The Public Ministry of the State of Rio de Janeiro announced yesterday that an investigation was underway, with search warrants granted against 10 individuals alleged to be involved in tax fraud, money laundering and identity fraud.

A total of 20 searches were conducted at addresses in Rio de Janeiro and in Saquarema, a nearby city.

Antonio Peres Alves, a former Mayor of the city, and former Brazilian Volleyball Confederation (CBV) President Graça are among the individuals under investigation.

It is alleged the former Mayor, who served an eight-year term from 2000 and 2008, made laws that granted illegal tax benefits by reducing the cost of starting companies in the city.

It is claimed the Saquarema Business Center and Jomi companies orchestrated a scheme which encouraged the establishment of shell companies to secure tax benefits, while the Mayor benefited from political support.

Graça, who led the CBV until 2014, allegedly used money from a sponsorship agreement to enter contracts with shell companies, which were run by people with connections to the official.

"According to the complaint, the former President of CBV, Ary Graça Filho, managed the sponsorship resources of Banco do Brasil to the entity he managed in favour of himself and the criminal group, entering into contracts with newly created companies, without personnel structure and established in fictitious headquarters," a statement from public prosecutors read.

"Thus, despite having headquarters in the capital, CBV entered into contracts that were not properly executed with companies established in Saquarema through the illegal scheme of tax fraud."

A further statement from the Public Ministry of Rio de Janeiro confirmed various documents and money had been seized in searches.

"The agents carried out 20 search and seizure warrants in the neighbourhoods of Leblon, Barra da Tijuca, Copacabana, Ilha do Governador and Vargem Grande, in the capital of Rio de Janeiro, and in the municipality of Saquarema," the statement read.

"The agents seized various documents, eight cell phone devices, seven hard drives, two notebooks and money.

"According to delegate Thales Nogueira, holder of the DCC-LD, after inspection by the Ministry of Labor and Employment, it was found that in two small offices in Saquarema, more than a thousand companies that received tax benefits granted by the then mayor operated in a fictitious way.

"The amounts obtained from the hundreds of sublease contracts were shared among the members of the criminal organisation.

"With the aid of financial intelligence reports produced by the Financial Activities Control Council and through breach of fiscal secrecy, it was found that crimes of money laundering and concealment of assets were found in several purchase and sale transactions. property prices below the market.

"The values obtained by the criminal organisation, between unfulfilled contracts, fictitious subleases of commercial properties and assets without financial backing, add up to more than R$52 million (£7 million/$9.8 million/€8 million)."

Graça, who led the CBV from 1997 to 2012 before stepping down to taking over as FIVB President, has previously had to deny allegations that he was involved in the funnelling of money to family and friends between 2010 and 2013.

Accusations against Graça emerged in 2014.

He was accused, along with other CBV directors, of involvement in the funnelling of BRL30 million (£4 million/$5.6 million/€4.6 million) in a 50-page report by a Federal Anti-Corruption Agency.

Graça has issued a statement confirming he intends to challenge the latest allegations.

"Dr. Ary Graça received with surprise the search in his apartment and the news published earlier today by the media," Graça said in a statement to Brazilian newspaper Globo.

"He is in Lausanne, his place of residence for work reasons, and has called on his lawyer to take immediate action to challenge the allegations, the same ones made in the past and which are now coming to the fore.

"Ary Graça provided all the clarifications at the time when the allegations were raised and, after his pronouncement, there was no resulting action by the Brazilian justice.

"As before, he makes himself available to the authorities for any clarification."

Graça was first elected as FIVB President in 2012.

The Brazilian official, now 78, was re-elected in 2016 for an eight-year term.

The CBV confirmed it was subject to searches by investigators, and said it would seek to recoup losses, should any wrongdoing by former directors be proven.

"The CBV confirms that it received this Thursday in the morning the Civil Police at its headquarters in Barra da Tijuca, in Rio de Janeiro (RJ), and in Saquarema (RJ), on account of a investigation initiated by the Public Ministry of Rio de Janeiro in 2013 about former directors of the entity," a CBV statement read.

"Confederation officials provided all assistance to police authorities seeking documents related to an alleged tax fraud scheme that would have counted on the assistance of the former President of CBV, Ary Graça Filho.

"According to the investigations, the CBV was allegedly the victim of its then directors, who allegedly created fictitious contracts to divert money from the institution.

"The current management of the confederation will cooperate fully with the investigation and, if financial losses are proven to CBV, it will take all necessary measures so that these values are fully refunded to the volleyball community."