Foreign Relations of the United States, 1958–1960, Vietnam, Volume I

111. Despatch From the Ambassador in Vietnam (Durbrow) to the Department of State¹

No. 267

Saigon, March 2, 1960.

SUBJECT

• Internal Security Situation and Corruption

Summary:

On February 24, Presidential Advisor Wolf Ladejinsky related to me his most recent and highly sensitive conversations (see memorandum enclosed²) with Le van Dong, Minister of Agriculture, Vice President Nguyen ngoc Tho and Vo van Hai, Chief of the President’s private secretariat, concerning the internal security situation in Viet-Nam and corruption in the GVN.³

1. Conversation between Le van Dong and Ladejinsky.

Dong has for more than a year been seriously concerned about the negative attitude of the peasants toward the government and has mentioned this concern both to the President and to Ladejinsky. According to Dong, the government lays down policies from on high, giving little heed to the needs, desires and aspirations of the peasant masses. Although Dong believes the situation can be rectified, he feels it is essential for the government to work up policies and plans on a lower level by talking to local leaders and ascertaining the peasants’ desires. Unless the GVN does something to take the peasantry into its confidence, he believes the situation can become quite serious.

Dong also expressed his serious concern over the deterioration of Army morale, noting that a large segment of the officer corps has become disgruntled over (a) the fact that incompetent officers have received promotions through influence, (b) recent setbacks sustained by ARVN in clashes with Viet Cong forces, and (c) the low rate of pay. Ladejinsky told Dong the first two reasons may be valid but the third is not, since ARVN forces are the highest paid in Asia. Ladejinsky and I speculated whether Dong might not be concerned about Army promotions since it is possible that officers favored by the Nhu faction of the party are receiving promotions instead of those favored by the Dong faction. In any event, Dong seemed deeply worried about Army morale and according to Ladejinsky felt that unless something was done about it almost immediately the regime would be in serious jeopardy.

2. Conversation between Vice President Nguyen ngoc Tho and Ladejinsky.

On February 24, the Vice President discussed the deteriorating internal security situation with Ladejinsky and again stressed the urgent need to train ARVN and other security forces in anti-guerrilla operations. In analyzing the attitudes towards Communism of various sectors of the Vietnamese population, Tho expressed the view that the Hoa Hao were the most anti-Communist, the Cao Daists second, Catholics third and Buddhists fourth. Because of the Hoa Hao’s strong anti-Communism, the Vice President said he had suggested to Diem that he be permitted to sound out the Hoa Hao leaders with whom he had kept in contact to see whether they would be willing, if given arms and governmental support, to conduct a campaign against the Communist elements which are getting progressively stronger in the Delta area. Tho said that the Hoa Hao had great experience in guerrilla fighting in this area and are the only element which could be used immediately to stem the Communist drive. He admitted to Diem that it would be taking a calculated risk to rearm the Hoa Hao who might get out of hand. However, if this occurred, it would not be serious since the Hoa Hao had no foreign backers and could either be bought off again or defeated by force. Tho said the President had given him permission to sound out his Hoa Hao contacts while Diem was in Malaya⁴ and Tho found that these leaders were agreeable to the idea. The Vice President heard that Diem’s brother Nhu is opposed to this course of action, but Tho said that the President is considering the matter seriously. Ladejinsky and Tho discussed Nhu’s nefarious influence and agreed it should be eliminated, although there was little possibility of doing so.

Vice President Tho also told Ladejinsky he was under considerable pressure from the Can Lao Party to accept proposals made by the Sterling Oil Company to enter the Vietnamese petroleum market. The Party is demanding that the Vice President agree to allocate to Sterling Oil 25% of foreign exchange available for petroleum imports which would automatically give Sterling 25% of the petroleum market before it made any real investment in the country. Tho and Ladejinsky were perturbed that Nguyen van Buu (business agent for the Can Lao Party) is supposed to receive 25% of Sterling Company’s stock without putting up any money in return for special favors, such as station sites, etc. In Ladejinsky’s opinion, this is straight unadulterated corruption and Ladejinsky had advised Secretary Thuan to this effect. Thuan has reported Ladejinsky’s feelings to the President and Ladejinsky will raise this matter himself with Diem. The Vice President also told Ladejinsky he suspects that Thuan is now taking part in corrupt operations. Ladejinsky, who is close to Thuan, expressed the hope that this information was incorrect.

