Thieu Ousts Defense Minister in Scandal

SAIGON, South Vietnam, Aug. 6 (Reuters) - President Nguyen Van Thieu has dismissed his Defense Minister, Lieut. Gen. Nguyen Van Vy, following a financial scandal involving mismanagement of South Vietnam's big military savings fund.

Under a presidential decree, General Vy was retired and forbidden to travel abroad until completion of an investigation into the administration of the multimillion-dollar fund to help war widows and maimed soldiers, the Saigon radio said.

Military sources, said the army's Inspector General might still bring formal charges against General Vy, who has been in President Thieu's Cabinets since 1967 and was in charge of the Soldiers' Mutual Aid and Saving Fund.

Last March a military magazine written by young officers charged that there were irregularities in the handling of the $8-million to $10-million fund, to which each South Vietnamese soldier made a compulsory monthly contribution of 100 piasters, or about 25 cents. It was charged that some war widows had not received payments for more than a year after their husbands had been killed.

General Vy has denied press reports of embezzlement and it was reported recently that he had told President Thieu, in writing, that an investigation into the fund being carried out under Vice President Tran Van Huong was unconstitutional and lacked impartiality.

Though he was Defense Minister, General Vy, 56 years old, and trained in France, had little to do with the daily prosecution of the war or with questions of tactics and strategy. The general, who served under the French colonial government, and holds the French Legion Of Honor, headed the sprawling military bureaucracy that administers the army.

President Thieu turned over the Defense portfolio to Premier Tran Thien Khiem, who is also Minister of the Interior. Under the Thieu decree, seven colonels and three civilians were also dismissed from the Defense Ministry and were refused permission to leave the country.

The New York Times
Monday, August 7, 1972

ARVN Generals
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