TNAG-0768-FCO40-972-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 186

GR 635

IMMEDIATE

DESKAY 9408002

CYPHER/CAT A

CONFIDENTIAL

788

FM

C HONG KONG 240323Z

CONFIDENTIAL

DESKBY 240800Z

HKKIGYA

RELEVER

YMD. જ છે. 21

2 4 JUL 1978

OFFICER

PA

TO IMMEDIATE F.C.O TELNO.BTC 60 OF 24 JULY 18, No as

INFO D.0.1 (FOR EPT1), D.0.T (FOR CRE4),

187

YOUR TELNOS.390 AND 391 : HONG KONG COAL DEAL.

REGISTRY

See 190

1. JOHN MILLS (NCB) AND DAVID WARING (INTER-CONTINENTAL FUELS LTD)

LEFT HERE YESTERDAY AFTER TWO DAYS OF DETAILED TALKS WITH KADOORIE GORDON AND STONES ON THE ORGANISATION REQUIRED TO ADMINISTER A COMPENSATORY TRADING ARRANGEMENT. THEY CONCLUDED THAT THE FUNCTIO OF BUYING COAL AND ARRANGING SALES OF BRITISH EQUIPMENT SHOULD BE SEPARATED. THEY PROPOSE THAT FOR THE FORMER A BROKING COMPANY BE ESTABLISHED BY KADOORIE, SCHRODERS AND CHARTERED, INTER-CONTINENTA FUELS AND PERHAPS THE CHINESE TO FOSTER SALES OF CHINESE COAL. THE PROCEEDS OF SUCH SALES WOULD BE PAID INTO A ''TRUST FUND' MANAGED BY A MERCHANT BANK (E.G SCHRODERS AND CHARTERED) OR A

CONSORTIUM OF MERCHANT BANKS. THE ONLY LINKS BETWEEN THE BROKING

COMPANY AND THE MERCHANT BANK TRUST FUND' WOULD BE ADMINISTRATE

AND PROVISION FOR THE PAYMENT TO THE BROKERS OF EXPENSES AND

COMMISSION. THE MERCHANT BANK OPERATED TRUST FUND'' WOULD THEN

HAVE TRIANGULAR LINKS WITH THE H.M.G (D.0.1) AND U.K MANUFACTURERS

TO PROMOTE SALES OF MACHINERY TO CHINA AGAINST PAYMENT BY THE MERCHANT BANK(S) THE 0.0.1, REPRESENTING H.M.G, WOULD HAVE THROUGH BRITISH NATIONALISED INDUSTRIES, A LINK WITH THE BROKING

COMPANY TO PROVIDE ADVICE AND TO ASSESS THE FUTURE FLOW OF INCOME TO THE TRUST FUND FROM COAL SALES. FINALLY, THE MERCHANT BANK OPERATED TRUST FUND WOULD HAVE DIRECT CONTRACTS WITH THE CHINESE

H.M.G AND U.K MANUFACTURERS TO CO-ORDINATE THE NEGOTIATIONS FOR UK GOODS AND SERVICES. ORGANISATIONAL CHARTS OF THE ABOVE FOLLOW BY AIRMAIL ADDRESSED TO LIPPITT AND BENJAMIN (D.0.1), BROWNING (CREA)

AND SAMUEL (F,E,D).

A

9

2. MILLS AND WARING TELL ME THAT THE SCHEME COMMENDS ITSELF TO

KADOORIE AS HE WILL NOT BECOME DIRECTLY INVOLVED WITH SALES OF U.K

EQUIPMENT AND CAN THEREFORE DROP THE LABEL TRADING COMPANY' * FROM THE NEW ORGANISATION. HOWEVER HE STILL HANKERS AFTER A

CONFIDENTIAL

/DIRECT H.M.G