MUNICH: German prosecutors said Wednesday they have arrested the former chief executive and two board members of Wirecard for "commercial fraud", saying investigations show that trickery was already happening in 2015.

The widening probe suggests that banks in Germany and Japan as well as other investors were conned into providing funds of up to 3.2 billion euros ($3.7 billion) to Wirecard, said prosecutors, adding that the sums are now "very likely lost because of the insolvency of Wirecard".

Described by Germany's finance minister as an "unparalleled scandal", the collapse of the payments provider in June shocked the nation and has since snowballed into a political hot potato for the government.

Ex-CEO Markus Braun, who had already been arrested before being freed on bail over market manipulation, and the board members 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.

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.

The missing cash makes 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.

The German-based group was finally forced to admit the sum likely did not exist.