(Bloomberg) -- Former Thai leader Thaksin Shinawatra faces a trial in a royal insult case while a top court ordered his ally and Prime Minister Srettha Thavisin to submit more evidence in a case seeking his ouster, deepening a political crisis that’s gripped the Southeast Asian nation. 

Thaksin, a two-time former prime minister and the de facto leader of the ruling Pheu Thai party, was arraigned under Thailand’s stringent lese majeste law that protects the royal family from criticism. The 74-year-old politician was granted bail after his lawyer posted a 500,000 baht ($13,590) bond.

Read: Thai Royalists Make Risky Bet in Fresh Showdown With Thaksin

Hours after Thaksin was indicted, Thailand’s Constitutional Court asked Srettha — who heads the Pheu Thai-led coalition government — to furnish more documents and evidence in the case seeking his removal. This was in relation to allegations of ethics 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 political uncertainty have rattled Thailand’s financial markets, prompting foreign investors to pull almost $4 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 Thai stocks index pared gains in the afternoon session when it got a chance to react to court news. It ended morning session 1% higher but is now down 0.6%. 

The charges against Thaksin, 74, stem from an interview he gave in Seoul in 2015 that prosecutors deemed had breached Article 112 of Thailand’s penal code. It carries a maximum jail term of 15 years for each offense of defaming the monarchy. 

The attorney general last month decided to indict Thaksin, saying there was enough evidence to press ahead with a trial. Thaksin has rejected the charges and his lawyer has vowed to contest the case in the court. 

“The case is baseless — it’s fruit from a toxic tree,” Thaksin told reporters on June 8, in his first public comments about his legal troubles, which stem from remarks he made in 2015 in the wake of the military takeover. “It’s an example that shows how charges are abused after a coup.”

The court seized Thaksin’s passport and ordered him to be present on Aug. 19 when it will begin scrutinizing the evidence in the case.    

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 40 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. 

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. 

Srettha now has 15 days to furnish fresh evidence. The court will review the case again on July 10.

The constitutional court will also resume hearing a case on whether to disband the pro-democracy Move Forward party over its pledge to amend Thailand’s lese majeste law on July 3, it said in a statement. 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.

(Updates throughout. An earlier version corrected the lead paragraph to say Thailand is in Southeast Asia.)

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