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CONFIDENTIAL ANNEX
(OPD(67) 20th Meeting, Item 3)
THURSDAY, 25th MAY 1967 at 9.45 a.m.
BRITISH INDIAN OCEAN TERRITORY (BIOT)
THE SECRETARY OF STATE FOR DEFENCE said that when BIOT was set up
we had made arrangements to compensate Mauritius and the Seyschelles for
the detachment from them of islands to form the new territory up to a
total of about £10 million. The United States Government agreed to contribute half the cost of this compensation (up to a maximum of £5 million)
and at the time, to avoid embarrassment in Congress, particularly requested
us to keep secret the arrangements for their contribution; for this reason
it had been arranged that it should take the form of their waiving part of
ar payments to them in connection with the development of Polaris. Until
recently there had been no reason to suspect that difficulties would
arise over this secret arrangement, but the United States authorities had
now told us that some American scientists had become aware of the United
States' financial involvement; for this reason they were now contemplating
admitting in public if pressed that while no cash payment had been made
they had made a "contribution" to the cost of detachment of the islands.
This proposal of the United States Government gave rise to great difficulties because we had made arrangements with the agreement of the
Comptroller and Auditor General to avoid drawing Parliament's attention
to the transactions and we had maintained a firm line in public that there
had been no United States contribution. The Prime Minister had also
informed the Premier of Mauritius that this was a matter solely between
ourselves and Mauritius, in rebutting his proposal that the United States should help Mauritius and the Seychelles. Mr. Christopher Mayhew MP was
also aware of the transaction through his former appointment as Minister of Defence for the Royal Navy. He (the Defence Secretary) had circulated
with his minute of 12th May a draft telegram to HM Ambassador at
Washington containing instructions to the Ambassador for discussion with the United States Secretary of State, Mr. Dean Rusk, but this would require some modification in the light of a minute from the Commonwealth Secretary dated 24th May.
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