CONFIDENTIAL
16605
MDLOAN 07.
ARRANGEMENTS, FAUTE DE MIEUX, DESPITE THE DRAWBACKS DESCRIBED IN PARA 2 ABOVE.
5.
CURRENT FCO THINKING ON COMPENSATION ARRANGEMENTS IS AS
FOLLOWS:
(A) THE MOST APPROPRIATE ARRANGEMENTS, GIVEN THE SPECIAL CIRCUMSTANCES OF HONG KONG, REMAIN THE SORT OF PROPOSALS WHICH WE PUT TO MINISTERS IN 1988.
(B) COMPENSATION WOULD BE BROADLY BASED ON THAT WHICH WE
HAVE BEEN PAYABLE UNDER A TRADITIONAL COMPENSATION SCHEME.
(C) IN ORDER TO PROVIDE AN INCENTIVE TO BENEFICIARIES TO STAY ON AFTER 1997: THE MONEY WOULD BE PAID IN ANNUAL
INSTALMENTS
-
PROBABLY FOR 8 YEARS.
(D) IN ORDER TO HELP BENEFICIARIES TO GET OVER THE PSYCHOLOGICAL BARRIER OF 1997, SOME 20 PER CENT OF THE TOTAL SUM WOULD BE PAID IN 1997, AFTER THE TRANSFER OF SOVEREIGNTY.
(E) IN ORDER TO OVERCOME POSSIBLE CHINESE SENSITIVITIES
ABOUT SERVING SARG OFFICIALS BEING IN RECEIPT OF PAYMENT FROM HMG, ALL COMPENSATION PAYABLE UNDER THE SCHEME MIGHT BE SET ASIDE AND WOULD BE ACCESSIBLE TO THE OFFICER CONCERNED ONLY WHEN SHE OR HE RETIRED, RESIGNED OR OTHERWISE LEFT THE SERVICE OF THE SARG.
THE FUNDS MIGHT, FOR EXAMPLE, BE PLACED IN AN INTEREST
BEARING ACCOUNT WHICH WOULD REVERT TO THE OFFICER AT THE APPROPRIATE TIME.
(F) THE TOTAL COST OF THE SCHEME WOULD HAVE TO BE ACCOMMODATED WITHIN A FINANCIAL CEILING (TO BE NEGOTIATED WITH
THE TREASURY).
6. AS FAR AS THE TREASURY IS CONCERNED, DETAILED CONSIDERATION OF COMPENSATION ARRANGEMENTS IS BACK IN THE MELTING POT, PENDING FULL EXAMINATION OF THE STERLING SAFEGUARD ISSUE.
7.
ALL THIS UNDERLINES THE NEED FOR AN EARLY VISIT BY
KEITH SHIPLEY TO ASSIST US IN CARRYING FORWARD OUR CONSIDERATION OF STERLING SAFEGUARD PROPOSALS. WE WOULD HOPE FOR THIS TO TAKE PLACE AS SOON AS CONVENIENT TO YOU, PERHAPS IN THE EARLY PART OF NOVEMBER. SUBJECT TO YOUR VIEWS, WE WOULD ENVISAGE INVOLVING THE TREASURY IN AT LEAST SOME OF THE TALKS WITH SHIPLEY.
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