97499 St.5.
NOTHING TO BE WRITTEN IN THIS MARGIN
Copies as in
Last
last para.
ANG
24j11
Registry H. K. & W. I. C'
No.
HWB 21/5
DRAFT
LETTER
To:-
Type 1 +
From
93
Top Secret. Secret.
Confidential. Restricted. Unclassified.
Sir Anthony Percival, CB., Sir A.Galsworthy
Secretary,
Exports Credit Guarantee Dept.'
Barrington House,
59-67 Gresham Street,
London, E.C.2.
Telephone No. & Ext.
Department
Hong Kong Cross Harbour Tunnel
I think you will know that for some
considerabletime now we, ECGD, the Board of
Trade and the Treasury have been engaged in lengthy talks, 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 these
discussions has been the conditions under
which ECGD cover would be granted for the
£10 million loan from Lloyds Bank. In fact
it is the Hong Kong Government who would
guarantee the loan, and HMG would undertake to
stand behind the Hong Kong Government as to
half of the amount involved in the event of the
guarantee being invoked.
2.
At one point ECGD stated that they would require the Hong Kong Government's guarantee
to be given in the form of a lien on the Hong Kong Government's funds held in London. We
pointed out that this would be absolutely
impossible politically: it would give the
world the impression that HMG believed that
the only assets of the Hong Kong Government
which had any value as security were those held in London, and consequently that HMG had no confidence in Hong Kong or its future. This was accepted by the Treasury and by
ECGD; and at a meeting held in the Commonwealth
Office on October 27th, at which
representatives of the Hong Kong Government
were also present, we thought we had succeeded in hammering out an acceptable alternative.
The essence of this was that the Hong Kong Government's guarantee would take the form of an irrevocable authority to their London
Agents (i.e. the Crown Agents) to honour within
14
Page 45Page 46