Google crazed Microsoft in its quest to beat the search giant has become blind to reality. First, there was the outrageous $6 billion the company paid for aQuantive a month after Google announced the acquisition of DoubleClick for $3.1 billion. DoubleClick was the market leader in digital display advertising and aQuantive was a distant second player. Hence the company should have commanded a much lower price. Then there was Facebook, then Tellme, now Powerset which is worthless junk and on it goes.

But many industry insiders are shaking their head in disbelief over the Fast fiasco. Fast Search & Transfer is a Norwegian enterprise search company. The company always claimed that it was a leader in its space. Recenctly it has come to light that all those claims were based on false and aggressive accounting.

Fast had booked $50 million in fake revenue, $20 million in fictional contracts, a company director purchased an unprofitable company called Hercules Communications and sold it to Fast for $6 million. The company’s executives siphoned millions from the company to luxury homes and fancy cars (see below - Former President in a Audi R8) and worst Microsoft was aware of all this prior to the purchase.

So why did Microsoft go along with it? Microsoft was intent on buying its way into the fast-growing enterprise search market. Its SharePoint product had a beachhead in the middle market but was being threatened by Google, which has quickly racked up $400 million in annual revenue from the business.

According to industry expert Stephen Arnold, Fast’s problems were related to the nature of large enterprise accounts typically worth $500,000 over a period of about three years. It can take a team of engineers three to six months to install the complex search software, but Fast was short of installation experts, in part because so many joined Google. That led frustrated clients to delay payments that Fast had already booked as revenue, leading to huge revenue shortfalls and earnings restatements.

By the time Microsoft closed the transaction Fast was delisted from the Norwegian stock exchange.