TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 170

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5,000 M.? A TELEGRAM TO THIS EFFECT BEFORE TUESDAY 0900 (HONG KONG TIME) WOULD CERTAINLY RESULT IN THE ANGLO-ITALIAN CONSORTIUM REMAINING IN THE RACE. IF, LATER ON, HMG ARE UNABLE TO SHARE THIS

RISK WITH THE ITALIAN GOVERNMENT OR FOR OTHER REASONS CONCLUDE

THAT THEY WISH TO WITHDRAW, IT WOULD ALWAYS BE POSSIBLE FOR THE CONSORTIUM TO BACK OUT LATER. IF THIS PLAN APPEALS TO YOU, 1

SHOULD BE GRATEFUL IF THE TELEGRAM DID NOT REFER TO THIS ONE. THE

WORDING IS OF COURSE FOR THE D.T.I., BUT I SUGGEST SOMETHING

ALONG THE FOLLOWING LINES:~

QUOTE ON FURTHER CONSIDERATION I AM ABLE TO ASSURE YOU THAT THE

ANGLO-ITALIAN CONSORTIUM CAN NOW OFFER TERMS WHICH WILL RESULT IN

LIMITING THE LIABILITY OF THE CLIENT TO HONG KONG DOLLARS 5,00g M. FOR THE CONTRACT COVERED BY THE ANGLO-ITALIAN COUNTER-BID UNQUOTE.

5. IF YOU ARE UNABLE TO RESPOND, AND ON TUESDAY'S EXECUTIVE COUNCIL ADVISES THAT WE SHOULD NEGOTIATE WITH THE JAPANESE ONLY, AS BEING THE MORE FAVOURABLE BID, IT IS STILL CONCEIVABLE THAT THE NEGOTIATION

WILL SUBSEQUENTLY BREAK DOWN ON DETAIL. BUT JUDGING BY THE HIGHLY EFFECTIVE PERFORMANCE OF THE JAPANESE SO FAR, I VERY MUCH

DOUBT IT.

6. FOR THE RECORD THE LAST 2 SENTENCES OF YOUR PARAGRAPH 2

MISREPRESENT THE FACTS - THOUGH THE POSITION WAS FULLY UNDERSTOOD

BY THE CONSORTIUM'S NEGOTIATING TEAM AND IS CLEAR IN THE MINUTES.

BY AN QUOTE ACCEPTABLE COUNTER-BID UNQUOTE WAS MEANT ONE WHICH

WAS SUFFICIENTLY EXPLICIT TO BE CAPABLE OF COMPARISON WITH THE

JAPANESE. IN THIS SENSE THE ANGLO-ITALIAN COUNTER-BID WAS QUOTE

ACCEPTABLE UNQUOTE. HOWEVER THE PROCESS OF SUBSEQUENT COMPARISON

WITH THE PRE-EMPTIVE BID WAS FOR THE HONG KONG STEERING GROUP

TO CONDUCT. IT IS IN THE PROCESS OF THIS COMPARISON THAT THE

COUNTER-BID SHOWS UP SO UNFAVOURABLY THAT I DOUBT IF EXECUTIVE

COUNCIL WILL CONSIDER IT WORTHWHILE TO NEGOTIATE WITH THE ANGLO-

ITALIAN CONSORTIUM AS WELL AS THE JAPANESE - UNLESS THE FORMER

BID IS MODIFIED IN THE WAY I HAVE SUGGESTED.

MACLEHOSE

FILES

HD HKIOD

HD TRED

P3/MR ROYLE

PS

PS/PUS

MR YOUDE

SIRD WATSON

COPIES TO:

SIR J HUNT CABINET OFFICE

MR D MITCHELL TREASURY PS CHANCELLOR OF THE EXCHEQUER

TREASURY

PS SECRETARY OF STATE

DTI

SIR MAX BROWN

MR D ROYCE

MRR FELL ECGD

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