After the coup on November 1, 1963 that overthrew President Diem, the ARVN were headed by four four-star generals. These generals were trained under the French system in military schools in Cap Saint Jacques and Thu Dau Mot. They participated in most of the major battles when France was fighting against the Viet Minh. After 1954, they commanded many elite units for South Vietnam. However, their promotions were not based on accomplishment or experience but primarily based on political alignment or needed power balance among the military leaders. There existed a pronounced lack of respect for the generals and difficulties in governing and administering the country.
After the January 30, 1964 reorganization, General Duong Van Minh was sent into early retirement and he stopped participating in the political arena. General Nguyen Khanh went into exile since February 26, 1965. There remained two four-star Generals, Cao Van Vien, Chief of the Joint General Staff, and Tran Thien Khiem, Prime Minister and Minister of Defense. Both Generals reported to President Nguyen Van Thieu, a former Lieutenant General now Commander-in-Chief of the Armed Forces of the Republic of Vietnam.
Khiem was appointed Minister of Defense to replace Lieutenant General Nguyen Van Vy who was fired by Thieu because of Vy's questionable involvement in the Bank of Industry and Commerce. This was a military bank founded by Thieu and later abolished by Thieu himself. The main reason for the abolishment of this bank was that the U.S. and capitalists in Cholon felt uneasy about a large pool of money (billions of piasters) being placed under the control of the military. Although widely known for his excellent work and his impartiality, General Vy became the scapegoat. He was a General when both Thieu and Vien were still both majors. In addition, for Khiem to hold the Minister of Defense posisiton without challenges, Vy must be expelled, which was what happened.
Having assisted Thieu many times in the past, Khiem returned from his diplomatic post in Taiwan to help Thieu one more time. Thieu used Khiem, as he had used Huong. Thieu selected Tran Van Huong as his running mate in 1971 when Thieu wanted to create a new Southern Vietnamese allies through Huong's contact and influence. Now he used Khiem to gain Khiem's support from the military. A quiet, easy going, but very observant person, Khiem was temperamental but had self-control. He frequently gave favors to friends and subordiantes, either money or promotions. He appeared cool and always remembered the unhappy days in exile from 1964 to 1968.
When General Khanh learned about Khiem's suggestion to General Duong Van Duc and Colonel Huynh Van Ton to conduct a "show of force" on September 13, 1964 and to promote the anti-government demonstrations by Buddhists, Khanh went to Khiem's house and threatened, "I cannot guarantee safety for your life here, therefore, I am assigning you the position of Ambassador to the United States." Khiem's wife was angry but decided to leave Vietnam in a hurry when a fortune-teller told her that she must go abroad for safety.
Involved in many scandals, Khiem was behind almost every important events such as Diem's overthrow in 1963. Khiem appeared very quiet and moral, but he was "quietly taking money". His men made substantial money from the scandals involving Saigon Harbor and Tan Son Nhut Airport.
Khiem frequently told his friends, "I always respected and loved President Diem. The situation at the end of 1963 unfolded too quickly; if I didn't change my mind to support the coup leaders, I would not be alive now". After the coup, Khiem offered Minh several important advises, notably against the formation of a Cabinet led by Nguyen Ngoc Tho. According to Khiem, Tho was Diem's Vice-President therefore not suitable for the demands of the new situation. Furthermore, Khiem had advised Minh not to allow the repatriement of Lieutenant Colonels Tran Dinh Lan and Vuong Van Dong who worked for the French counter-espionage agency. However, the consequence was 24 hours later, Khiem was reassigned to Bien Hoa as a Commander of Army Corps III/Military Region3.
During the period that Khiem was Khanh's subordinate, Khiem found that Khanh's Machiavellian manipulations had brought chaos for the country, helping the communists gaining ground almost everywhere. Khiem tried to stop Khanh without success. Finally, not withstanding the fact that Khiem was Khanh's best friend, he was expelled from Vietnam until Thieu became President. Although Khiem knew that Thieu was on the way to become a dictator, he had to accept the fact that at least Thieu would act within the confinements of the South Vietnamese Constitution. Therefore, he considered himself as being Thieu's Chief of Staff. Thieu personally appointed all important positions which included cabinet officials, heads of military corps, divisions, province chiefs, and city mayors.
Similar to Thieu and Vien, Khiem fully understood that all the actions and power must originate from the U.S. When General Cao Hao Hon, Director of Pacification and Rural Develpment of the Central Committee submitted an exact translation of the annual plan from the CORDS, Khiem rubber-stamped the plan immediately.
Thieu never trusted anyone. Seeing Khiem being so obedient, Thieu became suspicious and began to neutralize Khiem. When the Vietnamese Democratic Party was created, Thieu did not even inform Khiem. And when Thieu decided to alter the constitution so that he would be qualified to run for a third term as President; Khiem was not consulted. Thieu tried every way to prevent Khiem from running for an elective office.
In early 1974, while North Vietnamese communists substantially expanded the war, Thieu secretly ordered the Senators and Representatives in his Democratic Party to investigate and impeach Khiem. However, Khiem escaped unharm because of the friends he had in the congress.
Rather "unusual" in its objectives and functions, either in the Free World as well as in the Communist World, the Ministry of Defense under Khiem's leadership had only two primary tasks: 1. Formulating the defense budget; 2. Executing the draft of civilians to serve in the Armed Forces.
Hoang Van Lac and Ha Mai Viet