German prosecutors arrest head of Wirecard unit in Dubai

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BERLIN / FRANKFURT (Reuters) – German prosecutors said Monday they have arrested the head of a Dubai branch of Wirecard, expanding the circle of suspects in a multi-billion dollar fraud investigation into the collapse of the payment company.

FILE PHOTO: The logo of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment transactions, is pictured at its headquarters in Aschheim, near Munich, Germany, on July 1, 2020. REUTERS / Andreas Gebert / File Photo

The Munich prosecution said in a statement that it had questioned the managing director of Cardsystems Middle East FZ-LLC earlier today and arrested him on the basis of a warrant.

The executive had come from Dubai and had gone, prosecutors said, without naming him. Unless the defendants are well known to the public, their identities can be protected under German law to avoid prejudice to legal proceedings.

Prosecutors said the arrest was made on suspicion of conspiracy to commit fraud, attempted fraud and complicity in other crimes. They said there was a risk that he would leak or falsify evidence.

Wirecard filed for insolvency last month due to 4 billion euros ($ 4.5 billion) to creditors after revealing a hole of 1.9 billion euros in its accounts which, according to its auditor EY, was the result of sophisticated global fraud.

Investigative journalists and speculators have long emphasized Wirecard’s dependence on an obscure trio of third-party acquiring partners – including Cardsystems – to generate the bulk of its reported revenues and profits.

Wirecard’s creditors’ committee was scheduled to meet for the first time on Tuesday, people familiar with the matter said.

GATHERING OF THE SURVEY

The latest arrest came after police and prosecutors searched the Wirecard headquarters in Munich and four properties in Germany and Austria last Wednesday as they investigated.

Prosecutors said they are investigating Wirecard chief financial officer Alexander von Knoop and product manager Susanne Steidl in addition to former CEO Markus Braun and chief operating officer Jan Marsalek .

Wirecard did not immediately respond to a request from Reuters to comment on behalf of von Knoop and Steidl.

Braun was released after posting a 5 million euro bond. It is unknown where Marsalek is and his lawyer refuses requests for comment.

Creditors will meet on Tuesday to discuss the latest fraud investigation news, as well as planned asset sales with which insolvency administrator Michael Jaffe hopes to recover at least a fraction of the money owed, said people close to the case.

One of the people said that Jaffe was probably only going to raise 400 to 500 million euros for Wirecard’s assets, including around 100 million euros for its banking unit. This equates to approximately 10% of the total due to them.

Wirecard’s lenders will be represented by ING and the German regional bank LBBW, while bondholders will be represented by a law firm appointed by Cyrus Capital, people familiar with the matter have said. Holders of other titles have appointed German law firm Tilp to the creditors’ committee, while employees will also be represented, people said.

Members of the creditors’ committee declined to comment or were not immediately available for comment.

Reports by Douglas Busvine, Joern Poltz, Alexander Huebner and Arno Schuetze; Assembly by Arno Schuetze / Edward Taylor / Jane Merriman

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