TNAG-2127-FCO40-3037-Investment-in-Hong-Kong-1990 — Page 125

RESTRICTED

RESTRICTED

FM BTC HONG KONG

TO TELELETTER FCO

TELELETTER

FILE REF NFR

OF 011115Z JUNE 90

INFO TELELETTER DTI LONDON, HONG KONG

174202

MDTTAN 1120

thas 121/2

'Y

JUN 1990

FOR ALAN PAUL, HKD FROM P W HEAP

HONG KONG PERSONAL FOR GOVERNOR

DTI FOR OT2 DAVID LOVE

34

YOUR TELNOS 67, 47 AND 38 : VALUE OF BRITISH INVESTMENT IN HONG

KONG

1. FURTHER DELVING INTO THESE MURKY WATERS HAD BEEN TIME CONSUMING BUT NOT VERY CONSTRUCTIVE. I AM DRIVEN FURTHER TOWARDS THE VIEW, EXPRESSED IN MY TELNO 113, THAT PRODUCING CORRECT FIGURES, BASED ON

PRE UNIVERSALLY ACCEPTABLE DEFINITIONS, IS ALL BUT IMPOSSIBLE, BUT EXAMPLES CAN BE USED WHICH IN SOME CASES ARE ACCURATE AND SOMETIMES SERVE TO PRESENT ORDERS OF MAGNITUDE. TO GO FURTHER WOULD REQUIRE A STUDY GOING BEYOND THE RESOURCES OF THIS POST, AND EVEN THEN I AM NOT SURE WE WOULD GET THE ANSWERS. THE CHAIRMAN OF JARDINE MATHESON HOLDINGS HERE TELLS ME THAT EVEN HE DOES NOT KNOW FOR SURE THE SIZE OF THE KESWICK FAMILY HOLDINGS IN THE JARDINE GROUP CHE BELIEVES IT TO BE 10 TO 15 PER CENT MORE THAN ENOUGH TO GIVE CONTROL) NOR THEREFORE THE EARNINGS OF THE FAMILY FROM THAT INVESTMENT. IF ACCESS TO THAT FIGURE IS SO DIFFICULT, HOW MUCH MORE DIFFICULT IT IS TO BE PRECISE ABOUT THE SIZE OF OTHER UK HOLDINGS. EVEN IF WE WERE TO SCRUTINISE THE SHARE REGISTERS OF MAJOR COMPANIES WE WOULD NOT KNOW WHO OR WHERE MOST OF THE SHAREHOLDERS WERE AND STILL LESS WHO WERE THE ULTIMATE BENEFICIARIES.

2. NEVERTHELESS SHARE THE VIEW OF HENRY KESWICK, SIR ADRIAN SWIRE AND OTHERS, WHICH WAS CONCEDED IN THE CHANCELLOR'S LETTER OF 26 MARCH TO MR HESELTINE, THAT, IN THE CHANCELLORS WORDS, I AM IN NO DOUBT THAT THE TOTAL MAGNITUDE OF UK INVOLVEMENT IN HONG KONG IS A GREAT DEAL LARGER THAN POUNDS STERLING 2 BILLION EVEN THOUGH IT IS NOT POSSIBLE TO BE PRECISE''. THAT, AS THE REST OF THIS TELELETTER MIGHT INDICATE, TO ME SEEMS TO SUM IT UP, THE LESSON PERHAPS IS TO USE THE 2 BILLION FIGURE AS LITTLE AS POSSIBLE, IF AT ALL. THE FIGURE HAS ITS ORIGINS IN THE DTI TABLE OF OUTWARD INVESTMENT ATTRIBUTABLE TO UK COMPANIES' FOR THE YEARS 1974 TO 1987 WHICH FOR HONG KONG IN 1987 WAS GIVEN AS POUNDS STERLING 1,924 MILLION. THIS

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