TNAG-0563-FCO40-658-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 259

GR 130

IMMEDIATE

CYPHER/CAT A

SECRET

RECEIVED IN REGISTRY No.52

13 JAN1975

HILI

FM HONG KONG 138215Z

MK11 21/6

SECRET

7.c

TO IMMEDIATE F C O TELNO 44 OF 13 JANUARY 1975

PERSONAL FOR SIR DUNCAN WATSON.

MASS TRANSIT RAILWAY.

THE JAPANESE CONSORTIUM HAVE INFORMED THE PROVISIONAL AUTHORITY

THAT IT IS UNABLE TO CONCLUDE NEGOTIATIONS FOR A CONTRACT. THEIR

EXCUSE FOR FAILING TO MEET THEIR MORAL AND COMMERCIAL OBLIGATIONS

UNDER THE LETTER OF INTENT SIGNED LAST FEBRUARY IS THAT THEY COULD

NOT HAVE REASONABLY FORESEEN THE CURRENT DIFFICULTIES FACING THE

JAPANESE ECONOMY. THIS WE DO NOT ACCEPT AND, UNLESS THE CONSORTIUM OFFERS US A REASONABLE SUM BY WAY OF COMPENSATION, WE SHALL BE

FORCED TO SPELL OUT OUR VIEW OF THE CONSORTIUM'S PERFORMANCE IN

SOME DETAIL.

2. ON TUESDAY (14TH) EXECUTIVE COUNCIL WILL BE ASKED TO ADVISE WHETHER WE SHOULD PROCEEED WITH THE CONSTRUCTIONS OF A MODIFIED INITIAL SYSTEM ON THE BASIS OF A MULTI-CONTRACT APPROACH OR DROP. THE PROJECT ALTOGETHER. THE ARGUMENTS FOR AND AGAINST EACH COURSE OF ACTION AND THE RECENT HISTORY OF THE NECOTIATIONS ARE SET OUT IN MEMORANDUM XCS (75) 1, A COPY OF WHICH WILL BE IN BAG NO. A5

LEAVING HERE ON TUESDAY.

MACLEHOSE

FILES

HKIOD

FED

TRED

PS

FS LORD GORONWY-ROBERTS

PS/PUS

SIR D WATSON

MR WILFORD

MR MARSHALL

SECRET