CSIRO

DataDot Technology Ltd, a partner company to the CSIRO, has been placed in a trading halt by the Australian Securities Exchange after a Fairfax investigation revealed it and the country's peak scientific body had duped one of the world's biggest pharmaceutical companies in a major transaction.

DataDot's company secretary Graham Loughlin requested the trading halt as a result of "press coverage today of allegations regarding DataTrace DNA Pty Ltd, a subsidiary company". Shares in the company will be traded again by Monday.

DataTrace was 50 per cent owned by CSIRO when it sold an anti-counterfeit technology, which they were warned could be easily compromised, to Novartis, the Swiss-based pharmaceutical giant.

DataDot Technology: The joint venture between DataTrace DNA and CSIRO which convinced Novatiris to buy an easily compromised product.

DataDot Technology: The joint venture between DataTrace DNA and CSIRO which convinced Novatiris to buy an easily compromised product.

Instead of selling what it promised – a custom-designed microscopic tracer manufactured in-house by the CSIRO – DataTrace instead issued it cheap chemicals from China that were widely available and could be easily cracked by counterfeiters.

Organised crime gangs have been dumping bootleg medicines in poor economies around the world at enormous profits in recent years, prompting an Interpol task force that targeted 100 countries last year and netted 3.75 million units of fake drugs.

Novartis had wanted to protect the hundreds of millions of ampoules of injectable Voltaren (which is not registered for use in Australia) from precisely such an attack when it signed a five-year deal with DataTrace in 2010.

But a Herald investigation on Thursday has revealed Novartis was deliberately misled both by DataTrace executives and CSIRO officials in the transaction, reporting damning internal warnings that the "tracer" being issued to the company was not fit for the purpose.

"If there is a serious counterfeiting threat to the Novartis ampoules, then this code risks being quickly and easily cracked," the project's chief scientist, Dr Gerry Swiegers, warned months before the deal was announced to the market.

"Serious questions could then be raised, especially if the successful counterfeiting attack resulted in injury or death."

Mr Loughlin told the market this morning that "these matters require a response from the parent company", which is DataDot.

"In order for the facts to be assembled and the response to be prepared we request a trading halt in our shares until the market opens on Monday 15th April or until DataDot Technology Limited makes an announcement to the market on this subject, whichever is sooner.

The CSIRO remains a minority shareholder in DataDot.

Do you know more? Email investigations@smh.com.au