Below is the blog post by Matt Cutts about "Why did our PageRank go down?"

Recently a newspaper contacted me. Their PageRank had dropped from 7 to 3, and they wanted to know why. They genuinely didn’t seem know what the issue was, so I took some time to write them an in-depth reply. Part of the motivation for my blog is to provide information in more scalable ways, so I figured I’d strip any identifying information from my email and post it. Here’s what I wrote:


Hi, the usual reason why a site’s PageRank drops by 30-50% like this is because the site violates our quality guidelines by selling links that pass PageRank. Here’s our documentation on that: http://support.google.com/webmasters/bin/answer.py?hl=en&answer=66356 and here’s a video I made about this common case: http://www.youtube.com/watch?v=kFcJ7PaLoMw (it’s about 1:30 into the video). http://www.nytimes.com/2012/08/26/business/book-reviewers-for-hire-meet-a-demand-for-online-raves.html?_r=1&pagewanted=all is a good recent article about paid reviews. In Google’s world, we take paid links that pass PageRank as seriously as Amazon would take paid reviews without disclosure or as your newspaper would treat a reporter who was paid to link to a website in an article without disclosing the payment.
In particular, earlier this year on [website] we saw links labeled as sponsored that passed PageRank, such as a link like [example link]. That’s a clear violation of Google’s quality guidelines, and it’s the reason that [website]‘s PageRank as well as our trust in the website has declined.
In fact, we received a outside spam report about your site. The spam report passed on an email from a link seller offering to sell links on multiple pages on [website] based on their PageRank. Some pages mentioned in that email continue to have unusual links to this day. For example [example url] has a section labeled “PARTNER LINKS” which links to [linkbuyer].
So my advice would be to investigate how paid links that pass PageRank ended up on [website]: who put them there, are any still up, and to investigate whether someone at the [newspaper] received money to post paid links that pass PageRank without disclosing that payment, e.g. using ambiguous labeling such as “Partner links.” That’s definitely where I would dig.
After that investigation is complete and any paid links that pass PageRank are removed, the site’s webmaster can do a reconsideration request using Google’s free webmaster tools console at google.com/webmasters. I would include as much detail as you can about what you found out about the paid links. That will help us assess how things look going forward.
Sincerely,
Matt

That’s about it. This case was interesting because we also had an external spam report about the newspaper selling links. 



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