Lawyers said Khaleda, her son, and aides were convicted Thursday of stealing $253,000 in foreign donations received by an orphanage trust set up when she was last prime minister, from 2001 to 2006.
"Since the court has been able to prove the charges against her and considering her social and physical status, Zia has been sentenced to five years in jail in the section 409 and 109 of the penal codes," Judge Mohammad Akhteruzzaman said.
Khaleda’s son, Tarique Rahman, and four others were jailed for 10 years at the end of a case that lasted nearly 10 years.
Their lawyers said Zia was set to appeal against her conviction and that she was likely to be freed on bail during the process.
“We didn’t get justice. We’ll go to the higher court,” Khandker Mahbub Hossain, the leader of Khaleda’s legal team, told reporters in the Bangladeshi capital Dhaka.
Hossain called the ruling issued earlier in a packed courtroom amid tight security as "political vengeance”.
Khaleda and her Bangladesh Nationalist Party (BNP) say the charges are part of a plot to keep her and her family out of politics.
BNP senior leader Ruhul Kabir Rizvi a denounced the sentence, calling it “an attempt to eliminate the opponent."
BNP Secretary General Mirza Fakhrul Islam Alamgir said the verdict will deepen the country’s existing political crisis and damage people’s faith in the judiciary.
Law Minister Anisul Huq, however, said Khaleda’s conviction “proves that Bangladesh has the rule of law and that no one is above the law.”
“She can challenge the ruling in the High Court after getting a certified copy of the verdict,” he added.
Guilty verdict sparks tensions, clashes
Violence erupted in major cities across Bangladesh, with BNP supporters clashing with police and activists from the ruling party. Thousands of supporters took to the streets of the capital to protest.
Authorities have cut bus and ferry links into the capital and deployed thousands of riot police to quell likely unrest. Earlier, police fired tear gas to disperse protesters who gathered to support Khaleda. Television broadcast images of motorcycles set on fire.
BNP announced a plan for protests on Friday against what it called a “biased and compromised” ruling. Party leaders said more than 3,500 supporters have been detained over the past few days.
The renewed tension between them raises the specter of a long, destabilizing spell of unrest for Bangladesh and its economy. Khaleda is due to run in parliamentary polls set for December and can still do so if an appeal is pending.
Prime Minister Sheikh Hasina and Khaleda have nursed a long and bitter rivalry as they have dominated politics in poverty-stricken Bangladesh for more than two decades.