TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 153

AS PAPER

CENFO 012/02

PRIORITY

FOLLOWING RECEIVED FROM HONG KONG DATED 1ST GFEB 233@Z

Dr Goodfellow

D.

Wato as

to see

AS 5/2

CONFIDENTIAL

PRIORITY

CHRISTIAN TELEGRAM 40 OF 1 FEBRUARY

TO : FELL (E.C.G.D.) FROM ASTON

RPTD:

D.T.1. FOR WATSON (O.P.C.) AND MISS WELCH (C.R.E.2), F.C.O. FOR STUART (H.K.1.0.D.) AND FINLAYSON (E.P.D.)

MIPT

MASS TRANSIT SCHEME

1. HONG KONG GROUP PROPOSAL APPEARS TO BE IN THE SHORT LIST ON THE QUOTE FRAGMENTATION UNQUOTE SIDE. BUT ACCORDING TO JONES THE STEERING COMMITTEE HAVE RECOGNISED THAT THE HONG KONG GROUP'S PROPOSALS ARE CONDITIONAL UPON THEIR HAVING THE OPERATIONAL FRANCHISE AND DESIGNED TO ENABLE THEM TO MAKE MONEY ON THAT. CONSEQUENTLY QUOTE IT HAS SNAGS IN

IT UNQUOTE. WE ARE SATISFIED THAT HE AND OTHER MEMBERS OF THE STEERING COMMITTEE (AND ALSO AT LEAST ONE INFLUENTIAL UNOFFICIAL MEMBER OF EXCO) ARE AWARE OF THE PRACTICAL DISADVANTAGES OF THE HONG KONG GROUP PROPOSAL AND THAT ITS PROJECT MANAGEMENT ELEMENT IS NOT UNIQUE.

2. MYSTERY STILL SURROUNDS THE JAPANESE PROPOSAL. JONES DESCRIBED IT TO ME IN TERMS VIRTUALLY IDENTICAL WITH THOSE QUOTED TO YOU BY MITI IN NOVEMBER 1.E. A LOCAL COMPANY WITH U.S. DOLLARS ONE MILLION CAPITAL AND A LOAN OF U.S. DOLLARS 250 MILLION OVER FIFTEEN YEARS AT SEVEN PERCENT TO BE UNCONDITIONALLY GUARANTEED BY THE GOVERNMENT OF HONG KONG. HF, NOT UNNATURALLY, SAID THAT THIS WAS NOT AS GOOD AS THE BRITISH OFFER AND THAT FINANCIAL SECRETARY WAS STILL PRESSING

THE JAPANESE TO DO BETTER. NE SEFMED GENUINELY NOT TO KNOW OF THE PROPOSALS OUTLINED IN EXCED 60525.

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