HL Deb 14 May 1958 vol 209 cc299-304

2.35 p.m.

LORD KILLEARN

My Lords, I beg to ask the Question which stands in my name on the Order Paper.

[The Question was as follows:

To ask Her Majesty's Government (1) if they can make a statement regarding the Agreement reported in the Press between the Government of Egypt and the shareholders of the Suez Canal Company involving payment of twenty-nine million pounds; and (2) whether in particular any of Egypt's blocked sterling will be released in order to be utilised for the payments to be made by Egypt under this Agreement.]

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)

My Lords, I will, with permission, publish the full text of this Agreement in the OFFICIAL REPORT. This document sets out Heads of Agreement, and the final Agreement has still to be completed and presented to the shareholders. Its main features are that the Company retains its assets and liabilities outside Egypt while Egypt retains the Company's assets and liabilities in that country. In addition, the Egyptian Government is to pay the Company as compensation the equivalent of £E28.3 million in French francs and sterling calculated by reference to the International Monetary Fund parity between the Egyptian pound and the United States dollar. Of this, £E5.3 million, which represents the equivalent of dues paid to the Company in London and Paris after July 26, 1956 (the date of the Egyptian nationalisation decree) is already in the Company's possession. The balance is to be paid in six annual instalments starting on January 1, 1959. Forty per cent. will be paid in sterling. The payment of the instalments may be advanced if Her Majesty's Government permit a specific release for this purpose or in the event of the release of the whole of the Egyptian No. 2 Account.

In all the circumstances Her Majesty's Government regard this Agreement as reasonably satisfactory. While the Egyptian nationalisation decree left many details unsettled, the present Heads of Agreement appear to secure a more advantageous financial settlement to the Company. In particular the Company retains its profitable assets outside Egypt and the payment of instalments is guaranteed in transferable currencies at a fixed rate of exchange. I have no doubt that the Company will in due course explain in more detail the precise financial consequences.

As regards the second part of the noble Lord's Question, any question of a special release from Egypt's sterling balances will arise only after the present negotiations with Egypt for the settlement of the claims of British citizens have been concluded.

Following is the text of the Agreement:

HEADS OF AGREEMENT

The representative of the Government of the United Arab Republic (as successor to the Government of Egypt), and the representatives of the Suez Stockholders, namely, the shareholders, the holders of founder shares, and the holders of the Parts Civiles (Société Civile pour le recovrement des 15% des produits nets de la Compangnie Universelle du Canal Maritime de Suez attribués au Gouvernement egyptien), hereinafter referred to as "the Stockholders", have agreed the following Heads of Agreement:

1. As a full and final settlement of the compensation due to shareholders and holders of founders shares as a consequence of the Nationalisation Law No. 285 of 1956, and in full settlement of the claims of the holders of the Parts Civiles, the Government of the United Arab Republic will make a payment equivalent to £.E 28.3m.(twenty-eight million and three hundred thousand Egyptian Pounds) and will leave all the external assets to the Stock—holders.

2. In consideration of the above, the Stockholders will accept responsibility for all liabilities outside Egypt as of July 26, 1956, including liability for the service of the outstanding debentures (principal and interest) and for pensions in accordance with paragraph 4 (b) below.

3. The Government of the United Arab Republic will continue to assume responsibility for all liabilities within Egypt as of July 26, 1956, including liability for pensions in accordance with paragraph 4 (a) below.

4.—

  1. (a) The Government of the United Arab Republic will assume liability for pensions, as follows:
    1. (i) Pensions already granted as of July 26, 1956, and being paid by Egypt to pen—sioners resident in Egypt on the date of signature of the present Heads of Agreement;
    2. (ii) Pensions accruing to staff who were employed, in the service on July 26, 1956, and who are still in the service of the Suez Canal Authority, or who, having remained in the Authority's service, retired on pension after that date in accordance with the regular pensions regulations.
  2. (b) The Stockholders will assume liability for all pensions other than those specified in (a) below.
  3. (c) Each party to these Heads of Agreement will afford facilities for the preparation of lists of individual pensioners falling within the various categories mentioned in this paragraph 4 in order that the liability for payment of pensions to each individual may be properly determined.
  4. (d) The Stockholders will pay to the Gov—ernment of the United Arab Republic the capital value of the pensions payable to persons who, having remained in the Authority's service after July 26, 1956, retired on pension after that date in accord—ance with the regular pensions regulations, but ceased to reside in Egypt prior to the date of the signature of these Heads of Agreement and who, at the date of signature of these Heads of Agreement, do not receive their pension from the Stockholders.
  5. (e) liability for pensions after the date of signature of these Heads of Agreement will not be affected by any subsequent change of residence by a pensioner.

5. The payment specified in paragraph 1 will be made as follows:

  1. (a) An initial payment of £E5.3m. (Five million and three hundred thousand Egyp—tian Pounds), through the retention by the Stockholders of the transit tolls collected in Paris and in London since July 26, 1956.
  2. (b) The balance in instalments as follows:

6. The instalments specified in paragraph 5 (b) above will be free of interest and will be payable in Pounds Sterling in London or in French Francs in Paris, calculated at the fixed rate of U.S.$2.8715576 to £E1. Not less than 40 per cent. of each instalment shall be payable in Pounds Sterling.

