TNAG-2028-FCO40-2890-Hong-Kong-freezing-of-Kuwaiti-and-Iraqi-assets-1990 — Page 93

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Mr Stone

Ms Marsden

HONG KONG: KUWAITI ASSET FREEZE

Reference

ECEIVER

HKCB 020 126

7 0 AUG 1795

Si

INDEX

ريم

CODE 18-77

1. I attach a minute from the Bank of England regarding a problem facing the Hong Kong subsidiary (BIAAL) of the Baring Asset Management Ltd. In essence, the BIAAL, who have a discretionary investment management agreement with the Kuwaiti Investment Authority (KIA), have applied for permission of the Hong Kong Government to continue to manage the portfolio on behalf of the Kuwait Investment Office, London (KIO). Their application is based on a letter of authority purportedly signed by the Kuwait Minister of Finance and dated 2 August (the date of the Iraqi invasion of Kuwait).

2.

There is some doubt about the legality of this document, and the legal adviser to the Monetary Affairs Branch (Gannon) has raised queries relating to the witnessing of the Minister's signature and also the relationship between the KIA and the KIO. As a result, the Bank of England have rejected the document and recommended Barings refer the case to HMG via the Hong Kong Government for decisions to be made on the legality of the document, and the relationship.

3. I have referred the papers initially to MED having spoken to Mr Heigl, who thought (before seeing the papers) that confirmation of the document might be obtained from the Kuwait Embassy, London, on a government-in-exile basis. thought that possibly DTI might need to be also consulted regarding exemption from licence requirements.

He

4. You will recall that a recent telegram from Hong Kong

referred to a discretionary investment manager having continued to trade on behalf of the KIO after the imposition of the freeze. It is possible that this is the case which

BRIABW/1

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