3. Conversation between Vo van Hai⁵ and Ladejinsky.

Hai expressed to Ladejinsky his deep concern over the growing corruption among top officials in the government, particularly in the Can Lao Party. Hai said corruption takes the form of special payments received in the name of the Party for necessary expenses, but he is convinced a large part of the money goes to individuals in the Party. Hai was perturbed that the President knows that individuals are receiving large sums through these Party operations. Although Ladejinsky questioned whether Diem in fact knew this, we both agreed if this were the case the situation is much more serious than we had previously thought.

Comments:

Unfortunately similar various critical comments to those reported by Ladejinsky have been increasingly heard from other GVN officials and intellectuals who have been sympathetic to the regime. Many of the critical comments have emphasized that civil servants and military administrators have shown little concern about the desires and wishes of the people and have been too firm in carrying out directives. This has caused discontent which is being taken advantage of by the Viet Cong. Furthermore it has been the general consensus that practically all the Government officials have failed to speak frankly with Diem about the internal security situation and the basic grumblings of the people but instead have told him what they thought he would like to hear. Despite reports we were getting about growing discontent in the country, stepped-up guerrilla activities and more and more corruption, Diem during the autumn of 1959 and even into early January 1960 described in detail to me and others how much better internal security had become despite the Viet Cong efforts. He particularly praised the fine anti-Communist work being done by the recently organized youth groups and in general seemed to believe that the situation was more in hand than ever.

Although Diem is not unduly alarmed now, it is quite evident that the Tay Ninh attack on the local ARVN Headquarters⁶ and other recent attacks which took place have opened his eyes and he is giving serious consideration to various ways to combat these Communist activities. Some of his suggestions, however, such as recruiting up to 20,000 “commandos” seem very unrealistic and exaggerated. Vice President Tho’s suggestion about the Hoa Hao would also at first glance appear to be a rather desperate and not too wise action. It, like Diem’s suggestion to raise 20,000 “commandos”, seems to be a bit too precipitous and defeatist. For this reason Diem may turn it down.

As I have had occasion to report in recent despatches, Diem has also begun to dwell at considerable length on the need to pick good administrators who are sympathetic to and will try to do something about the basic needs of the rural population. He has emphasized that unfortunately many Government officials have carried out their instructions too ardently and have not tried to temper their actions so as to take into consideration the feelings of the population nor have they taken the trouble to try to explain the reasons behind various Government policies. This realization on the part of Diem would seem to indicate that not only the Vice President but other loyal officials have talked to him frankly about their evaluation of the situation and therefore he is now getting a more realistic picture of current developments.

Much of the intelligence regarding the internal situation undoubtedly has come to the President through Nhu and his somewhat ruthless organization of informers, and even officials who do contact the President directly usually check first with Nhu, or the President seeks Nhu’s views on what they tell him. Except for fairly frequent hunting trips in the jungle and forest areas, Nhu spends practically all his time in his “ivory tower” in the Palace making his Machiavellian plans of how to control the population, eliminate Sihanouk, or perhaps how to get more income for the Can Lao Party. Thus it is not unlikely that Nhu has misinformed or misadvised Diem on the true situation. I, too, agree that it would be most useful for all concerned if Nhu could be eased out of his influential position in the Palace and sent abroad, for instance as Ambassador, but I am also afraid that this is a forlorn hope.

It will be recalled Mr. Arthur Gardiner, Director of USOM, last year under instructions told Diem about our deep concern over the under-invoicing of cassia (cinnamon) shipments to the United States by the Can Lao Party.⁷ At that time Mr. Gardiner also told the President that we had heard many other disturbing reports about Can Lao activities which seemed to be quite irregular. It will also be recalled that at a luncheon conversation in July 1959 just after the Colegrove articles came out, I took the opportunity to tell Nhu himself that Colegrove had alleged that Nhu, his wife and other high officials were engaged in corrupt practices.⁸ I added that it was unfortunate that rumors of that kind have appeared in the press but added these rumors persisted in Saigon and other correspondents might also pick them up. Nhu of course denied that there was any truth to these reports. These frank talks apparently have not brought much corrective action except to bring about proper invoicing of cassia. Unfortunately in recent months more and more serious Vietnamese acquaintances have been talking about the business activities of the Can Lao Party, particularly the alleged personal gains made by members of the Party. The story of Nguyen van Buu’s alleged unpaid-for interest in the Sterling Oil Company is being rumored around the town. Others, who have always been sympathetic to the regime, have talked about the growing power of Can Lao Party members who are gaining increasing control over licensing, building permits and the letting of Government contracts. While it is possible that Diem has not heard these stories of corrupt practices, I believe we must assume that he had some knowledge of them but perhaps accepted the denials of those close to him or their assurances that the funds collected or actions taken are for the benefit of the country (via the Party). Since Buu apparently is the business agent for Diem’s brother Can, and since we have had many indications over a long period of time that even Diem hesitates to dictate to Can, it may be that Diem finds himself reluctant to try to stop these operations. In any event, Vo Van Hai’s statement to Ladejinsky about Diem’s knowledge of corruption in high places is very disturbing.

