THE Government is finding it increasingly difficult to ignore the plight of thousands of investors who have taken to the streets in protest at losing billions of yuan through investment scams some claim are masterminded by officials. Over the past two weeks alone, thousands have staged protests in the city of Xinhui, in Guangdong province, over local authorities' refusal to pay back 2.8 billion yuan (HK$2.6 billion) they invested in five public utilities firms set up by the municipal Government which then lost the money in bad deals. Last month, scores of Beijing residents staged a sit-in protest outside Zhongnanhai for eight days, claiming the general manager of Xinguoda Futures and two top associates had disappeared, taking more than one billion yuan. And six months ago, thousands of investors in the Three Star Industrial Company demonstrated in the streets of Zhengzhou, Henan province, demanding the return of their 'blood and sweat money', which they said amounted to nearly 900 million yuan. In all cases investors were lured by high interest rates. These are just the tip of the iceberg when it comes to cases of irregularities involving financial institutions over the past few years, and the Government, under Premier Zhu Rongji, is striving to clean up the mess by imposing a ban on all unauthorised financial institutions. However, the ban is only effective in that it aims to avoid future improprieties, but fails to deal with irregularities that have already occurred, leading to the widespread demonstrations. In Zhengzhou recently, according to Henan's Dahe Daily, demonstrators 'blocked traffic for several days and the normal life and work of the citizens has been seriously affected'. Despite this, the situation now appears under control. Since the arrest of 14 executives of Three Star Industrial Company, including the boss, Li Guofa, the city has been quiet. In an unusual move in Beijing, the victims of Xinguoda Futures were allowed to hold demonstrations outside the Zhongnanhai leadership compound without permission. After the protest, Beijing appointed a team to investigate the scandal which comprised officials from the China Securities Regulatory Commission, the Public Security Bureau and the State Administration for Industry and Commerce. There has been no word on whether the Government will compensate investors. In Xinhui, demonstrations have continued for days and the municipal Government has submitted a report on the scandal to Wang Qishan, Guangdong's Vice-Governor. But whatever the outcome, some experts believe the Government will not be rocked by the demonstrations. Eddy Li Sau-yung, chairman of the Hong Kong Economic and Trade Association, said: 'The mainland has a lot of experience in controlling protest actions like these. I don't think they will create any problem for the Government.' Mr Li, a member of the Chinese People's Political Consultative Conference and a businessman who has made a number of investments in the mainland, doubted if the central Government would help as the cases involved such huge sums. 'They don't have money to pay workers and take care of medical and other welfare, let alone offer refunds to investors who have lost money,' he said. In some of the financial scandals, investors have pointed the finger at what they claim are corrupt government officials. In Xinhui, a former city government high-ranking official, who has since been assigned to another city, was said to be behind the setting-up of the utilities companies. Although he was accused of being responsible for unwise investments and misappropriation of funds, he is not under investigation. Leading local government officials on the mainland have the dual responsibility of implementing polices and operating businesses, making it easy for the seeds of corruption to be sown. They are asked to devise ways to make money. In order to attract outside investments, they will try different ways to raise funds, such as offering high returns for investments. As long as investments pour in, they care little about future consequences because they are unlikely to be around when trouble erupts. In Zhengzhou and Beijing, although no government officials have ever been mentioned in the scandals, authorities will still find it hard to evade taking some degree of responsibility.