 23rd August on Financial Devaluation.)

GOVERNOR,

3. The arrangements proposed are as follows :-

(a) The Secretary of State's approval will be required for:-

(1) the annual estimates

(ii) supplementary expenditure not provided for in

the estimates involving items of capital ex- penditure exceeding $1,000,000 or recurrent ex- penditure exceeding $250,000 per annum

(iii) expenditure involving important points of

principle

(iv) the terms of issue of Government loans,

(b) The authority of the Secretary of State will no longer be

needed under Colonial Regulations 240 and 278 for the writing-off of losses, the abandonment or omission of claims or the writing-off of assets, on the understanding that the approval of the Legislative Council will be ob- tained for all writes-off, with prior reference to the Finance Committee where substantial amounts or questions of principle are involved, and that similarly the Finance Committee will be consulted regarding the abandonment or omission of claims where substantial amounts or questions of principle arise.

(0)

(a)

The Secretary of State willbe kept fully informed of the Colony's financial position and of the general trend of its financial policy by quarterly statements, supplemented by more frequent statements as circumstances may require e.g. in the months preceding the submission of the estimates to the Legislative Council.

The Secretary of State will keep the Lords Commissioners of His Majesty's Treasury informed of all important matters affecting Hong Kong's finances and will consult them on these as may be necessary.

SIR ALEXANDER GRANTHAM, K.C.M.G.,

/4. The

etc.,

etc.,

etc.