TNAG-1981-FCO40-2814-UK-Hong-Kong-Scholarship-Scheme-donation-to-the-UK-Governme-1989 — Page 295

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Our re

HKG/120/2

Your ref

Direct line 01-389 4799

Mr. Moms

I suggest

MID 28611

4 MAY 1989

(a) CC CRP, Mr Long (b) cc Mr Edward by with privius

papers

P Morris Esq Hong Kong Department

(1) We meet with Mor Edwards

Foreign and Commonwealth Office + Mr Long #

King Charles Street London SW1

Dear

SK TANG DONATION

discuss this once they

have bated at it.

(d) we will then need to put

The British Council

Promoting cultural, educational and technical co-operation between Britain and other countries

10 Spring Gardens London SW1A 2BN Telephone 01-930 8466 Telex 8952201 BRICONG Fax 01-839 6347

9 January 1989

this and our thoughts IIIK. (e) cc this plus our privius dift letter

to the British camat for me.

N

1

My apologies for the considerable length of time it has taken us to consider your proposed letter of intent governing the arrangements for the S K Tang donation.

This has been considered at great length by both our Financial and Legal sections and I regret that they have advised me that for a sum of money as large as this that they do not consider a letter of intent appropriate. It is normal in cases of this kind for a declaration of trust to be made and our Legal Adviser considers it essential that this be done in this case.

I am enclosing a draft declaration of trust which follows closely the declaration made for the Charles Wallace India Trust set up some five years ago which is the closest analogy. We would propose that the donation should be accepted on this basis.

I recognise that this is of course going to further delay the handing over of the donation while you consider this document but we feel it is essential that the donation be placed on a firm legal basis from the beginning in particular to ensure that it fully meets the requirements of the Council's charitable status. This is obviously important for tax reasons.

There are a number of points you might like to consider:

(1) clause 3(b) (1) we have here and in subsequent clauses included the power to use both capital and income of the Trust fund. This is done so that if inflation rises rapidly it would be possible to maintain the level of activity by using both income and capital, accepting of course that this will eventually lead to using the whole of the capital sum. The alternative is over a longer period of time that by using income alone activity will be reduced to a very low level while a not inconsiderable sum of capital remains untouched.

(2) clause 3(b)(2) we have defined that beneficiaries of the Trust as persons domiciled and normally resident in Hong Kong. We feel this meets your basic proposal but you may wish to consider whether a different definition is required.

(3) clause 6(a) the involvement of the Government of Hong Kong and the FCO in administration of the scheme is recognised here.

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