ER' ́NT HOUSE HONG KONG.
TUE JO KPR 93 10:03
26.11
CONFIDENTIAL
2
Suffice it to say that HMOCS officers have waited patiently for many years for announcements and decisions. To expect self-restraint for much longer would be to delude ourselves. An urgent decision is required and further consultations with the Association should take place within the next few weeks. I cannot allow this issue to drag on any longer against a background of all the other political
difficulties.
All the issues and the arguments are, I believe, well set out in the letter of 15 April from the Foreign Secretary's Private Secretary to your Private Secretary. I would only reiterate that the HMOCS obligation in Hong Kong should be honoured having fair regard to the way in which this obligation was honoured in the 42 other territories. The Secretary of State's proposal takes full account of the realities of the Hong Kong situation and the interests of UK taxpayers and is already at a 35% discount on what should be accorded by reference to practice and precedent in all previous cases.
I should add that we have always been ready to go a very long way towards the Treasury position by accepting an artifically low compensation cap of £120,000 and a Sterling pension safeguard at HK$16: £1, when it should be about HK$12:£1 based on the average over the last twenty years. Additionally we are only arguing about a difference of £11 million on the compensation scheme. A Sterling pension safeguard set at HK$16:£l, coupled with SPOS revision, is a potential contingent liability only, which on past performance and future expectation is most unlikely to be called.
The FCO proposal is already a compromise and a bottom-line. Hong Kong HMOCS officers will certainly accept nothing less. If less were offered, they would seek judicial review. The legal opinion we have taken
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