"Since completing our acquisition in April 2008, Microsoft has taken ongoing steps to align Fast's financial reporting and controls to Microsoft's high standards," a company spokesman said. "We are fully committed to taking all appropriate actions to ensure consistency with our company's core values."

Industry sources say Fast C.E.O. John M. Lervik is still in charge of the unit, although he has been forced to step aside as chairman of its international unit. Microsoft also has moved the headquarters of its global enterprise search business to Norway, a strong show of confidence in Fast.

Microsoft, which has faced down the U.S. Justice Department and the European Union, probably figures it has little to fear from the Norwegian police. That may be true—for now. But allegations of criminal accounting fraud raise the level of risk for the company, and is bout to be a huge distraction for Lervik as he leads Microsoft's battle against Google, a potent rival.

And there's always the possibility that the matter will go beyond the Norwegian police. Tech companies face intense scrutiny in Europe. The National Hi-Tech Crime Unit in London, for example, was launched with great fanfare in 2001.

Internally, the question is whether Microsoft did adequate due diligence on the Fast deal. It was an expensive transaction, even before Fast restated its results. Microsoft paid a 42 percent premium to Fast's share price when the deal was announced. The restatements last spring make the price seem even pricier.

There were signs of trouble before Microsoft bought the company. Fast reported a $100 million loss during the third quarter of 2007, citing accounting issues. The accounting issues had led to the loss of several key executives and infighting among board members.

One director, Tomas Fussel, reportedly bought a company called Hercules Communications and sold it to Fast for a big profit. This led to criticism in the Norwegian press, which follows the Fast story closely.

In a separate episode, director Robert Keith reportedly said in 2007 that he should have "shot" fellow director Oystein Spay Spatelan the first time he saw him. Both men have since left the board.

Ultimate accountability for the deal rests with Microsoft C.F.O. Christopher Liddell, who oversees acquisitions.

It remains to be seen whether Microsoft will get its $1.23 billion's worth from Fast. That all depends upon whether Fast turns out to be more Enron than Google, or vice versa.

The atmosphere is uneasy, according to one rival. "Microsoft is 'role mapping' former Fast field employees to new roles, so things are a bit chaotic there," says Steve Papa, C.E.O. of Endeca, a Fast rival. "Its all a bit murky."