By Andrew Stern
CHICAGO (Reuters) - An American who scouted targets for the 2008 Pakistani militant raid on Mumbai testified on Wednesday about conversations he had with a Chicago businessman accused of helping the attackers and a retired Pakistani military officer.
David Headley took the stand in the trial of Pakistani-born businessman Tahawwur Rana, 50, who is charged with providing support to Lashkar-e-Taiba, the group blamed in the attacks that killed 160 people.
The trial is being closely watched for revelations that could complicate U.S.-Pakistani relations already tense following the American killing of al Qaeda leader Osama bin Laden in Pakistan.
Headley has said Pakistan's Inter-Services Intelligence directorate (ISI) and elements in Pakistan's military coordinated with Lashkar and other Pakistani militants.
Headley, who has admitted he scouted targets for the attacks, told the U.S. District Court jury about secretly recorded telephone conversations he had with Rana and retired Pakistan military officer Abdur Rehman, known as Pasha.
Headley said he and Rana gloated over the success of the Mumbai raids and praised its planners, listening to recordings of cell phone conversations between the attackers and Headley's main Lashkar contact, Sajid Mir, during the raid.
One of Headley's conversations with Pasha months after the Mumbai raid turned to Headley's anger at a man identified as Major Iqbal of Pakistan's ISI, who had provided guidance during Headley's surveillance work in Mumbai.
He called Iqbal a "coward" for telling Headley, "Friend, do not have any contact with me any more."
Pasha and Iqbal are among six Pakistanis charged in the case but not in custody. Several Lashkar members were detained in Pakistan after the Mumbai raids.
Rana is also accused of supporting the militant group in a separate plot, never carried out, to attack the Danish newspaper that published cartoons depicting the Prophet Mohammed that angered many Muslims.
Defense attorneys questioned Headley later in the day. They have portrayed Headley, Rana's best friend since their youth, as a manipulator who tricked and used Rana. Headley cooperated with U.S. authorities after being caught twice smuggling heroin. He avoided the death penalty and extradition in this case by pleading guilty and testifying.
Defense attorney Charles Swift sought to undermine Headley's credibility, asking Headley about a heroin-buying trip to Pakistan when he brought Rana along in the belief it would minimize his chances of being caught.
Swift also asked Headley how his Pakistani handlers could know whether he was keeping Rana informed, citing $25,000 Headley received from Iqbal for expenses. Rana was unaware of the money, Swift said, and paid the expenses.
"The only person who knew everything was you, correct?," he asked. "Yes," Headley said.
(Editing by Cynthia Osterman and Doina Chiacu)