Former South American soccer boss mired in FIFA scandal

Paraguay: The power that Nicolas Leoz had as the long-time leader of South American football is captured by a plaque in front of the headquarters of his previously impenetrable soccer kingdom.

Inscribed in four sentences is the local law that gives legal immunity - similar to that of an embassy - to the confederation headquarters that sits on a 100-acre complex on the outskirts of Asuncion, and includes a five-star luxury hotel, large convention center and heliport.

Leoz, former president of CONMEBOL, lobbied Paraguay's legislators in 1997 for the law making the headquarters exempt from legal intervention. The immunity includes protection from the kinds of raids that happened last week at the FIFA and CONCACAF headquarters in Switzerland and Miami, in the biggest corruption scandal in the history of the world's most popular sport.

Leoz, for decades essentially untouchable despite corruption allegations and now under house arrest, once bragged that only the Vatican enjoyed the same kind of "immunity and total privileges."

"The police can't come in, nor can an investigating judge, nobody as long as this law is in force," Leoz told Argentine sports daily Ole in 2012.

But the era of grand privileges and immunity for the confederation appears to be coming to an end in this poor, landlocked nation of 6.8 million, where smuggling, corruption and tax evasion are endemic. Leoz, now 86, was one of 14 people indicted by the US Justice Department last week on charges of bribery, racketeering and money-laundering.

Eugenio Figueredo, who succeeded Leoz as CONMEBOL chief before becoming a FIFA vice president in 2014, was among the seven FIFA officials arrested last week in Zurich, along with vice president Rafael Esquivel of Venezuela. Leoz and Esquivel are fighting extradition to the US.

According to the US indictment, Leoz, Figueredo and other CONMEBOL officials accepted $110 million in bribes from a marketing company in exchange for the rights to four editions of Copa America, the South America national team tournament, which starts Thursday in Chile.

Interpol has added Leoz to its most wanted list as the US seeks to extradite him. On Wednesday, the lower house of Paraguay's Congress voted to overturn the immunity law, a stunning development considering the close ties that Leoz has traditionally kept with lawmakers. The bill, which President Horacio Cartes says he supports, now goes to the Senate.

Hugo Rubin, a lower house member who submitted the bill, said Paraguayans were proud of having the CONMEBOL headquarters, and lawmakers at the time, less than a decade after the end of a dictatorship, believed the immunity law would provide extra protection.

"Today we realize that was a mistake that might have helped orchestrate many (financial) irregularities, which I imagine could be uncovered when the immunity law is lifted," Rubin told The Associated Press, also expressing concern that Paraguay could lose the headquarters.

Leoz, who has had four heart bypass surgeries, was released earlier this week from a private hospital that he owns. He was being treated for high blood pressure. Police cars stand guard outside his home in a wealthy neighborhood of Asuncion.

"He knows the generic charges against him, but you have to understand that there are more than thirty people involved and no one has specified the involvement of each person," lawyer Raul Barriocanal said during an interview with the AP, adding that his client was innocent.

That the headquarters of the ruling confederation of soccer-mad South America, a continent whose teams have won a combined nine World Cups, was ever in Paraguay speaks to Leoz's power.

Surrounded by soccer and economic powerhouses Argentina and Brazil, the country is one of the poorest in the region. The corruption watchdog group Transparency International ranks it 150 out of 176 nations. In 1990s, Paraguay could not offer modern infrastructure, an efficient banking system or direct flights to Asuncion from other South American capitals.

But Leoz, a real estate magnate involved in Paraguayan soccer decades before he became CONMEBOL's president in 1986, could offer land donated by a municipality, and the promise that the affairs of the organization would be off-limits to authorities.

For years, the organization's headquarters rotated with its president, but in 1990 confederation heads voted to put it permanently in Asuncion. The building was dedicated in 1998, and the complex grew over the next decade.

"Leoz is the Paraguayan who had the most success in the 20th century," said Horacio Galeano, a former education minister. "More than any actor, singer or soccer player. So this is all very delicate, because it has caused the fall of a Paraguayan legend."

In 2008, Leoz was identified during a Swiss criminal trial as having received $130,000 in payments from FIFA's former marketing partner ISL, which folded in 2001 with debts of around $300 million.

"These payments were apparently made via front companies in order to cover up the true recipient and are to be qualified as 'commissions', known today as 'bribes'," said a report published by FIFA in 2012.

In 2013, Leoz acknowledged that he had received the money in 2000, and said it had been used it to build schools in a $1 million project for indigenous children in the northwestern El Chaco Boreal region.

"Those schools have been built," Barriocanal said.

Amid the growing scandal, Leoz resigned as head of the confederation and as a member of FIFA's executive committee in 2013, citing health reasons. FIFA reprimanded Leoz but didn't penalize him.

Leoz began his career as a sports journalist on radio in the 1940's. Graduating with a law degree, in the 1950's he briefly worked as a court clerk and then took over the family's real estate business while getting involved in soccer as president of Libertad, a first-division club that was crowned champion under his helm in 1976.

Leoz enjoys a Robin Hood status among some of his countrymen. He bought the Migone private hospital on the verge of bankruptcy in Asuncion in 2006, and helped improve a Catholic nun's school.

Edilberto Vera, a former head of the Sol de America club, recounted how his cousin was working for Leoz when he suffered a stroke. Leoz gave him a house and paid for a nurse.

"If Leoz likes you, he's going to care for you," said Vera.

Even after the previous corruption accusations, Leoz remained popular for bringing Paraguay international acclaim and providing jobs.

Corruption is so widespread in Paraguay that the Leoz case will be interpreted as business as usual, said Fernando Masi, a senior economist at the Center for Analysis of the Paraguayan Economy.

"Leoz's image, arrested and possibly extradited, only worsens the image of a corrupt Paraguay," said Masi.

But to Aldo Benitez, a sports reporter at local ABC Color newspaper, the arrest and political will to scrap the immunity law represent turning points.

Had Leoz died a month ago, "everyone would have been fighting to bestow awards on him and rename everything after him," Benitez said. "He was completely omnipotent and CONMEBOL could not be touched. Not anymore."