In Haiti a few months ago, I sat in on an Oxfam-organised HIV-awareness workshop with a dozen teenagers in one of the Port-au-Prince slums. All the girls had children, some more than one. They all believed that you could best avoid Aids - or “homosexuals' diarrhoea” as the disease is commonly known in Haiti - by having sex only when in the sea. And a boy with Aids could cure himself by drinking the water in which his girlfriend had washed her private parts (it didn't work the other way round). They then sang a rap song they'd written, urging all the kids of Carrefour Feuilles to use condoms. We weren't entirely surprised, after the boys left the room, when the girls told us that none of their boyfriends had, in fact, ever worn a condom. They giggled - the very idea.

Haiti was one of the early crucibles of the Aids epidemic: because of the country's proximity to America, hundreds of millions of dollars (nobody knows how much) have been poured into Haiti for prevention, education and treatment of HIV/Aids over the past 20 or more years. Last year, the American government alone spent $84.7m, or $10 for every Haitian, with more thrown in by NGOs and, of course, by the United Nations agencies. So it seems fair to ask - given the fantastic ignorance of those teenagers and the fact that Haiti's Aids prevalence rate remains the highest in the western hemisphere - where the hell all that money went?

Elizabeth Pisani provides some answers. Her book is a gripping and surprisingly entertaining account of the waste, fraud and jaw-dropping arrogance of the Aids industry, and it tells you a lot about what has gone wrong in the fight against the millennial plague. It's an insight, too, into some other conundrums of the modern world: why public-health science has lost our trust; why so many of the super-national bodies set up in the hopeful years after the second world war have failed to do the good they promised; and why such institutions find it so easy and acceptable to lie to the public. It's hard to think of anyone who shouldn't read it.

Pisani is herself a member of what she calls the Aids mafia, although I suspect that some former colleagues might like to see her over a bridge in concrete slippers. She worked during what she refers to, with irony, as “the excitement and optimism” of the early years of the global Aids response, slipping with worrying ease and no qualifications from journalism into epidemiology and HIV research for the United Nations' only body devoted to one disease alone: UNAids.

When Pisani started out as a consultant writer (“soon morphed to ‘expert'”) for UNAids in 1997, her main activity was, in the American journalists' term, “beating up” the story. That means exaggerating it. “We weren't making anything up,” she writes. “But once we got the numbers, we were certainly presenting them in their worst light. We did it consciously...we were pretty certain that neither donors nor governments would care about HIV unless we could show it threatened the general population.”

In that she was certainly right, and the strategy succeeded: in 2002, George WBush announced that America would increase its HIV/Aids spending in the developing world tenfold, to $15 billion over five years. Pisani and her colleagues in UNAids must take some credit for that. It's a dubious accolade, of course - because those jazzed-up statistics that aid-agency PR lives by (Unicef's habitual abuse of the figures on child trafficking comes to mind) can lead to potentially disastrous errors of strategy.

One problem for the UNAids flacks was that, outside southern Africa, the disease was patently not spreading into the general population. In 2001, Pisani started working in Asia, as an epidemiologist, and her tours to collect blood samples and interviews in the brothels and waria (transsexual) cruising joints of Jakarta are luridly fascinating. She became, you think, rather a good Aids researcher, and an honest one. But in the slums of Indonesia she confirmed what she already knew: Aids is a disease principally spread by rough sex, especially anal, and the sharing of dirty needles. It was never going to “blaze through the general population” - as UNAids press releases liked to put it - until the general population started doing those things.

Pisani tells all this brilliantly: the scenes in southeast Asia's grubbiest sex joints read like a glorious low-life travelogue, and she's funny, too. Her accounts of inept statistics' gathering and the aid agencies' befogging of truths with their PC dialect will ring bells with anyone who has worked in the development business (one standard UNAids footnote begins, “While we use the term ‘men who have sex with men' here it is within the context of understanding that the word ‘man/men' is socially constructed...”). She is extremely effective in damning the Bush administration's obtuse insistence on spending a large proportion of that $15 billion not on condoms but on encouraging people not to have sex at all, a notion “that has a failure rate of 76% even among American kids who choose to sign on for abstinence”. That misguided enterprise is probably the most tragic waste of resources in all the disease's history.

It's a pity that Pisani never worked in sub-Saharan Africa, because it is there that HIV/Aids has gripped the general population, and there also that the strategic errors have had the grimmest results. She blames the African disaster on an ideological obsession among the agencies in the 1990s that “HIV is a development problem”; that is, that the issues to be addressed were poverty, education and women's rights, rather than the more simple base cause - sex. This “ideological obsession” lured the UN and World Bank strategists into alliances with political leaders whom they should have shunned - such as Thabo Mbeki, of South Africa, who still questions whether HIV causes Aids, and who has worked actively to derail the response in his country; 30% of pregnant South Africans are now HIV-positive. It is certainly true that more money should have been spent tackling the sexual-infection vector: condoms, and education about condoms, seem to work. They did in Thailand. But in Africa, as late as 1999, enough condoms were being provided to allow each mature male to have protected sex just three times a year.

Pisani's “It's about sex, stupid” argument is both refreshing and naive. Plainly, it's actually about education, poverty, gender rights and sex (and drug injection and, in China, contaminated blood supplies): the few successful national HIV/Aids strategies to emerge so far have taken a holistic approach to these. Poverty is key: outside Europe and North America it is the poor predominantly who get HIV, just as it is they who die from malaria, diarrhoea and all the other banal diseases we can usually get over after a few days in hospital. Arguably, one reason Aids has spread so far into the general population in southern Africa (after reading this book, I'm shy of quoting disease prevalence statistics) is because those women who slept with HIV-positive men were vulnerable thanks to the depredations of malnutrition and the other ailments of ingrained poverty.

Nonetheless, this is an important and wise book and if it is not on the bedside tables of all UN agency managers soon, they should consider resignation. But they won't: salaries, as Pisani says, are awfully good. It is a mafia, after all.

The Wisdom of Whores by Elizabeth Pisani
Granta £17.99 pp372

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