VZCZCXRO6910
OO RUEHCN RUEHGH
DE RUEHHK #1470/01 0980252
ZNY CCCCC ZZH
O 080252Z APR 06
FM AMCONSUL HONG KONG
TO RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC IMMEDIATE
RUEAHLC/HOMELAND SECURITY CENTER WASHINGTON DC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 6008
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNFB/FBI WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 001470 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/MCGANN, EAP/CM 
NSC FOR WILDER 
 
E.O. 12958: DECL: 04/08/2031 
TAGS: PTER PREL PGOV ECON EWWT HK CH
SUBJECT: SECRETARY CHERTOFF'S MEETING WITH CHEUNG KONG 
CHAIRMAN LI KA-SHING 
 
Classified By: Consul General James B. Cunningham.  Reasons: 1.4 (d, e) 
. 
 
Summary 
------- 
 
¶1.  (C) On March 31, U.S. Department of Homeland Security 
Secretary Michael Chertoff met with Hong Kong business leader 
 
SIPDIS 
and port operator Li Ka Shing at Li,s request to discuss 
port security.  Secretary Chertoff outlined the U.S. desire 
to find a way to improve maritime security without impeding 
the flow of commerce; technology held out the promise of a 
common-sense solution.  Li emphasized his eagerness to work 
with the USG and his hope that past misunderstandings of his 
position and interests would not be repeated.  End Summary. 
 
¶2.  (C) On March 31, Homeland Security Secretary Michael 
Chertoff met with Cheung Kong (Holdings) Chairman Li Ka 
Shing; Cheung Kong is the parent company of Hutchison Port 
Holdings, a major global port operator.  Susan Chow, Deputy 
Group Managing Director of Hutchison Whampoa, and Gerry Yim, 
head of the Americas, Middle East and Africa for Hutchison, 
accompanied Li. Hutchison's terminal in Hong Kong, inter 
alia, hosts a test site for the Integrated Container 
Inspection System (ICIS) which Secretary Chertoff visited on 
April 1 (septel). 
 
Li seeks to clear up misunderstandings 
-------------------------------------- 
 
¶3.  (C) Chairman Li explained that he wished to meet with 
Secretary Chertoff because there had been misunderstandings 
 
SIPDIS 
about him in the past.  Li explained that he had come to Hong 
Kong in 1940, during the Sino-Japanese War.  For almost 
thirty years after 1949, when the Communists came to power, 
Li never visited China. Instead, he worked in Hong Kong to 
build his business.  After Deng Xiaoping came to power, and 
the Chinese established their investment company CITIC, he 
was asked to be on the board.  It was difficult to say no to 
that request, but some people in Washington have 
misunderstood Li's presence on the CITIC board. 
 
¶4.  (C) Li emphasized that he had always sought a friendly 
relationship with the United States, and said that if anyone 
in the USG wanted to meet with his people, in any country of 
the world, he would always instruct them to be available and 
to answer any questions.  He would authorize access to his 
companies' books -- something he had never done for any other 
country.  Li had always considered the United States to be an 
excellent country, and his company was always on the lookout 
for additional investment opportunities in the U.S.  If the 
USG had questions about Li's operations, for example, in 
Panama, he would welcome a team, as long as it was on a 
friendly basis. 
 
Secretary Chertoff describes U.S. port security goals 
 
SIPDIS 
--------------------------------------------- -------- 
 
¶5.  (C) Secretary Chertoff thanked Chairman Li for his 
willingness to cooperate.  We live in a complicated world, 
the Secretary continued, and Li's company is a major player 
in the maritime sector.  The security of the United States 
depends on preserving freedom of movement and freedom of 
trade, and a security system so rigid that it stopped trade 
would be self-defeating.  We want a "win-win" outcome, with 
better security and, in particular, better port security. 
Stopping and physically searching every container would 
effectively close down the ports, said the Secretary, an 
untenable approach to security.  We know that you share our 
interests: if a bomb went off in a container shipped from 
your port it would seriously damage your company. 
 
