HC Deb 28 April 1959 vol 604 cc1235-44

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooman-White.]

10.12 p.m.

Mr. Ernest Thornton (Farnworth)

I wish to call attention tonight to the circumstances under which the Mountain Lead Mines, in Hong Kong, were closed, or the mining operations there were stopped. I hope that the Under-Secretary of State for the Colonies will not fall back on his reply of 12th February, that the mines were never opened. There are, I understand, five separate tunnels on the property which have been working five years, and ores have been extracted at various times and sold locally. I want to press tonight for the early reopening of the mines in the interests of the economy of Hong Kong, and for an independent inquiry into why the mines were closed.

I feel sure the hon. Gentleman will agree that I have not hastily taken action to bring this case to public notice. It is now many months since I first wrote to the Colonial Secretary about it, and, as the hon. Gentleman probably knows, several letters have passed between the right hon. Gentleman, the hon. Gentleman's predecessor and myself. The replies of the Colonial Secretary to my representations have not by any means removed my misgivings, and it is because I still feel unhappy about the whole affair that I bring the matter to the notice of the House tonight.

The history of this property goes back to January, 1952. As I think the hon. Gentleman will agree that this is a very complicated issue, I shall give a few dates and make a few references. Since January, 1952, prospecting and mining licences have been issued and cancelled in accordance with the Mining Regulations in respect of several individuals, syndicates and companies. Transfers of licences are not legally permitted. The old licence must be cancelled before a new one can be issued. According to the Commissioner of Mines for Hong Kong, during the court proceedings, to which I shall refer later, there had been no occasions, apart from the closing of the Mountain Lead Mines, which required him to cancel a lincence or refuse to renew one.

In 1956, after the several transactions to which I have referred, the property was taken over by Messrs. Wheelock, Marden & Co., Ltd., which formed the Mountain Lead Mines Ltd. with an authorised capital of 1 million Hong Kong dollars, and on 17th May, 1956, Mountain Lead Mines Ltd. were issued with prospecting and mining licences. This company engaged the services of a fully-qualified British mining engineer and geologist and proceeded to prospect the area in a scientific manner, assisted by three Europeans with mining experience and about eighty Chinese workmen. Modern accommodation was built for the workers, electricity installed and generally rapid progress was being made with development work.

On the 15th March, 1957, without prior warning, the renewal of the licence was refused. I want to pose several questions to the Under-Secretary. What was the reason for the refusal to renew? The reasons given in correspondence to me have been rather uncertain and vague. Was the Commissioner of Mines ordered to refuse the renewal and, if so, by whom? Had Mountain Lead Mines Ltd. committed any breach of the ordinary regulations? I understand not. Had the villagers objected to the mining operations? Again I understand not. The objections of the villagers came only some time after the mine had been closed. What really was the reason? This is the 64-dollar question.

This brings me to the important and disturbing point. In September, 1956, the then Superintendent of Mines, William Murray Keay, was convicted of: having corruptly received the sum of 25,000 Hong Kong dollars as a reward for showing favour or for his forbearing to show disfavour to the Bohespic Syndicate in relation to the granting of an issue to the said syndicate of certain purported licences and the subsequent transfer of the purported licences to the Mountain Lead Mines Ltd. Keay was found guilty and sentenced to a term of imprisonment. At the same time, Keay along with three members of the Bohespic Syndicate were charged with: Conspiring on divers dates between 1st January and 5th June, 1956 to enable Keay to receive a bribe for his showing favour or for his forbearing to show disfavour in the discharge of his official function to the Bohespic Syndicate. The verdict of His Honour Judge Charles was as follows: I find each of the accused not guilty"— Each of the accused referred to the three shareholders of the Bohespic Syndicate and Keay himself. Judge Charles said on this charge: I find each of the accused not guilty. My reason for so finding is that I am not satisfied beyond doubts which I consider reasonable that any of them conspired together as alleged. The Colonial Secretary, in his letter to me of 8th October last, says he holds to the conclusions in the letter of the Minister of State of 5th November. 1957. which letter stated: it was Burns who gave to the police the initial information regarding the proposed bribe to Keay. This, I submit, is a misrepresentation of the facts as established by the court's finding. It suggests that some of the shareholders conspired with Keay.

Mr. H. Rhodes (Ashton-under-Lyne)

Who said that?

