BEIJING - Police are investigating a Beijing security company linked to the unauthorised but lucrative practice of holding citizens in so-called "black jails," or illegal detention centres, according to state media.

The official China Daily reported Monday that police have detained Zhang Jun, the chairman of Beijing-based Anyuanding Security and Prevention Technical Support Service, and his general manager Zhang Jie for "illegal detention and unlawful operation." It did not say when the two men were taken into custody.

The company was profiled in a hard-hitting expose this month by the Chinese financial magazine Caijing, which described the practice of illegally locking up citizens to prevent them from filing formal complaints with the central government. The magazine said the company reportedly earned 21 million yuan (US$4.15 million) in revenue in 2008.

Anyuanding agents dressed in police-like uniforms would grab petitioners off the streets of Beijing and other cities and forcibly hold them in hotels or rented houses, often physically mistreating them as well, the magazine said.

The company charged local and provincial governments up to 300 yuan per person per day for "controlling, forcing and escorting petitioners" to the black jail until they could be escorted back by police from their hometown, according to a report by Southern Metropolis Daily.

In China, local officials are under pressure to have no petitions from their area, since their performance is linked to the number of grievances filed - a sign of instability - from their locality.

In the past, police have often turned a blind eye on the practice while the Chinese government has repeatedly denied the existence of the black jails.

However, a formal police investigation of such practices is an "encouraging development," said Phelim Kine, an Asia researcher with Human Rights Watch, which issued a major report in 2009 on China's black jails.

"It suggests that pressure may be building within the Chinese government to address the egregious abuses perpetrated in black jails against thousands of petitioners each year," he said.

But Kine said the problem of black jails extends far beyond a single company and that China must undertake a systematic effort to locate and shut them all down. China must also recognise that penalising local officials for the number of petitioners from their area creates a "perverse evaluation process" that creates the incentive for a black jails system, he said.