By Richard Balmforth
KIEV (Reuters) - Ukraine's chief prosecutor accused jailed opposition leader Yulia Tymoshenko of ordering the killing of a business rival 16 years ago, dealing a new blow to the ex-prime minister who the West says is the victim of a political vendetta.
The announcement came on Friday after a court adjourned a second trial against Tymoshenko for tax evasion and her defense counsel warned her health had declined to a "critical" level.
Tymoshenko is already serving a seven-year jail sentence for abuse of office, meted out in October 2011.
She and Western governments say she is the victim of a witch-hunt by the leadership of President Viktor Yanukovich who narrowly beat her in a run-off for the presidency in February 2010.
Political enemies of the 52-year-old politician have indicated for a year that an additional case was building against her over the killing of Yevhen Shcherban, a deputy and businessman who died in a hail of bullets in 1996 as he stepped from a plane.
But the announcement by state prosecutor Viktor Pshonka that Tymoshenko, a powerful gas trader in the 1990s, had conspired with a former prime minister, Pavlo Lazarenko, in ordering a $2.8 million "hit" against Shcherban came as a surprise.
If convicted she could face life imprisonment, Pshonka said in remarks carried by Interfax news agency.
"The material which has been assembled in the pre-trial investigation testifies to the fact that Tymoshenko indeed ordered the killing together with Lazarenko. Today investigators went to Tymoshenko to present her with the suspicions about the crime," said Pshonka, according to Interfax.
The investigation showed that those who had ordered Shcherban's killing had paid $2.8 million, he said.
Tymoshenko, the heroine of street protests in 2004 called the 'Orange Revolution' which overturned the old post-Soviet order and doomed Yanukovich's first bid for the presidency, denies wrongdoing.
The United States and the European Union have supported Tymoshenko, calling her case an example of selective justice. The EU has shelved agreements on free trade and political association with Ukraine over the issue.
Lazarenko was jailed for nine years in the United States for fraud and money laundering. He served his sentence but is still in detention in the United States over immigration issues.
Jailed in October 2011 on charges of abuse of office linked with a 2009 gas deal she brokered with Russia as prime minister, Tymoshenko has spent much time in hospital for back trouble, causing her second trial to be postponed repeatedly.
When the court in the eastern city of Kharkiv announced the latest adjournment on Friday until February 12, a group of her supporters called out: "Shame on the torturers!"
Tymoshenko said on January 8 she was launching a disobedience campaign in protest at measures such as the installation of video cameras in her hospital quarters. She has refused to return to her hospital bed and has been sleeping in a chair in the hospital corridor, her supporters say.
At an emotional press conference on Friday, her defense counsel Serhiy Vlasenko said: "Yulia Tymoshenko's health condition is worsening sharply."
Looking shaken after visiting her in hospital, Vlasenko said he had found her lying in the shower room in her quarters.
"When I entered, I thought she had died. For two minutes, she couldn't recognize me. I had to call for the head doctor. I am not an expert, but in my opinion the situation is critical," he said.
He did not provide more details of her condition.
Shcherban was shot dead at an airport in the eastern city of Donetsk by attackers disguised as airport mechanics, along with his wife and several bystanders.
The killings followed several other murders in Donetsk, including a football stadium bombing that killed the owner of Shakhtar Donetsk club, and led to a realignment of political and business alliances in the key steel and coal-producing region.
Back then, both Tymoshenko and Yanukovich were big players in a turbulent region which seethed with intrigue and where fortunes were made and lost in murky dealings ranging from sales of state assets to protection rackets, extortion and theft.
Pshonka said in May last year that investigators were trawling through evidence in the case, including new testimony from the dead man's son.
Ruslan Shcherban was 19 at the time and survived the attack by hiding under a car, but he emerged last year to say he had evidence implicating Tymoshenko.
(Editing by Tom Pfeiffer)