The Politics of Heroin in Southeast Asia

Diem's Dynasty and the Nhu Bandits

Shortly after the Binh Xuyen gangsters were driven out of Saigon in May 1955, President Diem, a rigidly pious Catholic, kicked off a determined antiopium campaign by burning opium-smoking paraphernalia in a dramatic public ceremony. Opium dens were shut down, addicts found it difficult to buy opium, and Saigon was no longer even a minor transit point in international narcotics traffic. (15) However, only three years later the government suddenly abandoned its moralistic crusade and took steps to revive the illicit opium traffic, The beginnings of armed insurgency in the countryside and political dissent in the cities had shown Ngo Dinh Nhu, President Diem's brother and head of the secret police, that he needed more money to expand the scope of his intelligence work and political repression. Although the CIA and the foreign aid division of the State Department had provided generous funding for those activities over the previous three years, personnel problems and internal difficulties forced the U.S. Embassy to deny his request for increased aid. (16)

But Nhu was determined to go ahead, and decided to revive the opium traffic to provide the necessary funding. Although most of Saigon's opium dens had been shut for three years, the city's thousands of Chinese and Vietnamese addicts were only too willing to resume or expand their habits. Nhu used his contacts with powerful Cholon Chinese syndicate leaders to reopen the dens and set up a distribution network for smuggled opium. (17) Within a matter of months hundreds of opium dens had been reopened, and five years later one Time-Life correspondent estimated that there were twenty-five hundred dens operating openly in Saigon's sister city Cholon. (18)

To keep these outlets supplied, Nhu established two pipelines from the Laotian poppy fields to South Vietnam. The major pipeline was a small charter airline, Air Laos Commerciale, managed by Indochina's most flamboyant Corsican gangster, Bonaventure "Rock" Francisci. Although there were at least four small Corsican airlines smuggling between Laos and South Vietnam, only Francisci's dealt directly with Nhu. According to Lt. Col. Lucien Conein, a former high-ranking CIA officer in Saigon, their relationship began in 1958 when Francisci made a deal with Ngo Dinh Nhu to smuggle Laotian opium into South Vietnam. After Nhu guaranteed his opium shipment safe conduct, Francisci's fleet of twin-engine Beechcrafts began making clandestine airdrops inside South Vietnam on a daily basis. (19)

Nhu supplemented these shipments by dispatching intelligence agents to Laos with orders to send back raw opium on the Vietnamese air force transports that shuttled back and forth carrying agents and supplies. (20)

While Nhu seems to have dealt with the Corsicans personally, the intelligence missions to Laos were managed by the head of his secret police apparatus, Dr. Tran Kim Tuyen. Although most accounts have portrayed Nhu as the Diem regime's Machiavelli, many insiders feel that it was the diminutive ex-seminary student, Dr. Tuyen, who had the real lust and capacity for intrigue. As head of the secret police, euphemistically titled Office of Social and Political Study, Dr. Tuyen commanded a vast intelligence network that included the CIA-financed special forces, the Military Security Service, and most importantly, the clandestine Can Lao party. (21) Through the Can Lao party, Tuyen recruited spies and political cadres in every branch of the military and civil bureaucracy. Promotions were strictly controlled by the central government, and those who cooperated with Dr. Tuyen were rewarded with rapid advancement. (22) With profits from the opium trade and other officially sanctioned corruption, the Office of Social and Political Study was able to hire thousands of cyclo-drivers, dance hall girls ("taxi dancers"), and street vendors as part-time spies for an intelligence network that soon covered every block of Saigon-Cholon. Instead of maintaining surveillance on a suspect by having him followed, Tuyen simply passed the word to his "door-to-door" intelligence net and got back precise, detailed reports on the subject's movements, meetings, and conversations. Some observers think that Tuyen may have had as many as a hundred thousand full- and part-time agents operating in South Vietnam. (23) Through this remarkable system Tuyen kept detailed dossiers on every important figure in the country, including particularly complete files on Diem, Madame Nhu, and Nhu himself which he sent out of the country as a form of personal "life insurance. (24)

Since Tuyen was responsible for much of the Diem regime's foreign intelligence work, he was able to disguise his narcotics dealings in Laos under the cover of ordinary intelligence work. Vietnamese undercover operations in Laos were primarily directed at North Vietnam and were related to a CIA program started in 1954. Under the direction of Col. Edward Lansdale and his team of CIA men, two small groups of North Vietnamese had been recruited as agents, smuggled out of Haiphong, trained in Saigon, and then sent back to North Vietnam in 1954-1955. During this same period Civil Air Transport (now Air America) smuggled over eight tons of arms and equipment into Haiphong in the regular refugee shipments authorized by the Geneva Accords for the eventual use of these teams. (25)

