TNAG-0772-FCO40-976-Modernisation-and-electrification-of-the-Kowloon-Canton-Rail-1978 — Page 7

3.77

༢3!

CONFIDANTAU

Suncel Khanna Nom 401 Reference

TAKE 173/2

MR TAREE

OPG

KOWLOON | CANTON

5300

7/401

paren...

12. 5/1 have suggeredl mehrading wparks (esp. food f

Act

HONG KONG NOVICUS, RAILWAY

You will recall that we

fent

action

(57

çe Mr Knighton Dep Sec

Mr Wilks BOTE

BB

Mr Lippitt Dep Sec Mr Benjamin lic/DoI Mr Browning CREA Mr Cotterill ECCD Mr J Palmer D/Transport Miss J Kelley HM Treasury Mr Dell M/DOI

2

You will recall that we decided after the last exchange of telegrams with Hong Kong that we could do no more and must await the outcome. Yesterday Mr Lazarus of the Department of Transport, who is in Hong Kong, telephoned Sir Peter Baldwin, Permanent Secretary at Department of Transport, to say that the Governor was still bankering after a contribution from HG to the Transmark consultancy as a clinching argument for the award of the contract to Metro Cam.

I explained to Mr Palmer, who conveyed Mir Lazarus' message to me, that I had discussed the position on the consultancy with Mr Campbell at British Rail and Mr Bartlett at Transtark. Clearly the consultancy

which the Governor has in mind is that for the management of the whole project. The agreed fee is £3 million. There was apparently quite a tussle over the amount but, according to Transwark, the fee claimed is entirely in line with the normal practice of consultants for contracts of this size.

In internal discussion it secmed clear that we could not offer any money directly to Transmark. It would so obviously come from an interested party other than their employer. Department of Transport, having looked afresh at the situation yesterday, do not themselves see any way of steering money on this scale to British Rail.

The only payments which are made by the UK Government to the Hong Kong Government are from COM for a small technical co-operation programme running at about £300,000. I considered with CRE4 whether to make an application to SCAT but thought it hopeless.

I have now, however, heard from a source which must be protected that the Finance Committee meeting in Hong Kong at which a decision on the KCR contract will be taken is scheduled for 20 December. therefore, with Mr Palmer to circulate a minute explaining the situation

I agreed, to all those most interested within RNG to give us a last chance to ask ourselves whether we want to try to contribute to the Transmark fee,

I do not see how we could do this from the Overseas Frojects Find, though you may wish to look at that issue again. Since the payment would have, I think, to go direct to the Hong Kong Government, SCAT would look to be the only hope i would have thought a forlorn one but would be grateful if CRE4 would think again.

Any other thoughts or suggestions from copy addressees would of course be most welcome.

P

}

DN ROYCE

30

12 December 1973

CONF

ITAL