TNAG-0508-FCO40-573-Construction-of-underground-railway-system-in-Hong-Kong-1974 — Page 191

PRIME MINISTER

CONFIDENTIAL AND PERSONAL

FLAG

Secretar, if State

Hached

B

Ithe attached is a

telegram from

3/E/i

nr Walker

to the

Эк

7

HONG KONG MASS TRANSIT

18/12.

Further to my minute of 10 December we have now heard that

the Hong Kong Government have nevertheless decided to negotiate

only with the Japanese and have announced this publicly.

It

They have thus rejected an impressive Anglo/Italian bid on

which quite exceptionally favourable credit terms were available

and which I am advised involved a highly competitive price.

They have accepted a bid which all our information suggests

involves very considerable risks, and whose main attraction

appears to have been a quite unrealistically low fixed price.

appears from my contact with the Governor that the Colony would

have been prepared to have accepted an Anglo/Italian bid only if

we and the Italian Government provided quite unprecedented price

guarantees which I and my colleagues at the Treasury and the

Foreign Office and my advisers at ECGD regarded as quite impossible

for us to offer in the present economic and currency situation.

I should add that the Governor himself had indicated to me when

I spoke to him about this project in Hong Kong at the beginning

of this year that he would use all his endeavours to ensure that

the United Kingdom bid succeeded. I find it difficult in the

light of the circumstances outlined above to feel that this

assurance has been honoured.

CONFIDENTIAL AND PERSONAL