CONFIDENTIAL
Reference
TS LO
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RECORD OF CONVERSATION OVER LUNCH, 30 JULY 1991
I lunched today with Mr T S Lo. It was at his invitation. No-one else was present. I have known T S Lo reasonably well since shortly after my arrival. He appears to regard me as a channel to the British government separate from the government of Hong Kong and as I have reported, has made offers of mediation, eg on the airport problems between HMG and the PRC government.
1.
2.
TS Lo began by commenting on the airport and saying that I must be pleased with the recent turn of events which he reminded me was exactly as he had predicted before I went on leave. He said little more, but I think was referring to the need for direct consultation between HMG and the PRC without Hong Kong Government involvement and perhaps the need for an intermediary (in which role he had earlier offered himself, as I reported).
3. He then said with considerable emphasis, to the point where I suspect it may have been the main purpose of the lunch, that China would give full co-operation on the airport, and would hope to see it built as rapidly as possible to a very high standard, so long as everything was above board and no deals were made to favour local interests. When I said that every- thing I had seen indicated that all the tendering would be open and competitive and that there was little scope for any deviation from the straight and narrow for this, he replied that he had heard that Li Ka Shing was to be given the development rights for the old Kai Tak airport area. Such a move he said would be most unwelcome to China. Macau airport had been brought to a halt because China did not like the deals which have been put together to favour a clique of local businessmen, including Stanley Ho, and China could do the same over the Hong Kong aiport if deals of that sort were done. If land were sold to Li Ka Shing or anyone else as a result of the airport project, at prices less than that which China would expect to realise at an auction, then the Hong Kong Government would be expected to make up the difference to China. I simply replied that I had heard no suggestion that Li Ka Shing, or anyone else for that matter, was to be advantaged in this way.
4.
At another point T S Lo commented that the Chinese (he did not specify who) had told him that he could expect to have a position of considerable influence in Hong Kong after 1997. They had also said that that message was neither to be read as indicating that he would be made Chief Executive, nor that he would not receive that post. That was a matter which the Chinese had not yet considered. TS Lo said he was quite happy with that situation. He fully intends to stay here and he hoped he would have a useful role to play, but he was not bothered about what that role might be. (Comment. This was the first time T S Lo has ever made reference to me to any link between himself and the post-1997 Chief Executive of Hong Kong although it is of course widely said in Hong Kong that it is a role which he covets.) I made no comment on this.
15.
CODE 18-77
CONFIDENTIAL