¶6.  (C) We are exploring how to use technology to get a 
better level of information, the Secretary continued, and so 
are placing radiation monitors at all our own ports, and 
ideally will also place them overseas, once we have convinced 
governments and port operators of the need. The ICIS system 
that Hutchison is testing is an interesting combination of 
radiation monitors and x-ray scanning of the containers.  If 
we could have something like that in the ports where 
 
HONG KONG 00001470  002 OF 003 
 
 
containers are loaded for U.S. destinations, then we might be 
able to offer expedited treatment at the U.S. port.  That 
would be a competitive advantage for those originating ports. 
 We want to be tough-minded about assessing the effectiveness 
of the monitoring system.  So, we had to be mindful of public 
perceptions: we need not only increased security, but also 
the perception that security has increased.  That may mean 
having law enforcement officers on site to ensure that the 
monitoring is secure.  By working together, the Secretary 
concluded, we can significantly elevate the level of 
container security. 
 
Hutchison eager to cooperate 
---------------------------- 
 
¶7.  (C) Li Ka Shing agreed on the need to secure shipping and 
promised his companies' full cooperation.  He added that if 
the U.S. equipment was the best, that was what he would 
purchase.  He asked Gerry Yim, head of Americas, Middle East 
and Africa, to describe what Hutchison has done so far.  Yim 
explained that they have accumulated images of 1.5 million 
containers; Hutchison executive John Meredith had called on 
Homeland Security last week to discuss how these images could 
be used.  Yim reiterated Li's message that Hutchison wanted 
to work together with Homeland Security, and added that there 
were some people whose comments were having an "unhelpful" 
effect on public opinion. 
 
¶8.  (C) Secretary Chertoff responded that it was true there 
were limits as to what could be done regarding public 
opinion.  As for the images, there might be software that 
could read the images.  Eventually we will develop an 
algorithm to "red-flag" problematic containers.  Another area 
of concern that impacts Hong Kong specifically is that many 
cargoes are trans-shipped here; if they are loaded from 
ship-to-ship, would they avoid the screening process?   Yim 
acknowledged that this was a problem, but said that they were 
working on something that checks the container while it was 
on the crane.  (Note: During the port visit, terminal 
representatives told Secretary Chertoff that in fact there 
are few ship to ship direct transfers.  End note). 
 
¶9.  (C) The Consul General observed that not only the U.S., 
but other countries should be interested in the security that 
an ICIS-like system could provide.  Yim answered that 
Hutchison was working with the World Customs Organization to 
develop global standards.  The CG also noted that Li's 
operations included several mainland ports, so that he would 
play an important role beyond Hong Kong in implementing a 
higher level of security.  Li reiterated that his interests 
were identical to the USG's; he could not afford to have a 
single container with anything illegal inside.  Even if they 
were checking 99 percent now, they needed to go to 100 
percent.  Even if it cost them more, they had to do it. 
 
¶10.  (C) Secretary Chertoff observed there were other kinds 
of problems with screening technologies.  For example, if 
radiation tolerances were set too low, there were many false 
positives, but if they were set too high, there was an 
increased danger of harmful material getting through.  A 
likely solution would be to set low tolerances, but match the 
information against a baseline reading calibrated to the 
manifest before actually stopping the container, in order to 
reduce the number of false alarms.  Yim said that the 
technology existed, but somebody would have to pay for it. 
If the USG were to pick a technology and mandate it, then the 
costs would be equal for all operators.   Secretary Chertoff 
responded that it was necessary to give shippers and port 
operators a market-based incentive to participate, such as 
expedited service.  We want a system that could meet our 
security needs without harming the shippers' and operators' 
business model. 
 
¶11.  (C) The Secretary told Li that he appreciated his 
cooperation.  We are committed to security and want to make 
sure it makes business sense for the private sector to 
cooperate with us.  In closing, Li told Secretary Chertoff 
that his staff was welcome to visit any of Hutchison's port 
operations worldwide, and that he would make sure that 
Meredith knew of his offer. 
 
HONG KONG 00001470  003 OF 003 
 
 
 
¶12.  (U) Secretary Chertoff's party has cleared this cable. 
 
Cunningham