OTTAWA (CP) – Officials suspect a multimillion-dollar fraud ring may have been operating for up to 10 years in at least two federal departments – National Defence and Public Works – and possibly elsewhere, a key source told The Canadian Press on Friday.
So far, only one federal employee, civilian director Paul Champagne, has been fired after auditors discovered National Defence had paid $160 million for military computer hardware and support services it never received.
Federal audits continue and an RCMP investigation is underway.
The principal company involved, Hewlett Packard, has said that Steve Bailey, a sales representative who worked with Champagne, is no longer with them.
But a highly placed government source said play bazaar others are believed to have been involved in what Public Works Minister Stephen Owen described as a “very sophisticated criminal scheme” that racked up $160 million in phoney billings.
“We don’t know how extensive, but I would be very surprised if the RCMP investigation and the Ingatbola88 audit didn’t uncover more involvement than simply one or two people,” said the source, who spoke on condition of anonymity.
A spokesman for HP said the company’s own investigation pointed to that conclusion, as well.
There is no suggestion at this point, however, that any of the six companies subcontracted to do the work were considered “Liberal-friendly,” said the official.
In Windsor, Ont., Prime Minister Paul Martin emphasized the scandal occurred before he was prime minister.
“I have met with the minister of Defence, the RCMP are on it,” Martin said.
“The Department of Defence has already brought in the lawyers and is very, very confident that we’re going to get our money back, and that those who engaged in this are going to be punished.”
Federal ministers say HP chose the subcontractors at its own discretion. HP says the government instructed it to use specific subcontractors for unspecified work.
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