Teixeira accused of embezzlement in further blow to Fifa and Blatter

The Brazilian football authorities have denied claims that Ricardo Teixeira, the body's president and the man in charge of the 2014 World Cup, was involved in embezzling funds from a friendly international between Brazil and Portugal three years ago.

A police investigation is under way in Brazil into the use of £2.5m paid to a company to market the match, amid allegations that Teixeira received some of the funds. Teixeira is a key Fifa ally of Sepp Blatter, the world governing body's president, and one of the leading contenders to succeed the Swiss when he steps down. If proven the case would be another body blow for Fifa – the influential Teixeira is a member of the troubled Executive Committee (ExCo) – as Blatter attempts to show he can bring an end to the series of corruption scandals that has gripped it over recent months.

Yesterday a global anti-corruption organisation, Transparency International (TI), released an eight-page report it has compiled for Fifa. It says Fifa should limit terms in office – this is Blatter's fourth as president – set up an independent body to look into all corruption claims and above all ensure the body becomes more transparent as it still gives the appearance of being run like an "old-boys' network". TI's senior advisor on sport, Sylvia Schenk, said that Fifa's reputation is "at an all-time low".

In the wake of his unopposed election at the start of June – when Mohamed bin Hammam withdrew after he was accused of bribery – Blatter promised to instigate reform. But there has so far been little concrete evidence of that, apart from a pledge in his acceptance speech to set up a committee to act as a watchdog. He has since suggested Henry Kissinger and Placido Domingo as possible members.

Blatter did ask TI to produce a report, which it published yesterday. "Fifa says it wants to reform, but successive bribery scandals have left public trust in it at an all-time low," Schenk said. "Working with an oversight group – taking its advice, giving it access, letting it participate in investigations – will show whether there is going to be real change.

"When an organisation says it wants to change, TI stands ready to provide constructive advice. Now that we have laid out clear, straightforward steps, it's up to Fifa to prove its commitment to transparency and accountability."

Fifa responded with a statement. It said: "The Fifa president, who welcomes the contact with TI and acknowledges their input, insists that especially after the Fifa Congress on 1 June 2011, Fifa remains committed to the task of continuing to improve its organisation, with a strong focus on increasing transparency and acting with zero tolerance against any form of corruption.

"Fifa is pleased to note that several of the best practices and recommendations made by the TI report are already being implemented by Fifa, and that others have been approved by the 2011 Fifa Congress for implementation in the coming months."

Earlier this week Brazilian police searched the offices of Ailanto Marketing as part of an investigation into what happened to federal money awarded to promote the game against Portugal in 2008. Teixeira, president of the CBF, the Brazilian federation, for 22 years, is being investigated for having supposedly approved use of the money and as a possible recipient.

This is not the first time Teixeira has been accused of impropriety and he divides opinion at home as well as abroad. He was the subject of protests in Rio de Janeiro during the World Cup draw earlier this month. Teixeira was also one of the four Fifa figures, who included Jack Warner, Lord Triesman accused of acting improperly during England's bid for the 2018 World Cup. He recently described Britain as "pirates of the world", and said England were "pissed off" because of what happened to the 2018 bid.