As the refugee exchanges came to an end in May 1955 and the North Vietnamese tightened up their coastal defenses, CIA and Vietnamese intelligence turned to Laos as an alternate infiltration route and listening post. According to Bernard Yoh, then an intelligence adviser to President Diem, Tuyen sent ten to twelve agents into Laos in 1958 after they had completed an extensive training course under the supervision of Col. Le Quang Tung's Special Forces. When Yoh sent one of his own intelligence teams into Laos to work with Tuyen's agents during the Laotian crisis of 1961, he was amazed at their incompetence. Yoh could not understand why agents without radio training or knowledge of even the most basic undercover procedures would have been kept in the field for so long, until he discovered that their major responsibility was smuggling gold and opium into South Vietnam. (26) After purchasing opium and gold, Tuyen's agents had it delivered to airports in southern Laos near Savannakhet or Pakse. There it was picked up and flown to Saigon by Vietnamese air force transports which were then under the command of Nguyen Cao Ky, whose official assignment was shuttling Tuyen's espionage agents back and forth from Laos. (27) Dr. Tuyen also used diplomatic personnel to smuggle Laotian opium into South Vietnam. In 1958 the director of Vietnam's psychological warfare department transferred one of his undercover agents to the Foreign Ministry and sent him to Pakse, Laos, as a consular official to direct clandestine operations against North Vietnam. Within three months Tuyen, using a little psychological warfare himself, had recruited the agent for his smuggling apparatus and had him sending regular opium shipments to Saigon in his diplomatic pouch. (28)

Despite the considerable efforts Dr. Tuyen had devoted to organizing these "intelligence activities" they remained a rather meager supplement to the Corsican opium shipments until May 1961 when newly elected President John F. Kennedy authorized the implementation of an interdepartmental task force report which suggested:

In North Vietnam, using the foundation established by intelligence operations, form networks of resistance, covert bases and teams for sabotage and light harassment. A capability should be created by MAAG in the South Vietnamese Army to conduct Ranger raids and similar military actions in North Vietnam as might prove necessary or appropriate. Such actions should try to avoid the outbreak of extensive resistance or insurrection which could not be supported to the extent necessary to stave off repression.

Conduct overflights for dropping of leaflets to harass the Communists and to maintain the morale of North Vietnamese population . . . . (29)

The CIA was assigned to carry out this mission and incorporated a fictitious parent company in Washington, D.C., Aviation Investors, to provide a cover for its operational company, Vietnam Air Transport. The agency dubbed the project "Operation Haylift." Vietnam Air Transport, or VIAT, hired Col. Nguyen Cao Ky and selected members of his First Transport Group to fly CIA commandos into North Vietnam via Laos or the Gulf of Tonkin. (30)

However, Colonel Ky was dismissed from Operation Haylift less than two years after it began, One of VIAT's technical employees, Mr. S. M. Mustard, reported to a U.S. Senate subcommittee in 1968 that "Col. Ky took advantage of this situation to fly opium from Laos to Saigon. (31) Since some of the commandos hired by the CIA were Dr. Tuyen's intelligence agents, it was certainly credible that Ky was involved with the opium and gold traffic. Mustard implied that the CIA had fired Ky for his direct involvement in this traffic; Col. Do Khac Mai, then deputy commander of the air force, says that Ky was fired for another reason. Some time after one of its two-engine C-47s crashed off the North Vietnamese coast, VIAT brought in four-engine C-54 aircraft from Taiwan. Since Colonel Ky had only been trained in two-engine aircraft he had to make a number of training flights to upgrade his skills; on one of these occasions he took some Cholon dance hall girls for a spin over the city. This romantic hayride was in violation of Operation Haylift's strict security, and the CIA speedily replaced Ky and his transport pilots with Nationalist Chinese ground crews and pilots. (32) This change probably reduced the effectiveness of Dr. Tuyen's Laotian "intelligence activities," and forced Nhu to rely more heavily on the Corsican charter airlines for regular opium shipments.

Even though the opium traffic and other forms of corruption generated enormous amounts of money for Nhu's police state, nothing could keep the regime in power once the Americans had turned against it. For several years they had been frustrated with Diem's failure to fight corruption, In March 1961 a national intelligence estimate done for President Kennedy complained of President Diem:

"Many feel that he is unable to rally the people in the fight against the Communists because of his reliance on one-man rule, his toleration of corruption even to his immediate entourage, and his refusal to relax a rigid system of controls." (33)

The outgoing ambassador, Elbridge Durbrow, had made many of the same complaints, and in a cable to the secretary of state, he urged tha Dr. Tuyen and Nhu be sent out of the country and their secret police be disbanded. He also suggested that Diem make a public announcement of disbandment of Can Lao party or at least its surfacing, with names and positions of all members made known publicly. Purpose of this step would be to eliminate atmosphere of fear and suspicion and reduce public belief in favoritism and corruption, all of which the party's semi-covert status has given rise to. (34)

In essence, Nhu had reverted to the Binh Xuyen's formula for combating urban guerrilla warfare by using systematic corruption to finance intelligence and counterinsurgency operations. However, the Americans could not understand what Nhu was trying to do and kept urging him to initiate "reforms." When Nhu flatly refused, the Americans tried to persuade President Diem to send his brother out of the country. And when Diem agreed, but then backed away from his promise, the U.S. Embassy decided to overthrow Diem.

