TNAG-0423-FCO40-469-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 167

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1.

You asked for comments on Mr Cotterill's letter to Mr Glaves-Smith of 5 April. This letter covered the record of discussions held by Mr Fell and Mr Coggins in Hong Kong on 19 and 20 March.

2. The enclosures are mainly concerned with the detailed financial discussions and in essence add little to the account given orally by Mr Fell at his meeting on 22 March. Please see my submission of 23 March (folio 74). Principally the minutes confirm that the Hong Kong Government wish to have a price from the British consortium within certain parameters. It is recognised that this price can only be given with reservations as to stated assumptions. Mr Haddon- Cave had recognised that the consortium approach had considerable advantages for the Hong Kong Government. The timetable at that stage for a final decision on a contractural approach was stated by Mr Haddon-Cave to be end May/ early June. However, we have subsequently learned that Mr Haddon-Cave will be on leave until the middle of June and it is not expected that a decision will be taken in his absence.

3. In the covering letter, Mr Cotterill brings out the importance that the Hong Kong Government attach to the capitalisation of interest. Paragraph 20 of the enclosure gives Mr Fell's response to this as being something for detailed negotiation that the Hong Kong Government had decided on the consortium approach. Mr Fell felt sure that

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the Hong Kong Government would not find the consortium inflexible in their depoříment. This is in line with the discussion with ECGD and the Treasury held last month (please see Mr Stuart's submission of 19 March at folio 70).

4. Faragraph 4 of the covering letter concerns the matter of communications between the British Trade Commission and London on this project. This is certainly made complicated by the different series used (not only the secure channel but also via the Hong Kong Govern- ment, as well as in the CREDA and EXCED series.) Although the FCO is not the lead Whitehall department on the Hong Kong underground, we are nevertheless the principal communications channel between Government departments in London and the Trade Commission in Hong Kong: Probably the best way of ensuring that everyone concerned obtained copies of incoming and outgoing messages would be for them to be channeled through a particular department in the FCO, presumably HKIOD. If you agree, we might suggest this to

Mr Glave-Smith.

10 April 1973

CC:

Mr Finlayson Mr Gray (EPD)

M A Goodfellow

(17293) 897465 400m 1/73 G.W.B.Ltd. Gp.863

CONFIDENTIAL