CONFIDENTIAL
112634)
MDHIAN 8275*
REPEATED REQUESTS (MOSTLY EXCHANGES BETWEEN MYSELF AND SIMON MURRAY). THEY PROBABLY QUALIFY UNDER D(III) BUT IT IS NOT CERTAIN THEY MEET ANY OTHER OF THE REMAINING CONDITIONS AT D. THE COMMITTEE HAS ASKED FOR MORE DETAILS ABOUT BOARD STRUCTURE AS WELL AS A BREAKDOWN OF THE GROUP'S MAIN COMPONENTS IE CHEUNG KONG, HUTCHISONS, HONG KONG ELECTRIC AND CAVENDISH, THEIR MANAGEMENT STRUCTURES AND A COMPLETE LIST OF SUBSIDIARIES. I HAVE PUT THESE POINTS TODAY (14 JANUARY) TO SIMON MURRAY. WHEN WE HAVE THE FULL INFORMATION WE WILL RECONSIDER THEM.
5. THE COMMITTEE RECOGNISED TOWN GAS WILL QUALIFY UNDER SECTION D(III) BUT HAS ASKED FOR MORE INFORMATION ON THE COMPOSITION OF THEIR BOARD TO CONSIDER FURTHER CRITERION DCI). IT SEEMS LIKELY THAT THEY WILL BE ABLE TO MEET THIS.
UN (see telno 20)
6. THE COMMITTEE MEMBERS ARE CLOSE TO ACCEPTING THAT MTR WILL QUALIFY UNDER DCIII) AND PROBABLY UNDER DCI) BUT HAVE ASKED FOR INFORMATION ON THE COMPOSITION OF THEIR BOARD. I HAVE SOUGHT TO STEER THE COMMITTEE AWAY FROM THIS AFTER RECEIPT OF THE LEGAL ADVISER'S VIEWS IN YOUR FAXED LETTER OF 7 JANUARY BUT THE COMMITTEE HAVE RESPONDED THAT FOR OUR DELIBERATIONS TO HAVE CREDIBILITY WE MUST BE CONSISTENT, AND THAT IF THEY MEET OUR GUIDELINES THEN THEY SHOULD BE INCLUDED.
7. KCRC ARE ALSO THOUGHT TO MEET CONDITION DCIII) BUT THE COMMITTEE HAS ALSO ASKED FOR MORE INFORMATION ABOUT MANAGEMENT. THEIR BOARD IS ALMOST CERTAINLY NOT PREDOMINANTLY BRITISH, SO THEY WILL BE DIFFICULT. NOR DO THEY HAVE AS MANY BRITISH SENIOR MANAGERS BELOW BOARD LEVEL AS MTR, ALTHOUGH THEY DO HAVE SOME.
8. MY OWN VIEW, WHICH I HAVE EXPRESSED TO THE COMMITTEE, IS THAT WE WILL FIND OURSELVES IN DIFFICULTY IF WE ACCEPT ON OF HUTCHISON OR WHARF AND NOT THE OTHER, AND DITTO FOR MTR AND KCR. ALSO THAT THE CLAIMS OF HUTCHISON AND WHARF ARE BETTER THAN THOSE OF THE RAILWAYS BECAUSE THE LATTER ARE GOVERNMENT CORPORATIONS FIRMLY ANCHORED IN HONG KONG FOR ALL THEIR ACTIVITIES, AND THUS ARE DIFFICULT TO DESCRIBE AS BRITISH UNDERTAKINGS. OF COURSE THE ACCEPTANCE OF ANY AS BRITISH UNDERTAKINGS WILL CAUSE APOPLEXY IN SOME QUARTERS (H KESWICK FOR EXAMPLE, BUT PERHAPS ELSEWHERE AS WELL). MY GUESS IS THAT THE COMMITTEE CAN BE STEERED TOWARDS ACCEPTING BOTH WHARF AND HUTCHISON AND AGAINST ACCEPTING THE RAILWAYS, BUT THAT IS NOT THE MOOD OF THE COMMITTEE AT PRESENT. ANY UPDATE ON MINISTERS' THINKING ON THESE CANDIDATES WOULD BE VERY HELPFUL. THE UTILITIES ARE DIFFICULT. CHINA LIGHT AND POWER
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