(Adds Myanmar government speech in Geneva, new paras 7-9, 16 and U.N. investigator's remarks in new paras 13-14)
By Shoon Naing and Stephanie Nebehay
YANGON/GENEVA, Sept 16 (Reuters) - Hundreds of thousands of Rohingya Muslims who remain inside Myanmar face systematic persecution and are living under the threat of genocide, a U.N. fact-finding mission said on Monday, repeating calls for top generals to face trial.
Myanmar security forces are accused of killings, gang rape and arson during a crackdown that drove more than 730,000 people to flee western Rakhine state for neighbouring Bangladesh after attacks on police posts by Rohingya insurgents in August 2017.
Myanmar has rejected most of the accusations and dismissed a report last September by a U.N-appointed panel which said military officers carried out the campaign against the Rohingya with "genocidal intent" and should stand trial.
"The threat of genocide is continuing for the remaining Rohingya," Australian human rights lawyer and panel member Christopher Sidoti said in a statement accompanying a new report issued in Geneva, adding that Myanmar was failing to prevent and punish genocide.
Some 600,000 Rohingya are living in "deplorable" conditions in Myanmar's Rakhine state, subject to restrictions on movement that touch almost every aspect of their lives, the U.N report said.
"These facts underscore the impossibility of return for the nearly one million Rohingya refugees, mostly in Bangladesh," it added.
Myanmar's Ambassador Kyaw Moe Tun told the U.N. Human Rights Council that some Hindus and Muslims had gone back to Myanmar where authorities were creating a "conducive environment", adding: "It is crystal clear that there are people who want to return, even now."
"We cannot overlook the horrific atrocities committed by ARSA (Arakan Rohingya Salvation Army) against innocent people and its coordinated terror attacks on police outposts," he said.
Tun, referring to the former U.N. Secretary-General who led an advisory commission on Rakhine, added: "The late Kofi Annan cautioned on the use of the word genocide in referring to the situation in Rakhine state. It is a charge which requires legal review and judicial determination and should not be thrown around loosely."
Myanmar rejected the fact-finding mission when it was formed at the rights forum in March 2017, with a mandate to investigate military abuses against the Rohingya and in other conflicts with ethnic armed groups in Myanmar.
The new report accuses the security forces of "torture and ill-treatment" of suspected insurgents in northern Myanmar, and says sexual and gender-based violence by the Myanmar military "remains a prominent feature of conflicts in Shan and Kachin states".
Two military spokesmen did not answer phone calls seeking comment.
"In Rakhine State, the Tatmadaw (army) has been using helicopter gunships against the Arakan Army and both sides are accused of indiscriminate use of heavy artillery fire, gunfire and landmines in civilian areas," Yanghee Lee, U.N. special rapporteur on Myanmar, said in her own update on Monday.
"Myanmar has done nothing to dismantle the system of violence and persecution and the Rohingya who remain in Rakhine live in the same dire circumstances that they did prior to the events of August 2017," she told the council during a three-hour debate.
The U.N panel said the evidence it gathered from nearly 1,300 interviews with witnesses had been passed to a new investigative mechanism for Myanmar which will support any future prosecution in international courts.
Tun said Myanmar's own independent commission of inquiry was a "work in progress" and action would be taken against perpetrators upon credible evidence. He said his government strongly rejected any attempt to take the matter to any international judicial or legal body unless national processes were clearly exhausted. (Editing by Poppy McPherson, Catherine Evans and Deepa Babington)
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