Exclusive: Therapeutic Goods Administration investigates Neran de Silva firm Promedical over claims it has approval for rapid test kit

This article is more than 4 months old

This article is more than 4 months old

Health authorities have launched an investigation into an Australian company’s attempts to sell large quantities of unsanctioned coronavirus test kits, after it falsely claimed its tests had been approved by medical regulators.

Promedical Equipment Pty Ltd, a company that sells cryogenic treatment and erectile dysfunction machines, made headlines last month when it announced it had “obtained TGA go-ahead” to supply 5m rapid Covid-19 antibody test kits to Australian hospitals and labs every week.

Its chief executive Neran de Silva – a convicted rapist and former business associate of the government services minister, Stuart Robert – was quoted in the Daily Telegraph and Daily Mail, and his representatives appeared on the Today Show and Paul Murray Live, where the development was described as an “amazing piece of news”.

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“The rapid test kit provides immediate peace of mind for health and medical staff who are exposed to Covid-19 daily,” De Silva said. “They can be tested and back at work within 15 minutes, freeing up valuable treatment time.”

But Guardian Australia can reveal Promedical is now the subject of an investigation by the Therapeutic Goods Administration, and has been disowned by the Chinese manufacturer of a TGA-approved test. It has also been enveloped in a separate US securities scandal after a Nasdaq-listed supply chain business was placed in a trading halt related to announcements it had struck a $805m deal to onsell 46m of the tests.

The Wondfo deal

Promedical’s bold claims of bringing 5m tests to Australia per week were, initially at least, based on a distribution agreement with a relatively well-known Chinese manufacturer, Guangzhou Wondfo Biotech.

On 20 March, the TGA gave Promedical an approval that allowed it to supply Wondfo-manufactured tests in Australia, but no others.

Promedical, though, told Guardian Australia it “didn’t proceed” with its agreement with Wondfo. It did confirm, however, that it ordered a batch of unapproved tests, from an unknown supplier, which was delivered to its Brisbane warehouse on 22 March.

Promedical has repeatedly refused to say who manufactured the tests it is now marketing.

Guardian Australia understands that soon after becoming aware Promedical was promoting a different test, Wondfo rescinded its relationship with the Australian company. It released a statement saying: “We hereby clarify that now Promedical Equipment Pty Ltd is NOT an authorised representative nor distributor of [Wondfo] in Australia, America, and any other countries/districts,” the statement said.

“We recommend purchasing products only from authorised distributors or dealers, which will increase the likelihood that you will receive authentic products. [Wondfo] is not responsible for any product complaints arising from products purchased from Promedical Equipment Pty Ltd.”

In early April, the TGA revoked Promedical’s approval to supply Covid-19 test kits, at the company’s own request. The US Food and Drug Administration also removed Promedical’s name from its list of test providers.

Despite no longer having TGA approval to supply test kits in Australia, Promedical has since continued to market test kits in Australia and overseas, including publishing claims it has “Australia’s first approved and certified rapid test kit”.

After being approached by Guardian Australia last week, some references to having Australian and US approval were removed from its websites.

But, at the time of publication, the Promedical website was still claiming the company had TGA approval for its test.

“Promedical’s Covid-19 Rapid Test Kit is an Australia-first professional medical testing kit that can detect the presence of IgG and IgM antibodies in human blood,” the website said.

“The Covid-19 Rapid Test Kit is approved by the Therapeutic Goods Administration (TGA), which means the clinical kit is safe for use by the Australian public.”

Promedical also issued a press release on 1 April claiming it had TGA approval, which included images of a test kit. It also supplied media outlets with the images.

At that stage, it had TGA approval to supply the Wondfo product only.

But the company confirmed it never proceeded with the Wondfo deal, and the pictured test kit looks similar to the non-Wondfo product delivered to its Brisbane warehouse on 22 March, according to video obtained by Guardian Australia.

Trading halt on US shares

On 10 April the Nasdaq-listed US supply chain and logistics company SCWorx filed documents with the US Securities and Exchange Commission claiming it had entered into a “supply agreement” with Promedical for the purchase of 52m of its test kits. On 13 April, SCWorx’s share price increased more than 500%.

