Second executive arrested in Wirecard scandal in Germany
FRANKFURT, Germany — Another executive with bankrupt payment
company Wirecard has been arrested in Germany on suspicion of aggravated fraud,
prosecutors said Monday. The suspect, the head of a company subsidiary in
Dubai, had returned to Germany to face proceedings.
The arrest comes after former CEO Markus Braun was taken
into custody on June 23 on charges of market manipulation and falsifying
financial results and released on bail.
Wirecard, once a high-flying star of the burgeoning
financial technology center, filed for protection from creditors through an
insolvency proceeding on June 25 after executives admitted that $2.1 billion
that had been represented as being held in trust accounts in the Philippines in
fact did not exist. The company said it is investigating the scope of its
business handling payments through regional third parties, a major source of
profits, and how that business was being conducted.
Prosecutors in the German city of Munich said in a statement
that the suspect arrested Monday, who was not named in the news release, would
be brought before a judge the same day. Bail and conditions of release are
typically decided at such appearances.
The Wirecard debacle has let to questions about the
effectiveness of German financial regulation and has been viewed as a setback
for the investment climate and attempts to promote the country as a base for
financial services companies. German Finance Minister Olaf Scholz has announced
plans to restructure financial services regulator BaFin, saying the entity must
be given a broader mandate to check company finances. BaFin had directly
overseen only Wirecard’s German banking arm, not the group as a whole.
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