WHILE the rest of the world still shivered in the icy chill of the Cold War, Lantau Island became the battleground for a strange Soviet-China standoff in the mid-1970s. The collapse of an ambitious scheme to create a Monte Carlo-style casino complex on the island nearly left control in the hands of the Russians who had financed the plan, and Beijing fearing a Black Sea resort on its doorstep. In the end, the Soviet bankers were ousted and a pair of Hong Kong Chinese tycoons installed. The Monte Carlo concept became more like Miami Beach with a southern Californian twist - and Discovery Bay was born. The yuppie enclave was in the headlines again last week and again facing the prospect of at least partial foreign ownership. China's huge Hong Kong-based investment corporation, CITIC Pacific, spent $3.4 billion for a 50 per cent stake in Hong Kong Resorts (HKR), which has steered Discovery Bay through the recurring controversies of the past decade and a half. The selling price leaves HKR and its already cash-rich parent companies with an enormous investment armoury. ''They have the biggest bank balance in Hong Kong right now,'' says one inside observer. ''I'd expect to see an announcement of another major deal within weeks.'' Indeed, mercurial HKR managing director Payson Cha promises an unusual period of activity for his normally conservative company. ''We're cashed up and CITIC is also financially very strong,'' Mr Cha boasts. Compared to other Hong Kong developers, HKR has moved at a snail's pace on Lantau. ''This is my own dream,'' concedes the 51-year-old chief executive of HKR International. ''My goal was always to build a peaceful place.'' However, Discovery Bay has been far from tranquil over the years with residents complaining about facilities. But controversy predates Mr Cha's arrival at Discovery Bay. The development began as the grand plan of wheeler-dealer Eddie Wong, known as Fast Eddie. He bought more than 900 plots at Discovery Bay during the uncertainty of the 1950s. By 1976 they were valued at more than $35 million. By then, he had formed the Hong Kong Resort Company and the Government approved preliminary plans for a luxury resort with hotels and golf courses. About $20 million was poured into the project. Discovery Bay was Mr Wong's dream, but, ultimately, his ruin. Lease conditions were signed in September 1976 after a huge land trade. Mr Wong ceded all his parcels in exchange for Lantau land. Mr Wong made the first premium payment to the Government in 1976, with $61 million due in 10 annual installments. But he had staked his entire fortune on it and by early 1977, it was clear Fast Eddie was going down. He was forced to turn to the Moscow Narodny Bank in Singapore, which according to press reports, worried Beijing. The worries worsened when Mr Wong's empire collapsed and the Russians served a writ for nearly $40 million on April 1, 1977. Fast Eddie hit the road and little was heard of him thereafter. Hong Kong newspapers had a field day with speculation that the Soviets were landing in Lantau. How much was hysteria or hype is unclear, but many sources maintain serious anti-Soviet sentiments prompted Beijing to bankroll a bailout scheme. HKR went intoliquidation in April 1977 and was redeemed the next month by a pair of prominent local families. John Wu, younger brother of Hopewell's Gordon Wu, joined textile king Cha Chi-ming to rescue Hong Kong Resorts. Mr Cha had built his China Dyeing Works (CDW) into one of Asia's largest textile operations. The diversification into Discovery Bay represented a marked departure from his plan to dominate a single industry. However, sources say it was the case of an ideal opportunity and perfect timing. Hong Kong's clothing industry was in decline and despite the overseas expansion, CDW needed to look further afield. This was the advice of eldest son Payson Cha, when he returned from a decade-long stint running the family business in Nigeria and took over the Discovery Bay development. The younger Cha powered his way into the picture, pushing aside Mr Wu in a battle for HKR. Mr Cha prevailed in late 1978, but only after a high-stakes power game. The Chas prevailed and Payson immediately asserted full control. By 1979, when construction began on Discovery Bay, the concept had changed to a self-contained residential community with resort facilities. From the start, this was Payson's personal vision of paradise with profits. He had attended university in California and the Chas had a major stake in a California bank which facilitated investment in Napa Valley vineyards. The idyllic grape vines surrounding San Francisco may well have coloured Payson's perception of urban utopia. While the high-rise towers of Discovery Bay are distinctly Hong Kong, a community anchored by a shopping mall amid tennis courts and golf greens, where residents ride around in golf carts is more akin to Palm Springs. Construction started in 1979 and the suburban Shangri-la was a hit. Buyers queued for hours on August 1, 1980, about three years before the first phase was formally opened. Enthusiasm has not waned since. Despite the 1982-83 property downturn when the second phase was suspended, the most recent phases was oversubscribed by 40 times. The new partnership with CITIC Pacific could change everything. Inside sources predict deals will be struck within days for major new China investments and that the partnership virtually guarantees construction of the tunnel linking Discovery Bay to new roads on Lantau. After all the years of effort and disappointment, it seems Payson Cha is finally poised to reap the rewards projected by Discovery Bay's Chinese name, Yu Geng Wan (Good Prospect Bay). Mr Cha is clearly pleased, but knows he could do better. ''I'd like to do Discovery Bay all over again,'' he says. In China, with CITIC Pacific, he may get his chance.