Malaysia's leading opposition figure Anwar Ibrahim was charged with sodomy at a court hearing on Thursday in a move that could damage his chances of staging a political comeback.
Anwar, 60, denied the charge that he had sex with a 23-year-old male aide and was bailed until his next court appearance on September 10. This will allow Anwar to contest a by-election on August 26 in which he is the favorite.
"I am pleased with this decision (bail). I will proceed with my campaign," Anwar told reporters after the court appearance in which he was accompanied by his wife and daughters.
About 100 cheering supporters shouted "long live Anwar" at the courthouse, which was surrounded by police.
The opposition People's Alliance coalition said on Thursday it would formally appoint Anwar as leader if he won the poll.
Anwar and his supporters say the charges are politically motivated and aimed at damaging his chances of a return to parliament and also the alliance's chance of winning over MPs from the ruling coalition in a confidence vote.
The alliance hopes to lure 30 MPs from the coalition to win a September 16 vote in parliament.
The alliance rode a wave of popular discontent with rising prices in March's election and deprived the coalition, which has ruled Malaysia since independence from Britain half a century ago, of its two-thirds majority.
It also lost five of the 13 states to the opposition in its worst election performance in more than 50 years.
FEARS OF LONG PRISON TERM
If he is found guilty, Anwar could be imprisoned for up to 20 years, effectively ending the career of a man who has long coveted the top job in Malaysia and who was only allowed back into politics in April following his release from jail in 2004.
Zami Idrus, the lawyer for Anwar's accuser, said he was relieved the case, in which Anwar was accused of committing consensual anal sex, was finally proceeding and said that his client would give his "full cooperation".
Anwar faced sodomy charges 10 years ago when he was deputy prime minister and was convicted, but that was overturned on appeal, although a corruption charge stood.
"The (current) trial is flawed. It is not rape or assault as originally charged," Anwar said.
The political uncertainty surrounding the trial and speculation on the future of Prime Minister Abdullah Ahmad Badawi has hurt both the stock market and the ringgit currency, which on Thursday hit a 6-month low against the dollar at 3.2840. The stock market was down about 0.8 percent.
"There is a risk that the political situation (in Malaysia) deteriorates significantly in the coming weeks," Credit Suisse analyst Stephen Hagger said in a research report published on Thursday.