The government has admitted that the Army and UK civil servants helped market so-called "bomb detectors", which did not work, around the world.
Export of the "magic wand" detectors to Iraq and Afghanistan was banned on 27 January 2010 because of the threat they posed to British and allied troops.
The move followed a BBC Newsnight investigation showing they could not detect explosives - or anything else.
BBC Newsnight 27 January 2011
Now Newsnight has learned that they are still being sold around the globe.
At least four rival manufacturers have sold their own versions of these devices and they are now the subject of a major fraud investigation by the City of London police.
One maker, ATSC Ltd, sold thousands of the so-called detectors, which essentially consist of a radio aerial on a hinge attached to a plastic handle, to Iraq for $85m.
It has been alleged that hundreds of Iraqis died in explosions in Baghdad after ADE651 detectors failed to detect suicide bombers at checkpoints.
ATSC boss Jim McCormick is currently on bail after being arrested on suspicion of fraud in connection with the so-called detectors.
The profit margins in the sale of this equipment are enormous.
The manufacturer of another of the devices, the Alpha 6, has admitted to Newsnight that they make them for £11 and then they are sold for £15,000 each to the end user.
'Unsuitable for British Army'
On Thursday, the UK government told BBC Newsnight that between 2001 and 2004 a Royal Engineers sales team went around the world demonstrating the GT200, another of the "magic wand" detectors which has been banned for export to Iraq and Afghanistan, at arms fairs around the world even though the British Army did not consider them suitable for its own use.
The government's Department of Trade and Industry, which has since been superseded by the Department for Business, Innovation and Skills, helped two of the manufacturers sell their products in Mexico and the Philippines.
Newsnight has also found that the manufacturers are still trying to market so-called "bomb detectors" which do not work.
Just three months after the ban on sales to Iraq and Afghanistan, a product called the HEDD1, consisting of a radio aerial on a handle made in Bulgaria, was displayed at a security exhibition at Olympia in London.
The company selling the devices, Unival, claimed that while all the other products which looked like it were a "massive scam", theirs was different.
The HEDD1 was marketed by a retired British Army colonel, John Wyatt, who told prospective buyers that it had "proved extremely successful in several foreign countries", including in "double blind" tests.
In reality the maker of HEDD1, Yuri Markov, had been charged in the United States in 2008 for fraudulently claiming that the previous version of his so-called bomb detector could detect explosives.
The US Navy had subjected it to a double-blind test and found it "does not work".
Asked by Newsnight why he had promoted such a product, Col Wyatt said: "I would never put lives at risk on this at all - it is intangible science - I wouldn't use it in a life or death situation."
Nevertheless, in July 2010 he demonstrated the HEDD1 to the Royal Engineers at an army base in Surrey as a potential bomb detector to be used in Afghanistan to deal with IEDs.
The Royal Engineers showed the HEDD1 to explosives expert Sidney Alford of Alford Technologies, who has previously helped Newsnight expose other so-called detectors.
The HEDD1 failed to find any explosives during a double blind trial and Mr Alford's report concluded by saying "this equipment does not detect explosives".
Col Wyatt told Newsnight he would have made 3,000 euros profit on every HEDD1 he sold but that he had not sold any so far and would not do so without further testing.
Asked by Newsnight whether he had given the product's makers an air of respectability by becoming their agent he said: "If you perhaps feel that they're gaining an edge by my involvement, I'd say probably, yes I'm guilty."
After the Moscow bombing on Monday there will be questions about why the ban on exports to Iraq and Afghanistan has not been extended to protect the citizens of other countries.
The Department of Business, Innovation and Skills told Newsnight that there was little point: "The impact of any further UK action in preventing the supply of these devices from the UK would be limited if they are available elsewhere"