5. Chung also expressed dissatisfaction with
 the present government. He claimed that the popular
 support which Ky enjoyed after the defeat of the
 struggle movement has now been largely dissipated.
 He blamed this development on widespread misgivings
 over the prime minister's entourage, particularly
 police director Loan.
 General Loan's Contingency Plans
 6. A usually reliable source reports that police
 director Loan is considering several plans to create
 a political crisis prior to this year's elections in
 the event that the constitution precludes military
 officers from running for office. The bogus crisis
 would be used by the government to justify dissolving
 the Constituent Assembly, annuling the constitution
 and postponing the elections.
 7. The source states, however, that Loan is
 reviewing the schemes at the behest of one of his
 subordinates who has been urging the general to play
 a more active role in national affairs, and may not
 be fully committed to supporting them.
 Corruption
 8. A South Vietnamese security officer in Binh
 Dinh Province has stated that corruption among high-ranking
 officials is threatening the province's
 revolutionary development program.
 9. The officer told a US source that the morale
 of honest officials, South Vietnamese soldiers, and
 peasants was adversely affected by war profiteering
 by some provincial officials. He said that the
 province chief, Lt. Col. Tran Dinh Vong, the assistant
 province chief and several district chiefs were
 working with local merchants in numerous black-market
 and vice operations, including illegal control
 of the province's lucrative rice trade. The security
 officer held out little prospect for local reform
 unless Prime Minister Ky, whom he characterized
 as an "honest man," can be persuaded to clean house
 in Binh Dinh.
 2 January 1967
 II-2
 
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 No Foreign Dissem/Background Use Only
 No Foreign Dissem/Background Use Only
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 COPY
 LYNDON BAINES JOHNSON LIBRARY