CONFIDENTIAL
132725
MDHOAN 6969
CONSULTANT, IN ORDER TO DISCUSS WITH HIM WHAT VIEW HONG KONG FINANCIAL INSTITUTIONS WERE TAKING TOWARDS THE HYPOTHECATION OPTION HE HAS BEEN STUDYING, AND HOW THE SCHEME MIGHT BE ADJUSTED FOR HMOCS OFFICERS. OTHERWISE, WE SHALL FIND THAT WHEN THE CONSULTANT'S REPORT IS PRODUCED (END JANUARY COULD THIS BE SPEEDED UP, I WONDER?) IT STILL DOES NOT COVER ALL THE GROUND, AND THAT FURTHER WORK IS NEEDED.
6.
A
I SUGGESTED THAT WE SHOULD NOW GO AHEAD WITH THE COMPENSATION PACKAGE ON ITS OWN, GIVEN THE APPROACH OF THE AGM OF THE HMOCS ASSOCIATION. THE ODA FELT STRONGLY THAT THE COMPENSATION SCHEME WHICH WE HAD PUT TO THE TREASURY FELL SO FAR BELOW WHAT HMOCS OFFICERS WERE EXPECTING THAT EVEN IF IT WERE AGREED AS IT STOOD, IT WOULD NOT BUY ANY TIME WITH THE STAFF ASSOCIATIONS, BUT WOULD ONLY REDOUBLE CALLS FOR A STERLING SAFEGUARD.
7. WE LEFT IT:
(I) THAT THE TREASURY WOULD DO FURTHER WORK QUICKLY ON THE HYPOTHECATION OPTION, IF POSSIBLE USING INPUTS ON THE ATTITUDES OF HONG KONG INSTITUTIONS FROM YOUR CONSULTANT. THEY WILL AIM TO HAVE REACHED SOME CONCLUSIONS BY THE TIME OF YOUR VISIT HERE IN LATE JANUARY.
(II) THAT WE WOULD GIVE SOME THOUGHT, ILLUSTRATIVELY, TO HOW THE CAPITALISATION OPTION MIGHT BE PUT TO THE CHINESE (I MADE CLEAR MY STRONG DOUBTS THAT THIS COULD EVER BE A STARTER, GIVEN THE LEGCO AS WELL AS CHINESE ANGLES):
(III) THAT I WOULD DISCUSS THE POSITION WITH YOU FURTHER IF I HAVE A CHANCE TO SEE YOU ON MY WAY THROUGH HONG KONG ON THE WAY TO VIETNAM WITH LORD CAITHNESS.
IN
(IV) THAT THE FCO WOULD AIM TO PRODUCE FOR YOUR VISIT HERE LATE JANUARY A DISCUSSION PAPER ANNEXING THE FOUR APPROACHES IDENTIFIED SO FAR COUR ORIGINAL SCHEME: CAPITALISATION: HYPOTHECATION: AND DOING NOTHING) AND CONCENTRATING ON THE POLITICS OF THE PROBLEM. WE WOULD HOPE TO CLEAR THIS WITH YOU, THE TREASURY AND THE ODA.
8.
I HOPE THAT THE PAPER AT (IV) ABOVE WILL HAVE THE EFFECT OF BRINGING THE DISCUSSION DOWN TO A FINITE LIST OF CHOICES, AND TO THE POLITICAL ACCEPTABILITY OF THEM. ALTHOUGH WE HAVE NOT
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