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Web services firm Outblaze and online auctioneer Cat-Street have denied any wrongdoing after a series of irregularities surfaced during an Internet auction of 25 million banner advertisements.

Since the first package of 500,000 ads on the Outblaze network of Web sites was put up for auction last week with a starting bid of HK$10, the deal has been changed, the log recording bid times was altered inexplicably and Cat-Street chief executive Alois Paier was found to have joined in the bidding under a pseudonym.

It is an inauspicious start for what the companies had hoped would provide a cost-effective outlet for the sale of advertising.

The problems began when a clerical error led to an offer of 500,000 impressions on financial services site kgieworld.com being posted on Cat-Street. The deal was withdrawn and replaced two days into the 10-day auction.

'Someone connected to Cat-Street uploaded the incorrect information and we corrected it as soon as we spotted it,' said Outblaze director of communications Ibrahim El-Mouelhy.

'We probably didn't scrutinise the Web site as closely as we should have to make sure all the information was correct.'

Mr El Mouelhy said Outblaze was aware of the error early, but the auction was not changed by Cat-Street until the next day. At least six people bid on the incorrect package.

The auction was changed to being 500,000 ads on eight financial sites instead of featuring kgieworld.com.

Cat-Street maintains the right to withdraw items, but only in extreme cases.

Mr Paier said the deal would have been withdrawn completely if there had been any complaints over the issue.

Hong Kong financial analyst David Webb, editor of Webb-site.com, said altering the item after bids were made appeared to violate Cat-Street's user agreement.

'Changing the item for sale is the same thing as withdrawing the original item. You cannot take bids on a Toyota and then settle the deal with a Ford,' he said.

There also is confusion over exactly when the bids were made.

On June 21, there had been six bids logged between June 19 and June 21. On June 22, the time of the bids was changed so they all appeared to have been placed over a seven-minute period on June 21.

Mr Paier said he could not explain how or why the times were changed. He said the times were set automatically by the server.

Hilda Wong, director of business development for competing auction site Red-dots.com, said it was shocking if the bid times and item description had been altered.

'The operator shouldn't be doing something like that, it's not fair to the bidders. The normal practice is that once the auction starts, everything is fixed,' she said.

Meanwhile, complaints have arisen over Mr Paier becoming involved in the bidding. According to the bid log for the auction appearing on Cat-Street yesterday, the highest offer for a package of ads that would normally cost HK$10,000 was HK$310 before a user by the name of Hope and one named havel-havel-havel drove it up to HK$3,110 over the span of a few minutes. When questioned about the connection, Mr Paier admitted that he was Hope.

'You know it is me,' he said when provided with evidence that he had placed the bids. 'I have bought a lot of things from the site on a constant basis.'

Mr Paier said Cat-Street's employees could take part in auctions as long as they did not own the items up for sale. He said he did not see a conflict of interest in bidding on the banner ads.

'This completely complies with our rules and regulations,' he said.

Bidders on the auction would have no way of knowing Hope's identity, Mr Paier said.

Under the section where Cat-Street users can rate buyers and sellers as a measure of credibility, there are two positive ratings for Hope. Mr Paier's e-mail address is attached to both comments and he admitted to being the source of the positive comments about his alias.

But Mr Paier said the comments were made last year when Cat-Street was testing the site and were not meant to be seen publicly. He said the comments could not be removed.

Ms Wong said Red-dots did not ban its employees from bidding on auctions, but that the banner ad sale was a special case because Cat-Street was promoting the event alongside Outblaze.

'It is an ethics issue. It's not politically correct,' she said.

Mr El-Mouelhy said he personally was not concerned if Mr Paier was bidding on the ads. He said Outblaze had no position on the matter.

Despite the controversy, Outblaze plans to push ahead with the auction, and will put a new package of ads on the block on Monday.

'Outblaze entered into an agreement to serve a specific number of ads for auction on Cat-Street, and we will honour this agreement, barring a breach of contract or similar legal problems,' said Mr El-Mouelhy.



Irregularities exposed in Outblaze-Cat Street Internet offering of banner advertisements