TNAG-0563-FCO40-658-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 47

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XCC(75)6

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Control by Direction. In the final analysis the Governor may, if he considers the public interest so requires, give directions of a general character to the Corporation under clause 20. The provisions of this clause are of fundamental importance, for they provide that the Government will fully recompense the Corporation in respect of any direction to act contrary to prudent commercial principles and the balancing of its books. The intention behind this clause is that the Government must automatically compensate the Corporation for loss of revenue or profitability which arises as a result of a directive from the Governor. An example of possible loss of revenue would arise if the Government asked the Corporation to lower its fares, or to suspend an increase in fares, in order to redress a temporary imbalance between surface and sub-surface public transport. An example of reduced profitability would arise if the Government, as a matter of social and overall public transport policy, required the Corporation to incur expenditure on providing special services and facilities.

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Other aspects of control. Apart from these three main aspects, the Government could exert control by other means. The Governor may, for sufficient cause, remove a person from the Board under clause 4(4)(b). Under clause 15, the Corporation may not invest any moneys in any type of security unless that type of security is approved by the Financial Secretary (this is a standard provision in all Ordinances in respect of organisations and trust funds in which the Government has made or continually makes a financial contribution). Under clause 16, the Corporation is required to provide audited accounts and a report on its activities. Finally, under clause 19, the Corporation is required to furnish information to the Governor on request.

C.S. 166

CONFIDENTIAL

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