TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 7

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Your reference

Dear Canter,

Telephone: MONarch 6699

Telex: 21821

Our reference SL/CW 24126/35

23rd February, 1968.

Hong Kong Tunnel

At his request I saw Michael Montagu yesterday to discuss the Hong Kong Tunnel. He is obviously keen to re-start the project as a purely commercial venture. He seems to take a fairly critical view of the Hong Kong "entrepreneurs" who have been concerned with the Tunnel Company and in particular he recognises their financial shortcomings in what is so largely a financing operation. He also expressed himself as concerned at the effect that the recriminatory atmosphere in Hong Kong could have on the continuing British trade.

2.

In Montagu's view the prospect of the Hong Kong Government taking a more benign view of the prospect is good. (I am taking now of the project as a commer- cial deal; I had assumed and Montagu said nothing to alter this that the "political" proposition is no longer a live one.) Apparently the recent report to the Government of Hong Kong on how to deal with the traffic problem as a whole has come up with schemes which are likely to cost such astronomical sums that the Government is very likely to re-examine more down to earth schemes like the Tunnel as a means of relieving what continues to be a growing traffic problem. The other motive of the Hong Kong interests, and in his view the major one, in their continuing desire to get this project going is that they have spent quite a lot of money which they do not wish to lose.

3.

Montagu said the he recognised that the company as initially set up was hardly adequate for the venture and that the two major companies concerned had not been having too good a time recently; I pointed out that the shareholding structure of the Tunnel Company was now a complete mystery to us but that Hutchisons and Wheelock Marden now certainly appeared to hold a much smaller part of the Tunnel Company shares. Who owned the rest was not clear. We then came to what Montagu had in mind. This is to try to interest a merchant banker, preferably one

W. S. Carter, Esq., Commonwealth Office, Curtis Green,

Victoria Embankment,

London, S.W.1.

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