IMMEDIATE
YPHER/CAT A
FM FCO 061625 Z
DEDIP SECRET
DESKBY 970190 Z
RECAVIO I REGISTRY MO, A1
DEC:973
NKK 21/4
BECKET DECIOT
TO IMMEDIATE GOVERNOR HONG KONG TEL NO 1251 OF 6 DECEMBER. 1973
PERSONAL FOR GOVERNOR OF HONG KONG FROM SECRETARY OF STATE FOR
TRADE AND INDUSTRY.
YOUR TELEGRAM NO 1397: MASS TRANSIT RAILWAY.
3590
325
I PUT THE SUBSTANCE OF YOUR ADVICE TO WILTSHIRE, MANAGING- DIRECTOR OF GEC-ELLIOTT AUTOMATION, WHO IS MAINLY RESPONSIBLE FOR
THE BRITISH SIDE OF THE BID. HE TOLD ME THAT FOR THE MECHANICAL
AND ELECTRICAL EQUIPMENT WHICH COMPRISED MOST OF THE BRITISH
CONTRIBUTION HE WAS CONFIDENT THAT A HIGHLY COMPETITIVE PROPOSITION
HAD BEEN LAID BEFORE THE STEERING GROUP. THE GOODS WHICH WOULD BE
SUPPLIED WERE BASED LARGELY ON TESTED DESIGNS. THE UNCERTAINTIES
ON THIS SIDE WERE THEREFORE FAR SMALLER THAN IN RELATION TO THE
CIVIL ENGINEERING. IF ANYTHING COULD BE DONE TO PARE THE
ANGLO-ITALIAN BID IT WOULD BE ON THE CIVIL ENGINEERING SIDE. SINCE SPEAKING WITH ME, WILTSHIRE HAS TELEPHONED BOTH PICAGLI AND HIS OWN TEAM IN TAIWAN AND HAS REPORTED THROUGH THE DEPARTMENT THAT
ON COST ESCALATION THE ANGLO-ITALIAN GROUP WERE PREPARED TO TAKE ANY PERCENTAGE BETWEEN ZERO AND TEN PER CENT PROVIDED THAT ABOVE THE CEILING A FORCE MAJEURE CLAUSE OPERATED. THE STEERING GROUP WERE WELL AWARE OF THIS AND HAD RECORDED THE OFFER IN THE MINUTES OF THEIR MEETING WITH THE ANGLO-ITALIAN GROUP, THE ANGLO-ITALIAN GROUP COULD NOT SEE THEIR WAY TO CARRYING THE RISK THAT THE
ESCALATION FIGURE MIGHT BE BETWEEN FIVE AND TEN PER CENT. ON THE OTHER HAND, THEY COULD NOT SQUARE THE FIGURES IN PARA 4 OF YOUR TELECRAM UNDER REFERENCE WITH THEIR SUBMISSION TO THE STEERING GROUP. THE PRICE THEY HAD PUT IN WAS AROUND HK DOLLARS 4,000 MILLION WITH A CEILING OF HK DOLLARS 5,876 MILLION. WILTSHIRE WAS CONCERNED THAT SOME UNKNOWN ADDITIONS SEEMED TO HAVE BEEN LOADED ON TO THE ANGLO-ITALIAN BID. SO AM 1. THE MORE SO AS YOU QUOTE THE JAPANESE FIGURE TO ME AT A STRAIGHT CONVERSION RATE FROM THE YEN
WHICH IMPLIES THAT YOUR ADVISERS HAVE NOT MADE ANY MATCHING ADDITIONS TO THAT FIGURE, I AM SURE, HOWEVER, THAT I CAN RELY ON YOU TO SEE THAT LIKE IS COMPARED WITH LIKE WHEN THE ISSUES ARE
PRESENTED TO EXCO.
SECRET
2
/ I GATHER