Mr. Thornton

The Minister of State, in a letter dated 5th November, 1957, stated: it was Burns who gave to the police the initial information regarding the proposed bribe to Keay. The important words are, "the proposed bribe to Keay". This, I contend, is a misrepresentation of the facts as established by the court's findings and suggests that some of the shareholders conspired with Keay, whereas the judge in his verdict said that he was not satisfied … that any of them conspired together as alleged". I submit that it is not even for the Minister of State to flout the decision of the court in Hongkong.

The story that was accepted by the court was that the money was paid to Keay at his request to buy out a Chinese who already had a licence for additional land needed by the company. Therefore, I submit there was no conspiring, as established by the court, and no proposed bribe, but Burns, who was the biggest shareholder, did not believe Keay's story and, after warning Keay, reported the matter to the police. This is a somewhat different version and accords with the facts as established by the court far more than does the version of the Minister of State, which is in conflict entirely with the court's verdict.

I am left with the unhappy feeling that it may be that the licences were not renewed as a means of punishing Burns for having the temerity to lay information which led to the conviction and imprisonment of a high officer of the Colonial Government. I am left with that unhappy feeling, and nothing that has been sent to me from the Colonial Secretary's Department has removed that unhappy feeling. There seems also some doubt as to the legality of the action taken by the Commissioner of Mines. He apparently tried to cover this point in his notice of 15th March, 1957, but the licences, in accordance with the Mining Regulations, are clearly marked: This licence is not transferable and any rights or interests conferred by this licence are not assignable. The Bohespic licence was properly and legally cancelled on 17th May, 1956, and a new licence was issued to the Mountain Lead Mines on the same date. I ask the Under-Secretary to make sure of the legality of this position. I believe it calls for the closest possible legal scrutiny.

Mr. Edward du Cann (Taunton)

May I ask whether there is any connection between the companies, the names of which the hon. Member mentioned, and whether he is imputing in any way—I take it he is not—improper conduct by the Wheelock, Marden Company?

Mr. Thornton

No. I am glad that the hon. Member for Taunton has raised that point. I am not imputing any improper conduct. What I am trying to point out is that the licence of the Bohespic Syndicate was properly cancelled and its interests were taken over by the Mountain Lead Mines Limited, of whom Wheelock, Marden & Co. Ltd. were the holders. They took over control, anyhow.

I come now to the point that, whether or not the process was legal, I think that it was morally wrong and damaging to honest behaviour in the Colony. The Chairman of the Hong Kong Reform Club made this declaration last year in public: Corruption is bad in every big city in the world, but in Hong Kong it is the worst in the world. The judge in passing sentence on Keay said: I have taken into account that corruption is all too prevalent in the Colony, so prevalent that there is a special branch of the police to deal with it. Under these circumstances, if a person reports someone whom he has good reason to believe is acting corruptly and a conviction follows, and the informer as a direct consequence is made to suffer heavy financial loss, this is not the way to reduce corruption; it is the way to make corrupt practices safe.

I repeat that I have an unhappy feeling, after very long consideration of this case, that something was seriously wrong in the action taken by the Hong Kong authorities. I hope that as a result of the facts I have put before the House tonight and as a result of the representations I have made, the Under-Secretary of State or his right hon. Friend will take action to order an independent inquiry, because I believe that the prestige of our Colonial Government is at stake. There is very severe apprehension in many quarters in Hong Kong that this action was a punitive action against someone who had informed against a high official of the Colonial Government, and this was the punishment accorded to him by closing the mine and incurring him in very serious financial loss.

10.27 p.m.

The Under-Secretary of State for the Colonies (Mr. Julian Amery)

I have a great regard for the hon. Member for Farnworth (Mr. Thornton), and I know that he would not have taken up this matter if he had not felt strongly about it. I must, however, ask him to bear with me if, before I answer his main point, I go over the historical background a little.

As the hon. Member rightly says, in 1952 a Mr. O'Neill was granted a temporary mining licence to prospect over an area at Tai Mo Shan in the Leased Territories. In 1953, Mr. Burns acquired a 50 per cent. share in Mr. O'Neill's interest. In 1955, Mr. O'Neill transferred his interest to the Lam Chuen Syndicate, both for a sum of money and for a guarantee that some of the shares in any public company formed to operate the mine would be made over to him. Mr. Burns became a shareholder to the extent of 100,000 Hong Kong dollars in this new company.

