69 Mr R.R. Sedgwick, Official Secretary of U.K. High Commission in Australia, to Mr F. Strahan, Secretary of Prime Minister's Department

Letter CANBERRA, 3 April 1939

SECRET

With reference to my Secret letter of the 23rd March [1] regarding oil concessions in Timor, I am directed by the High Commissioner [2] to inform you that he has now received a telegram from his Government stating that His Majesty's Ambassador at Lisbon [3] reports that he spoke to the Portuguese Secretary General [4] on the 21st March and emphasised the importance of an early decision regarding Oil Search Ltd.

The Secretary General replied that no further developments had occurred as regards the Japanese, and he promised, so far as Oil Search Ltd was concerned, to speak again to the Minister of Colonies. [5] The Secretary General denied that there had been any application for a Japanese air base in Portuguese Timor and stated that, while it was true that the Governor of Macao [6] was on his way back to Portugal, this was purely for the purpose of consultation on a matter affecting the internal administration of Macao.

His Majesty's Ambassador at Lisbon will continue to press for a decision as regards Oil Search Ltd.

The High Commissioner is also informed that the Governor of Macao, in conversation with a British military officer from Hong Kong, stated in strict confidence that the matter on which the Portuguese Government desired to consult him was connected with Japanese concessions in Timor. It was gathered that the Japanese threatened to foreclose on the Montalvao property [7] and that the Governor was hoping to induce British financial interests to come forward to save the property.

R.R. SEDGWICK

1 Not printed (on file AA: A981, Timor (Portuguese) 22, iv). It acknowledged the letter printed as Document 54 and reported the communication of the information therein to the U.K. Government.

2 Sir Geoffrey Whiskard.

3 Sir Walford Selby.

4 Dr Luiz Teixeira de Sampaio, Secretary-General, Portuguese Ministry of Foreign Affairs.

5 Dr F.J.V. Machado.

6 Dr Tamagnini Barbosa.

7 See Documents on Australian Foreign Policy 1937-49, vol. I, Documents 49, 87 and 100.

[AA: A981, TIMOR (PORTUGUESE) 22, iv]