TNAG-0855-FCO40-1065-Construction-of-underground-railway-system-in-Hong-Kong-1979 — Page 172

DEDIP

2

CONFIDENTIAL

DESK 151023Z

DIAT

FM BTC HONG KONG 150857Z JAN 79

NO DISTRIBUTION

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HKLIDVANCE COPY RECEIVED IN RECORD 170/HK+ GD

15 JAN 1979

TO IMMEDIATE D.0.1

IND

TEĽNO.INDUS 12 OF 15 JANUARY.

No

fi:

Action

allton it is for MI to take the lead.

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PERSONAL FOR LIPPITT, DEPUTY SECRETARY.

Pla

MY TELNO.CREDA 15: MASS TRANSIT RAILWAY CORP. (MTRC).

Sea (13

1. MY REPORT, SENT IN RESPONSE TO TWYMAN'S CREDA 8 OF 12 JANUARY, IS, OF COURSE, BASED ON MY CONVERSATION WITH THOMPSON, CHAIRMAN OF MTRC WHICH TOOK PLACE ON A STRICTLY PRIVATE AND CONFIDENTIAL

BASIS.

2. THOMPSON TOLD ME THAT THE ORIGINAL JAPANESE BID PROVIDED FOR

A WAIVER OF INTEREST UNTIL 31 JULY, 1981 BUT THAT, IN THE COURSE

OF NEGOTIATIONS ON THE ESCALATOR AND ENVIRONMENT CONTROL CONTRACTS

H.M.T EXTENDED THE DATE OF THE WAIVER TO 31 DECEMBER, 1982 AND

APPLIED IT TO ALL CONTRACTS COVERED BY THEIR FINANCIAL PACKAGE.

THIS INCLUDED CONTRACT 351 (RAILCARS). THE SUM INVOLVED IS

H.K DOLLARS 42 MILLION AND THOMPSON IS QUITE CONVINCED THAT HIS

BOARD WOULD NOT ALLOW HIM TO REJECT THIS LATE AMENDMENT TO THE

FINANCING TERMS.

3. I AM SURE THAT THOMPSON IS DOING ALL HE CAN TO ENABLE METCAM

TO COUNTER JAPANESE SUICIDE TACTICS. HE TOLD ME THAT BEFORE THIS LATEST JAPANESE OFFER THE BIDS WERE 'EVEN-STEPHEN''. 1

JUDGE OUR PRICE WAS SUFFICIENTLY CLOSE TO ENABLE HIM TO ARGUE THAT ANY MARGIN WAS SO SMALL AS TO JUSTIFY AN AWARD TO METCAM

ON GROUNDS OF COMMONALITY OF EQUIPMENT. IT WAS THOMPSON'S ANNO YANCE THAT THE JAPANESE HAD SUCCEEDING IN ALTERING THE EFFECTIVE PRICE FOR CONTRACT 351 THAT LED HIM TO INSTRUCT ALLUM

TO TELL GEMMILL THAT HE CAN STILL ACCEPT AN ADJUSTMENT IN

FINANCIAL TERMS FROM US.

4. I CANNOT STRESS TOO MUCH THE NEED TO KEEP OUR KNOWLEDGE OF

THIS DEVELOPMENT FROM THE JAPANESE. THE INFORMATION COULD ONLY

HAVE COME FROM THOMPSON OR ALLUM AND THERE WILL BE A STORM IF

H.M.T FIND THAT THEIR ACE CARD HAS BEEN TRUMPED.

5. IF YOU ARE ABLE TO +

ARE ABLE TO INDICATE THAT WE SHMDL TRY AGAIN TO CLOSE THE CLAP, WHICH I CALCULATE TO CHE ABOUT SHED MILK

4-5 MILLION

ILKION, I THINK

1.

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