7.—

  1. (a) If the Government of the United Kingdom provides a special release from Egypt's No. 2 Sterling account for the specific purpose of making advance payments on the instalments specified in paragraph 5 (b), amounts so released will be paid over forth—with by the Government of the United Arab Republic for application to the payment in advance of the two next maturing instalments specified in paragraph 5 (b).
  2. (b) In the event of a release by the Govern—ment of the United Kingdom of the total of Egypt's No. 2 Sterling account, the Govern—ment of the United Arab Republic will pay over forthwith an appropriate amount of the funds so released for application to the pay—ment in advance of the two next maturing instalments specified in paragraph 5 (b).
  3. (c) If either of the releases under (a) or (b) above takes place before the effective date of the final agreement referred to in paragraph 9 below, the appropriate amounts will be paid over forthwith on the effective date.

8. The conclusion and implementation of the final agreement referred to in paragraph 9 will be done in such a way that the rights and liabilities attributed to the Stockholders under the present Heads of Agreement are effectively exercised and assumed by an entity acceptable to both parties as representing regu—larly all the Stockholders and duly qualified to give full and final discharge to the Govern—ment of the United Arab Republic.

9. In view of the fact that the present Heads of Agreement have been negotiated under the good offices of the International Bank for Reconstruction and Development, the Bank have accepted the capacity of the signatories for the purposes of concluding the present Heads of Agreement, the parties hereby request the Bank to continue its good offices until the conclusion and documentation of a final agreement implementing these Heads of Agree—ment and to act as fiscal agent for the purpose of receiving and paying out the monies pro—vided for in paragraphs 4 (d), 5 (b) and 7 above.

Done in triplicate at Rome on 29th April, 1958, in the presence of a Vice President of the International Bank for Reconstruction and Development. One copy to be retained by the Government of the United Arab Republic; one copy to be retained by the Representatives of the Suez Stockholders; and one copy to be deposited in the archives of the Inter—national Bank.

On behalf of the Government of the United Arab Republic:

Signé: Abdel Galeel E1 Emary.

On behalf of the Suez Stockholders:

Signé: J. Georges-Picot.

Charles M. Spofford.

John Foster.

Witnessed by:

Signé: W. A. B. Iliff,

Vice-President.

International Bank for Reconstruction and Development.

LORD KILLEARN

My Lords, may I thank the noble and learned Viscount for his full Answer and especially for saying that the initialled Agreement will be circulated. May I call attention to the fact that Article VII of that Agreement does, in fact, forecast the possibility of the release of some of the blocked sterling? If that were done, I wonder how it could be reconciled with the assurance which the Foreign Secretary gave in another place on May 16, 1957, as follows [OFFICIAL REPORT (Commons) Vol. 570, col. 584]: The blocked accounts are our security for the claims of British subjects against the Egyptian Government. We have no intention of whittling away that position. The House can be sure of that. Does not this Agreement contemplate that very whittling away against which the assurance was given in the other place?

VISCOUNT HAILSHAM

My Lords, I think I made it plain that any question of a special release from Egypt's sterling balances will arise only after the con—clusion of the present negotiations. I should have thought that that answered the question.

LORD SILKIN

My Lords, could the noble and learned Viscount say what is the relationship between the value of the assets confiscated and the amount of com—pensation?

VISCOUNT HAILSHAM

My Lords, I am sorry, but I think I should require notice of that question. The figures are extremely complicated, and if I gave a spot figure I should probably be mis—leading; but if the noble Lord wants to have information he shall surely have it.

LORD KILLEARN

My Lords, may I thank the noble and learned Viscount once more for what he said, and especially for saying that the Agreement will be circulated, so that noble Lords can judge for themselves in the light of the discus—sion to-day?

LORD SILKIN

Perhaps I can make my question a little plainer. The offer of the Egyptians was to pay the value of the shares at par at the time of the original confiscation. Is the Agreement based upon that, or has a different figure been arrived at?

VISCOUNT HAILSHAM

The figure has been arrived at as the result of negotiation, which seldom means an exact valuation.

LORD SILKIN

This is a different figure. Would the noble Viscount look into the matter?

VISCOUNT HAILSHAM

I will cer—tainly try to get for the noble Lord any information which he requires. I should like to see the precise form of the information on the figures, and then I shall be sure of giving an answer which is at least as correct as I can make it.

LORD KILLEARN

May I raise one further point? Can the noble Viscount confirm the fact that the British Govern—ment hold something over 44.1 per cent.—we will say 45 per cent.—of the Canal Company shares?

VISCOUNT HAILSHAM

My Lords, before April 21 Her Majesty's Govern—ment held 44 per cent. of the shares. Since then the percentage has altered because there has been a reorganisation of the capital structure; and the voting rights, as I am sure the noble Lord knows, do not exactly, in the case of this company, follow the percentage of shareholding, so that it would be mis—leading to refer to the voting rights as corresponding either with the old per—centage or with the new.

LORD KILLEARN

I thank the noble Viscount.