* Rwanda minister is commanding rebels in Congo - report
* UN source: Rwanda has effectively annexed eastern Congo
* Rwanda, Uganda reject U.N. expert panel's report
* Rebels recruit child soldiers, execute recruits (Adds new quotes, details)
By Louis Charbonneau and Michelle Nichols
UNITED NATIONS, Oct 16 (Reuters) - Rwanda's defense minister is commanding a rebellion in eastern Democratic Republic of Congo that is being armed by Rwanda and Uganda, both of which sent troops to aid the insurgency in a deadly attack on U.N. peacekeepers, according to a U.N. report.
The U.N. Security Council's Group of Experts said in a confidential report that Rwanda and Uganda - despite their strong denials - continued to support M23 rebels in their six-month fight against Congolese government troops in North Kivu province.
"Both Rwanda and Uganda have been supporting M23," said the 44-page report, which was seen by Reuters on Tuesday.
"While Rwandan officials coordinated the creation of the rebel movement as well as its major military operations, Uganda's more subtle support to M23 allowed the rebel group's political branch to operate from within Kampala and boost its external relations," it said.
Bosco Ntaganda, a former Congolese general wanted by the International Criminal Court for alleged war crimes, controls the rebellion on the ground and M23 leader Sultani Makenga is in charge of operations and coordination with allied armed groups, the U.N. report said.
Both Ntaganda and Makenga "receive direct military orders from RDF (Rwandan army) Chief of Defense staff General Charles Kayonga, who in turn acts on instructions from Minister of Defense General James Kabarebe," it said.
Uganda and Rwanda have denied the accusations of involvement by the U.N. experts, who monitor compliance with sanctions and an arms embargo on the Congo and delivered their report to the Security Council's Congo sanctions committee earlier this month.
"Rwandan officials exercise overall command and strategic planning for M23," the report said. "Rwanda continues to violate the arms embargo through direct military support to M23 rebels, facilitation of recruitment, encouragement and facilitation of FARDC (Congolese army) desertions as well as the provision of arms and ammunition, intelligence, and political advice."
"UPDF (Ugandan army) commanders sent troops and weapons to reinforce specific M23 operations and assisted in M23's recruitment and weapons procurement efforts in Uganda," it said.
PEACEKEEPER KILLED
Nearly half a million people have been displaced due to the fighting. M23 has proven so resilient that one senior U.N. diplomatic source told Reuters that Rwanda has effectively "annexed" mineral-rich eastern Congo thanks to the rebel force.
U.N. peacekeeping chief Herve Ladsous said last month that the rebels had set up de facto administration in eastern Democratic Republic of Congo, controlling the people and collecting taxes.
The rebellion also is being funded by traders in Rwanda who are profiting from tin, tungsten and tantalum smuggled across the border from mines in the eastern DRC, according to the U.N. experts' report.
An interim report from the Group of Experts that was published in June raised similar accusations against Rwanda but with far less detail. Kigali was furious about that report, saying it was one-side and contained false allegations.
Rwanda has backed armed movements in the Congo during the past two decades, citing a need to tackle Rwandan rebels operating out of Congo's eastern hills.
The new report said that M23 had expanded its control of Rutshuru Territory with extensive foreign support in July 2012 and had taken advantage of a recent informal ceasefire "to expand alliances and command proxy operations elsewhere."
The experts said that units of the Ugandan and Rwandan armies "jointly supported M23 in a series of attacks in July 2012 to take over the major towns in Rutshuru Territory, and the (Congolese army) base of Rumangabo."
During these attacks, the rebels killed a U.N. peacekeeper and fired on a U.N. peacekeeping base at Kiwanja.
"According to several M23 soldiers, RDF troops provided the rebels with heavy weapons such as 12.7 mm machine guns, 60 mm, 91 mm and 120 mm mortars, as well as anti-tank and anti-aircraft launchers ahead of the attack," the report said.
"RDF Special Forces in Rutshuru also aided the rebels and fired 13 rounds on a FARDC (Congolese army) combat helicopter during the takeover of Kiwanja," it said.
CHILD SOLDIERS
Ugandan military spokesman Felix Kulayigye rejected the report.
"Where's the evidence for their claims? Some of those so-called experts came here and did not interview anyone," he said. "Where's their authentic facts to back those claims? Those accusations are absolute rubbish, hogwash."
Olivier Nduhungirehe, senior Rwandan diplomat at the country's U.N. mission, had a similar denial, which he sent to Reuters on Sunday. He said the U.N. experts have been "allowed to pursue a political agenda that has nothing to do with getting at the true causes of conflict in the eastern DRC."
Rwandan President Paul Kagame reiterated Rwanda's denials at a high-level meeting in New York last month that both he and Congolese President Joseph Kabila attended.
The Group of Experts said that it has corroborated its findings with multiple intelligence sources.
"Various South African Development Community (SADC), European, Ugandan, and Burundian intelligence agents also confirmed the group's findings concerning Rwandan violations of the (arms) embargo," the report said.
It added that the Rwandans have stepped up recruitment for M23, which has around 1,250 soldiers.
"M23 faces challenges in carrying out independent operations and controlling heavily guarded positions due to troop shortages," said the report.
It said the Rwandan army was targeting Rwandan demobilized soldiers and civilians and Congolese refugees to recruit for M23, while M23 itself has stepped up its use and recruitment of child soldiers. Since May, the experts said M23 has recruited some 250 children and killed dozens who tried to escape.
"Furthermore, certain M23 commanders have ordered the extrajudicial executions of dozens of recruits and prisoners of war," the report said.
"M23 uses boys on the frontlines as cover for advancing units, often after a week of training," the experts said. "Others act as porters, intelligence operatives and bodyguards. The rebels use young girls as cooks and as commanders' wives." (Additional reporting by Elias Biryabarema in Kampala and Yara Bayoumy in Nairobi; Editing by Paul Simao)
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