Corruption - Hottest Saigon Issue

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363-04852
Title
Corruption - Hottest Saigon Issue
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Article published in the New York Herald Tribune about corruption in South Vietnam, page 12
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Draft transcripts were automatically generated via Google Document AI and are currently under review. Please report significant errors to Archives & Special Collections at archives@unl.edu.
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Our Girl in Viet
Corruption-Hottest Saigon Issue
In the midst of a life-and-death struggle
with its puritanical Communist enemy, the
South Vietnamese government is sinking
ever deeper into corruption. More often.
than not, American aid funds-which have
totaled more than $3 billion in the past
decade-provide the incentive for officials and
officers to dip their hands into the government
till. In this third article of a six-part series
on Viet Nam, Herald Tribune special corre-
spondent Beverly Deepe outlines this "hottest
issue in Saigon" with analysis and anecdote.
By Beverly Deepe
A Special Correspondent
SAIGON.
The hottest issue in Saigon is not bombing Hanoi, nor
Viet Cong terrorism, nor possible negotiations for peace. It
is corruption.
Vietnamese sources-generals, majors, captains, ex-
ministers, economists-say that corruption has now reached
scandalous, unprecedented proportions.
Highly-placed sources in Saigon-American, Vietnamese
and Western-urged tighter controls on Vietnamese gov-
ernment funds and on American aid and goods.
The issue is considered a gift for the Viet Cong Commu-
nists; who promise the workers and peasants justice and
equality. It also has caused friction within the Vietnamese
government and armed forces.
Several weeks ago a low-ranking Vietnamese civil servant
was fired after he spat on the Minister of Economics be-
cause of differing views on the issue. A Vietnamese general
and an admiral have been suspended on charges of cor-
ruption.
One high-ranking American official in the United
States Agency for International Development (AID) report-
edly estimated that 30 per cent of American economic aid
was unreceipted or unaccounted for last year. A low-echelon.
American provincial official says some of the 45 Vietnamese
provinces had not submitted vouchers for expenditures dur-
ing the past three years.
Another official said that "outright corruption-Ameri-
can funds ending up in the pockets of the rich"-was prob-
ably limited to 10 per cent. Last year, this would have been
$233,000.
One high-ranking Western official angrily commented:
"This is a major American scandal. The way American-
generated funds flow out of this country to Paris--or back to
America itself-well, it makes your hair curl.
"There are millions and millions of piastres that go to
France or go to Hong Kong-and these piastres are gen-
erated by American aid funds. The French have a saying in
Saigon that every time America increases its aid funds
there's a new hotel on the Champs Elysee."
FRENCH GIGGLE
The ambassador of another Western embassy la-
mented, "The French stand by, look at what you're doing
and giggle."
American aid falls into two broad categories-military
and economic. During past decade $1.1 billion was given
to
Viet Nam through the U. S. Military Assistance Pro-
gram. This program gives guns, ammunition, bombs and
other equipment to the Vietnamese armed forces.
The original purpose of American advisers was to
train Vietnamese to use the equipment-"and to keep
track of
the equipment, which sometimes took some
doing," one
American captain who worked on the program
for two years said.
"We brought in air-conditioners for hospitals-they
ended up in the general's house. We brought in hospital
refrigerators to store vaccines in. The vaccines spoiled and
the refrigerators wound up in the general's house."
The second broad category totalling $2.1 billion during
the past decade is the economic aid program administered
through the AID.
However, of the 10-year economic aid program, 75 per
cent has been channeled into the commercial import pro-
gram and sales under the food-for-peace program. It is
this
program, copied from the Marshall Plan for Europe
after World War II, that highly placed sources in Saigon
believe should be reappraised.
SPECIAL KITTY
The commercial import program, plus selling of Ameri-
can farm surplus goods, calls for the importing of goods
from
America or U. S.-authorized countries. The Ameri-1
can government pays the exporter in dollars for the goods.
