TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 32

BRITISH TRADE COMMISSION IN HONG KONG

7th Floor, Shell House, Queen's Road, Central, HONG KONG Mail Address: P.O. Box No. 528, Hong Kong

Cable Address: "Uktrade Hongkong"

Telephone- 230176

w/37+

Our reference: 21/1 Your reference: CONFIDENTIAL

DN Royce Dsq

Overseas Projects Group

Department of Trade & Industry

1 Victoria Street

London S W 1

Dew David,

MASS TRANSIT SCHEME

-

20 December 1973

!

In my telex Creda 151 I implied that I would try to send you some comment and back- ground on the EXCO decision to go for the Japanese bid after we had sniffed around a bit but although a week has now passed since the unhappy day we are really not very much wiser at this end about what went wrong. There is, perhaps understand- ably, still a general reticence among the best informed officials to talk about it partly I suspect because many of them still feel rather embarrassed about the way things went wrong.

I say "went wrong" because from my own talks with Philip Haddon Cave and sub- sequently with the Governor as reported in my Creda 150 and Christians 55 and 56 and also from the talks which the local commercial representatives of the Anglo/ Italian Group had with lladdon Cave and with members of the Steering Group we were all convinced (indeed had been specifically assured) that it was the aim of the Steering Group and of the Hong Kong Government to try to ensure that the Anglo/ Italian bid not only went forward alongside the Japanese pre-emptive bid to EXCO but would be running with it for at least the next lap of negotiations after IXCO. As you know, all that was done thereafter was aimed at trying to ensure that the bid was in such terms that it would make this possible and we believed that the Steering Group and the Governor in the background would say if the bid fell short of what was required for this purpose and would do all that they could to assist in getting it appropriately shaped. Help them write it if nced be" had been the Governor's words).

-

G

it

at all three levels that we As you know, we had even been specifically told need not regard the ceiling price of five thousand million as sacrosanet would be possible to go a little above it and it would also be possible to make some special provision for escalation. The clear inference, separately picked up by cach of us was that this would be taken as a reasonable quid proguo for having let the Japanese off the "no guarantee" hook.

Against this background the counter bid as it was finally submitted (which was presentationally considerable improvement on the first draft that you were given in London) looked to be a fair starter. As you know, I personally had doubts whether it would be strong enough to survive the next lap of negotiations after jumping the EXCO hurdle without some modifications on the provision of escalation. There was clearly a lot of hard talking to be done when the Steering Group cot down to looking at the details of it but at this stage the Steering Group seened almost deliberately to wish to sweep the escalation complications to

and allowed this to be one side. Indeed Haddon Cave went so far as to say

CONFIDENTIAL

re-affirmed /

Every effort is made to ensure that the information given herein is accurate, but no legal responsibility is accepted for any errors or omis. sions in that information and no responsibility is accepted in regard to the standing of any firms, companies, or individuals mentioned.