The Red Mansion private club in the Chinese port of Xiamen was a favourite with high-ranking party officials and military officers. There they could frolic with attractive hostesses in the hot tub or retire to private rooms for sex.
What they didn't know was that the owner, a corrupt business tycoon, was compromising them by making secret videotapes of their sexual exploits.
This is the latest and most lurid allegation to emerge in the huge corruption scandal unfolding in southern China, which is rapidly turning into a crisis for the Communist Party leadership.
According to sources quoted in the Hong Kong Ming Bao newspaper yesterday, officials from Xiamen and Fujian province were shown the videotapes after they had made four or five visits to the club.
The Red Mansion, tucked away in an industrial estate, was owned by the Yuanhua group, which is alleged to have smuggled $10 billion worth of crude oil, vehicles, electronics and weapons into China over a period of years, avoiding payment of high tariffs.
Those videotaped were told that if they did not provide protection for the hugely profitable criminal conspiracy the tapes would be sent to officials in Beijing.
The uncovering of the scandal resulted from a gambling spree in Macau during which a vice-president of the Yuanhua group lost 10 million Chinese yuan (almost £1 million), it was also reported yesterday. He asked the president of the company, Mr Lai Chang xing, to extract funds from public officials to pay the debt.
When he was turned down, the vice-president, in a fit of pique, wrote to China's Prime Minister and strong opponent of corruption, Mr Zhu Rongji, and blew the whistle on the Yuanhua group's activities.
Beijing soon learned that the case involved high-ranking party officials and officers of the People's Liberation Army. A team of several hundred investigators from the party's Central Discipline Inspection Commission was sent to Xiamen.
When it arrived, sources said, it discovered that its every move was being made known to suspect officials because its rooms in the flashy 300-room Jinyan Hotel were bugged.
Mr Lai and 10 top government and party officials, including a former Xiamen deputy mayor, Mr Lan Fu, and his wife, have fled China recently, and the Yuanhua group and Red Mansion club have been shut down.
Authorities have asked Interpol to help in the search for the suspects, who are believed to have headed for Australia. Hundreds of senior officials in Xiamen have been called in for investigation. They include the former party deputy secretary for Xiamen who was detained after being invited to a "meeting" one night. Now officials in the city are extremely nervous about being summoned to any night-time meetings, sources say.
Thirty officials are reported to have confessed their crimes in return for leniency.
One of the most explosive aspects of the scandal is the alleged implication of Ms Lin Youfang, ex-wife of the Politburo and Beijing party chief Mr Jia Qinglin. Ms Lin headed the Fujian province Import and Export Corp, which was the trading arm for Fujian province at a time when her husband was party chief of Xiamen. A divorce was arranged hastily after her involvement became known in Beijing.
Mr Jia is a protege of President Jiang Zemin of China, with whom he worked in the 1960s. The scandal is dangerous for Mr Jiang, who could be compromised if seen to be protecting Mr Jia, regarded as a political lightweight, although so far only scant details about the scandal have been published in China.
In Beijing at the weekend, Mr Jia obliquely declared his innocence by calling on city leaders to crack down on corruption and nepotism. He was quoted in the Beijing Daily as saying: "We must comply with the clear-cut regulations of the central party on the influence of leading officials and the use of their powers and duties by their wives and children to make illegal gains. Faced with party discipline everyone is equal. Any behaviour violating party discipline must be strictly dealt with."
The handling of the scandal is said to be causing agitated debate in the top leadership. Mr Zhu is insisting that the investigation be completed and that if it didn't produce a result the party's central committee should explain why. The central committee is said to be very dissatisfied with the small number of confessions obtained. The investigation is being directed by the Politburo member in charge of party discipline and inspection, Mr Wei Jianxing. He has assigned China's top investigator, a former policewoman, Ms Liu Liying (68), a deputy secretary of the Communist party's Central Discipline Inspection Committee.
Ms Liu was responsible for the conviction of Chen Xitong, a former Beijing party chief and only Politburo member to have been found guilty of corruption.