TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 38

HWA 21%

•EXPORT

CREDITS

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ANTEE

DEPARTM

EXPORT CREDITS GUARANTEE DEPARTMENT

P.O. BOX NO. 272, BARRINGTON HOUSE, 59-67 GRESHAM STREET, LONDON EC2

Your reference

CONFIDENTIAL

Telephone: MONarch 6699

Telex: 21821

Our reference SL/CW/24126/35, Part 3.

Mr Carter

6th December, 1967.p

M.Figel Full

My dear Antly my

Hong Kong Cross Harbour Tunnel

ay

Lin

You wrote to me on 24th November about the guaran- tee which the Hong Kong Government might be prepared to give in respect of this contract. I think that there may be some misunderstanding.

The Treasury have been discussing with you and the Hong Kong Government the terms on which they will stand behind any guarantee offered by the Hong Kong Government. It has to be realized that this is quite a different kind of operation from ours, under which we would insure a British bank's loan to the Tunnel Company, and as a con- dition of that loan we would require the Hong Kong Government's guarantee.

The meeting to which you refer, at which represen- tatives of the Hong Kong Government were present, examined a wide range of issues concerning both these operations. As you say, the essence of a form of Hong Kong Government guarantee acceptable to E.C.G.D. was agreed upon as des- cribed in your paragraph 2. The meeting was not, however, a suitable forum for detailed discussion of the proposed loan agreement, of which the guarantee would form a part.

We were consequently surprised when the draft of a Saving despatch was circulated in a form which would have defined in a comprehensive form the terms and conditions of the proposed guarantee. The discussion had been far too general to have arrived at this degree of precision. In order, therefore, to safeguard the position we said that either the Saving despatch should be expressed in general terms, making it clear that details would have to be settled later or the despatch should go into a lot more detail, including in particular the underwriting conditions to which you refer.

Sir Arthur Galsworthy, K.C.M.G.,

Deputy Under-Secretary of State,

Commonwealth Office, Downing Street,

London, S.W.1.

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