HWB 21/5
SECRET
COMMONWEALTH OFFICE,
London, 8.W. 1.
17 April, 1968
108
104/í
Hong Kong Tɑmnel
100
Cotterill bás kindly provided me with a copy of Hannam' letter of 11 March to which you referred in your letter of 25 March.
2. Until we received your letter we were not aware that any fresh proposals were under consideration, although we had reason to believe that the Tunnel Company might make fresh proposals in response to a letter from the Hong Kong Government in December (a copy of which I attach - Annex A). The text of this letter reached me through devious (Tunnel Company) channels; I have no reason to doubt its accuracy, although I believe the correct date may have been 18 December. From Government channels
(Mr. Cowperthwaite) I received what purported to be alternative proposals the Tunnel Company had under consideration for submission to the Hong Kong Government (copy attached - Annex B) with an oral indication that the Hong Kong Government would find these unacceptable if they were put forward.
3.
The current proposals of the Tunnel Company (as relayed by Hennam) do suggest that there has been some contact between the Company and the Government, The reduction of the equity from Hong Kong $110m to 890: presumably reflects the effects of devalua- tion and the economies noted in paragraph 4 of Hannam's letter. This brings the share of the Hong Kong Gove. nment well within the terms of its letter of December last year; on this point at least the proposals must be acceptable to the Government.
I am,
4. But 1 agree that there is no indication what position the Hong Mong Government have taken up on the proposals as a whole. however, reluctant to ask them where they stɛnd at this juncture. I wrote to Cowperthwaite last month saying that there were no developments known to us which would indicate that the project might now proceed and reque ting him to consult us about the terms of any announcement which might be made about the abandonment or shelving of the project. I would not find it at all easy to follow this up without leaving the impression that we were now reacting to informa- tion received here about developments and Cotterill has expressly
I would much asked me to safeguard Hannam's position in all this. prefer to see what response my letter brings or alternatively tackle
But if Cowperthwaite when he is here at the end of this month. you and Cotterill consider that there are strong reasons for seeking information immediately, I suppose I could at a pinch write to him again along the lines that when I wrote to him earlier I had
/ overlooked
C.C. Lucas, Esq.,
H.M. Treasury
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