TNAG-0425-FCO40-471-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 194

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TO IMMEDIATE FCO TELNO 1213 OF 22 OCTOBER,

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HY TELEGRAM 1990: VALIDATION OF THE JAPANESE BID FOR MASS TRANSIT RAILWAY.

THE ONLY POINT AT WHICH THIS DID FAILS TO MEET THE CRITERIA LAID DOWN BY THE STEERING GROUP IS IN RESPECT OF A GUARANTEE BY THE HONG KONG GOVERZICHT,

9. THE JAPANESE CONSORTI. REQUIREMENT FOR SUCH A GUARANTEE STEMS FROM THEIR EXT.. BANK'S INSISTENCE THAT A LIFE OF CREDIT WOULD ONLY BE MADE AVAILABLE TO THE CONSCATIUR IF A GUARANTEE WAS FORTHCOMING

FROM THE HONG KONG GOVERNMENT TO THE CUT SORTIUM BECAUSE THE GOVERNMENT IS THE MAJOR AND ONLY EQUITY SHAREHOLDER. THE EXIM BANK'S

ATTITUDE IS INFLUENCED BY THE FACT THAT THE CAPITAL STRUCTURE OF THE MASS TRANSIT RAILWAY CORPORATION WILL HAVE A HIGH LOAN GEARINC. WHETHER OR NOT EXECUTIVE COUNCIL MOULD ACTUALLY AUTHORISE ACCEPTANCE REPEAT ACCEPTANCE OF A BID WHICH REQUIRED A GUARANTEE FOR EXPORT CREDIT TYPE FUNDS 1 CAMBOT CAY, BUT THE STEERING GROUP DID NOT THINK THAT VALIDATION REPEAT VALIDATION OF THE BID SHOULD BE WITHHELD BECAUSE OF THE GUARANTEE REQUIREMENT, NEVERTHELESS THE GROUP RECALL. CONCERNED THAT LATER ON SUCH A GUARANTEE NIGHT MAKE IT OWNE DIFFICULT TO GET THE MASS TRAUSIT PAILWAY CORPORATION TO RAISE FAPHS I ORDER TO MEET DELT PAYMENTS IF IT KNEW THAT THE HONG KONG GOVERNMENT WAS CONTRACTUALLY COMMITTED TO MEETING THE DEPTS ANYWAY.

7. ONE OF THE CONFETITOR CONSOFTHE FAVE MALE AN ISSUE OF THE ADSENCE OF A HONG PONG GOVERNMENT QUARA TEE, TO COURT THIS REFLECTS

LACNE

FUNDS TO LEST 173 SILTATICS TO THE CONTRACTOR, THE NM. & MORG

PRACTICE PROVIDE 142 Y ALL NICKEL INJECTIC.S OF DALITY, NAVEVER, SINCE IN THEORY THE PROVISION OF SUCH A GUARALTES AFFESTS FUT ACTHE COSTING, THE STEL GROUP THOUGHT IT RIGHT TO : 31ST OF A FORTNIGHT'S EXTRA GRASE TO ANY COPITITOR CONSORTIA INTERESTED BRING A VRE-BUPTIVE DID IN ORDER TO ALLOW

THE TRE TO RE-SM.COLATE THEIR FIZUPES.

4. THE EXIM BACK'S REQUIREVENT RESULTS FROM ITS REGULATICKS, THESE DO NOT REQUITE B... TO UNDERUDITE THE HONG KONG GOVERNMENT'S GUARANTEE, AS WAS THE CASE IN TIL ASTA DEVELOPMENT BAPK LOAN TO

HONG KONG FOR A DESALTES AND THERE HAS NEVER BEEN ANY SUGGESTION OF SUCH A RELLIPERENT FROM .... CY THE JAPANESE CONSORTIUM,

E OF COURSE REALISE THERE COULD BE NO QUESTION OF ANYTHING OF THE

SORT, NEVERT. ELESS IT IS CIVIOUSLY IMPORTANT TO MAKE SURE THAT

IF THE CALCUTIVE COUNCIL WERE TO AUTHORISE SUCH A GUARANTEE THEY

WOULD NOT MADVERTENTLY DE SADIL 150 KUNG. WITH SONE RICHT OF

RESTIDAL RECOURSE IY THE CONTRACTOR IF THE HONG KONG GOVERNMENT

COULD NOT WAY OF HAD CEASED TO EXICT. JUR LEGAL ADVISERS TELL US

THIT INSOFAR AS THERE IGHT BE HELD TO BE SUCH GROUYDS FOR A RIGHT

OF RESIDUAL "EOGLASE TO A.^.6., THEY COULD AND WOULD ES EXCLUDED BY THE TER C IN WHICH THE GUARANTEE WAS DRAFTED, THIS OF CCURSE

WOULD BE A STEKING FUIT, YOU WILL REALISE THAT THE GUARANTEL, LIKE THE REST OF THE CONTRACT, STILL KIFANO TO BE NEGOTIATED AND

COULD OF COURCE SOME VASTUCK IN THE PROCESO OF VIGOTIATION.

MACLEHOSE

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