Experts continue to argue over whether the investments of future energy earnings were legal, the ramifications of the massive loss of public funds, and the ethical aspects of the Terra Securities approach.

While choosing a path of borrowing on future earnings and investing in a high risk project already threatened by the looming US credit crunch, the communities put their trust in the Terra Securities sales pitch for high-risk bonds from Citibank.

Nordland County officials are now investigating whether such investments violate the legal possibilities of the local authorities who made them, while the Financial Supervisory Authority of Norway will examine Terra's conduct.

Citibank and Terra are guaranteed large fees even if the bonds turn out to be a disaster, and the communities now risk losing NOK 900 million (USD 166.7 million) on the total investments of NOK 4 billion.

On Wednesday Terra decided to pay NOK 70 million (USD 13 million) in extra guarantees for two weeks, giving the troubled communities a small breathing space.

The investments were made on the strength of a possible legal precedent - in 2001 the energy community Vik violated regulations forbidding municipalities from borrowing money for the purchase of stocks, and was granted permission to do so afterwards.

On Thursday newspaper VG reported via financial web site E24 that the material used by Terra Securities to entice the investment in the high-risk bond project had all mention of risk omitted from the Norwegian translation.

The American prospect had a separate page outlining the project as a major risk, and several pages explaining the risk, including a passage that said that investors must "be prepared to lose all or significant parts of the investment". VG reports that all of this material was omitted in the Norwegian version of the Terra presentation that they have received.

Steen Koekebakker, Associate Professor at the University of Agder and financial expert, expressed shock over the omission of risks.

"Either Terra are outright crooks, or they have not understood the product they were selling. If the latter is the case, they should not have had the role of adviser," Koekebakker told VG.

"The essential information is missing, namely the heavy borrowing that is the reason this is going badly. Terra has taken the sunny side and chosen not to present the possibility of rain," Koekebakker said, and added that the Terra salespeople had no incentive to advise, only to sell.

At a press conference the mayors of the four townships said that they felt tricked by Terra, and argued that the financial group's credibility has been so damaged by the affair that it must take a greater economic responsibility for the losses facing them.

Norwegian finance experts were surprised by just how bad the investment chosen is for the four townships. The fund guarantees Citibank and Terra fat earnings no matter the outcome.

"This is very profitable for Citibank if it goes as planned, but it is also profitable for Citibank if it goes completely wrong, as it did here," Thore Johnsen, finance professor at the Norwegian School of Management in Bergen, told E24.