charges.
(2) As requested, I explained to Jay the situation in respect of Michael
Hannam's transfer and his replacement by Blackwell: that the South China
Morning Post had rather over-played the situation in its special report
on Blackwell and that in fact the post is not to be upgraded because of
Blackwell's arrival.
(3) Lease of Pig Pens: I explained to Jay the position concerning the
leasing of pig pens to laans in the new Kennedy Town abattoir. I said it
was highly desirable that the seven communist laans should pay the
required deposit amounting to one month's rent, but that if this were
quite impossible to arrange, then Government would be prepared to accept
a banker's guarantee. Jay said that he would see what he could do to
influence NG FUNG HỌNG and through them the laans: he agreed that it was
far better to encourage them to fit in with official arrangements,
although he really could see nothing wrong in proceeding by way of a
banker's guarantee 'except, of course, Government would not then be
getting an interest-free loan".
(4) As requested, I mentioned to Jay the problems recently experienced
on the border and in particular the various incidents at Sha Tau Lok. I
repeated what I had said at a recent meeting, that whilst in themselves
the incidents might seen sinor and the result of actions by people of
low intelligence, nevertheless they could in themselves lead to serious
difficulties and certainly when taken in aggregate they formed a serious
source of annoyance. Jay noted the position but enquired whether an
approach had been made to K.C..A. as agreed in 1967, x.C.N.A. would be
the contact for minor border problemas.
I said that the N.C.H.A. had indeed been contacted on this but
nevertheless we now thought it sufficiently important for Jay to know of
the situation and to be in a position to` advise the communists of the
risks involved. Jay thought it was probably of little value for him to
raise the matter locally but he said that he would mention the matter
next time be wrote to Peking.
(5) South China Iron Works: I advised Jay that this matter still under
consideration: that the Governor vas taking a personal interest: that
B.B. vas anxious to see that any offer made shoili be fair to both sides
and that he would ensure that from the point
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/contd....
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3
I
of view of the S.C.I.V. the price offered was reasonable. informed Jay
that the indications were that the offer would be n the region of $8
million, Jay said that he was pleased to Hearn that this matter at long
last was nearing completion. He said that although in the past he had
given the impression that this was a fairly straightforward financial
proposition, nevertheless I should now understand that there were
important political aspects attached to the matter which should not be
ignored. He expressed the opinion that it was of the utmost importance
that an answer should be given in the very near future and that, rather
than have further procrastination, he would prefer to see a negative
answer given. I again assured Jay that a reply would be given in the
"near future".
5.
Jay made two further points:-
(1) He had recently been advised that because of lack of satisfaction
with the existing Jay/Cater channel, an attempt would be made to set up
a channel to the H.K.G. through Jake Saunders of the Hongkong & Shanghai
Bank. Jay asked that this information should be kept "secret between
ourselves" as he felt that he could handle the situation. Jay suddenly
went very red
in the face when telling me of this attempt to set up a new channel, and
I gained the impression that this was probably a figment of his
imagination. I asked whether he wanted me to have Saunders varned off
but he became rather agitated at this suggestion and said that the whole
thing should be left to him to handle.
(2) Referring back to mention of M.C.N.A., Jay enquired whether I knew
that TÂM Keng of N.C.N.A. (the contact in N.C.N.A. used by
I said that I Mr. Robin McLaren) is an ex-Government Servant.
was not aware of this and Jay said he believed TAN used to work in the
Colonial Secretariat and advised that we should be very careful in our
dealings with him as TAM had maintained contacts in the Secretariat.
(J. Cater)
c.c.
Mr. J. Murray, CMG (F.C.o.) Mr. J.B. Denson, OK (PEKING) D.8.B.
H.S.Q.
E.8.3.
3517169
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T3x. 4/68
100
dee
30 July
ملی
With the Compliments of the 6s Caytes.
Political Adviser 667
Hong Kong
2
леду
ра
333/9
17 Juky, 1969
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Le.g. Hamilton
or Holmes
Political Adviser
I made arrangements to meet Mr. K.C. Jay at 12 noon
on Saturday, 12th July.
2.
Jay said that be had no specific information to pass on to me, although
he had received from the Prime Minister's office in Peking a letter
giving general comments on the situation there. Allegedly CHOU En-lai's
position was steadily improving after the all time low it had reached at
the time of the gth Party Congress. There were rumours in Peking to the
effect that HAO was not very well disposed towards CHOU but clearly
realised that he was in no position to oust CHOU. On the other hand, LI
Piao allegedly had made a great deal of effort to be pleasant to CHOU
and in recent veeks had seen a great deal of hin, Jay advised that
"important soves" være about to take place in Peking which would cause
quite a stiri I asked for more details of these moves but Jay was not
forthcoming.
3.
The following subjects were discussed briefly with Jay:-
(1) Jay said that recently Paking had instructed the x.C.N.A. Hong Kong
to "cause no new trouble":
so new trouble": Jay thought that this possibly a follow-up instruction
to a report he had made to Peking after I saw him on 23rd June. Jay was
not particularly impressed by the Peking instruction as he felt it was
too loose and could possibly be interpreted by the N.C..A. as being
tacit approval for action already taken or in hand but a warning not to
stir up anything "new",
(2) IU Nong-kval: as agreed, I informed Jay that a warning had been
given to the 3.C.X.A. that IU had been seen on two or three occasions in
British territory and that it should be appreciated that he was liable
to arrest.
(3) Referring back to my meeting with Jay on 19th June, I said that it
had occurred to me that his comment that it would be unwise to have a
Chinese as Governor or Colonial secretary might have been prompted by a
comment made by the Colonial Secretary on arrival in Hong Kong
concerning localisation of the Hong Kong Civil Service and the possible
appointment of a "local man" as Colonial Secretary. I said that in this
context the Colonial Secretary was not referring to local Chinese but
simply toserving members of the Civil Serviceć It was immediately clear
that the discussion on 19th June vas à direct reference to the C.5.'s
statement, for Jay at once gaid that it was this comment which had
caused some concern:
se concern: the position was now fully understood.
4.
Jay was clearly delighted that H.E. the Governor had spoken to him at
the cocktail party for Canada's National Day on 30 June: be made several
references to this during the discussion and on one occasion said that
he was particularly pleased that the Governor had given him so much time
as this had been noticed by representatives of China Resources Company
who vere also present at the cocktail party and undoubtedly would be
reporting back to their superiors.
/Contd...
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2
5.
I mentioned to Jay that representations had been made to the W.C.H.A.
concerning firework rockets which had been aimed into British territory
from across the border: said that incidents had been much reduced
recently but, hopefully, they would be stopped altogether as in certain
circumstances they could unfortunately cause an unpleasant incident. Jay
said that he would take the opportunity of mentioning this when an
occasion arose.
6. McL
I
I mentioned to Jay the possibility that Mr. Robin of your office might
be going to Peking: I explained the circumstances.
7.
Jay asked whether I had any further news concerning the South China Iron
Works land. I said that I had nothing specific to say to him but assured
him that the matter was receiving consideration. Jay said that he had
spoken to the solicitors recently who had suggested that if nothing were
forthcoming from the H.I.G. in the near future perhaps the visest move
would be for the Bank of China and the S.C.I.V. to accept completely the
proposals of the H.K.0, which vere still valid two years ago. Jay said
that he had rejected this advice, as clearly it was intended to
embarrass the H.K.G. rather than provide a satisfactory solution to the
problem.
мо
(J. Cater)
10th July, 1969.
c.c.
Hr. J. Murray, CMG (F.C.0.) Mr. J.B. Denson, 038 (PEKING) D.8.9. K.5.G.
E.S.$.
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