CO129-625-1 Trading Reserve Fund 1-5-1950 - 31-10-1951 — Page 55

APPENDIX A

57

STATEMENT OF THE CIRCUMSTANCES SURROUNDING

THE SCOTT & ENGLISH LTD. ACCOUNT WITH S.C.A.P.

As a result of transactions spread over the

previous year and a half, some connected with Hong Kong,

others not, Scott and English Limited were left, in March 1949, with a debit balance of about US$600,000 on a spe-

cial account maintained between them and S.C.A.P. They

proposed to liquidate this balance by shipping jute from

Pakistan to Japan; some jute had been shipped previously

against this special account. They had already made pre-

liminary arrangements and opened credits for at least part

of the value of the jute involved when the United Kingdom

Liaison Mission in Tokyo learned of the proposed transac-

tion. They protested against it on the grounds that Pakis-

tan was a signatory to the Sterling Area Payments Arrange-

ments with Japan, which provided that goods exported from

Sterling countries to Japan would be paid in sterling from

a Japanese account. They called upon the Hong Kong Govern-

ment to rectify the matter in view of the status of Scott

and English Limited as a Hong Kong company, although Hong

Kong was not directly involved in this particular trans-

action.

2.

Mr. E. Himsworth, Director of Commerce and Indus-

try, was in Japan at the time and negotiated the settle-

ment. S.C.A.P. on his part agreed to pay sterling for the

jute provided that arrangements were made to liquidate

their special account with Scott and English Limited by

30th June, 1949. Under considerable pressure from the

Hong Kong Government Scott and English Limited agreed to

accept sterling for the jute and to clear their debit bal-