Photo Defense Minister David Pratt responds to questions Friday in the House of Commons regarding the $160 million computer scandal. (CP/Jonathan Hayward)

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 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 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.

The firm said Defence repeatedly refused to provide it with particulars about the subcontracted work on security grounds.

The government has told HP to account for the services or pay the money back by March 22. Ottawa has already withheld $50 million in payments to the computer giant.

Owen has said the scheme aimed to defraud both the government and HP. And Defence Minister David Pratt has said there was a "very deliberate and well-crafted strategy to hide irregularities from audit teams at both Defence and Public Works."

Rob Ireland, HP's manager of corporate and public relations, said Friday a company investigation "revealed the potential for fraudulent activity by an employee and others unknown to HP."

"There is the potential for it to be multiple people," said Ireland. "That would be an employee of DND and others unknown to HP.

"To the best of our knowledge, no HP employee knowingly participated in wrongdoing or derived any benefit."

In the Commons on Friday, Opposition MPs wondered how so much money could go out the door without the relevant ministers' knowledge.

Tory Cheryl Gallant noted the Financial Administration Act limits the signing authority for public servants to $250,000. Anything over that must go to Public Works.

"How could one person have signing authority for $160 million?" she asked.

Owen said Champagne had no authority to sign any contracts. Owen said the scheme involved a series of small contracts.

"There may be further disciplinary action forthcoming," he told the Commons.

Champagne lived in a $1.3 million Ottawa mansion with a gym, indoor pool and tennis courts on a 12-acre plot "on Billionaires' Row."

"Did anyone think to ask him how he could afford all that on a director's salary?" asked Conservative Jay Hill.

"Why did no one take the time to investigate whether Paul Champagne had won a lottery or made a killing on the stock market, as he claimed?"

Pratt said improvements have already been made to the contract management process and he urged opponents to wait for the outcome of the investigations.

"We can't jump to any conclusions. Let's let the process work."

Whittaker was not home at the time, and Chief Deputy John Dailey said the death of Jesse Joe Tribble, 18, was not related to the burglary and was not a homicide. It may have been drug-related, Dailey said.

Judge Deborah Neal, 54, has been on paid leave since Aug. 16; she remains hospitalized for treatment of depression. She was among the patrons in a Kansas City, Kan., casino that was raided by authorities in April.

Dar Heatherington cried in court as she was handed the sentence for public mischief.

That evidence included letters, sexy lingerie and a computer disk with Ms. Heatherington's face pasted on photos of a woman performing various sex acts.

Armed men burst into the north Moscow arcade at about 6 a.m. and opened fire, the Interfax news agency reported. They killed a security guard and a customer, and seriously wounded the cashier.

Iorworth Hoare, the rapist, who has already been in jail for 36 years, has been moved from a low-security open prison to a high-security cell in another jail amid fears that he could be attacked by jealous prisoners.

But City of Lethbridge administrators found a section of the Municipal Government Act that said Heatherington's resignation took effect the day it was tendered – meaning her role on council ended Monday.

The 60-page filing, presented in San Francisco Superior Court, alleges that the companies sell rights to web advertisements based on searches for terms such as "illegal gambling," "internet gambling" and "California gambling."

Mayor Bob Tarleck said the city isn't waiting to see if Dar Heatherington voluntarily resigns before it applies to court for her removal. A lawyer is "presently engaged in this case," Tarleck said.

The 40-year-old had signed a plea agreement that the misdemeanor charge would be dropped if she stayed out of trouble for a year and saw a psychiatrist.

Under the deal, the charge was to be dismissed if she provided proof she had seen a psychiatrist, paid court costs and stayed out of trouble for the full year.

VLTs generate 30 per cent of Loto-Quebec's profits but the corporation wants to reduce the number of machines in poorer areas.

…"Former street cop Rick McIntosh, who stepped down temporarily as president of the Toronto Police Association on Sunday, is among those being investigated...