CYPHER/CAT A
ROUTINE HONG KONG
TELEGRAM NUMBER 19
CONFIDENTIAL
PERSONAL FROM GOVERNOR.
CROSS- HARBOUR TUNNEL.
CONFIDENTIAL
TOP COPY
H
TO FOREIGN AND COMMONWEALTH OFFICE
8 JANUARY 1969
I UNDERSTAND THAT HANNAM, SENIOR BRITISH TRADE COMMISSIONER,
HAS ALREADY REPORTED THE OFFER BY SOCIETE GENERALE OF PARIS
TO FINANCE 75 PER CENT OF CONTRACT PRICE ON CONDITION THAT
CONSTRUCTION CONTRACT IS AWARDED TO THE FRENCH FIRM DUMEZ.
THIS OFFER IS FREE OF ANY GUARANTEE EITHER BY PROMOTERS OR
BY THIS GOVERNMENT AND IS TO BE SECURED AGAINST THE GROSS
RECEIPTS FROM THE TUNNEL. IT IS UNDERSTOOD THAT THEY HAVE
SECURED EXPORT CREDIT GUARANTEE FROM COFACE, FRENCH EQUIVALENT
OF E.C.G.D. DETAILS OF FINANCIAL ARRANGEMENT ARE NOW UNDER
NEGOTIATION BUT NEGOTIATIONS WITH DUMEZ HAVE NOT YET BEGUN.
THE TUNNEL COMPANY IS NOT YET IRREVOCABLY COMMITTED.
સો
2. AS YOU ARE AWARE, THIS GOVERNMENT HAS AGREED IN PRINCIPLE
TO PROVIDE 25 PER CENT OF THE TUNNEL COMPANY EQUITY AND, IF FRENCH FINANCE IS SUCCESSFULLY NEGOTIATED, I SHALL FEEL
BOUND TO IMPLEMENT THIS.
3. THE OBJECT OF MY APPROACH IS TO EMPHASISE THE ADVERSE
POLITICAL CONSEQUENCES HERE IF IT IS PUBLICLY DEMONSTRATED
THAT A FRENCH STATE-OWNED BANK AND AN OFFICIAL
FRENCH CREDIT INSTITUTION SHOULD APPEAR TO HAVE MORE CONFIDENCE
IN THE FUTURE BOTH POLITICAL AND ECONOMIC, OF HONG KONG THAN HAS AN AGENCY OF THE BRITISH GOVERNMENT. IT IS, OF COURSE, PUBLIC KNOWLEDGE THAT NEGOTIATIONS WITH E.C.G.D. BROKE DOWN
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LARGELY BECAUSE OF THEIR INSISTENCE, BY REASON OF THEIR ASSESSMENT OF THE POLITICAL RISK, ON WHAT WAS EFFECTIVELY A GUARANTEE
ARCHIVES No.311
- 9 JAN 1969
HKK 21/4
CONFIDENTIAL
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