By Sue Pleming WASHINGTON, March 15 (Reuters) - Calling the case "a matter of deep concern," the United States urged close anti-terrorism ally Pakistan on Thursday to handle in an "above-board," open way the dismissal and detention of the country's top judge. "It is essential for any developing democracy to adhere to the rule of law and conduct any investigations ... in a clear, above-board, transparent manner that strictly accords with Pakistan's laws," State Department spokesman Sean McCormack said. Pakistani President Pervez Musharraf suspended Chief Justice Iftikhar Chaudhary last week after he met with the top judge, whose subsequent confinement at his Islamabad home has sparked outrage in Pakistan. "It is a matter of deep concern," said McCormack of the case. McCormack declined to say whether Washington believed Musharraf had handled the case incorrectly so far but he appeared to go further in his stance than U.S. Assistant Secretary of State for South and Central Asia Richard Boucher, who was asked about the dismissal during a visit to Pakistan. "We do think this is a matter that needs to work its way through the Pakistani system," Boucher told a news conference in Islamabad on Thursday. McCormack said U.S. officials had raised the issue with Pakistan's government and would continue to closely monitor what was happening. The handling of the case has raised suspicion in Pakistan that Musharraf feared the judge would not accept any move by him to retain his role as army chief, which constitutionally he should give up this year. Despite Musharraf's stated commitment to democratic transition and "enlightened moderation", the State Department's annual human rights report released this month pointed to Pakistan's "poor" human rights record. The report noted the "disappearances" of activists and political opponents and extrajudicial killings by security forces. In addition, it said corruption was pervasive throughout the government and police forces. Human Rights Watch said the Pakistani government's dismissal and detention of the chief justice severely undermined judicial independence in the country. "The Pakistani government must allow Justice Chaudhary a fair, open hearing where he has adequate opportunity to study the charges leveled and benefit from legal advice," said Ali Dayan Hasan, Asia researcher for the human rights group. "Anything less will amount to a mockery of justice," he said in a statement.