By Susan Cornwell

WASHINGTON, Nov 14 (Reuters) - The State Department's top investigator recused himself on Wednesday from probes into the Blackwater security firm after discovering -- during a break in a congressional hearing -- that his brother was connected with the company.

Howard Krongard, who began a hearing of Rep. Henry Waxman's government oversight committee by denying the "ugly rumors" that his brother "Buzzy" was linked to Blackwater, returned after a recess to say he had just contacted his brother and learned he had attended a Blackwater advisory board meeting.

"I had not been aware of that. And I want to state on the record right now that I hereby recuse myself from any matters having to do with Blackwater," Krongard, who acts as an independent internal investigator for the State Department, told the panel.

Waxman's committee is examining allegations by current and former officials in Krongard's office that he thwarted probes into waste, fraud and abuse in Iraq, including alleged arms smuggling by Blackwater, which protects U.S. diplomats and other State Department officials in Iraq.

In September, the private security contractor denied it was involved in illegally shipping automatic weapons and military goods to Iraq after a report that federal officials were investigating.

The North Carolina firm is also under scrutiny after several violent incidents involving its contractors, including the shooting of 17 Iraqi civilians in a September incident. The New York Times reported on Wednesday that FBI agents found at least 14 of those shootings were unjustified.

Waxman, a California Democrat with a reputation for tenacity as an investigator, has charged Krongard with interfering in ongoing investigations to protect the State Department and White House from political embarrassment -- a charge Krongard flatly denied.

"I have never impeded any investigation," Krongard said, adding he had never worked in government before now, had no political ties and never met President George W. Bush.

Republicans belittled Waxman's investigation, saying the only thing he might pin on Krongard was an abrasive management style.

But they admitted surprise at Krongard's revelation his brother was in fact linked to Blackwater, after he started the hearing denying it.

"He has done you tremendous damage," said Rep. Christopher Shays, a Connecticut Republican.

Krongard seemed unfazed. "I'm not my brother's keeper, and we do not discuss our business with each other," he said.

A.B. "Buzzy" Krongard is a former executive director of the CIA. Howard Krongard is a former general counsel at Deloitte & Touche.

Krongard contacted his brother after Democratic lawmakers waved e-mails showing Blackwater had invited him to be on the company's advisory board and attend a meeting in Williamsburg, Virginia, this week.

Several current and former staffers from Krongard's office said he threatened investigators with retaliation if they cooperated with Waxman's probe. Krongard is also accused of telling the staff not to cooperate with the Justice Department, and impeding investigations into alleged arms smuggling by Blackwater and construction problems with a massive new U.S. embassy in Baghdad.

(Editing by David Wiessler)

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