TNAG-0097-FCO40-133-Construction-of-a-Cross-Harbour-Tunnel-1968 — Page 79

CONFIDENTIAL

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 concerns your query as to how the Hong Kong Government will satisfy Costains that the firm will be paid if the contract cost exceeds £10 million. As Cotterill will recall, Cowperthwaite made the point that Costains, and the Tunnel Company, must not be informed of any undertaking the Hong Kong Government might give to E.C.G.D. to accept responsibility for ensuring that additional finance is available lest they be encouraged to carelessness or extravagance by the knowledge that the Hong Kong Government will foot the resultant bill. The risk that it may be divulged in the course of necessary legislative processes is one that the Hong Kong Government would have to take (and we for our part assume that if Costains ask for some such guarantee they will seek it, and get it, from the Tunnel Company). distinction between this risk and the risk (mentioned in paragraph 4) of a loan guarantee enforceable against their London assets becoming known publicly is that this is a commercial one which the Hong Kong Government can, however unwillingly, accept, whereas the latter is a political risk quite unacceptable to them.

The

(H.P. Hall)

CONFIDENTIAL