Two identical blocks next to the one that went up in smoke remained wrapped in scaffolding and green plastic mesh yesterday afternoon. Through gaps in the scaffolding, it was possible to see insulation materials had been fitted to sizeable areas of the walls. Although much of the foam looked to have been plastered over with cement, it was still visible in wide gaps where the work was unfinished.

There was almost no sign of such insulation remaining on the charred surface of the burnt building.

The two intact towers were still occupied yesterday, but police were guarding the compound's gates, and residents declined to be interviewed.

A State Council investigation headed by Luo Lin, director of the State Administration of Work Safety, reported on Wednesday that the fire was started by two unlicensed welders, who then fled the scene. However, the speed with which the flames spread across the entire structure was blamed on the use of flammable insulation foam and nylon mesh around the scaffolding outside the building.

Questions have also arisen about the link between the contractor that was carrying out the work, Shanghai Jiayi Building Decoration Engineering, and the Jingan district government, which ordered the work.

Shanghai Jiayi is listed as a state-owned company under the Jingan government. Documents posted online say it was registered in Jingan in April 2000, with a working capital of 5 million yuan (HK$5.8 million).

The Beijing News reported yesterday that the firm had been awarded 35 contracts out of 36 tender applications in Jingan in the past three years, worth a total of 28 million yuan.

Shanghai Jiayi's offices are in a small, dishevelled red-brick house tucked down a back alley two blocks from the fire. Most of the surrounding houses have been cleared for redevelopment, and there is nothing on the building's rusting metal outer doors to indicate business offices are operating inside. Thermal underwear and bras were hanging out to dry outside the building yesterday afternoon.

The one member of staff present in the office yesterday said none of the company's management were available. 'We really cannot make any statements at the moment. All the responsible persons are under investigation [over the fire],' he said. 'I have no way to contact them.'

Staff at a Jingan government media centre set up in response to the fire were unable to provide details of the relationship between the two.

'A great many reporters have been asking about Shanghai Jiayi, but we do not have the information available at this moment,' a spokesman said.

He confirmed that the insulation project had been part of a government pilot scheme to improve the environmental efficiency of local buildings, but was unable to explain the size of the project, including how many other buildings had been fitted with similar flammable insulation.

We really cannot make any statements at the moment. All the responsible persons are under investigation [over the fire]. I have no way to contact them

An employee of Shanghai Jiayi Building Decoration Engineering, contractor of the insulation project

Winning bidder

Shanghai Jiayi has been awarded 28 million yuan worth of projects in Jingan district in the past three years

Out of 36 tender applications, the company won this number of contracts: 35