HANOI, Vietnam - Vietnam has failed to police its adoption system, allowing corruption, fraud and baby-selling to flourish, the U.S. Embassy says in a new report obtained by the Associated Press.

The nine-page document describes brokers scouring villages for babies, hospitals selling infants whose mothers cannot pay their bills, and a grandmother giving away her grandchild - without telling the child's mother.

"I'm shocked and deeply troubled by the worst of the worst cases," said Jonathan Aloisi, deputy chief of mission at the U.S. Embassy in Hanoi.

Vietnam's top adoption official called the concerns "groundless." Bribery of orphanage officials may occur, but serious offenses such as baby-selling or kidnapping are not a problem, said Vu Duc Long, director of the Department of International Adoptions.

The dispute comes amid a boom in adoptions from Vietnam. Americans - including actress Angelina Jolie - adopted more than 1,200 Vietnamese children over the 18 months ending March 31. In 2007, adoptions surged more than 400 percent from a year earlier, with 828 Vietnamese children adopted by American families.

While China remains the most popular overseas country for adoptions, a growing number of Americans are looking to Vietnam, which has fewer restrictions. The wait for adoption approval has also gotten longer in China after authorities there tightened rules.

U.S. adoption agencies active in Vietnam said that despite some cases of

wrongdoing, most adoptions in the country are ethical.

"We're definitely aware of the problems, but adoption is a wonderful thing, and I don't think children in Vietnam should pay the price," said Wendy Martinez, director of international services at Adopt International.

The San Francisco-based agency handles about 20 adoptions per year from Vietnam. It also helps Bay Area residents adopt babies from such countries as China, South Korea, Bulgaria and Ukraine.

Problems such as corruption and baby-selling are not necessarily worse in Vietnam, Martinez said, "they're just getting a lot more attention."

"Our experience has been a good one," said Susan Cox, vice president of public policy with Holt International Children's Services, based in Eugene, Ore., which has operated in Vietnam since the 1970s. "We are concerned about any unethical practices, but I would not agree that these cases are indicative of adoptions in Vietnam."

Martinez of Adopt International said her agency tries to avoid corruption and fraud by having its own staff in Vietnam, which allows the agency to avoid using local "facilitators."

"That's where you get into the problem of selling babies," she said. "We employ people in our program who work purely in the best interest of the children."

The United States suspended all adoptions from Vietnam in 2003 over concerns about corruption. Adoptions resumed in 2006 under a bilateral agreement intended to ensure they were above board.

That agreement expires Sept. 1, and many adoption agency officials believe the Vietnam program will be suspended again, at least temporarily.

"I can't see any possible way that this agreement is going to continue," said Tad Kincaid of Orphans Overseas in Portland. "There's certainly going to be a lapse."

The U.S. Embassy report is based on a review of hundreds of adoptions since they resumed in Vietnam in 2006.

Already, the U.S. Embassy concerns have left scores of Vietnamese adoptions in limbo, as American families wait for U.S. permission to bring the babies home.

Victoria Krebs of Chapel Hill, N.C., said she and her husband have been waiting more than four months to find out whether U.S. visas will be approved for the two girls they plan to adopt. They have pictures of the children and feel as if they are already part of the family.

"They don't reply to my e-mails," Krebs said of U.S. immigration officials.

A suspension in Vietnamese adoptions would not only put families on hold, but also threaten humanitarian work in Vietnam that is largely funded by American adoption agencies, such as foster care and programs that help keep families together, Cox said.

That occurred when the United States suspended Vietnamese adoptions in 2003, Cox said. "Since there were no adoptions, the groups didn't have the means to stay and help," she said.


Mercury News Staff Writer Ken McLaughlin contributed to this report.