Britain's biggest lap-dancing chain is under threat because Scotland Yard alleges its flagship club is being used as a brothel.
The Metropolitan Police's clubs and vice unit claims to have found evidence that "indecent conduct has taken place" at the Spearmint Rhino club on Tottenham Court Road in central London. Officers are understood to have viewed CCTV tapes from the club and to have sent in undercover officers.
If the police, backed by Camden council, are successful in having the liquor licence revoked, similar action could be taken at other premises where claims of paid sex are made. The chain, which markets itself as a "Gentlemen's Club" that operates a "look-but-don't-touch" policy, offers visitors topless dancing and all-nude performances in private booths. On top of the £15 entrance fee, it costs £10 to watch a public dance and £20 for a private one.
The big money is made from the businessmen and City traders willing to shell out thousands of pounds on champagne and private performances.
The club was in the headlines last month when a senior manager at the City firm Cantor Fitzgerald claimed in the High Court that "80 per cent of the market" [financial traders] could be seen on a "good night" at Spearmint Rhino.
Spearmint's owner, John Gray, a 48-year-old Californian, boasts that the turnover of the West End branch, which opened in November 2000, is £300,000 a week. There are six clubs in England, including Birmingham and Bournemouth, with five more planned for other locations – the latest opposite the MI6 headquarters in south London.
At the clubs, dancers strip around a pole on a stage while other women persuade customers to buy private dances. Signs say: "Gentlemen must remain seated during a dance, with their hands at their sides. There must be no touching of the dancers except when paying a fee into the dancer's hand or garter."
The dancers pay £80 for working the 8pm-2am evening shift, and make their money through tips and cash stuffed into their garter belts.
But after claims that some dancers were being paid for sex, a police inquiry was set up. In July last year, at a licensing hearing, police voiced concern that conduct in the club might amount to prostitution.
Scotland Yard said yesterday: "Camden officers who became concerned about activities taking place at the Spearmint Rhino, Camden, contacted the clubs and vice unit who began an investigation ...
"In partnership with Camden council, officers will make a case for the revocation of the Clubs Liquor Licence on the grounds that indecent conduct has taken place on the premises and that the licensees are not fit and proper to hold a licence."
Spearmint Rhino has strongly denied the allegations. A spokeswoman said the clubs operated a strict code of conduct and included random drug testing of the women.
Two girls quoted in a newspaper article suggesting that they were willing to have sex for money had been fired, she said. "We are a table-dancing club where people can come to have a meal and a drink."
The police and the local authority will present their evidence at a licensing hearing at Highbury Corner magistrates' court on 19 August. In a separate hearing, Camden has turned down an application to renew the public entertainment licence of the Tottenham Court Road branch. The club is appealing against the decision.