Guilty Defense official blames businessman

WASHINGTON, Feb. 4 (UPI) -- The former U.S. Defense Department official who arranged to bilk millions in Iraqi reconstruction money said a U.S. businessman started the scheme.

Robert Stein pleaded guilty to five charges Thursday of stealing at least $2 million and taking kickbacks on rigged contracts, the bidding of which he was overseeing for the Coalition Provisional Authority in Iraq.

Two senior Army officials have been arrested in the investigation and more arrests are forthcoming, The New York Times said.

When asked by Washington District Court Judge Colleen Kollar-Kotelly how the con started, Stein said the person known as co-conspirator No. 6 approached him.

The Times reports No. 6 is businessman Philip Bloom, who won construction contracts in 2003 and 2004 after allegedly he and Stein rigged the bids.

Stein's charges included conspiracy, bribery, money laundering, unlawful possession of machine guns and being a felon in possession of a firearm.

The BBC reports Stein's rigged contracts were worth $8 billion.

He also was given gifts and sexual favors in his Baghdad villa as part of the bribes, media reports said.

This is the latest in critiques of the Coalition Provisional Authorities handling of reconstruction funds.

A scathing inspector general's report is expected in the next few weeks, reports said.