At the end of 1955 the Lam Chuen Syndicate was dissolved. One effect of this was that the members of the syndicate were relieved of any further obligation towards Mr. O'Neill. In its place they formed the Bohespic Syndicate, which consisted of nineteen persons and was an unincorporated group of individuals. Mr. Burns' interest was transferred to the new syndicate under a new agreement, which also gave him 25 per cent. of the voting power in the company.

From late 1955 the Bohespic Syndicate was in negotiation with the Superintendent of Mines, Mr. Keay, to secure two things—first, licences over the area previously held by the Lam Chuen Syndicate plus a new area giving access to the main road which was important for the economic development of the property, and, secondly, the right to transfer the licences to a limited company to work the mine. The licences in question would have been valid for six months, with no guarantee of renewal. As the hon. Member has said, Mr. Keay alleged that a Mr. Tsao had already applied for the extra land, and that he would not surrender his right unless he was paid about 25,000 Hong Kong dollars. Mr. Keay purported to act as intermediary between Mr. Tsao and the syndicate. It afterwards transpired that Mr. Tsao was a fictitious person.

On 27th February, 1956, Mr. Keay granted the Bohespic Syndicate a prospecting licence and a mining licence, valid for six months, for an area including the additional land giving access to the main road. He claimed that he had paid most of the compensation to Mr. Tsao. The syndicate was in some disagreement as to whether or not it should repay Mr. Keay for this transaction. Mr. Burns was against paying him, and on 10th April he made a report to the police about Mr. Keay, on the lines mentioned by the hon. Member.

Meanwhile, the Bohespic Syndicate had become short of money. Its only assets were the licences it had acquired. It therefore concluded an agreement with the Mountain Lead Mines Company. Under this agreement it transferred its interests to the Mountain Lead Mines Company in return for 445,000 ordinary shares of one Hong Kong dollar each and 50,000 founder shares of 10 cents each. Mr. Burns received 100,000 of the one and 10,000 of the other.

On 4th June, 1956, licences in the name of the Bohespic Syndicate were transferred to the Mountain Lead Mines Company after Bohespic had paid over 25,000 Hong Kong dollars to Mr. Keay.

Mr. Thornton

The licences are endorsed to the effect that they are not to be transferred and that they have to be cancelled in accordance with the Mining Regulations and new licences issued.

Mr. Amery

I think that I have the facts here. On 17th May, 1956, Mr. Keay took the original licences to the syndicate and delivered to the solicitor—a Mr. Armstrong—the new licences in the name of the Mountain Lead Mines Company, to take effect after the payment of 25,000 Hong Kong dollars. On 4th June, 1956, the licences in the name of Bohespic were transferred to the company by Mr. Keay, after Mr. Armstrong had paid a fee of 25,000 dollars on behalf of the Bohespic Syndicate. I hope that I have made the position clear.

Mr. Thornton

The point is that if it is illegal to transfer licences, how does it come about that these have been transferred? They cannot have been.

Mr. Amery

They were transferred in fact. Whether the matter is illegal is another question, but they were transferred.

I come to the consequences of this. Mr. Burns thought that this was wrong, and on 5th June he visited the Anti-Corruption Branch of the Hong Kong Police, where he telephoned to Mr. Keay in the presence of the police. The conversations led the police to institute inquiries, and on 6th July Mr. Keay was arrested, with three members of the Bohespic Syndicate.

As the hon. Gentleman said, on one charge of conspiracy Mr. Keay was acquitted along with the three members of the syndicate. On the other charge of receiving 25,000 dollars as a reward for showing favour to Bohespic, he was found guilty and convicted and sentenced to two years' imprisonment. He appealed, but the appeal was dismissed.

Mr. Keay's conviction put the validity of the licences in question. The Attorney-General's advice was sought. He advised that the Government were entitled to repudiate all the actions of Mr. Keay in relation to the grant of the two licences to Bohespic, which would, indeed, cover any transfers. If the transfer was illegal, which is a point I am not competent to answer from the legal point of view, and there were further illegal action committed by Mr. Keay, that would only make his action the more one to be repudiated by the Hong Kong Government. On 15th March, 1957, the Government informed the Syndicate that Mr. Keay's acts were repudiated, and the licences were, therefore, null and void, together with any consequences springing out of them such as the transfer.