A Promedical spokesperson said: “[The company] had initial discussions with SCWorx in the US, and supplied an invoice, but an order was never placed, nor was payment ever made”.

“SCWorx has not been approved to use the Promedical brand, or promote the Promedical branded [test] via their website.”

On 15 April, the chief executive and chairman of SCWorx, Marc Schessel, told investors on a conference call he had chosen the supplier because the product was not manufactured in China or South Korea and that the manufacturer “had the proper FDA authorisations”.

Two days later Schessel released a statement confirming the deal would involve the supply of 2m test kits per week for 23 weeks, which would be onsold to another company, Rethink My Healthcare, for $35m per week. The statement contained links to Promedical’s website.

Last week the SEC placed a trading halt on SCWorx citing “concerns regarding the adequacy and accuracy” of statements regarding the deal.

Two law firms have announced investigations into SCWorx on behalf of shareholders following a report by Hindenburg Research, which first detailed the events.

De Silva in the public eye

It’s not the first time De Silva has come to public attention.

In 2018, he was convicted of rape for sexually assaulting an adult dancer who had been sleeping on the couch of a mutual friend’s house in the Brisbane suburb of Fortitude Valley in 2016.

Two months after his conviction, then-backbencher Stuart Robert joined De Silva’s cryogenic treatment company, Cryo Australia, as a director. Robert said De Silva had said nothing of the criminal case.

In the subsequent liquidation of Cryo Australia, Robert and his business partner stood to lose hundreds of thousands of dollars from their ill-fated investment.

De Silva appealed his conviction all the way to the high court, but lost.

Promedical’s corporate head office is listed at the same address as Cryo Australia’s former Brisbane headquarters. Its two shares were purchased for $2 by De Silva’s partner, Cassandra Auty.

Guardian Australia visited the office on Thursday and found it under renovation, with construction workers gutting the interior. A “Cryo Australia” sign was still on display outside.

Promedical’s response

Responding to questions, Promedical released a statement that said it had “partnered with another Australian company to manufacture the [test kits] under the Promedical brand name”.

It confirmed it received a “small batch delivery” from the supplier on 22 March. When asked to identify who was making the kits, Promedical said it “did not wish to disclose the name of the new supplier” until TGA approval had been obtained.

“Promedical’s … rapid test kit is the same initial response test that has been successfully and effectively used by medical teams throughout Asian countries hard-hit by the Covid-19 virus since the beginning of 2020,” the company said.

“A new TGA application is currently awaiting upload to the TGA system. This is the same case with the FDA in the US.

“Promedical is not aware of any investigations relating to the company, involving the TGA.”

A TGA spokesman said it could not comment on applications that might have been lodged, but confirmed an investigation was under way into Promedical.

“The investigation into Promedical Equipment Pty Ltd relates to Covid-19 rapid test kits. Promedical Equipment Pty Ltd is not currently approved by the TGA to supply Covid-19 test kits in Australia.”

In response to suggestions it wrongly claimed to have approvals, and that its marketing materials clearly linked the initial Wondfo approval to its new product, the company said: “Promedical is not claiming that its current Covid-19 [test], from its new supplier, is TGA or FDA approved. All references to TGA approvals related to its past agreement with Wondfo, which has since ended along with all marketing of the product.”

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“Promedical have not, and do not, advertise they have FDA approval.”

At the time Promedical made the above comment it was still advertising its tests as “FDA approved” on an official export site. The company has pointed out it holds a valid TGA permit to export the tests.

After being contacted by Guardian Australia, Promedical has removed claims that it had various approvals from its websites.

Peter Collignon, an infection diseases expert with the Australian National University, said that while accurate rapid antibody tests were crucial in the fight against the pandemic, allowing unknown or inaccurate testing on to the market was extremely dangerous.

Australian regulators needed to do more to place suppliers of testing kits under intense scrutiny, he said.

“The trouble is that this is an emergency … we can’t do things on the normal slow bureaucratic process, I fully accept that,” Collignon said.

“But equally we have to have a set of minimum of standards that they accept for both drugs and antibody tests. The post-marketing surveillance has to be more intense than normal because we need to rapidly remove these tests if they’re not up to scratch.”