By Sushil Sharma
BBC News, Kathmandu
An ex-prime minister and six former ministers in Nepal have been cleared on a graft charge by the country's powerful anti-corruption panel.
Ex-premier Deuba (C) refuses to recognise the commission
Sher Bahadur Deuba and the others had been accused of misusing funds.
However, Mr Deuba remains in detention on a second corruption charge related to a water project.
King Gyanendra set up the controversial commission, which has the powers of a court, after seizing direct control of Nepal in February.
He said he took power because many politicians were corrupt and had failed to tackle the nation's 10-year Maoist insurgency that has claimed about 12,000 lives.
US Deputy Assistant Secretary of State for South Asia, Donald Camp, is currently in the country to discuss the political crisis the takeover has sparked.
A spokesman for the corruption commission said that although the former ministers had been found guilty of improperly distributing funds, there was not enough evidence to punish them on corruption charges.
The king seized direct power saying many politicians were corrupt
Mr Deuba and the ex-ministers - all of whom worked under him in his cabinet - had been accused of distributing the money to party workers.
The commission can investigate and arrest anyone on corruption charges and punish those found guilty.
Mr Deuba and another former minister, Prakash Man Singh, are still being held over alleged corruption in the multimillion-dollar water project.
They have refused to recognise the commission, saying it was unconstitutional and is politically motivated.
The widening rift between the king and political parties will be one of the main items on the agenda of Mr Camp, who is on a two-day visit.
He is due to meet senior officials of the royalist government and top opposition leaders.
The US says the rift will benefit the Maoist rebels, who oppose the monarchy and parliamentary democracy.
The US has been urging the king and the parties to reconcile their differences.