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4. MR ADAMS SAID THAT IF PROJECT FINANCE (BOOT) COULD BE USED
THE CHINESE WOULD HAVE LESS TO CRITICISE BECAUSE THE PROJECT
WOULD HAVE LESS IMPACT ON THE RESERVES. BUT BY REDUCING CONFIDENCE THEY MADE BOOT PROJECTS DIFFICULT TO LAUNCH. THE GOVERNOR AGREED WITH THIS ASSESSMENT: THE LANTAU BRIDGE HAD BEEN CHANGED FROM PRIVATE SECTOR TO GOVERNMENT FUNDING FOR THIS VERY REASON. THE PRIVATE SECTOR HAD SEEMED LIKELY TO INCLUDE AN INSURANCE LOADING IN THEIR PRICE WHICH MADE THE PROJECT MUCH MORE EXPENSIVE. THE GOVERNOR SAID THAT HE WOULD BE PUTTING THIS ARGUMENT TO CHINESE OFFICIALS ON HIS FORTHCOMING VISIT TO BEIJING. A GOVERNMENT PROJECT WAS MORE STRAIGHTFORWARD THAN A PRIVATE SECTOR FINANCED ONE, WHICH REQUIRED SWEETENERS OR GUARANTEED RETURNS FOR THE INVESTORS.
5.
THE SECRETARY OF STATE SAID HE WAS ANXIOUS THAT UK COMPANIES SHOULD BE GIVEN A FAIR CRACK OF THE WHIP AT THE COMMERCIAL ASPECTS, AND HE NOTED THAT AMERICAN COMPANIES HAD WON TWO MAJOR CONSULTANCIES. HE FELT THAT THE CONSULTANTS COULD EXERCISE A DISCREET INFLUENCE IN FAVOUR OF AMERICAN COMPANIES. MR ADAMS SAID THAT WE WERE SURPRISED THAT THE FINANCIAL CONSULTANCY HAD GONE TO MORGAN STANLEY WHO HAD LESS RELEVANT EXPERIENCE THAN UK BANKS SUCH AS HAMBROS OR CHARTERED WEST LB. THE GOVERNOR REPLIED THAT THE HONG KONG GOVERNMENT TENDERING SYSTEM WOULD NOT ALLOW
AMERICAN BIAS AND HE FELT THAT THIS WAS AN UNREALISTIC CONCERN. THE HONG KONG GOVERNMENT WOULD BE DELIGHTED IF UK COMPANIES COULD COMPETE SUCCESSFULLY, AND INDEED A LARGE PERCENTAGE OF THE
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Redacted under FOI exemption 27(1)