WASHINGTON (CNN) -- The State Department's inspector-general announced Wednesday he would recuse himself from decisions involving security contractor Blackwater, after admitting his brother serves as an adviser to the company.
A destroyed car sits at the location of the September 16 killings of 17 Iraqi civilians in Baghdad.
Howard Krongard already was under scrutiny by the House Oversight and Government Affairs Committee, led by California Democrat Henry Waxman.
Waxman said Krongard's oversight of construction of the nearly $600 million U.S. Embassy in Baghdad, Iraq, was conducted with "reckless incompetence," and that he refused to pursue allegations of fraud and labor trafficking by contractor First Kuwaiti.
Republicans on the committee accused the Democratic majority of conducting a "drive-by" investigation.
During a hearing Wednesday morning, Krongard first denied that his brother had any role with Blackwater -- but reversed himself after being confronted with evidence that his brother had attended a Blackwater advisory board meeting this week.
"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 told the committee after calling his brother during the break.
In a separate development, the FBI has not yet interviewed five "key" members of a Blackwater security team involved in the shooting deaths of 17 Iraqis, a Blackwater spokeswoman said Wednesday.
In addition, a senior U.S. official who asked not to be identified told CNN that "most, if not all, of the shooters" in the September 16 incident "have not been interviewed."
An FBI team has been in Baghdad investigating the shootings by Blackwater security contractors who were hired by the State Department to protect U.S. diplomats.
"To the best of our knowledge, the key people in this incident have yet to even speak with investigators," said Blackwater Worldwide spokeswoman Anne Tyrrell.
She said it was her understanding that none of the five "key" Blackwater employees involved in the incident have been interviewed by the FBI. An FBI representative refused to comment on Tyrrell's statement.
The North Carolina-based firm says its guards came under fire while protecting a State Department convoy and acted properly in self-defense, but Iraqi authorities have called the killings "premeditated murder."
Some Blackwater employees who've given statements to State Department investigators in exchange for limited immunity have refused to answer FBI questions, according to government sources close to the investigation. The State Department investigators promised the employees that their statements would not be used against them in a criminal prosecution. Watch the latest legal wrinkles in the case »
The killings placed the operations of Blackwater and other security firms under scrutiny in Iraq, where an estimated 25,000 private contractors protect diplomats, reconstruction workers and government officials. Under a provision put into place in the early days of the U.S.-led occupation of Iraq, security contractors have immunity from Iraqi law. See details about security contractors in Iraq »
Several, if not all, of the Blackwater guards involved in the shootings have returned to the United States from Iraq, said a highly placed industry source.
The killings have angered members of Iraq's government and prompted demands in the U.S. Congress that American security contractors be held accountable for their actions abroad.
"We have always supported stringent accountability and continue to support stringent accountability," Tyrrell said. "If it is proven that there was wrongdoing, we want that person or persons held accountable."
Iraqi officials said 17 people, including women and children, were killed and 27 were wounded when Blackwater guards fired on motorists around Nusoor Square.
But Blackwater has said its contractors fired in self-defense.
"It's very clear that they were faced with deadly force throughout the morning," Tyrrell said. "As you recall, there was the massive car bomb earlier in the day."
The shooting began when the Blackwater security team was stopped in a jammed traffic circle while on its way to assist another Blackwater team that was escorting a State Department official. That official was rushed back to the U.S. Embassy after a roadside bomb exploded near where the official was in a meeting.
U.S. Secretary of State Condoleezza Rice sent a high-level team to Baghdad to conduct an inquiry, which resulted in new rules and procedures for diplomatic security teams operating in Iraq.
A team of FBI agents flew to Baghdad to assist in the case, but the bureau eventually opened its own criminal probe. While State Department agents took statements from Blackwater employees involved in the incident, they promised them they would not share their statements with criminal investigators. E-mail to a friend
CNN's Charley Keyes, Barbara Starr and Kelli Arena contributed to this report.