CODE 18.77
CONFIDENTIAL ●
43
Reference..
11 mm 7/7
42
Mr Duffy
HKK Nox/1
HONG KONG: GENERATING EQUIPMENT FOR THE CHINA LIGHT AND FOWER CO
1. Please see Mr Murray's ephemeral minute of 9 May to Mr Stewart.
2. Do you think you could prepare the progress-note for which Mr Murray has asked? You might find it useful to look at paragraph 6 of the HKD diary for the week ending 25 March and paragraph 4 of that for the week ending 1 April for a summary of how the story began. You will also wish to take account of the telegram that Sir Peter Carey sent to the Governor of Hong Kong after Sir Lawrence Kadoorie's visit to London and the two telegrams from the Governor in return, including the latest one which adds to the information contained in the Governor's letter of 28 April to Sir E Youde. the DOI are, in fact, sending the telegram that we saw in draft yesterday we had better also take that into account.
If
3. Mr Murray has suggested we should make sure that Lord Goronwy- Roberts knows all about the discussions connected with Sir Lawrence Kadoorie's wish to buy British generating equipment and the connected Chinese aspects. We should let Mr Murray know that we put the Minister of State fully in the picture at the time of Sir Lawrence's visit and, as you will recall, if time had allowed a meeting was to I am not have been arranged between the Minister and Sir Lawrence. sure whether the developments that have taken place since Sir Lawrence's visit the DOI's discussions about setting up a joint industry/Whitehall group and the CLP's approach to China Resources justify saying anything more to Lord Goronwy-Roberts at this stage but that is for further consideration.
4.
In preparing a note for Mr Murray I should be grateful if you would also take into account paragraphs 5 and 6 of the letter of 8 May from Mr Wright at Number Ten to Mr Fergusson (copied, among others, to Mr Varley's PS) which contains an account of the Prime Minister's meeting with the Japanese Prime Minister on Sunday evening. As you will see, the Prime Minister asked Mr Fukuda to ensure that any tender that the Japanese might put in for generating
I do not know equipment for the CLP "did not cut any corners". whether the Prime Minister raised this matter on the advice of the DOI but, with respect to all concerned, I am not sure that it was wise of him to have done so. My understanding is that the DOI, with Sir Lawrence Kadoorie's co-operation, have been hoping to come up with a special offer for the supply of British equipment which would make it unnecessary for the CLP to go out to tender. It may still be possible to achieve this objective but there must now be a risk that if the CLP "buy British" without going out to tender the Japanese will accuse them and the Hong Kong Government and, by implication, HMG, of having deliberately denied them the opportunity of getting the business. More than that, I fear that the Japanese will now follow the matter up and before long we may find that the less British oriented members of the CLP board are put under pressure to invite open tenders for the supply of generating equipment. I doubt whether anything can be done to repair the damage, the significance of which I may have exaggerated,
/but
CONFIDENTIAL