The Thai government announced Tuesday that the GT200 failed rigorous tests carried out by scientists and the army in Thailand, after concerns were raised that the device was an elaborate hoax.
"We've done a double-blind test where the equipment was only successful in discovering in 20 percent of the cases, when just a random choice would give you 25 percent -- so there's no statistical significance to having the equipment," Thai Prime Minister Abhisit Vejjajiva told CNN.
The device's manufacturer, Britain-based Global Technical, disputed the tests' results.
Thailand has spent more than $20 million for about 700 of the devices, which are supposed to indicate the presence of explosives. Thailand also has paid for the manufacturer's eight days of training for device operators.
After the test results, the Thai government said it was looking into the possibility of legal action against Global Technical.
The Thai army has been using GT200 for six years in the country's troubled south, where insurgents have been waging a years-long secessionist movement, and where bomb attacks occur weekly.
The device also has been sold to Thailand's forensic scientists, navy, air force, narcotics control board and police.
Global Technical said in an e-mail it was "surprised and disappointed by the reported outcome of tests carried out by the Thai government."
It said the results were "completely at odds with other tests carried out by independent bodies" and with "the experience of the large number of users of this product all over the world.
"We shall not be commenting further until we have seen the report and have had the opportunity to study it and, in particular, to understand the testing methodology employed."
Global Technical and its Thai distributor, Avia Satcom, both declined CNN's request for an interview.
The company's Web site says the device has been sold to 30 countries around the world. Some of the countries thought to have purchased the units are the Philippines, Mexico and Kenya.
The British government has banned a similar device, the AED651, made by British firm ATSC, from being exported.
The managing director of ATSC, Jim McCormick, has been arrested and questioned by police, who alleged "suspicion of fraud." The company declined to comment, citing ongoing legal action.
The AED651 has been sold in Iraq and Afghanistan, although the Iraqi army has stopped using it.
Both the AED651 and the GT200 use technology that some scientists dismiss as little more than a car antenna mounted on a plastic box that is designed to act much the way a dowsing rod is used to find water.
"I can see no mechanism of a detecting nature whatsoever, except for the brain of the person who is holding it," said Sidney Alford, an explosives engineer.
"There is no electronic [component]," he said. "I would expect there to be some sort of electronic device if a person had told me this works. I would expect to see electronic components here."