Norwegian police had hidden cameras in the apartment of a suspected terror cell's leader arrested this week and knew he had explosive material for an attack, the VG newspaper reported on Saturday.
The Norwegian security police (PST) had the flat under video surveillance during their investigation for several months, VG reported on its website, identifying the suspect as a Norwegian named Mikael Davud.
He was one of three men arrested on Thursday on suspicion of plotting an Al-Qaeda attack in Norway and was the alleged leader of the group.
The secret surveillance revealed that he had the material to make a large bomb or several small devices but had not yet decided on the target, the newspaper said.
On Friday, VG reported that police had succeeded in substituting a harmless chemical for one of the bomb-making components that the suspects had bought.
The PST made the arrests on Thursday -- two near Oslo and one in Germany -- on charges of conspiring to "commit terrorist acts" and of having links to Al-Qaeda.
Lawyers for the three men say they have denied the charges, VG said.
The PST, which did not divulge anything about the alleged plot or whether the men were suspected of trying to make a bomb, insisted Thursday it had "had sufficient control of these individuals (leading up to the arrests), and according to our assessment the public have not been in any danger."
Police identified the suspects only as a 39-year-old Chinese Uighur who became a Norwegian citizen three years ago, along with a 31-year-old Uzbek and a 37-year-old Iraqi Kurd, both with legal resident permits in Norway.
Swedish media have identified the Iraqi Kurd as Shawan Sadek Saeed Bujak, and the man from Uzbekistan as David Jakobsen, a Norwegian name he allegedly adopted.
VG also reported on Saturday that the 31-year-old Uzbek asylum-seeker is suspected of embezzling six million kroner (944,000 dollars, 746,000 euros) from his company before it went bankrupt.
He managed a building construction and painting firm which was liquidated in 2009 and during the inventory the missing funds were discovered, the paper said.
Jakobsen's lawyer, Kjell Dahl, told the newspaper: "As far as I know, my client gave a good explanation (to the courts) of what happened and I do not wish to give my opinion at this stage."
On Friday VG also reported that Jakobsen applied to take a class in oil drilling, raising fears that the target of the alleged terror attack might have been Norway's lucrative oil industry.