TNAG-1660-FCO40-2308-Hong-Kong-Kowloon-Canton-Railway-Corporation-(Amendment)-Ord-1987 — Page 49

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GRS 470

CONFIDENTĦAL

FM HONG KONG

TO. PRIORITY FCO

TELNO 2277

OF 12082OZ JUNE 87

CONFIDENTIAL

173/2

3

TOP C Q DIST

FOLLOWING PERSONAL FOR HUM, HONG KONG DEPARTMTNT, FROM CLIFT

YOUR TELNO 1544: KOWLOON CANTON RAILWAY CORPORATION (KGRC)

MERCHANT BANKERS HAVE BEEN VERY ACTIVE IN RECENT MONTHS

LOBBYING THE ADMINISTRATION TO CONSIDER THE PRIVATISATION OF

VAR:NOUS PARTS OF THE PUBLIC SECTOR, INCLUDING STATUTORY AUTHORITIES SUCH AS KCRC. THEY HAVE SUGGESTED, FOR EXAMPLE, THAT WE SHOULD PRIVATISE THE WATER SUPPLIES DEPARTMENT, THE POST OFFICE, THE AIRPORT AND SOME ROADS AND TUNNELS. THEY ARE ALSO KEEN TO

GAIN BUSINESS AND ARE THEREFORE ENCOURAGING US TO SELL OFF SOME

OF OUR EQUNTY (INVESTMENTS.

2. THE MERCHANT BANKER TO WHOM YOU REFER IN TUR IS PRESUMABLY

EUGSTER OF KLE:INWORT BENSON WHO SAW ME ON 21 MAY. HKS MAIN

PURPOSE WAS TO GET A GENERAL BRIEFING ON THE POLITICAL SITUAT-KON

IN CHANA AND HONG KONG. EUGSTER DID MENT-MON PRIVAT:NSATION OF KCRC BUT DID NOT SEEK ANY INFORMATION FROM US. HE HIMSELF TOOK THE LINE # SECOND SENTENCE OF PARA. 2 OF TUR, ON WHICH I DID NOT COMMENT. IT APPEARED THAT HE HAD GOT HIS INFORMATION FROM DIRECT

CONTACT WITH KCRC.

3.

EUGSTER HAD LUNCH WITH THE GOVERNOR ON 22 MAY, BUT DAD NOT RAISE PRIVATESATION WITH HIM. INT WAS, HOWEVER, BROUGHT UP

BY BISCHOFF OF SCHRODERS WHEN HE CALLED ON THE GOVERNOR ON

4 JUNE. ONCE AGAIN, HOWEVER, NT WAS BISCHOFF WHO MADE THE RUNNING.

GRATEFUL IF YOU COULD CONFIRM THE NAMES OF THE MERCHANT

BANKER AND UNDER SECRETARY IN PARA 1 OF TUR.

5.

PROMPTED BY THE RECENT GENERAL INTEREST IN PRIVATISATION, THE FINANCIAL SECRETARY IS CURRENTLY CONSIDERING WHAT THE

GOVERNMENT'S OVERALL POLICY ON FURTHER PRIVATISATION AND EQUITY

HOLDINGS SHOULD BE. THIS STUDY IS NOT YET COMPLETE BUT OUR INIT HAL FINDINGS ARE THAT WHILE THERE ARE PROBABLY FEW OPPORTUNITIES LEFT IN THE PUBLIC SECTOR FOR GENUINE PRIVATISATION, THERE MAY BE SOME ROOM FOR CORPORATISATION AND THE CONTRACTING OUT OF SUCH

SERVICES AS VEHICLE MAINTENANCE AND SOME PRINTING.

CONFIDENTIAL

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