TNAG-2689-FCO40-3891-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1993 — Page 18

15-NOW-1993

16:21

FCO

PRIVATE OFFICE

071 270 2144

P.01

FCS/93/204

CHIEF SECRETARY

FAO. Helen Noble

CONFIDENTIAL

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Mr Chakrabaiti (By Hand)

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Ps/hr Goodlaḍ

PS/ Lady Chuike: isipus

Sir TC=ES

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as requested

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Aw Freemia, ODA

wiss Brooks, Legal Adm's

HONG KONG HMOCS: PENSIONS AND COMPENSATION i Tritter, CD

1. Thank you for your letter of 8 November.

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X59.x1

2. I have discussed this twice with the Governor. I agree that we should try to split the differences between us. propose that we should set the exchange rate for the pension safeguard at HK$21:£1. This represents the exchange rate mid-point between our respective proposals, but it does not split equally the difference in maximum contingent liability. Using your proposed mechanism, we calculate that an exchange rate of HK$20:El would be a fair splitting of the difference. This would present a maximum contingent liability of £166 million, compared with £106 million under your proposal and

£230 million under mine.

3. This represents a significant concession on the Governor's part. In the Governor's and my view, any package will only be acceptable to the HMOCS Association if it includes my prop jed amendment to the SPOS Regulations. At present exchange rates, the amendment would cost only about £700,000 per annum, rising to about £2 million if the exchange rate fell to HK$16:E1.

4. I propose that we should now agree on a package comprising:

CONFIDENTIAL