• Laos official accused of seeking out unwanted babies
• He "obtained papers" and "sold babies to foreigners"
• Said to have made up to $5000 for each baby sale

Laos is investigating a retired justice ministry official for allegedly selling adopted babies to Americans, Australians and Canadians for thousands of dollars each.

The official is accused of seeking out unwanted babies in poor rural areas, obtaining adoption papers and selling the infants to foreigners for up to $5000 each, according to a Radio Free Asia report today.

He has been taken in for questioning.

Laos has suspended foreign adoptions pending the outcome of the investigation.

"Adopting a child for sale... is a crime related to human trafficking, no question about it," a government official told the radio station.

The justice ministry is probing how the scam worked, including whether the birth parents sold their infants, which can constitute a human trafficking offence punishable by a three-to-five-year jail term, the official said.

It was not clear how many children were involved in the alleged adoption ring.

The retired official was "familiar" with most of the justice ministry's employees and had often applied for adoption and naturalisation papers, the report said.

Laos is listed as Tier Two - out of three - in the US State Department's 2011 anti human trafficking report, which praises the government's "significant efforts" to combat the problem.

The US, however, said the government had "never administratively or criminally punished any public official for complicity in trafficking in persons".