TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 108

CONFIDENTIAL

2.

the

details of the guarantee are just/matters to

which the opposition will give a thorough airing.

4.

political

The unacceptable/risk lies not in the fact

that the Hong Kong Government must give a guarantee

but in the demand that the guarantee should be

enforceable against its London assets. The

implication that would immediately be read into

this requiramat is that H.M.G, reckons that the

Colony's only worthwhile assets are those which

are held in London. The impact of this on

confidence in and outside Hong Kong would be

shattering; the whole purpose of the exercise

would be lost.

5. We therefore welcome your alternative

proposal involving promissory notes. The

arrangement could equally attract publicity but it is

not susceptible of the dangerous inferences which

must put the previous suggestion out of court.

The Hong Kong Government see no difficulty in

meeting your wish that your bankers should receive

payment in London without further specific

authorisation.

6.

There is one further point in your letter

which we must take up and that concemia your

query as to how the Hong Kong Government will

satisfy Costains that the firm will be paid if the

contract cost exœooûs £10 million. The same

point arises, of course, on the condition laid

down in paragraph 6(e) of the agroadbrief for

Lord Shepherd. As Cotterill will recall,

Cowperthwaite made the point that Costain's, and

CONFID NTIAL

/the