BaFIN IT chief arrested for fraud scam

According to press reports, the technology chief, who has not been named, was arrested on charges of corruption and breach of fiduciary duty following a nine-month investigation by Germany's Federal Audit Office.

Bonn prosecutor Friedrich Apostel told reporters that the employee teamed with a friend from outside BaFIN to set up a consulting company which was allegedly used to launder funds. The company is thought to have received around EUR7.6 million in orders since 2003. Some orders were never fulfilled and were used to disguise payments.

Apostel says the BaFIN employee used the scam to finance a luxurious lifestyle which included a penthouse flat in Berlin and multiple cars worth over EUR100,000.

According to a Bloomberg report, the discrepancies in payments from BaFin and the actual services provided by the consulting firm were discovered when the Federal Audit Office began checking BaFin's books last May. The audit office then alerted BaFin officials that some computer equipment was missing.

The IT chief was suspended several weeks ago and was arrested on his return from a holiday in Africa. Prosecutors said that he had admitted partial responsibility for the fraud. The head of the consulting firm involved has also been arrested.

A BaFIN secretary who approved the orders to the consulting firm is also being investigated on suspicion that she conspired in the fraud.