Details of Liu Zhihua’s colourful private life emerged today after he was sacked from his post when a foreign businessman reported him for extorting a bribe.

Mr Liu’s sacking has triggered accusations of widespread corruption surrounding the Games, and highlighted a culture of graft that is said to trouble British and other foreign companies working as specialist contractors on Beijing’s Olympic sites.

In the resort town of Kuangou, an hour’s drive north of the Olympic Village, police have sealed off Mr Liu’s multi-story development.

An unknown number of young woman, as well as waiting staff, are said to be confined to rooms there, waiting to be interviewed by investigators from the central discipline inspection commission, a shadowy anti-corruption agency inside the Communist Party.

“Liu has more than one mistress,” wrote the Wen Hui Bao newspaper in Hong Kong. “He has a secret pleasure palace for himself to have fun.”

Mainland media reported the sacking but no further details.

Mr Liu’s palace is part of a resort complex in the hills north of the capital, close to the Great Wall. The architecture mixes classical Chinese courtyard layouts with modern glass and steel structures.

Near by is a conference centre with 150 rooms where domestic and foreign companies regularly conduct business meetings. A sports club on the same piece of land offers tennis courts, saunas and private venues for karaoke. The interior of the buildings aims to emulate high-end hotels. The carpets are thick, the sofas gilded and the chandeliers bedecked with fake gemstones.

Mr Liu was sacked after he demanded a bribe from an unnamed foreign businessman for the sale of a piece of land in Zhongguancun, a Beijing district to the west of the Olympic site. When Mr Liu refused to hand over the land despite having been paid off, the businessman reported the Vice-Mayor to the authorities.

The case is an acute embarrassment for the Government, which has vowed to “clean up” Beijing. Anti-corruption investigators moved against Mr Liu with unusual speed. He was removed from his post within 24 hours of his last public engagement. Normally, officials in his position are left in limbo for weeks or months.

The Government also took action today against online critics of its anti-corruption drive. Websites where readers can comment on news articles about Mr Liu were shut down. Nonetheless, chat rooms buzzed with allegations that China was certain to win at least one gold medal at the 2008 Games - for graft.

Someone calling themselves Sleepy Hippo wrote: “If they tell us Liu was leading a 'dissolute life' they should give us an explanation what that means. Then the other officials can compare it to their lives.”

The chat rooms were also filled with allegations that the rot must be going higher than Mr Liu. In China, it is often the deputies who are punished in corruption cases while the top cadres are exonerated. “Again it is a vice-mayor? Why not punish No 1?” wrote Used To Be Intelligent.

Mr Liu was Beijing’s vice-mayor responsible for city planning, land sales and sports construction. Hong Kong media reported that the investigation may yet be widened to include other officials.

Mr Liu may be executed if found to have defrauded the state of more than half a million dollars - an unofficial threshold in financial crimes for the death penalty in China. Beijing is spending $40 billion (£21.7 million) on pre-Olympic construction work.

Other officials hurried yo distance themselves from the vice-mayor. “Liu Zhihua held no position with the Beijing Organising Committee for the Olympic Games,” said Sun Weide, a committee spokesman.

“It is his own problem and he is being investigated by the relevant department. His case will not affect the preparations for the hosting of the 2008 Olympic Games.”

The leadership of the Communist Party has embarked on a huge anti-corruption drive over the past two-and-a-half years with nearly 50,000 officials prosecuted and punished up to the end of last year.

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