Instead of taking such drastic measures as Diem’s 20,000 commando idea or Tho’s proposal to arm the Hoa Hao it appears to me that three basic steps are necessary: (a) use the actual security forces to give more protection to the population; (b) be more solicitous of the needs and desires of the peasants who are being treated in a too arbitrary way; and (c) do something about Can Lao activities, particularly corruption. If Le van Dong’s report about Army morale is true, corrective action should be taken immediately, particularly if the Party is the principal peddler of influence.

In regard to the arbitrary and roughshod methods used by provincial officials, this may stem primarily from the fact that Diem, in his hurry to get things done, gives these officials almost impossible tasks. Too often either in the military or in the civil service the officer who makes a not too grave mistake or does not get almost impossible things done on time is summarily dismissed. Therefore there is no incentive for them to think of anything else except to carry out almost impossible orders.

The concern now expressed by many who have heretofore been quite confident about developments or who were perhaps holding back their inner misgivings about the situation is somewhat emotional and basically exaggerated but probably healthy. It seems probable that the time had arrived for this pent-up emotional steam to bring sufficient pressure to release the safety valve. It also seems clear that the Communists have become more and more concerned by the basic progress the GVN has made and, after being frustrated in their attempt to disrupt the elections last August, decided they must take more drastic action to disrupt the progress and try to gain lost ground. The Communists undoubtedly were well aware of the latent as well as real grumblings of the population and therefore took the decision to try to gain the initiative by mounting a full-fledged guerrilla-terrorist campaign. As … reports have indicated over the past few months, the Communists have sent a considerable number of trained cadres from North Viet-Nam to strengthen their forces for this campaign. As indicated above, this outbreak of increased terror has apparently opened Diem’s eyes and he is not only getting more accurate information about the actual situation but is making a more realistic appraisal of developments. It is hoped that as he gets a clearer picture of the situation it will cause him to make some basic changes in his approach and attitude as well as bring about a more healthy and realistic attitude on the part of his inner circle of advisors with the exception, perhaps, of Nhu.

Since Diem and others seem seriously concerned about these recent developments in the internal security and disgruntled population fields and seem to be in the mood to try to do something about the situation, I plan to take the first suitable opportunity to encourage Diem to follow through on his present reappraisal mood by telling him of some of the more firm reports we have had on the attitude of the population, the need to get closer to the people, the extent to which corruption apparently has gone and suggest that it might be more effective if officials are not given impossible tasks and not dismissed when they make their first mistake. Since I have been here for almost three years, have always been very frank with the President and have previously talked with him in what I hope was an objective critical vein about fundamental matters, such as the Dup Chhuon affair,⁹ and since I believe he is sufficiently disturbed now to want to take action, I do not believe any harm will come from having such a frank talk with him.

Elbridge Durbrow

1. Source: Department of State, Central Files, 751K.00/3–260. Secret; Limit Distribution. Drafted by Grant and Durbrow. Sent also to Phnom Penh, Vientiane, Bangkok, and CINCPAC PolAd. A note in an unknown hand on the source text reads: “Read by FE—Mr. Steeves.”
2. Attached, but not printed.
3. A note in what is apparently Wood’s hand reads at this point: “Secretary of Agriculture has own political backing.”
4. Diem made an official visit to Malaya from February 15 to 19. A report of the trip is in despatch 219 from Kuala Lumpur, February 29. (Department of State, Central Files, 751K.11/2–2960)
5. Wood wrote the following marginal note on the source text at this point: “Diem’s personal secretary.”
6. On January 26 in the town of Trang Sup in Tay Ninh province, four Viet Cong companies (200 men) attacked the camp of the 32d ARVN regiment. At the time of the assault only 250 to 300 ARVN troops were in the military cantonment. During the ensuing hour-long battle, the Viet Cong destroyed two large barracks, the regimental headquarters, and damaged four other buildings. They killed or wounded 66 ARVN troops and captured large amounts of arms and ammunition. (Spector, The Early Years, p. 338) See also Document 121.
7. No record of this conversation has been found.
8. See Document 85.
9. Documentation on the abortive coup by General Dap Chhuon against the Sihanouk government in Cambodia will appear in a forthcoming volume of Foreign Relations.