It just keeps getting better and better...

OTTAWA (CP) - Former Olympian Myriam Bedard made some startling allegations in regard to the federal sponsorship scandal Wednesday, including that she heard Jacques Villeneuve was secretly paid $12 million US to wear the Canada logo on his racing suit. Bedard, who was appearing before a Commons committee probing the sponsorship scandal, also said she had been told that Groupaction - one of the ad companies at the heart of the scandal - was involved in drug dealing.... [She said] she was told in 2001 by Marc LeFrancois, then president of Via, that Groupaction was involved in drug trafficking. She said he told her a week later to forget what he had said.

CTV has more, including video of her testimony. Also see this Globe story. More from PolicyWatch:

When asked why she was fired from Via Rail in early 2002, Bedard said, "My personal analysis of all that is that when I was fired three or four days later there was a cabinet shuffle in Ottawa." "For some reason they had to get rid of me immediately."  That cabinet shuffle saw former public works minister Alfonso Gagliano leave Ottawa.

UPDATE: Mike Duffy on CTV saying the Villeneuve angle is going to be HUGE in Quebec: every federalist in the province is now going to be accused of being on the take. Of course, at the political level, that was always true. Fédéralisme rentable, anyone? AND BETTER...

Via Rail Canada's 2002 deficit of $153.7-million will balloon to $184-million for 2003, the Montreal Gazette reported Wednesday. The newspaper, quoting anonymous sources, said the inefficiency of the Crown carrier's recently bought Renaissance trains and the federal sponsorship scandal are being blamed for the increase. Two sources told the newspaper the passenger rail operator will try to pin all the blame for the $30.3-million increase in the deficit on SARS and the outbreak of mad cow disease, which hit transport operators hard. But nearly half of that amount can be attributed to the Renaissance rolling stock and to Via's role in the sponsorship scandal, they said.

AND BETTER.... Lest anyone think the government was serious about reforming the public sector, there's this hilarious passage from Reg Alcock's press release announcing details of the promised "comprehensive plan to modernize public sector management and review government spending":

In discussing the Government's review of spending, Minister Alcock emphasized that the expenditure review process is not Program Review III and acknowledged that while his candid, outspoken style may have spooked many federal public servants, he remains a staunch advocate of the public service and the public sector.

AND BETTER...

OTTAWA (Reuters) - Canada threatened on Wednesday to sue computer maker Hewlett-Packard over a C$159 million ($119 million) dispute involving defense contracts. Ottawa, saying there was no evidence Hewlett-Packard did any work on the contracts in question, sent the company a letter earlier this month demanding repayment of the money by March 22. Public Works Minister Stephen Owen told reporters the company had replied to say it denied any responsibility for what had happened.