GR 130
IMMEDIATE
CYPHER/CAT A
SECRET
RECEIVED IN REGISTRY No.52
13 JAN1975
HILI
FM HONG KONG 138215Z
MK11 21/6
SECRET
7.c
TO IMMEDIATE F C O TELNO 44 OF 13 JANUARY 1975
PERSONAL FOR SIR DUNCAN WATSON.
MASS TRANSIT RAILWAY.
THE JAPANESE CONSORTIUM HAVE INFORMED THE PROVISIONAL AUTHORITY
THAT IT IS UNABLE TO CONCLUDE NEGOTIATIONS FOR A CONTRACT. THEIR
EXCUSE FOR FAILING TO MEET THEIR MORAL AND COMMERCIAL OBLIGATIONS
UNDER THE LETTER OF INTENT SIGNED LAST FEBRUARY IS THAT THEY COULD
NOT HAVE REASONABLY FORESEEN THE CURRENT DIFFICULTIES FACING THE
JAPANESE ECONOMY. THIS WE DO NOT ACCEPT AND, UNLESS THE CONSORTIUM OFFERS US A REASONABLE SUM BY WAY OF COMPENSATION, WE SHALL BE
FORCED TO SPELL OUT OUR VIEW OF THE CONSORTIUM'S PERFORMANCE IN
SOME DETAIL.
2. ON TUESDAY (14TH) EXECUTIVE COUNCIL WILL BE ASKED TO ADVISE WHETHER WE SHOULD PROCEEED WITH THE CONSTRUCTIONS OF A MODIFIED INITIAL SYSTEM ON THE BASIS OF A MULTI-CONTRACT APPROACH OR DROP. THE PROJECT ALTOGETHER. THE ARGUMENTS FOR AND AGAINST EACH COURSE OF ACTION AND THE RECENT HISTORY OF THE NECOTIATIONS ARE SET OUT IN MEMORANDUM XCS (75) 1, A COPY OF WHICH WILL BE IN BAG NO. A5
LEAVING HERE ON TUESDAY.
MACLEHOSE
FILES
HKIOD
FED
TRED
PS
FS LORD GORONWY-ROBERTS
PS/PUS
SIR D WATSON
MR WILFORD
MR MARSHALL
SECRET