TNAG-2903-FCO40-4177-Drug-trafficking-agreements-between-Hong-Kong-and-other-coun-1993 — Page 6

CONFIDENTIAL

XCC(93)55

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(a)

unduly inflate both general revenue and public expenditure; and

(b) lengthen the administrative procedures involved in

processing requests for asset sharing.

We therefore propose that, in future cases, all net assets confiscated will be placed in a Deposit Account for a period of five years, or until they are shared, whichever is the earlier. The confiscated assets, or our share remaining, will then be transferred to the General Revenue. Our share of assets confiscated in and received from other jurisdictions will be transferred directly to the General Revenue. Amendments to the Drug Trafficking (Recovery of Proceeds) Ordinance will be required for these arrangements.

CHINA DIMENSION

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China has no objection to the conclusion of such time-limited bilateral drug agreements, and has been provided with copies of the agreements. The current proposals on asset sharing will give effect to a provision allowed for in the bilateral agreements, the tenure of which will expire before 1997. Operation of these agreements is a matter for the Hong Kong Government.

FINANCIAL AND STAFFING IMPLICATIONS

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The proposed sharing of confiscated assets in the LAW Kin- man case will involve appropriation of HK$48.6 million from General Revenue. This will require the approval of the Finance Committee because all the assets confiscated have already been transferred to General Revenue. However, in future cases, only Hong Kong's share of the confiscated assets (including, where the assets were confiscated locally, the portion to cover costs) will accrue to the General Revenue Account. The proposals have no staffing implications.

PUBLIC CONSULTATION

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The Action Committee Against Narcotics has been consulted on the proposals. It supports the proposals, which would enhance international cooperation in the fight against drugs.