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.

"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."

Another adoption agency, Families Thru International Adoption, of Evansville, Ind., said that corruption exists everywhere and it is up to the adoption agencies to screen who they work with in Vietnam and other countries.

"There's always somebody that is trying to do something under the table, and when there are children involved, the results are even more horrific," said program director Salome Lamarche. "As an agency, we have a responsibility to be very careful who we work with in a country and to only work with organizations that work in a morally responsible manner."

She said her group has recently stopped taking applications for families who want Vietnamese children — but not because of concerns about corruption.

"We stopped because our waiting list is getting long and we thought it wasn't ethical to accept applications from families when we didn't know if we could match them with children," Lamarche said.

The U.S. 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, Ore. "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 that she and her husband have been waiting more than four months to find out if U.S. visas will be approved for the two girls they plan to adopt. They have pictures of the children and feel like they are already part of the family.

"They don't reply to my e-mails," Krebs said of U.S. immigration officials. "I don't have any specific information about my case."

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 U.S. 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.

Many people involved in Vietnamese adoptions strictly adhere to adoption laws, U.S. officials say.

But others have been flooding the system with cash to get babies for American parents, who pay up to $25,000 for an adoption.

With 42 U.S. adoption agencies licensed in Vietnam, the competition for babies is intense.

Some agencies have been paying orphanage directors $10,000 per referral, the report says, and some have taken orphanage directors on shopping sprees and junkets to the United States in return for a steady flow of babies.

"Adoption service providers have reported that cash and in-kind donations have been diverted by orphanage officials and used to finance personal property, private cars, jewelry, and in one case, a commercial real estate development," the report says.