The detention of a senior finance official has revealed hidden practices in China's government bonds market where banks offer bribes to officials in exchange for help to nail bids.

Zhang Rui, a deputy director at the Department of Exchequer in the Ministry of Finance, has since January 17 been under double designations for allegedly tipping off a Chinese bank so it could buy government bonds at the lowest possible price, Caixin Magazine reported yesterday.

Double designations is a special procedure in which a Party official is ordered to explain allegations of disciplinary violations or corruption at a designated time and place.

Zhan was reported to have revealed the bid price and bond sales size to Baotou City Commercial Bank Co via cell phone messages during the auctions, the magazine said.

The bank landed several bids all at the lowest prices, which aroused suspicions among other bidders, who reported their concerns to the authority, the report said.

The government bond auction usually lasts an hour via the ministry's online bidding system. Most of the 60 bidders will complete their price offerings in the first half hour.

In the second half, officials from the ministry then map out a price range for the bonds based on these offerings while those who haven't made a bid continue to bid.

As bidders cannot see the prices offered by other participants, information from insiders is crucial if the bidders want to close the deals at the lowest cost.

Although the room where the auction is held can't receive cell phone signals during the bidding process, a senior official such as Zhang, who had been in charge of bond sales for 12 years, could leave the room whenever he wanted, an insider familiar with the auction process told the magazine.

Zhang is said to own a villa worth at least 10 million yuan (US$1.52 million) in Beijing, far beyond the reach of someone on a government official's salary, the magazine said.

Other insiders told the magazine that the Baotou bank was not the only one to use underhand tricks to land business as bribing officials had long been an unspoken practice and "everyone is just turning a blind eye," the report said.

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