TNAG-1269-FCO40-1619-Banking-situation-in-Hong-Kong-1983 — Page 69

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26.

IN their letter of 3rd October 1983, it is acknowledged

*

that, at least, confirming letters covering debts of US$235.4

+

million and HK$150 million require explanation. These confirming

letters appear to provide the link between the books of BMFL and

of the Carrian Group and appear to prove that these debts shown

as owed on the books, of BMFL were acknowledged by the Carrian

Group companies as correctly recorded. These documents are

wholly concerned with booką and records in Hong Kong. They

}

*

relate to the books then under audit of BMFL in Hong Kong. They

were sent to Carrian Group addresses in Hong Kong. They were

acknowledged by directors and officers of Carrian Group companies

in Hong Kong. They were returned to the auditors of BMFL in

Hong Kong and the documents have at all times remained in Hong

Kong.

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27.

THIS evidence of the debts requires in my view a

fundamental review by Mr. Tan and the other directors of CHL

and CIL and their related companies. The final credibility of

the reconstruction proposals rests on an adequate explanation

of these confirming letters. There appears to be either proof

of a major debt owing to BMFL or evidence of possible but

equally major misappropriation. The task of

clarification

was therefore the most urgent duty facing Mr. Tan and Mr. Ho

on 24th September and 25th September. The clarification did

not require any visits to Malaysia as by definition the

clarification could only be accomplished from records

established and always maintained in Hong Kong.