The Vietnamese importer in Saigon pays the Vietnamese
in
piastres.
These American-generated piastres are then put in a
special kitty belonging to the Vietnamese government.
This counterpart fund primarily is used to pay the oper-
ating expenses of the Vietnamese national armed forces
and to supplement Viet Nam's other revenues.
The total amount of piastres budgeted by the Viet-
namese government in 1964 was 37.1 billion, but only 31.5
was actually spent which created the impression in Saigon,
even among Vietnamese economists, that "there's too much
money in Saigon. We cannot absorb it all."
More than 19 of the 37 billion budgeted was spent in
the military budget. U. S.-generated piastres through the
counterpart fund accounted for 10.4 billion-or about one-
third of Viet Nam's expenditures.
The 1965 Vietnamese budget, still under discussion, is
expected to total more than 45 billion piastres. At the free
market rate $1 is worth 73 piastres.
These are the comments and criticisms which the
highly-placed sources in Saigon made about the commer-
cial import program and sales of farm surplus commodi-
ties.
First, according to one Vietnamese economist and
ex-minister, "economic aid doesn't aim at an economic
target, but is only in support of a military machine." About
four-fifths of the U. S.-generated piastres in 1964 were al-
located to support the Vietnamese military budget.
CONSPICOUS WEALTH
Second, the commercial import program has enriched
and enlarged the upper-middle-class elements in Saigon
and other cities, but it has also accentuated the extremes
between the urban and rural classes. "Often you bring in
a whole lot of things for the richer middle class with con-
spicuous consumption, and the Viet Cong can play on
this, saying it enriches the middle class and bourgeois,"
one Western ambassador said.
Third, the rural communities, especially earlier in the
program, received a relatively small proportion of the
commercial import aid. Between 1955 and 1960, when the
Viet Cong began organizing and recruiting in the country-
side, only 4 per cent of the direct and indirect American
aid was funneled into the rural population, which is an
estimated 85 per cent of the total population.
Fourth, the commercial import program has not been
geared to assist the building of industries which funnel
Vietnamese agricultural products into the light industrial
sector. During the critical period of Viet Cong formation
in the countryside, from 1955 to 1960, American economic
aid assisted in the establishment of 58 companies. But
about 70 per cent of these depended on imported raw ma-
terials; even the paper mills needed to import wood pulp.
After 10 years in Viet Nam, Americans still allow rub-
ber as one of the most important exports in the country-
most of it going to France-but no substantial rubber pro-
duction factories have been established in Viet Nam.
Fifth, the Vietnamese officials recognize two kinds of
corruption; there's "dirty dishonest corruption"-i.e., tak-
ing
Vietnamese government funds-but also "clean honest
corruption"-getting access to American-generated funds
or soaking Vietnamese citizens for money for rendering
government services, from the issuance of birth certificates
to fixing of taxi meters to meet government specifications.
The Vietnamese officials have therefore devised an ef-
fective system of padding their vouchers and receipts.
"Suppose a wooden bridge costs 1,600 piastres to build,"
an American district adviser complained. "The contractor
adds, another 200 piastres and the district chief adds an-
other 200 piastres can practically see the money flow
into their pockets, but they give me a receipt for 2,000
piastres. What can I do to disprove them?"
One Vietnamese province chief under the Ngo Dinh
Diem regime admitted he ordered a few of his loyal troops
to blow up his own bridge that was half-constructed so
that they could let another construction contract.
Some Vietnamese regional and regular units are known
to possess "phantom troops"-troops that never existed,
or were killed or deserted but never reported as lost. Their
paychecks slip into the hands of privileged commanders.
Last week, leaflets were printed to encourage Viet
Cong troops to return to the government side. Printing
cost 79,000 piastres, but 250,000 piastres had been allocated
for the job. The government official explained the remain-
ing two-thirds had to be divided with messenger boys up to
high-ranking civil servants.
Sixth, the Vietnamese administrative section of the
commercial import program has at times been corrupted.
