TNAG-2408-FCO40-3502-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-Brit-1992 — Page 134

CONFIDENTIAL

FM FCO

TO PRIORITY BTC HONG KONG

TELNO 52

OF 042323Z MARCH 92

CONFIDENTIAL

HKA 182/3

لك

W39

141110

MDLOAN 9232

FOLLOWING TELEGRAM NOW REPEATED TO YOU AT REQUEST OF HKD BEGINS

FOLLOWING PERSONAL FOR SENIOR BRITISH TRADE COMMISSIONER BTC HONG KONG

CONFIDENTIAL

FM SEOUL

TO PRIORITY FCO

TELNO 118

OF 030739Z MARCH 92

FOLLOWING PERSONAL FOR HEAD HKD

YOUR TELNO 81: KOREAN BID FOR HONG KONG'S NEW AIRPORT, LANTAU BRIDGE

1.

DURING HIS RECENT VISIT HERE, LORD CAITHNESS RAISED THIS PRIVATELY WITH ME. WHAT FOLLOWS REFLECTS MY COMMENTS TO HIM AND FURTHER REFLECTION.

2.

FIRST, THE RELATIONSHIP BETWEEN THE ROK AUTHORITIES AND HYUNDAI REMAINS DELICATE. NOT ONLY IS THERE EX-CHAIRMAN CHUNG'S POLITICAL CHALLENGE TO THE GOVERNMENT (AND THE PRESIDENT HIMSELF FOR HIS 'MISMANAGEMENT OF THE ECONOMY), THERE IS A CONTINUING DISPUTE ABOUT THE COMPANY'S RETROSPECTIVE TAX BILL AND A NEW PROBLEM OVER THEIR ACCESS TO CHEAP BANK CREDITS. THESE ISSUES ARE LIKELY TO REMAIN UNRESOLVED UNTIL WE SEE THE RESULTS OF THE 24 MARCH GENERAL ELECTION. IF CHUNG'S PARTY DOES WELL (UNLIKELY AT THE MOMENT), THE HYUNDAI CORPORATE STANDING IS LIKELY TO IMPROVE AND WITH THAT ITS BUSINESS POSITION. IF CHUNG'S PARTY DOES POORLY ITSELF, BUT AS A THIRD FORCE IN WHAT HAVE HITHERTO BEEN TWO-WAY CONTESTS HAS A SIGNIFICANT SPOILING INFLUENCE (QUITE POSSIBLE), THE KNIVES COULD BE OUT FOR HYUNDAI. BUT AS I TOLD LORD CAITHNESS, THERE IS A SIGNIFICANT DIFFERENCE BETWEEN OFFICIALLY SPONSORED MOVES TO MAKE LIFE DIFFICULT FOR HYUNDAI (EG OVER ACCESS TO CREDIT) AND ANY ATTEMPT TO PUNISH THE CHUNG FAMILY FOR THEIR POLITICAL HUBRIS BY UNDERMINING THE ENTIRE CORPORATE STRUCTURE. TO ATTEMPT THE LATTER

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