(Adds defence reactions, context)
By Thomas Escritt
AMSTERDAM, March 11 (Reuters) - The International Criminal Court case against a man accused alongside Kenya's Uhuru Kenyatta collapsed on Monday, prosecutors said, raising the chances that charges against the newly elected president will also fail to stick.
Last week's election of Kenyatta, accused by the ICC of crimes against humanity, has complicated Kenya's ties its Western allies which see it as a major bulwark against the rise of Islamist militancy in east Africa.
The ICC charged Kenyatta alongside former civil servant Francis Muthaura of orchestrating the violence that followed the 2007 election in which 1,200 were killed and more than 100,000 were forced to flee their homes.
But ICC prosecutor Fatou Bensouda said the decision of a key witness to recant their testimony forced her to drop charges against Muthaura. As the prosecution of Muthaura and Kenyatta is linked and based on a lot of the same evidence, the decision may well impact the case against the Kenyan president-elect.
"We no longer believe there is sufficient evidence to prove the charges against Muthaura beyond reasonable doubt," Bensouda she said.
"Witnesses who may have been able to provide evidence concerning the events of 2007 and 2008 have either been killed or have died since those events," she said, accusing the Kenyan government of going back on commitments to help the tribunal carry out its investigation.
But the decision to withdraw the charges would have no impact on the case against Kenyatta, she said.
ICC judge presiding judge Kuniko Ozaki however said the decision would have an impact on the joint prosecution of the pair.
"This is an important announcement which obviously has implications for the Muthaura and Kenyatta case," Ozaki said, without elaborating.
"NOT BAD NEWS FOR KENYATTA"
She resisted pressure from Muthaura's lawyers to acquit the former civil servant immediately and invited lawyers for both defendants to submit observations on how the case should proceed at a status conference to be held next Monday.
"It is clear the case (against Muthaura) cannot proceed," said Ozaki.
"However, the legal question as to whether the charges are withdrawn at the discretion of the prosecutor or whether any withdrawal requires the permission of the trial chamber is a matter which will be considered in a decision to follow."
Kenyatta's lawyers said the collapse of the case against Muthaura vindicated their long-standing criticism of the prosecution.
The charges, Kenyatta's lawyer Steven Kay said were "determined on false evidence, evidence that was concealed from the defence and the facts underlying the charges have been put utterly and fully in doubt".
Similar charges case against Kenyatta's election running mate William Ruto are part of a different ICC case.
Last week, Kay demanded the court take a fresh look at the charges facing Kenyatta, saying they were based on misleading and discredited testimony.
"The prosecution had in its possession prior to the Confirmation Hearing, exculpatory evidence, which completely undermined the credibility of one of its three core witnesses," Kay wrote in a filing.
Speaking in court, Bensouda rejected this allegation.
Karim Khan, Muthaura's lawyer, asked judges to formalise his acquittal as soon as possible to allow the 66-year-old to return home "and breathe a sigh of relief that this awful chapter in his life is closed, to enjoy his retirement."
"This development is obviously not bad news for Kenyatta," said William Schabas, a law professor at Middlesex University. "A piece of evidence that was very important to both the Muthaura and Kenyatta prosecutions has gone." (Additional reporting By Drazen Jorgic, James Macharia and Edmund Blair; Editing by Jon Hemming)