Nov. 17 (Bloomberg) -- The U.S. Justice Department filed the first criminal charges against a contractor receiving Iraq reconstruction contracts, according to court documents.

Philip H. Bloom, 65, funneled at least $693,000 in bribes and kickbacks through bank accounts in Iraq, Switzerland, Romania and the Netherlands in the year through January 2005, according to the documents filed yesterday. The money then went to at least two unnamed U.S. government officials and their spouses in exchange for reconstruction work valued at over $3.5 million, the documents show.

Bloom appeared in U.S. District Court in Washington where the papers were filed, marking the first charges brought as a result of audits and follow-up probes by Special Inspector General Stuart Bowen. The office was established by Congress in late 2003 to oversee the spending of almost $30 billion in appropriated U.S. tax dollars and funds controlled by the Iraqi government. The contracts to Bloom's firms were Iraqi dollars.

``This is the first case and there will be more,'' said Bowen's spokesman James Mitchell. The case was the result of a joint task force of agents with the Inspector General, Treasury Department and Department of Homeland Security, he said.

``Bloom conspired with U.S. government contract employees and military officials to obtain fraudulently government contracts which were awarded for the reconstruction and stabilization of Iraq,'' wrote Inspector General Special Agent Patrick McKenna in an affidavit filed with the federal court.

Bloom's firms did business as Global Business Group, GBG Holdings and GBG-Logistics Division, the affidavit said.

`Rigged Bidding'

``The investigation has revealed that contracts were awarded to businesses controlled by Bloom through a rigged bidding process, that work was ordered by certain of Bloom's co- conspirators and that such contracts were authorized for payment in some cases without any performance of the contracts by Bloom's companies,'' McKenna wrote.

One of the ``co-conspirators'' is identified as a public official performing as comptroller and funding office for the now defunct Coalition Provisional Authority's South Central Iraq region.

This official ``rigged'' the contract awards through the creation of fake, excessively high bids that justified the awards to ``low bids'' to Bloom's companies, McKenna wrote.

The affidavit listed nine tainted contracts, including four worth $1.3 million to renovate, landscape and equip a library in Karbala.

``Bloom directly paid or arranged for the payment of bribes, kickbacks and gratuities amounting to at least $200,000 a month,'' McKenna wrote.

The kickbacks were filtered through the Credit Bank of Iraq via the National Bank of Kuwait, Bank Hoffman AG in Zurich, and Garantibank International N.V. in Amsterdam.

The payments started in January 2004 and extended through Jan. 27 of this year, the papers said. The last payment was $6,400 sent to a jeweler by Bloom on behalf of one contracting official, according to the documents.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net

Last Updated: November 17, 2005 00:04 EST