Brazil head coach Luis Felipe Scolari has strongly denied allegations of tax evasion.
Portuguese police are investing claims that Scolari had failed to pay €7 million in tax when he was the Portugal head coach, between 2003 and 2008.
Scolari insists he is innocent, in a statement he said: "I made all my income tax declarations correctly. I always declared my earnings in all the countries I worked in.
"I am absolutely convinced of the correctness of my declarations."
With the opening game of the World Cup less than a month away, these damning claims may prove detrimental to Scolari's preparations.
After winning the World Cup with Brazil in 2002, Scolari took over as Portugal coach in July 2003 and took them to the 2006 World Cup semi finals before leaving for Chelsea in 2008.
The Dutch newspaper Financieele Dagblad claims that the former Portugal coach had been receiving money from two Dutch companies: Chaterella Investors Limited and Flamboyants Sports.
The Central Department for Criminal Investigations and Prosecutions will conduct the investigation.
But Portuguese police have also asked the US authorities for assistance as the money in question is believed to have been transferred between Holland and the USA.
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