On November 1, 1963, with the full support of the U.S. Embassy, a group of Vietnamese generals launched a coup, and within a matter of hours captured the capital and executed Diem and Nhu. But the coup not only toppled the Diem regime, it destroyed Nhu's police state apparatus and its supporting system of corruption, which, if it had failed to stop the National Liberation Front (NLF) in the countryside, at least guaranteed a high degree of "security" in Saigon and the surrounding area.

Shortly after the coup the chairman of the NLF, Nguyen Huu Tho, told an Australian journalist that the dismantling of the police state had been "gifts from heaven" for the revolutionary movement:

"... the police apparatus set up over the years with great care by Diem is utterly shattered, especially at the base. The principal chiefs of security and the secret police on which mainly depended the protection of the regime and the repression of the revolutionary Communist Viet Cong movement, have been eliminated, purged." (35)

Within three months after the anti-Diem coup, General Nguyen Khanh emerged as Saigon's new "strong man" and dominated South Vietnam's political life from January 1964 until he, too, fell from grace, and went into exile twelve months later. Although a skillful coup plotter, General Khanh was incapable of using power once he got into office. Under his leadership, Saigon politics became an endless quadrille of coups, countercoups, and demicoups, Khanh failed to build up any sort of intelligence structure to replace Nhu's secret police, and during this critical period none of Saigon's rival factions managed to centralize the opium traffic or other forms of corruption. The political chaos was so severe that serious pacification work ground to a halt in the countryside, and Saigon became an open city. (36) By mid 1964 NLF-controlled territory encircled the city, and NLF cadres entered Saigon almost at will.

To combat growing security problems in the capital district, American pacification experts dreamed up the Hop Tac ("cooperation") program. As originally conceived, South Vietnamese troops would sweep the areas surrounding Saigon and build a "giant oil spot" of pacified territory that would spread outward from the capital region to cover the Mekong Delta and eventually all of South Vietnam. The program was launched with a good deal of fanfare on September 12, 1964, as South Vietnamese infantry plunged into some NLF controlled pineapple fields southwest of Saigon. Everything ran like clockwork for two days until infantry units suddenly broke off contact with the NLF and charged into Saigon to take part in one of the many unsuccessful coups that took place with distressing frequency during General Khanh's twelve-month interregnum. (37)

Although presidential adviser McGeorge Bundy claimed that Hop Tac "has certainly prevented any strangling siege of Saigon, (38) the program was an unqualified failure. On Christmas Eve, 1964, the NLF blew up the U.S. officers' club in Saigon, killing two Americans and wounding fifty-eight more. (39) On March 29, 1965, NLF sappers blew up the U.S. Embassy. (40) In late 1965, one U S. correspondent, Robert Shaplen of The New Yorker, reported that Saigon's security was rapidly deteriorating:

These grave economic and social conditions [the influx of refugees, etc.] have furnished the Vietcong with an opportunity to cause trouble, and squads of Communist propagandists, saboteurs, and terrorists are infiltrating the city in growing numbers; it is even said that the equivalent of a Vietcong battalion of Saigon youth has been taken out, trained, and then sent back here to lie low, with hidden arms, awaiting orders. . . . The National Liberation Front radio is still calling for acts of terror ("One American killed for every city block"), citing the continued use by the Americans of tear gas and cropdestroying chemical sprays, together with the bombing of civilians, as justification for reprisals . . . . (41)

Soon after Henry Cabot Lodge took office as ambassador to South Vietnam for the second time in August 1965, an Embassy briefer told him that the Hop Tac program was a total failure. Massive sweeps around the capital's perimeter did little to improve Saigon's internal security because

The threat-which is substantial-comes from the enemy within, and the solution does not lie within the responsibility of the Bop Tac Council: it is a problem for the Saigon police and intelligence communities. (42)

In other words, modern counterinsurgency planning with its computers and game theories had failed to do the job, and it was time to go back to the tried-and-true methods of Ngo Dinh Nhu and the Binh Xuyen bandits. When the French government faced Viet Minh terrorist assaults and bombings in 1947, they allied themselves with the bullnecked Bay Vien, giving this notorious river pirate a free hand to organize the city's corruption on an unprecedented scale. Confronted with similar problems in 1965-1966 and realizing the nature of their mistake with Diem and Nhu, Ambassador Lodge and the U.S. mission decided to give their full support to Premier Nguyen Cao Ky and his power broker, Gen. Nguyen Ngoc Loan. The fuzzy-cheeked Ky had a dubious reputation in some circles, and President Diem referred to him as "that cowboy," a term Vietnamese then reserved -,for only the most flamboyant of Cholon gangsters. (43)