One former Vietnamese minister who worked with Ameri-
can foreign aid said that Vietnamese importers pay 4-5
piastres per American dollar for the import license.
Every time there's a coup or government shakeup,
Vietnamese businessmen complain they will have to pay
off a new minister to get their import licenses.
Vietnamese importers are legally allowed 5 per cent
of the import license to be deposited abroad in a foreign
account. However, as an inducement to sell his products,
the foreign exporter regularly offers an additional illegal
4-5 per cent listed as "promotion fees or discount" to be
deposited in hard currency outside of Viet Nam.
Hence, the program has allowed the Vietnamese to
build up foreign accounts of hard currency. In addition,
Vietnamese and Western sources complain that many
profits are being sent abroad, either physically or in paper
transfers, instead of being invested in local industries in
Viet Nam.
PIASTRES IN SUITCASE
Some sources believe that high-ranking officials simply
carry piastres to Hong Kong in a suitcase (four American
enlisted men were once arrested for doing this for a
Chinese). In other cases a paper transfer is made in which
piastres are paid in Saigon and American or Hong Kong
dollars or French francs are deposited in a foreign account.
Seventh, instead of selling goods to the Vietnamese
consumer at the lowest possible cost to keep the products
moving, some businessmen-principally Chinese-corner
the market, establish a monopoly and sell at inflated
prices, causing a rise in the cost of living. During a 10-
day shortage périod, the price of sugar or cement, for
example, would double.
Eighth, the commercial import program has pre-
vented large-scale deficit spending, runaway inflation,
paid the national army and assisted in the establishment
of more than 700 local industries. But it has also allowed
the Vietnamese government to use their own foreign ex-
change for other consumer demands-and too much of
this has been channeled into the luxury class.
The shops along the main street of Saigon are filled
with imported cheeses, French perfume, Japanese radios,
French costume jewelry and foreign-made cars. None of
these items can be bought by the rural peasants.
IN SCHOOLS, TOO
These problems have been accentuated by day-to-day
corruption in the Vietnamese system of life. A child in
a French school in Saigon-where sons of ministers and
generals go if they are not in France-easily can pass an
exam with a 10,000 piastres deposit under the table, "and
if you don't think so, just look at how many French
teachers leave Viet Nam and invest in hotels on the French
Riviera," an anti-Communist source remarked.
Transfers for Vietnamese battalion commanders from
the remote provinces to Saigon cost 50,000 piastres.
For 50,000 piastres, a young man can obtain a cer-
tificate that he's inlvolved in undercover work for the
Ministry of Interior-and is thus exempt from the army
draft. The Ministry has signed 1,300 of these certificates
in recent weeks.
Up to 5,000 piastres is siphoned off the allotments for
war widows, "and to survive she has to become a pros-
titute before the first payment arrives-which takes up to
10 months," one Vietnamese observer said. "Why should
her husband want to die unknown in the jungles-so his
wife can be a prostitute?"
"What it boils down to is whether to have a social
revolution or not and clean up this government," a Viet-
namese economist explained. "If America is too scared to
do it the Communists will, and will win the people. The
people want justice. They don't care if they have a de-
mocracy or a dictatorship-if the government comes in
with bullets or ballots. But they want justice-even if it
is harsh. The Viet Cong are harsh, but they are just."
TOMORROW: Social stagnation vs. revolution.
Date
1965, Jun. 1
Subject
Vietnam (Republic)--Politics and government; Political corruption
Location
Saigon, South Vietnam
Coordinates
10.8231; 106.6311
Container
B4, F6
Format
newspaper clippings
Collection Number
MS 363
Collection Title
Beverly Deepe Keever, Journalism Papers
Creator
Keever, Beverly Deepe
Copyright Information
These images are for educational use only. To inquire about usage or publication, please contact Archives & Special Collections.
Publisher
Archives & Special Collections, University of Nebraska-Lincoln Libraries
Language
English