It is one of those old-style Hong Kong apartment blocks, a bulky place with wide corridors and high rooms, big windows and long balconies.

Smith has lived there since 1965, having been attracted to the place originally, he says, because the rent was so low. And even today, if an apartment becomes available, it is hard to let.

The reason is that Cameron Mansions is haunted.

''He's not a bad ghost. He's a happy, randy ghost having a good time. He knocks on ladies' bedroom doors and he touches their bottoms whenever he can,'' said Smith. ''There are no bad vibrations here.'' Cameron Mansions is just off Magazine Gap Road, and to get to the entrance you take an exterior lift from the road. The lift goes up and sideways , like the Peak Tram, for the building is perched on a huge granite-clad platform which caps the top of the mountain.

Here lies the secret of the buried treasure.

The Hong Kong News was a daily English-language newspaper put out by the victorious Japanese forces soon after they had taken Hong Kong in December 1941.

In the edition of Thursday, October 8, 1942, is a brief news item which announces that a large monument ''dedicated to the war heroes who sacrificed their lives in the operations against Hong Kong'' is to be erected on Mount Cameron.

It is clear, however, that this is no simple memorial, for the story goes on to mention the founding of the Hong Kong Shrine, ''which will serve as the centre of the spiritual life of Nipponese here''.

WHAT the Japanese were planning in fact was a spirit house, a Shinto tradition which is believed to date back 2,000 years, where the souls of samurai who fell in battle would find eternal rest and honour.

The largest of these is the Yasukuni Shrine in Tokyo, erected in 1869 by the Emperor Meiji, and venerated by the faithful as a place of repose for 21/2 million souls: Japanese soldiers on suicide missions would often bid farewell to their friends by saying, ''I'll meet you in Yasukuni.'' The Hong Kong Shrine, which would dominate the harbour as a massive symbol of Japan's sacrifice and victory, was therefore going to be of profound importance, and Lieutenant-General Isogai, the Japanese Governor-General of Hong Kong, spared no expense inits creation.

A special committee was sent to Japan to obtain a suitable architectural design. The one chosen was for a 40-metre tower approach by a long flight of steps and with a central door guarded by the statue of a lion. Inside the tower would be a chamber with urns containing consecrated bones.

On December 8, 1942, the first anniversary of Japan's attack on Hong Kong, the foundation stone was laid with great ceremony by Lieut-Gen Isogai - Colonel Noma, chief of the Kempeitai, having the honour of first swing with the pickaxe.

The site, which had previously been occupied by Cable and Wireless buildings, was cleared and work then began, under the management of a Japanese contractor using forced Chinese labour.

Granite for the base and for cladding the tower was quarried in the Happy Valley area, where it was laid out in the grounds of the Craigengower and Police Cricket Clubs for facing.

All of these blocks had to be manhandled up Mount Cameron, a steep incline covered in parts with thick undergrowth.

On the evening of December 8, 1943, the second anniversary of the invasion, another ceremony took place. At sundown, white-robed Shinto priests bearing flaring torches conducted the sacred rites designed to protect the spirits of the dead from the forcesof evil who might otherwise prey upon them.

Among those present was the Japanese sword master Kurihara, who had brought with him a samurai sword, reputed to be 500 years old, which was placed inside a special box and buried 14 metres under the top step of the shrine.

There, if the tale is true, it remains to this day.

Smith, who is one of nature's burrowers, and also a collector of antiques, is convinced that the sword is still down there, somewhere underneath Cameron Mansions.

He has been digging around in the Archives Office and compiled an impressive file on the shrine, but nowhere does it mention that the sword was ever removed.

''The point is, that this sword, if it is 500 years old, dates back to the reign of one of the greatest of all samurai, Miyamoto Musashi.

''Apart from being a great warrior, he also wrote The Book of Five Rings, which is ostensibly about the art of swordsmanship but which really sets out the principles of psychological warfare.

''In fact, it is equally as applicable to modern business techniques, and a paperback version became very popular a few years ago.

''There is even a possibility that this is his sword. And that would make it very important, and valuable, indeed.'' Smith, as an avid follower of auctions, is fully aware that a samurai sword of this period could fetch between US$1 million (HK$7.7 million) and US$2 million if it ever went on the open market.

Collecting Japanese swords is now a small but growing sector of the international arts and antiques markets. Sotheby's, Christie's and other prominent auction houses handle them regularly.

But nowhere is the market so well developed as in Japan, where the swords are heavily laden with spiritual, artistic, historic, social and political significance.

As the samurai were the ruling class in Japanese society, and only they were allowed to carry a sword, this was the most important object they could own.

The Hong Kong shrine was never completed.

One story is that there wasn't enough rice available to feed the Chinese labourers who were building the shrine, but whatever the reason, work slowed down. In July 1945, with the surrender of Hong Kong imminent, the Japanese command issued orders to stopwork, leaving a 20-metre tower of reinforced concrete and brickwork standing forlornly on the hill.

Early in 1946, the British authorities began to deal with the problem of the ''disposal of this abomination'' as it was tersely described in one internal memorandum.

The Archives Office came up trumps for the intrigued Mike Smith, and produced copies of the correspondence between the various government departments. It was therefore possible to track the entire progress of the shrine's destruction.

The structure had comprised 12 heavily reinforced legs resting on an earthwork, granite-clad platform.

An explosion big enough to bring the tower down would have caused damaged to many other buildings in the area, so the engineers had removed eight of the legs and much of the cladding.

Not only would the toppling of the remaining structure by dynamite be immensely satisfying to those who had suffered through the Japanese occupation, it would also ensure that the frame of the tower smashed into small enough pieces to be carted away.

Crowds gathered along Magazine Gap Road, and took up vantage points in nearby looted houses and unkempt tennis courts as the Public Works Department supervised the laying of the charges.

At 4.30 pm on a hot, hazy afternoon, a gong began to pound its warning: then there was a puff of white smoke and an explosion, and the monument, with its legs taken from under it, fell on its side.

''When the smoke cleared, the ruin of Japan's mute symbol of attempted domination was revealed to the cheering crowd,'' reported the South China Morning Post. What was left intact, however, was the base. Cable and Wireless sold this to Mr W K Kwan, father of the actress Nancy, and a well-known property developer.

He built Cameron Mansions on top of the base, installed the exterior lift to transport residents and visitors up to the front door, sold the building to a lady who now lives in Kuala Lumpur, and that was the end of the matter.

Why didn't anybody go looking for the sword at the time? ''I think that everyone was sick of the war,'' said Smith. ''And Japanese swords and other relics were 10 a penny. No one cared.'' Finding the sword has now become something of an obsession with Smith, who thinks he knows where the front step would have been, and wonders if sophisticated sonar devices could pinpoint its exact location in the earthwork base.

He led the way to the parking space under the apartment building.

''That's odd,'' he said. Somebody had drawn a big chalk circle on the very spot below which he estimated the sword to be. ''Must've been kids. I don't think the ghost would do a thing like that.'' The trees were still sighing from the previous day's typhoon. ''Gets spooky here sometimes,'' he muttered.