13125 Z
COPY FOR HKD
COMMENT:
SECRET
FM FCO
TO IMMEDIATE HONG KONG
TELNO 459
OF 101745Z MARCH 92
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HKA 233/1
Br1313 Bass Williams
Mr Stone 1313
Enter Apa (Annex)
M
13/10
STRICTLY PERSONAL FOR GOVERNOR FROM BURNS, AUSS
HMOCS
1.
WE ARE SENDING BY SEPARATE TELEGRAM THE TEXT OF A LETTER FROM LORD CAITHNESS TO SIR D FORD ON COMPENSATION/INCENTIVE ARRANGEMENTS FOR HMOCS OFFICERS. I SHOULD LET YOU KNOW THE BACKGROUND TO THIS.
2.
AS REPORTED IN OUR TELNO 403, THE CHIEF SECRETARY TO THE TREASURY ACCEPTED LAST WEEK THAT, IF WE COULD NOT AGREE HIS PREFERRED FORMULATION ON STERLING SAFEGUARDS, IT WOULD BE BEST FOR LORD CAITHNESS TO SAY NOTHING ON PENSION ISSUES (SAFEGUARDS AND SPOS) WHEN IN HONG KONG, IE TO DELETE THAT PARAGRAPH FROM THE DRAFT STATEMENT. IN THESE CIRCUMSTANCES WE JUDGED IT WOULD BE BETTER TO DELETE THE INTRODUCTORY PROSE TOO, AND FOR LORD CAITHNESS TO CONFINE HIMSELF TO A LOW-KEY STATEMENT ANNOUNCING THE COMPENSATION/INCENTIVE SCHEME AND THE FORTHCOMING CONSULTATIONS ON THAT.
3=
LORD CAITHNESS ACCEPTED YOUR AND TONY GALSWORTHY'S ADVICE THAT IT WOULD BE BETTER TO BRIEF THE CHINESE BEFORE MAKING ANY STATEMENT WHICH MIGHT BECOME PUBLIC. BUT AS CLEARING THE SPEAKING-NOTE FOR USE WITH THE CHINESE WITH THE TREASURY WILL STILL TAKE A LITTLE TIME, WE THINK IT IMPORTANT THAT MINISTERS' AGREEMENT TO OUR OPENING DISCUSSIONS WITH HMOCS MEMBERS ON COMPENSATION SHOULD BE FORMALLY TRANSMITTED TO HONG KONG NOW. THIS IS FOR TWO REASONS:
- ONCE AN ELECTION CAMPAIGN IS UNDERWAY, IT IS GENERALLY ACCEPTED THAT MINISTERS DO NOT MAKE NEW FINANCIAL COMMITMENTS WHICH WOULD BIND A SUCCESSOR GOVERNMENT.
THE TREASURY REACTION TO YOUR VERY SUBSTANTIAL FISCAL SURPLUS, BOTH FOR 1991/92 AND THE PROJECTED ONE IN 1997, MAKE US CONCERNED THAT THEY MAY TRY TO ROW BACK FROM THEIR PREVIOUS POSITION AND REVISIT THE QUESTION OF WHETHER HONG KONG SHOULD PAY FOR THE COMPENSATION SCHEME.
4.
LORD CAITHNESS' LETTER TO SIR D FORD THUS STATES THAT HMG HAVE NOW FORMULATED A PROPOSAL FOR A SCHEME PROVIDING ELEMENTS OF INCENTIVE AND COMPENSATION AND THAT HMG LOOK FORWARD TO OPENING CONSULTATIONS ABOUT THIS WITH REPRESENTATIVES OF THE OFFICERS CONCERNED BEFORE EASTER. WE HOPE TO WRAP UP THE PRESENT PHASE OF MINISTERIAL CORRESPONDENCE IN THE NEXT FEW DAYS, DRAWING A LINE UNDER WHAT HAS BEEN AGREED SO FAR. ONCE THAT IS DONE, WE SHOULD BE ABLE TO AUTHORISE SIR D FORD TO MAKE THE CONTENTS OF THE LETTER KNOWN TO THE ASSOCIATION CHAIRMAN IN CONFIDENCE IF HE FEELS THAT THIS WOULD HELP AND THAT THE CONFIDENCE WOULD BE RESPECTED UNTIL WE ARE IN A POSITION TO GO PUBLIC.
5. THE PURPOSE IN ALL THIS IS TO LAUNCH THE
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