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19 OCT 1983
PA (Barking)
FM HONG KONG 18074OZ OCT 83
TO PRIORITY FCO
TELEGRAM NUMBER 1549 OF 18 OCTOBER
INFO PRIORITY KUALA LUMPUR
YOUR TELNO 306 TO KUALA LUMPUR AND KL TELNO 397 TO YOU:
BANK BUMIPUTRA.
1. IN OUR VIEW THE BEST DEFENCE TO ANY CHARGE FROM MAHATHER
ON THE BUMIPUTRA AFFAIR CAN BE DRAWN FROM HMS OWN COMMENTS TO THE PRESS ON 11 OCTOBER. MAHATHIR HAS PUBLICLY ACKNOWLEDGED THE RESPONSIBILITY OF BANK BUMIPUTRA AND BMF DIRECTORS FOR THEIR IMPRUDENT BANKING PRACTICES (SECOND TEL UNDER REF). MAHATHIR
ALSO REVEALED THE EXTENT OF THE MORALLY WRONG PAYMENTS TO BMF OFFICIALS BY QUOTING THE FIGURE HK DOLLARS 3.3 MILLION. WE GUESS THAT THIS IS THE THP OF AN HICEBERG.
2. IT IS TRUE THAT LEGAL ACTION AGAINST CARRAN IN HONG KONG HAS
PROBABLY DASHED HOPES FOR THE RECOVERY OF MORE THAN A SMALL
PROPORTION OF THE MALAYS-HAN LOANS, BUT IT WOULD BE KNAPPROPRIATE
TO COMMENT FURTHER ON THIS WHILST LEGAL ACTIONS IS STILL ÎN
PROGRESS.
3. THE ARGUMENT LINKING BMF'S TROUBLES TO THE **COLLAPSE'' OF
THE HONG KONG PROPERTY MARKET HIS SPECIOUS. TO DESCRIBE THE
MARKET'S DECLINE AS A ''COLLAPSE' IS EXAGGERATED AND IN ANY
EVENT MIT HAS CONTRIBUTED ONLY TO THE EXPOSURE OF BMF'S TOTALLY
IMPRUDENT BANKING PRACTICES, NOT (NOT) CAUSED THEIR TROUBLES.
4. NORMAL COMMITTAL PROCEEDINGS IN THE JALIL MURDER CASE (PARA 8
OF SECOND TEL UNDER REF) HAVE BEEN AVOIDED BY A DEVICE KNOWN AS
A ''VOLUNTARY BILL OF INDICTMENT HEARD BY A JUDGE IN CHAMBERS. THE REPETITION IN COURT OF MAK'S ALLEGATIONS HAVE THEREFORE BEEN AVOIDED FOR THE MOMENT. HOWEVER, THEY MAY EMERGE DURING THE TRIAL HITSELF. NO DATE HAS YET BEEN SET, ALTHOUGH OUR BEST
ESTIMATE WOULD BE FOR TRIAL IN JANUARY OR FEBRUARY NEXT YEAR.
HADDON-CAVE
LIMITED
SEAD
HKD
OED
Ps
PS/MR. LUCE
MR. GIFFARD
MR. DONALD
THIS TELEGRAM MR. D. G. HOLLAND
WAS NOT ADVANCED
COPIES TO:
BANK OF ENGLAND
CONFIDENTIAL
:
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