Former Thai leader Thaksin Shinawatra is set to be formally indicted in a royal defamation charge Tuesday while a court weighs a petition to disqualify Prime Minister Srettha Thavisin - two high profile cases that threaten to plunge the Southeast Asian nation into political turmoil.

Thaksin, a two-time former prime minister and de facto leader of the ruling Pheu Thai party, is due to be charged under the country’s stringent lese majeste law that protects the royal family from criticism. The attorney general last month decided to indict Thaksin, saying there was enough evidence to press ahead with a trial.

Once Thaksin, 74, appears before prosecutors, he will be arraigned and produced before a criminal court. The court can either send him into pre-trial detention or release him on bail.

Thailand’s Constitutional Court is also scheduled to resume deliberations on a case that seeks to remove Srettha - who runs a Pheu Thai-led coalition government - from power over allegations  of ethical violations in appointing a cabinet minister who spent time in prison.

While the outcomes of the cases are far from certain, the litigations pose risks to Srettha’s government that was formed in the aftermath of last year’s messy general election. They also signal the possible unraveling of a deal that saw Pheu Thai and a clutch of pro-royalist and military-aligned parties joining hands to take power and paved the way for Thaksin’s return from a 15-year exile.

The mounting political uncertainty have rattled Thailand’s financial markets, prompting foreign investors to pull more than $3 billion from the nation’s stocks and bonds. The benchmark SET Index of stocks has slumped to a near four-year low, ranking it the worst-performer of all global bourses tracked by Bloomberg in the past year, while the baht is Asia’s worst performer after the Japanese yen this year.  

“Rising political risks have dampened any investor optimism about Thailand’s quick economic recovery,” said Varorith Chirachon, an executive director at SCB Asset Management Co. “The lingering legal cases against Srettha and key political parties will probably derail government’s attempts and focus in implementing much-needed economic policies and stimulus.”

The charges against Thaksin stem from an interview he gave in Seoul in 2015 that prosecutors deem had breached Article 112 of Thailand’s penal code, which carries a maximum jail term of 15 years for each offense of defaming the monarchy.

Thaksin has rejected the charges and his lawyer has vowed to contest the case in the court.  

Thaksin is currently on parole after being sentenced in corruption cases. He’s due to walk free after his royally commuted jail term ends in August.

He held the country’s top political office from 2001 until being ousted in a 2006 coup. His sister Yingluck Shinawatra, whose government was overthrown by a coup, remains in exile after leaving Thailand in 2017 before a court sentenced her to five years in prison for dereliction of duty over a controversial rice purchase program.
Srettha’s Troubles

The legal trouble for Srettha meanwhile arises from a petition by a group of senators who alleged “serious violation of ethical standards” in the April appointment of Pichit Chuenban, a former lawyer for the influential Shinawatra family. Pichit was not qualified to become a minister after being sentenced to six months in jail in 2008 for attempting to bribe court officials while representing Thaksin, according to the senators.

Last week, the nine-member court called for lists of witnesses and evidence from the prime minister as well as the group of 40 senators who had filed the legal challenge.

Although Pichit resigned from the cabinet last month, saying he wanted to save Srettha from any legal troubles, it hasn’t stopped the court from probing the accusation against the prime minister. Srettha has said he was confident he could weather the court scrutiny, adding that his decision to appoint Pichit followed the law.

The same court is also hearing a case on whether to disband the pro-democracy Move Forward party over its pledge to amend Thailand’s lese majeste law. The party, which won the most seats in last year’s election, is seen as the biggest threat to the royalist establishment.

Move Forward has said it plans to “fight tooth and nail” against the dissolution threat, saying its loss would amount to an attack on democracy.

  - Bloomberg