An investigation has begun into the disappearance of 25 million yuan (US$4 million) compensation paid out following a deadly land struggle in southwest China's Yunnan Province.

In 2012, eight people were killed when residents from Fuyou Village attacked a construction site and fought workers.

While compensation was later authorized, authorities in Kunming, capital of Yunnan are now investigating where some of the cash went, the Beijing Youth Daily reported yesterday

Some 205.5m yuan compensation was given, but just over 180m paid out.

In 2012, tensions were high between Fuyou villagers and the Pan Asia Industrial Logistics Center after land was seized for a warehouse and logistics center, a project reportedly backed by the local government.

On October 14, 2012, villagers raided the construction site and fought with workers, Kunming government said.

Villagers were armed with homemade explosives and construction workers were set on fire in a confrontation that left 6 workers and 2 villagers dead and 18 people injured, said the government.

Villagers told the Beijing Youth Daily that the land grab had left them unable to continue to make a living through growing crops.

They also claim that they were forced to accept low compensation.

Village Party chief Li Yunxiang said they devised several compensation schemes, and that most villagers accepted an offer of 43,000 yuan each.

However, villagers dispute this account. "Officials never asked my opinion," said villager E Zhengrong.

Questions have now been asked about what happened to some of the money.

Yue Weimin, head of the Jingning County, which administers the village, said the village was given nearly 205.5m yuan and the sum had all been distributed, the paper reported.

But Li confirmed that the 4,070 villagers received 175m yuan, with an additional 5.36m yuan as crop compensation.

Li said he did not know where the other 25m yuan went.

Officials from the Kunming Party disciplinary watchdog are investigating.

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