Reference....
five years "in circumstances where the intervention of a foreign power in the affairs of Hong Kong has resulted in a change of the law of the Colony so that
(i) the guarantors were unable to implement
their guarantees in Hong Kong; or
(ii) the U.K. lenders were debarred from taking legal action in Hong Kong against the guarantors."
In all other circumstances, and in all circumstances without exception after the first five years, the guarantees of repay- ment were to be expressed unconditionally.
(g) When this department heard and was fully informed of this proposal, it stamped on it hard since it was quite unacceptable that an H.M.G. department should go on record as taking this view of the future of Hong Kong. (It transpired that ECGD thought this one up after consulting the Chairman of Barclays Bank in general terms about investment in Hong Kong, who advised that in the view of the banks the Colony was good for five years and no more!). Colonel Clague had in the meantime
protested with some vigour to Mrs. Dunwoody that this was politically unacceptable proposition.
The
(h) After consultation with this department and the Treasury, ECGD reverted to straightforward joint and several guarantees, without any frills. department urged that the project ought to be judged on a straight commercial basis; that the political risk was no greater than it had always been. In actual terms, if not for the same reasons, ECGD have now reverted to the position they took up in the original negotiations at the beginning of 1967.
for W. S. banter.
w.w.
(w. S. Carter)
19 July, 1968