TNAG-2488-FCO40-3619-Policy-papers-regarding-the-transfer-of-sovereignty-of-Hong--1992 — Page 16

CONFIDENTIAL

ANNEX C

The Hong Kong Government and British Commercial Interests

1.

The general, formal position is clear:

Hong Kong has long had complete autonomy in commercial, economic and financial matters. This is not an area for the Foreign Secretary to direct the Governor. It would be intensely controversial if we were now to seek to exercise power here. It would also lead to our acquiring new responsibilities.

the Hong Kong Government has a fair and open tendering system. The Government Gazette records details of all contracts awarded, including the amounts tendered;

the Independent Commission Against Corruption (ICAC) has been involved in setting up the tender system to ensure that the possibilities for corruption are minimal; the ICAC has far-reaching powers which it exercises actively;

- Hong Kong's is an international city, and any suggestion that Hong Kong Government was biased in its awards would be damaging to international confidence in the Territory and to its status and prosperity.

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- The Governor himself is not involved in the technical examination of tenders and would normally not be involved in the decisions as to which company to select. He could not therefore intervene without risking serious damage to his constitutional position and his credibility in Hong Kong. these difficult transition years it is essential that he should be seen to be committed to supporting Hong Kong's economic interests.

2.

In the case of the airport there are particular reasons for our not trying to direct the HKG to give favourable treatment to UK companies:

A key difficulty in the negotiations to win Chinese support for the airport was Chinese suspicion that the playing field would be tilted in our favour and that the project would be a way of funnelling Hong Kong funds towards British companies. The Prime Minister was directly involved in overcoming this suspicion and in assuring the Chinese that the project would be conducted in the most cost-effective way;

Chinese officials on the Airport Committee and particularly the (Provisional) Airport Authority will be kept fully in the picture on the tenders, so they will know the facts;

CONFIDENTIAL