A UN report says that UNITA rebels smuggle over $1million worth of diamonds out of Angola everyday, an estimated 5% of the worlds supply of rough, stating that "the structures for selling illicit diamonds remain in place."

The report, issued by a UN panel monitoring the Security Council sanctions against UNITA, also says that "It appears that the Antwerp and South African markets are two key points of sale or transit for embargoed diamonds, Israel being used as a laundering route for some imports."

It added that smugglers often routed Angolan diamonds through third countries, including Congo, South Africa, Cyprus, Tanzania, Burkina Faso and Zambia.

The panel noted that the Belgian authorities inspect only gems from countries on an embargoed list. This means that goods carrying false papers from other countries are ignored. It said that about 20 percent of the diamonds exported from the Democratic Republic of Congo are believed to come from Angola. Furthermore, documents submitted by the Belgians showed more diamonds originating from Zambia than that country actually produces.

According to Reuters, the Angola Selling Corp. (Ascorp), which was created last year to distribute Angola's official production, told the U.N. panel that between $1 million and $1.2 million of illegal diamonds leave Angola every day, amounting to some $350 million to $420 million a year - about 5% of world production. Ascorp is controlled by the Israeli diamantaire, Lev Leviev.

The panel, headed by Ambassador Juan Larrain of Chile, calls to establish a permanent capability of the Security Council to ensure continued monitoring of targeted sanctions regimes. It also urges all countries to close loopholes that could be exploited by UNITA.

Sources in the diamond industry estimate that UNITA sells about 25% to 30% of the illegal rough from Angola.

The panel said 16 diamond companies are suspected of sanctions violations within the past two years. All have offices in Antwerp, although four are associated with South African companies and three with Israeli firms. The report did not identify the companies.