THE Chinese army and police are using their power and status to make quick cash from dabbling in futures, which have proliferated with little government control, a government probe has revealed. The investigation found that the army, public security and armed police were joining local government agencies and financial institutions to trade futures and establish brokerages. ''This kind of participation jeopardises the principle of fair competition, resulting in malpractice and hidden danger,'' warned the mainland-funded Hong Kong China News Agency. The powerful government agencies enjoy many privileges not available to ordinary business entities. Some of them had sent pre-approved documents to the Bureau of Industries and Commerce demanding registration and some took advantage of the army's prestige to attract investors, the study said. ''Many investors blindly trust these companies' powerful background and esteem, pouring in huge amounts of money, but in the end suffer heavy losses,'' said the news agency. It said Hong Kong futures traders and Taiwanese underground futures companies were rushing to the mainland to take advantage of the immature mainland industry, which lacked both legislation and experience. ''To make quick money, some government agencies and departments enter into co-operation to set up brokerage firms with these foreign futures traders. This is one of the reasons for the uncontrolled proliferation of China's futures industry,'' it said. The news agency warned that the involvement of government agencies and departments in the futures business would increase the chances of corrupt activities among cadres. ''Government agencies and powerful organs are using public assets to invest in futures trading, but the profits mostly go into these units' own coffers. Some of the futures companies only submit a certain amount of the profits, retaining the rest for their own disposal,'' it said. ''The involvement of power in futures businesses make some unlawful activities look lawful,'' said the agency. At present, these futures companies were mainly dealing in futures outside the country - which the Government does not allow without authorisation. Some go a step further and hedge the transactions secretly to cheat the investors. ''These unlawful activities are being protected by the participation of government organs,'' said the news agency. The agency warned that such a situation was highly harmful and called on the Government to act immediately to stop the involvement of government agencies in futures trade. Companies which had been established should be immediately hived off, it said. The Government should also step up the drafting of legislation on the futures market to set out clear guidelines on the issue, it added.