CONFIDENTIAL
It was
Japanese demanded a guarantee from the Hong Kong Government.
validated for negotiation by the Hong Kong Steering Group, with
the proviso that Hong Kong did not promise to give the guarantee.
4.
Extensive negotiations followed to try to get the new
Anglo-Italian bid into a shape in which it could be validated for
negotiation in competition with the Japanese proposals. After much
discussion the Anglo-Italians produced firm proposals which met
Hong Kong's conditions in all respects except price. Because of the
risk of cost escalation, the consortium continued to insist on some
escalation provisions. They also proposed that, since the sub-soil
surveys would not be completed until the spring of 1974 their price
should, for the moment, be quoted within a range. The top of this
range was about 20% above the Japanese figure. The bottom was well
below it.
5.
However, when the two bids were considered on 11 December
by Hong Kong's Executive Council, together with the Anglo/French/
German proposals, ExCo decided to validate only the Japanese
proposals for negotiation. This meant that unless these negotiations
failed the Anglo-Italian proposals, which had been strongly backed
by HMG would no longer be considered. ExCo's reasons were that since
the Japanese had made a firm offer within Hong Kong's ceiling price
and since this offer was only open for a limited period, it would be
too risky not to close with it in the uncertain hope of a better
bach
ExCo clearly believed that this
The Governor has said that they took
final offer from the Anglo-Italians.
offer would not be forthcoming.
fully into consideration the political desirability of steering the
business towards the UK, but decided that this could not be overriding.
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16.