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OF 0905OOZ DECEMBER 91
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HKB 182/3
PERSONAL FOR PS/LORD CAITHNESS, BURNS AUSS AND COX, HKD FROM RICKETTS (VISITING)
HONG KONG: AIRPORT
1.
AS MR HEAP WILL BE REPORTING SEPARATELY, A SENIOR REPRESENTATIVE OF TRAFALGAR HOUSE CAME TO SEE LORD CAITHNESS AT MR HEAP'S APARTMENT ON THE EVENING OF 7 DECEMBER, SHORTLY BEFORE THE MINISTER WAS TO SEE THE GOVERNOR. THE MAIN MESSAGE FROM TRAFALGAR HOUSE WAS TWOFOLD: THAT THEY WERE INCREASINGLY NERVOUS ABOUT THE FINANCIAL EXPOSURE, PARTICULARLY IN THE LAST TWO YEARS OF THE PROJECT, IF THEY WERE TO COMPLY FULLY WITH THE TENDER REQUIREMENTS: AND THAT THEY WERE INCREASINGLY DOUBTFUL THAT THEIR JAPANESE PARTNER, MITSUI, WOULD BRING ANYTHING USEFUL TO THE CONSORTIUM (AND THAT INDEED MITSUI MIGHT LEAK COMMERCIALLY SENSITIVE INFORMATION TO OTHER JAPANESE COMPETITORS). THEY AND MR HEAP WAS CONCERNED THAT IF THEY WERE TO DROP ONE MEMBER OF THE CONSORTIUM, THEY MIGHT BE DISQUALIFIED.
2.
LORD CAITHNESS SUBSEQUENTLY RAISED THE AIRPORT PROJECT WITH THE GOVERNOR (AS RICHARD HOARE WAS NOT PRESENT, THERE WILL BE NO HKG RECORD OF THIS CONVERSATION). LORD CAITHNESS MADE THE MAIN POINTS FROM THE NOTE AGREED WITH THE DTI (NIGEL COX'S LETTER OF 4 DECEMBER TO ME) EMPHASISING IN PARTICULAR THE POLITICAL CREDIT WHICH THE PRIME MINISTER HAD PERSONALLY INVESTED IN THE AIRPORT PROJECT AND THE IMPORTANCE OF TAKING ACCOUNT OF THIS WIDER POLITICAL DIMENSION IN MAKING FINAL DECISIONS ON TENDERS FOR THE BRIDGE. LORD CAITHNESS WENT ON TO SAY THAT IT WOULD BE A MATTER OF THE GREATEST CONCERN IF THE BRITISH CONSORTIUM WERE TO PUT IN A COMPETITIVE BID BUT THEN BE DISQUALIFIED FOR EXAMPLE BECAUSE THE
MAKE UP OF THEIR CONSORTIUM HAD CHANGED.
3.
THE GOVERNOR ASSURED LORD CAITHNESS THAT THERE WOULD BE NO QUESTION OF A CONSORTIUM BEING DISQUALIFIED SIMPLY ON THE GROUNDS THAT ITS MAKE UP HAD CHANGED. HKG WOULD OF COURSE NEED TO TAKE A VIEW ON WHETHER THE CONSORTIUM WAS STILL CAPABLE OF UNDERTAKING THE PROJECT. THAT WOULD BE THE KEY CRITERION. THE GOVERNOR ALSO
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