KATMANDU, Nepal —  King Gyanendra (search) on Thursday announced the formation of an anti-graft commission that will be given broad powers to investigate and jail corrupt politicians and government bureaucrats under Nepal's (search) sweeping state of emergency.

Amnesty International (search), meanwhile, warned Thursday that the king's moves were destroying human rights and taking the country to the "brink of disaster."

The group's secretary general, Irene Khan, called on donor nations to suspend military aid to Nepal's government to pressure it to change its policies.

The royal palace said the six-member anti-graft commission would be headed by Bhakta Bahadur Koirala, a former bureaucrat, and would be granted authority equivalent to that enjoyed by the nation's courts.

The commission can take action against any person found to be involved in smuggling, tax evasion, illegal contracts or other forms of corruption, it said.

The move follows a series of draconian measures put in place since Feb.1, when Gyanendra dismissed the government and declared the state of emergency and a suspension of civil liberties.

The king said the measures were needed to combat a communist insurgency which has claimed more than 10,500 lives since 1996, and to bring political stability to the country.

He also promised to control corruption.

The move comes just a day before Nepal's annual Democracy Day, when opposition parties plan to take to the streets to protest Gyanendra's seizure of power.

Such protests are illegal under the state of emergency and police have arrested several opposition leaders ahead of the demonstrations.

Amnesty International said the state of emergency had strengthened the security forces and reduced the chances of a political settlement of the insurgency.

"The long-standing conflict between the Maoists and the armed forces has destroyed human rights in the countryside. Now, the state of emergency is destroying human rights in the urban areas, taking the country to the brink of disaster," Khan said.

She said she met Gyanendra during her visit to Nepal, and that he assured her of his commitment to uphold the country's international obligations. "The king will be judged not by his promises, but by how these promises are put into action," she said.

The new government has come under increasing pressure to restore democracy.

India, the United States, Britain, and other European countries have already recalled their ambassadors.