TNAG-1416-FCO40-1897-The-financial-activities-of-Xu-Jiatun--Head-of-New-China-New-1985 — Page 21

CONFIDENTIAL

GOVERNMENT SECRETARIAT LOWER ALBERT ROAD

HONG KONG

布政司署

香港下亞厘畢道

DIEU

** OUR REF.:

YOUR REF.:

A.C. Galsworthy Esq.,

Hong Kong Department, FCO.

3 May 1985.

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*

And submit to th. witne

НСК 10413

RECEIVED IN REGISTRY

Dean Torry,

1 4 MAY 1985

DLSK OFTAQUI

FINANCIAL ACTIVITIES OF MR. XU JIATUN head of new Cher

It has come to our notice that Xu Jiatun

has given a personal guarantee for a loan by the Kincheng Bank to the Tin Tin Daily News. The back- ground is tangled, but in short the newspaper was once part of an ailing empire known as Millie's Handbags and Shoes. The paper was removed from

scope in the nick of time, before it was wound up, and remains viable. To the extent that this can be summarised it is pulled together in Richard Margolis' memo of 1 May enclosed.

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PL

enclosed.

We have no problems with Xu's involvement unless things go wrong. If the paper folds his name is on the chit. In that case it is not excluded that he might try to extract himself from any proceedings

(leaving aside the natural wish to protect his pocket book) by claiming immunity. This is very much a worst case. Present indications are that the paper will survive. Even if it did not it seems unlikely that a communist bank would round on Xu. Still, one never knows. If matters look like coming to a crunch it might be necessary for us to make our position plain to NCNA. The argument in favour is that we might get Mr. Xu to disengage from a potentially ghastly position (in Hong Kong terms) in time. The argument against is it might feed Xu the thought that the time had come to regularise and strengthen his position in Hong Kong.

We have thus no intention of acting precipitately Should events force our hand however we should have it in mind to speak to NCNA informally on the lines of the enclosed text. Grateful to know your reaction.

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Form

(J.D.I. Boyd) Political Adviser

CC:

D. Blunt Esq., Peking FED, FCO

CONFIDENTIAL