(Adds details on creditor meeting)
By Douglas Busvine and Arno Schuetze
BERLIN/FRANKFURT, July 6 (Reuters) - German prosecutors said
on Monday they had arrested the head of a Dubai-based subsidiary
of Wirecard WDIG.DE , widening the circle of suspects in a
multi-billion-dollar fraud investigation into the collapse of
the payments company.
The Munich prosecutor's office said in a statement it had
questioned the chief executive of Cardsystems Middle East FZ-LLC
earlier in the day and arrested him on the basis of a warrant.
The executive had travelled from Dubai and turned himself
in, prosecutors said, without naming him. Unless defendants are
publicly well known, their identity can be protected under
German law to avoid prejudicing legal proceedings.
The arrest was made on suspicion of conspiracy to commit
fraud, attempted fraud and aiding and abetting other crimes,
prosecutors said. They said there was a risk that he would flee
or tamper with evidence.
Wirecard filed for insolvency last month owing creditors 4
billion euros ($4.5 billion) after disclosing a 1.9 billion euro
hole in its accounts that its auditor EY said was the result of
a sophisticated global fraud. Investigative journalists and speculators had long
highlighted Wirecard's reliance on an obscure trio of
third-party acquiring partners - one of which was Cardsystems -
to generate the bulk of its reported revenue and profit.
Wirecard's creditor committee was meanwhile set to convene
for the first time on Tuesday, people close to the matter said.
INVESTIGATION GATHERS PACE
The latest arrest came after police and public prosecutors
raided Wirecard's headquarters in Munich and four properties in
Germany and Austria last Wednesday as they widened their
investigation. Prosecutors have said they are investigating Wirecard's
Chief Financial Officer Alexander von Knoop and Chief Product
Officer Susanne Steidl, in addition to former Chief Executive
Markus Braun and chief operating officer Jan Marsalek.
Wirecard did not immediately respond to a Reuters request to
comment on behalf of von Knoop and Steidl.
Braun has been released after posting 5 million euros bail.
Marsalek's whereabouts are unknown and his lawyer is declining
requests for comment.
Creditors will convene on Tuesday to discuss the latest on
the fraud investigation, as well as planned asset sales with
which insolvency administrator Michael Jaffe hopes to recoup at
least a fraction of the money owed, people close to the matter
said.
One of the people said that Jaffe was likely to raise only
about 400-500 million euros for Wirecard's assets, including
about 100 million euros for its banking unit. That works out at
at about 10% of the total they are owed.
Wirecard's lenders will be represented by ING INGA.AS and
German regional bank LBBW, while bondholders will be represented
by a law firm appointed by Cyrus Capital, people close to the
matter said. Holders of other securities have named German law
firm Tilp to the creditor committee, while employees will also
be represented, the people said.
The members of the creditor committee declined to comment or
were not immediately available for comment.
($1 = 0.8842 euros)