COPY
SIZATION
CONFIDENTIAL
INWARD TELEGRAM
TO THE COMMONWEALTH OFFICE
(The Secretary of State)
FROM HONG KONG (Sir D. Trench)
Cypher
D. 7th April, 1967. R. 7th
10.45 hrs.
11
Akk
12
1967
Li
19
LART
REF
PRIORITY
CONFIDENTIAL
No. 439.
(15)
Your telegram No. 649.
Cross-Harbour Tunnel.
While I can well appreciate E.C.G.D.'s concern, there are formidable difficulties in this proposal. are as follows:
(a)
These
If this Government were to guarantee the E.C.G.D. it could not decline similar guarantee in the event that a non-British contractor were to be considered for the contract. I certainly could not contemplate asking my Legislature to commit Hong Kong funds in order to ensure that the contract went to Britain.
(b) The proposed equity participation of twelve and
a half per cent or 15 million dollars whichever is the lesser, although agreed by Executive Council, still requires a resolution of Legislative Council. Although the resolution is likely to be adopted, some opposition is expected and this would be sharply accentuated if Government were also to propose general guarantees in addition.
REF.
(30)
(c)
RECEIVED IN **IVES N~.
10 APRIES
The Cross Harbour Tunnel Co. has not yet submitted the consultant's report on the tenders or final details of their financing plans, and until we see them we cannot be sure even that they fulfil the conditions laid down for the equity participation.
(a) Throughout the negotiations leading to this
Government's letter of intent to participate, we have resisted giving any lead in this venture, maintaining that the project did not merit priority in the light of more pressing commitments. Government equity participation to the extent indicated was reluctantly agreed primarily to inspire confidence and help raise funds from private sources.
e)
(HWA 2/5 (0)
If this Government were to guarantee 20 million dollars of the loan this would mean that it would in effect have at risk 35 million which is a figure we simply could not contemplate. Moreover, it would appear that this Government would then be under- writing (and without interest) the E.C.G.D. which
/would