TNAG-0508-FCO40-573-Construction-of-underground-railway-system-in-Hong-Kong-1974 — Page 120

CONFIDENTIAL

Foreign and Commonwealth Office London SW1

DN Royce Esq

Room 207

DT I

1 Victoria St

SW1

K

Dear David,

Telephone 01-

Your reference

Our reference

Date

20 March 1974

AD

HONG KONG MASS TRANSIT SYSTEM

1.

I enclose, in case they have not yet reached you, copies of Tokyo telegram Exced nos. 9 and 10 and of BTC Hong Kong telegram Exced no. 7.

2.

I do not know how interested GDC are in the Japanese feelers. With reference to Tokyo Exced no. 10 it seems to me that if anyone i. to tell Jardines it should be the Japanese consortium for which they are agents rather than GEC or Mr Aston or anyone in London.

I

3.

My concern is with the ilong Kong Government. Those in the FCO more expert in Japanese tactics than I, suggest that the purpose bringing in GEC and making it appear that they are the démandeurs, may indeed be to use the British sub-contracting element in a Japer » group as a scape-goat for demanding more money from Hong Kong. C: 1 well imagine a situation where the Japanese might go to the Hong Kon Government saying that, although they are themselves prepared to kee to their fixed price, the performance of their British sub-contracto. for example on delivery dates or quality, wase such that the whole programme had been put out of gear and they needed more money.

We would then get the odium of Hong Kong's failure to enforce its much prized fixed price, without more than a fraction of the business..

My own recommendation would be that, if GEC wish to pursue the possibility of sub-contracting, we should write in strict confide to the Governor of Hong Kong personally telling him that this was in the wind; that, no matter what the Japanese might say for public consumption, they had solicited British participation;

that we SUSj their motivés but GEC was willing to go for the business; and thrt ii the Japanese tried to re-negotiate their fixed price, it would be nothing to do with us. Only if this was quite clear to the Governor and his most senior advisers and had raised no objection from them, would I recommend that GEC should take the risk of participation in Japanese consortium. Presumably at the level of participation envisaged, it would not be too difficult for them to do so on a price basis, particularly as the possibilities of escalation relate

fixeo

bas

CONFIDENTIAL

/mainly

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