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CONFIDENTIAL.
93
24th November, 1967.
Heng Kong Cross Harbour Tunnel
I think you will know that for some considerable time now we, RCGD, the Board of Trade and the Treasury have been engaged in lengthy triks, on one or two occasions with representatives of the Hong Kong Government, about the arrangements necessary to enable this project to proceed. The core of those discusci ne has been the conditions under which BGD cover would be granted for the C10 million loen from Lloyds Fank. in fact at is the Hong Kong Government who would guarantee the loon, and B. 9.6. would undertake to stund behind the Hong Kong Government as to half of the amount involved in the event of the guarantee being invoked,
At one point (005 stated that they would require the lɔng Yong Government's guarantee to be given in the form of a lien on the long Kong Government's funds held in Lond n. Te pointed out that this would be absolutely impossible politically: it would give the world the impression that ... believed that the only assets of the Hong Kong Government wh ch had any ve luc as security were those held in London, and consequently that th.e. had no confidence in Bug Kong or its future. This was accepted by the Treasury and by 3000; and at meeting held in the Commonwcdich of ice on October 27th, at which represent Lives of the Hong Kong Government were also present, we
hought we had succeeded in hammering out an acceptable alternative, The essence of this was that the Hong Kɔng Government's guarantee would take the form of an irrevocable authority to their London Vents (1.e. the Crown Agents) to honour within 14 days of their due date promissory notes issu d by the Tunnel ompany and bought by the lending bank.
This, together with the various conditions and stipulations discussed at the meeting, seemed to us a very fair compromise, and we thought that he essentials had been settled, subject to their formal acceptance by the Hong Kong "xecutive and Legislative Councils. e were thus dismayed to get a letter from ECG9 on November 1st, after
Sir Anthony Percival, C., Exports Credit Guarantee Department.
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