TNAG-0206-FCO40-242-Construction-of-a-cross-harbour-tunnel--under-Hong-Kong-harb-1969 — Page 56

CONFIDENTIAL

CYPHER/CAT A

IMMEDIATE FOREIGN AND COMMONWEALTH OFFICE

TELEGRAM NO.119

50

TOR CORM COPY

TO HONG KONG

12 FEBRUARY 1969. (HKK 21/4)

CONFIDENTIAL.

YOUR TELEGRAM NO.127.

HONG KONG TUNNEL.

THE POSITION AGREED IN APRIL/MAY 1967 WAS THAT ECGD WERE PREPARED TO ACCEPT THE POLITICAL RISK, AND IN DOING SO EXPECTED TO BE ABLE TO PURSUE ANY REDRESS IN HONG KONG, BUT NOT BEYOND HONG KONG, IN THE KNOWLEDGE THAT IF THE WORST HAPPENED IT WOULD PROBABLY NOT BE POSSIBLE TO PURSUE RECOVERIES IN HONG KONG. 2. THIS IS SUBSTANTIALLY ECGD'S PRESENT POSITION. THEY ARE SORRY REIR REPLY TO HANNAM'S ENQUIRY APPEARED EVASIVE. IT WAS NOT THEIR #TENTION, THE INTENTION IS TO TAKE THE EQUITY SHAREHOLDERS AS RISKS IN THEIR HONG KONG CAPACITIES. THIS MEANS THAT IF THERE WAS A FOREIGN TAKEOVER THE UK LENDERS WOULD REMAIN CREDITORS OF THESE KONG KONG ENTITIES AND COULD, IF HMG REGISTERED CLAIMS IN RESPECT @ UK ASSETS AND DEBTS OUTSTANDING TO ITS NATIONALS, ENTER CLAIMS DR COMPENSATION. THERE IS NOTHING EXCEPTIONAL IN THIS, OBVIOUSLY TE CLAIMS MUST BE PURSUED AS, SAY, WERE ENEMY DEBTS OR DEBTS IN OCCUPIED TERRITORIES AFTER THE LAST WAR. IT WOULD CLEARLY BE IMPOSSIBLE TO PROCEED AGAINST THE SHAREHOLDERS IF THE WERE TAKEN

OVER OR CEASED TO EXIST IN HONG KONG. ECGD'S CONCERN WITH LOCAL

SHAREHOLDERS STARTS AND FINISHES IN RESPECT OF THE LATTER'S

RESPONSIBILITY TO REPAY THE LOAN IN THEIR CAPACITY AS HONG KONG

ENTITIES AND NOT AS MEMBERS OF INTERNATIONAL GROUPS.

LAST

C. F.

3. TO DO LESS THAN THIS WOULD MEAN, IN ECGD'S VIEW, THAT THEY

WOULD BE INSURING LOCAL SHAREHOLDERS AGAINST POLITICAL EVENTS IN IONG KONG WHICH (AS THEY HAVE REPEATEDLY TOLD TUNNEL COMPANY) IS

NOT THEIR FUNCTION, THEY ARE OFFERING COSTAINS NORMAL REPEAT NORMAL

ECGD COVER FOR THIS BUSINESS.

4. THE SPECIAL POSITION OF THE HONG KONG AND SHANGHAI BANK IN

THE EVENT OF TAKEOVER IS KNOWN TO ECGD. THEY POINT OUT THAT, UNDER TE GUARANTEE, THEY WOULD ONLY PURSUE THEIR CLAIM AGAINST THE BANK AS A HONG KONG ENTITY AND, IF IT CEASED TO EXIST AS SUCH, IN THE

ANNER AND TO THE EXTENT OUTLINED IN PARAGRAPH 2 ABOVE.

15.

это

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FIN

CONFIDENTIAL