Hainan province is continuing investigations into the financial fraud which left debts of 445 million yuan (about HK$414 million) and led to the closure or merger of all but one of the island's 34 credit unions, Deputy Governor Wang Houhong said. The fraud, which had attracted the personal attention of Premier Zhu Rongji, was part of a financial and property bubble, the closest the country came to falling victim to the Southeast Asian financial crisis last year. The danger was averted only by the state taking control of all the obligations of the credit unions and paying back customers. To date, no one has been arrested or charged for the fraud, Mr Wang said. The crisis began in May when Chen Qi, head of the Haikou City People's Credit Union, disappeared with its money, triggering a run on credit unions by depositors who feared they would lose their money. Many credit unions were unable to meet their obligations, prompting the central bank in August to send 34 investigation teams that discovered the 34 credit unions had, as of the end of June, assets of 13.708 billion yuan and debts of 14.153 billion. Then Vice-Premier Zhu approved the allocation of four billion yuan to cover the debts and held two emergency meetings to resolve the problem. He ordered the Hainan Development Bank, majority owned by the provincial government, to take over 28 of the credit unions and close five others. Mr Wang said Mr Chen remained on the run, either at home or abroad. 'The authorities take a very serious view of this matter and are continuing their investigations,' he said. 'Our financial base was weak, too much money was invested in property and there was too high a level of bad debts,' Mr Wang said. Many of the bad debts were tied up in property. Haikou has six million square metres of unsold real estate. The credit unions offered depositors interest rates double those of the state banks or higher. One government economist in Haikou said the crisis was similar to that breaking out in Southeast Asia, with a high proportion of empty property and bad loans in the credit union. Hainan was not a country, but part of China, he said. 'We were rescued by money and support from the central government. 'All the depositors were paid, although only at the official interest rates.'