German prosecutors said Wednesday they have arrested the former chief executive and two former board members of Wirecard for "commercial fraud" reaching 3.2 billion euros ($3.7 billion), saying investigations show that trickery was already happening in 2015.

The latest arrests marked another episode in the fast-running thriller over the spectacular collapse of the German fintech company, which crashed in June after admitting that 1.9 billion euros on its balance sheets likely didn't exist.

Underlining the scale of the suspected fraud, prosecutors in Munich said investigations have had to be "substantially widened" as evidence showed that banks in Germany and Japan as well as other investors were conned into providing funds of up to 3.2 billion euros to Wirecard.

Those sums are now "very likely lost because of the insolvency of Wirecard," they added.

The collapse of the payments provider in June shocked the nation and has since snowballed into a political hot potato for the government.

Finance Minister Olaf Scholz is due to be grilled by parliament's finance committee on July 29 after it emerged that he had been aware of suspicions of misconduct at the company in early 2019.

The case is also proving to be embarrassing for Chancellor Angela Merkel who had on a trip to China discussed Wirecard's planned foray into the Chinese market.

Ex-CEO Markus Braun, who had already been arrested before being freed on bail over market manipulation, along with former finance chief Burkhard Ley and the group's former accounting head Stephan von Erffa were detained on Wednesday in Munich, prosecutors said.

All three, plus another suspect who was identified only as the managing director of Cardsystems Middle East FZ-LLC, a Dubai-based subsidiary of Wirecard, are suspected of "inflating the balance sheet and volume of revenues by falsifying the company's intake."

"The company was to be presented as financially strong and attractive to investors and clients, so that loans could be obtained from banks and other investors on a regular basis, as well as keep it generating its own income," said Munich prosecutors.

"In reality, it was already clear to the accused by the end of 2015 at the latest, that Wirecard group was making losses with its actual businesses."

Urging other participants in the massive fraud to come forward in exchange for leniency in sentencing for any convictions, prosecutors warned however that "the value of information" is diminishing as the investigations progress.

1.9 billion euros ($2.2 billion) was missing from Wirecard's accounts according to auditors
1.9 billion euros ($2.2 billion) was missing from Wirecard's accounts according to auditors AFP / Christof STACHE

Founded in 1999, the Bavarian start-up Wirecard rose from a company piping cash to porn and gambling sites to a respectable electronic payments provider that edged traditional lender Commerzbank out of the DAX 30 index.

Hailed as a champion of the burgeoning financial technology scene, it boasted a market valuation of more than 23 billion euros at one point -- outweighing even giant Deutsche Bank.

Wirecard's troubles began in January 2019 with a series of articles in the Financial Times alleging accounting irregularities in its Asian division, headed by chief operating officer Jan Marsalek.

But at that time, the FT's journalists themselves came under investigation over the reports as the financial technology company was able to repeatedly fend off claims.

The huge scam had unravelled in June when auditors Ernst & Young said they were unable to find 1.9 billion euros of cash in the company's accounts.

Making up a quarter of the balance sheet, the sum was supposedly held to cover risks in trading carried out by third parties on Wirecard's behalf and was meant to be sitting in trustee accounts at two Philippine banks.

But the Philippines' central bank has said the cash never entered its monetary system and both Asian banks, BDO and BPI, denied having a relationship with Wirecard.

While key figures in the company have since been detained, the company's former COO Marsalek, who is wanted by German prosecutors, is still at large.

Citing unnamed business, judicial and diplomatic sources, Handelsblatt economic daily said Marsalek is staying in an estate west of Moscow under the supervision of Russian military intelligence service GRU.

Both the German and Russian governments declined comment on the report.