At the end of the currency of the licences they were to run for only six months—on 26th August, 1956, after Mr. Keay had been arrested but before the proceedings were over, the Mountain Lead Mines Company asked for a renewal of the licences. The company was, in practice, allowed to enjoy a continuation of its existing rights, but a reply was delayed until the outcome of the legal proceedings was clear. There were the initial proceedings, there was the appeal, and the Attorney-General's advice had to be sought.

In March, 1957, the Mountain Lead Mines Company was informed that the licences were null and void and, therefore, there could be no question of renewal. The fact that no licence any longer existed over the area was notified in a Gazette Notice. I think that this was right and proper, considering that the licences had been allowed to continue beyond the normal point of expiry because of the need to await the outcome of the legal proceedings.

The Mountain Lead Mines Company and other persons, seeing this new situation, applied for a new prospecting licence. Since they could not have a renewal, they asked for a new licence. I can tell the hon. Gentleman that, in view of the past association of the Mountain Lead Mines Company with the area, and in the circumstances prevailing at that time, the Government of Hong Kong were of the opinion that, if a licence were to be granted at all, it should be granted to the Mountain Lead Mines Company. That was their view at the time; I have seen the documents which passed between them and the Colonial Office about it.

I say "if a licence were to be granted at all" because, in the meantime, there had been a new development. The people of Tai Mo Shan had not objected to the grant of the earlier licences. They now—speaking of the period from the middle or even the earlier part of 1957 onwards, from the time the legal proceedings had come to an end—objected strongly. I find it difficult to discover exactly what their motives were. It may be that they were influenced by the publicity to which the trial had given rise. At any rate, strong representations were made by them urging their objections to any grant of mining licences in the area.

These representations were of a character which the Government of Hong Kong really felt that they could not overlook. Therefore, after weighing the matter carefully, on 2nd February, 1959, the applications of all concerned for licences were refused.

Mr. Burns has pressed for an inquiry on three main grounds. First of all, he has urged the important public interest that, as a result of refusing a licence, there has been loss of employment and revenue suffered by the people and the Government of Hong Kong. It is quite true that about 60 people have lost jobs which they had, and it may well be that more who might have been employed had the venture gone forward will not now obtain employment, at any rate in the short run. On the other hand, the objections of the people of Tai Mo Shan are not by any means frivolous.

It is an agricultural community, quite distinct, as the hon. Member will know, from the town of Hong Kong. There is no doubt, though it is hard to say to what degree, that mining development would have affected both their cultivation of crops and to some extent, I think, their water supply. The unemployed in the town of Hong Kong would have gained, the country people of the Leased Territories would have lost. It is hard to strike a balance here. Whether the prospective revenue would have materialised it is hard to say. My information was that no mining in the real sense of the word was done, and that it was rather prospecting, and that such galleries as were sunk were of a prospecting character. Mining is a risky business and it is hard to say whether revenue would or would not have materialised. Of course, we should like to see more development in Hong Kong because of the terrible economic pressures on the Colony, but at the same time I do not think a case has been made for challenging the decision of the Hong Kong Government on this aspect of the matter, or for asking for an inquiry into it.

I turn to the second aspect. Mr. Burns implies that the fact that he disclosed corruption has angered the Hong Kong Government, and that this is the real reason why no new licence was granted to Mountain Lead Mines Company Ltd. Having looked into the case as well as I could from this distance, I am satisfied that there is no truth in this charge. There was a serious case of corruption. Mr. Burns brought it to light. His action in so doing was a public spirited action, and we recognise, and the Hong Kong Government recognise, it as such.

On the other hand, it has to be said that the licence which he had acquired, which the Mountain Lead Mines Company had acquired, although an illegal licence in the sense that it was wrongly granted by reason of the corruption, did run its full term, and the company did get a licence for the period for which it had contracted, that is for the full six months. No new licence was issued for reasons not connected with the affairs of Bohespic and Mountain Lead Mines, but because of the change of view of the people of Tai Mo Shan.

Thirdly, Mr. Burns claims that he has suffered severe personal loss by reason of his action, and so has the Mountain Lead Mines Company. He argues from this that the grant of a new licence would only be fair in view of his loss incurred by his public spirited action. I accept that he has suffered loss. I accept that his conduct gives ground for giving his and the Mountain Lead Company's application very sympathetic consideration, but I do not think it would in itself justify over ruling the objection of the villagers of Tai Mo Shan.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Eleven o'clock.