NAIROBI A U.N. Monitoring group report seen by Reuters on Thursday said Eritrea was behind a bomb plot in Ethiopia and that the Red Sea state bankrolled Somali al Shabaab rebels.
The report also said networks run by Kenyans in east Africa's biggest economy were channeling funds to al Shabaab fighters in Somalia.
Following are some other highlights from the report:
AL SHABAAB FINANCES
Somali rebel group al Shabaab earns money from taxation and extortion; commerce, trade and contraband; diaspora support and external assistance, the report said.
The UN Monitoring group conservatively estimates that al Shabaab generates $70-$100 million a year from duties at ports, taxes on goods and services, taxes in kind on domestic products, "jihad contributions" and extortion.
Al Shabaab also earns millions of dollars a month trading charcoal, sugar and other contraband. The trade cycle is dominated by Somali businessmen in Gulf Cooperation Council countries, notably Dubai, the report said.
"In a very real sense, al Shabaab is becoming a business: a network of mutually supportive interests in Somalia, Kenya, the Middle East, and even further afield. Even businessmen who are not ideologically aligned with al Shabaab have little incentive to see the Islamists displaced by a predatory and corrupt Transitional Federal Government," the report said.
Ethiopian troops entered Somalia in late 2006 to fight Islamist rebels holding the capital. Addis Ababa has supported the Transitional Federal Government in Somalia since it was established in 2004. It also supports authorities in Somaliland and Puntland, all eligible for help under UN resolutions.
The report states that Ethiopia also supports the sufi militia Ahlu Sunna, and while this is a group that could be considered eligible for assistance, Addis Ababa has never sought authorization from the Security Council to do so.
The Monitoring group also said that Ethiopian troops have frequently crossed into Somalia to help government troops and pro-government militias fight al Shabaab. In March, Ethiopian troops set up a base with Ahlu Sunna fighters inside Somalia.
"Whereas Ethiopian support for Somali security sector institutions should be addressed as a compliance issue within the context of Security Council resolution 1772 (2007), the presence of Ethiopian military forces on Somali soil constitutes a violation of the general and complete arms embargo on Somalia.
The report includes evidence that weapons and ammunition supplied to the African Union peacekeeping force in Mogadishu, known as AMISOM, are sold on the capital's main Bakara Market, which is in an area controlled by al Shabaab.
"Diversion of arms and ammunition from the Transitional Federal Government and its affiliated militias has been another significant source of supply to arms dealers in Mogadishu, and by extension to al Shabaab," the report said.
"Of the 11 varieties of ammunition observed in Bakara market, 8 bore the same lot number as those found in AMISOM ammunition stocks. Moreover, among the six varieties of ammunition seized from Al-Shabaab, four were of the same lot number as AMISOM ammunition."
The study of the weapons was carried out between January and April 2011.
The report states that a group of fighters from the Ethiopian rebel group, the Ogaden National Liberation Front (ONLF), captured in Ethiopia in September 2010 had weapons originally supplied to Eritrea by Bulgaria.
Rocket-propelled grenades seized by the Ethiopian authorities were assembled in Bulgaria in 1990-1991. Bulgaria confirmed they were part of a consignment sent from Port Bourgas, Bulgaria, to Eritrea in March 1999. The end user certificate is included in the report.
UN investigators questioned the captured ONLF fighters. The ONLF rebels said they had been trained in Eritrea and deployed to Ethiopia via Somaliland.
A Lebanese-registered company called Saracen International has significantly violated a U.N. arms embargo on Somalia and represents a threat to peace and stability in the country, the UN report concludes.
Between May 2010 and February 2011 Saracen provided military training and equipment and deployed armed, foreign security personnel on Somali territory. The report includes pictures of a Saracen base, vehicles and personnel in Bosasso, the main city in the semi-autonomous region of Puntland.
"The most egregious violations of the arms embargo during the Monitoring Group's current mandate were committed by the Hong Kong-registered company Southern Ace, and by the Lebanese-registered company Saracen International, together with affiliated companies registered in South Africa, Australia and Uganda," the report said.
"Saracen's presence has increased tension in north-eastern Somalia because its operations are perceived as a military threat by Puntland's neighbors, as well as by some parts of the Puntland population.
(Reporting by David Clarke; Editing by Barry Malone)