An Iraqi refugee has admitted arranging hundreds of fake abuse claims against British soldiers in Iraq.

Basim Al-Sadoon, 37, said the racket he was involved in was aimed at winning payouts from the Ministry of Defence.

Mr Al-Sadoon ran an office in Basra where he handled accusations made by locals against the British Army.

Basim Al-Sadoon (pictured), 37, said the racket he was involved in was aimed at winning payouts from the Ministry of Defence

He said clients exaggerated claims, produced bogus paperwork and falsely accused soldiers of wrongdoing.

'It was a racket, all of it,' he told The Sun. 'All these people cared about was money. It was like a claims factory and it didn't matter if the claims were true or false.'

Mr Al-Sadoon was hired by UK-based Iraqi Mazin Younis. Mr Younis, 59, was paid £1.6million in 2009 for passing clients to UK law firm Leigh Day. He also received £500 from disgraced lawyer Phil Shiner for every claimant he secured.

Mr Al-Sadoon said he helped to find more than 300 clients.

Mr Al-Sadoon ran an office in Basra where he handled accusations made by locals against the British Army

They exaggerated claims, produced bogus papers and falsely accused soldiers of wrongdoing

He said: 'It was all about money – people exaggerating sometimes what they see.'

He blamed the British legal system 'for making it so easy'.

Leigh Day denied wrongdoing and said the firm had no knowledge of the scheme and pledged to take action if claims were found to be without merit.

Mr Al-Sadoon said many clients obtained forged documents from Iraqi officials. He said: 'People were bringing papers randomly – there were no specific standards to accept cases. You can collect some case elements.

'After that you start your story. If you have an old spot on your body from old torture, you can use it as evidence against MoD.

'If you get a slap in the face, you can say it was a stick or a gun. If you have been jailed for 24 hours you'll say they put me in a very bad place – I have psychiatric problems. In Iraq it's easy to get doctors' papers backing claims.

'Doctors for cash can give you many reports. Claims were exaggerated to make money.'

Phil Shiner, the former head of now-defunct Public Interest Lawyers (pictured) was struck off after he was found to have acted dishonestly in bringing murder and torture claims against British Iraq War veterans

Mr Al-Sadoon, who lives in Denmark, lodged his own fake claim against British soldiers through Leigh Day. He said he would now withdraw the case.

Mr Younis has denied wrongdoing. He told The Sun: 'These allegations are false. Iraqi claimants who came via Mr Al-Sadoon were referred to Leigh Day if they had supporting evidence.

'Leigh Day would have then called or met the claimants to ensure the authenticity.'

Defence Secretary Gavin Williamson said he was 'repulsed' by the alleged scam. He added: 'Hundreds of brave and innocent British heroes suffered great pain at the hands of this sick get-rich-quick scam.

Defence Secretary Gavin Williamson said he was 'repulsed' by the alleged scam

'I'm repulsed by these vile revelations ... and those responsible should be held to account.'

The MoD has paid out more than £20million in compensation to Iraqis. Another £13million has been spent settling around 300 abuse claims.

The Iraq Historic Allegations Team was set up to probe hundreds of claims, made mainly via Leigh Day and Mr Shiner's Public Interest Lawyers.

PIL was shut down last June after Mr Shiner was found guilty of misconduct and paying a tout to drum up business.