North Rhine-Westphalia, Germany's most populous state and one of the hardest hit, paid €14.7 million for some 10 million masks in March only to discover they did not exist, according to prosecutors in Traunstein,
The German managing director of two distribution companies based in Zurich and Hamburg raised the alarm after realising he had been tricked.
According to the man's police report, he received an offer from companies allegedly based in Asia in mid-March to supply the masks and subsequently attracted the large order from North Rhine-Westphalia.
State authorities transferred €14.7 million to the company, which then made a €2.4 million down payment.
According to the Bavarian investigators, 52 vehicles had been lined up to pick up the coveted masks in the Netherlands and deliver them under police protection.
The distribution company has refunded €12.3 million to the state authorities.
However, it remains unclear whether the remaining €2.4 million, which has been frozen in foreign bank accounts, can be recovered.
Masks and other protective medical gear have become hot commodities worldwide as they are required by tens of thousands of health workers in the frontlines of the war against Covid-19.
Chancellor Angela Merkel said Monday a lesson to be learnt from the pandemic was that Europe needed to develop self-sufficiency in the production of critical medical gear like masks.
“Regardless of the fact that this market is presently installed in Asia… we need a certain self-sufficiency, or at least a pillar of our own manufacturing” in Germany or elsewhere in the European Union, Merkel told reporters in Berlin.