BEIJING—Gu Kailai, the wife of ousted Communist Party official Bo Xilai, was found guilty and given a suspended death sentence on Monday for the murder of British businessman Neil Heywood in the southwestern city of Chongqing last year, according to observers in the courtroom.
They said the Intermediate People's Court in the eastern city of Hefei gave Ms. Gu a death sentence with a two-year reprieve—a penalty that had been widely expected and is normally commuted to a life sentence in prison after two years of good behavior.
Zhang Xiaojun, a Bo family aide, was also found guilty but given a lighter sentence of nine years in prison for his role in the murder, the observers said. Neither plans to appeal, the state-run Xinhua news agency said on Monday.
The judgment is a key step in the party leadership's efforts to conclude its worst political scandal in more than two decades and paves the way for an announcement on how it plans to deal with Mr. Bo, the former Chongqing Party chief, according to analysts and Party insiders.
But party leaders are facing mounting public skepticism over the trial after friends of Mr. Heywood and prominent public figures in China pointed out omissions, ambiguities and contradictions in the official account of how and why Mr. Heywood was killed.
The Wall Street Journal was first to report earlier this year that U.K. officials had asked the Chinese government to launch an inquiry into the death of Mr. Heywood, a business consultant with close ties to the Bo family whose body was found in a hotel room in November in Chongqing, where Mr. Bo was party chief at the time.
Ms. Gu had been widely expected to escape the death penalty because of her family's status in the party, her history of mental health problems and her claim that Mr. Heywood threatened her son, analysts and party insiders said.
"If she had been actually executed, the political consequences could have been quite serious, because Bo is not just an ordinary person: He has his own group and family connections," said He Weifang, a law professor at Peking University. "I think this outcome was negotiated before the trial even began. But I still think there are still some differences over how to handle Bo Xilai."
Mr. Zhang's lighter sentence was also expected because prosecutors said he was an accomplice, and Ms. Gu the main culprit, according observers during the trial.
At their trial on Aug. 9, Ms. Gu and Mr. Zhang didn't contest charges that they murdered Mr. Heywood in his hotel room by pouring cyanide into his mouth after he became drunk, vomited and sought a drink of water.
Ms. Gu told the court that she had suffered a "mental breakdown" because she believed that Mr. Heywood had threatened the safety of her son, Bo Guagua, after they became embroiled in a business dispute over a failed property deal.
Bo Guagua, the son of Ms. Gu and the elder Mr. Bo, hasn't commented publicly since the trial and didn't immediately respond to a fresh request for comment Monday.
"We respect the court's judgment," He Zhengsheng, a lawyer for the Heywood family who attended Monday's hearing, told The Wall Street Journal.
The British Embassy, which sent two diplomats to observe the trial and the announcement of the verdict and sentence, said in a statement: "We welcome the fact that the Chinese authorities have investigated the death of Neil Heywood, and tried those they identified as responsible."
The statement added: "We consistently made clear to the Chinese authorities that we wanted to see the trials in this case conform to international human rights standards and for the death penalty not to be applied."
William Hague, the British Foreign Secretary, called publicly in April for a thorough investigation free from political interference, but an Embassy spokesman said he could not comment on process of the investigation or the trial.
Public attention in China will now turn to the even more politically sensitive question of how the party deals with Mr. Bo, who until he was removed as party chief of Chongqing earlier this year was seen as a candidate for promotion in a once-a-decade leadership transition this fall.
Party leaders are understood to be keen to announce a decision on that question ahead of the leadership change but have had difficulty reaching a consensus, in part because of residual party support for Mr. Bo, according to analysts and party insiders.
Those people say the decision is also complicated by party leaders' desire to avoid drawing more public attention to some of the issues raised by the Bo scandal, notably the private wealth of many top leaders' families.
Chinese authorities announced in April that Mr. Bo had been sacked from his party posts and placed under investigation for unspecified "serious disciplinary violations," but they have yet to declare whether he too will face criminal charges.
Nor have they said how they plan to deal with Wang Lijun, the former Chongqing police chief who in February sought refuge in a U.S. consulate in China, where he told diplomats he had evidence that Ms. Gu was involved in the death of Mr. Heywood.
The next step toward concluding the scandal is widely expected to be the trial of Mr. Wang, most likely on treason charges related to what authorities have called his "unauthorized" consulate visit. Mr. Wang, who was detained by Chinese security officers and placed under investigation after leaving the consulate, stepped down in June as a member of the national Parliament—a resignation that stripped him of immunity from prosecution.
Mr. Bo, however, is still a member both of the national Parliament and of the party—official exclusion from which is usually a necessary precursor to criminal charges, according to experts on Chinese politics and law.
Those experts also noted that Mr. Bo's name hadn't been mentioned at his wife's trial or the trial in Hefei the next day of four former Chongqing police officers charged with covering up Mr. Heywood's murder—which they didn't dispute. The Intermediate People's Court in Hefei found all four guilty on Monday and sentenced them to prison terms ranging from five to 11 years, according to Xinhua. It said they don't plan to appeal.
Some observers said the omission of Mr. Bo's name from the two trials suggests he won't be accused of direct involvement either in Mr. Heywood's alleged murder, or the subsequent alleged coverup. But others said it suggests the party leadership has yet to make a decision on Mr. Bo and is simply allowing itself leeway to define his wrongdoing later on.
Most analysts, however, agree that the party leadership will make a political decision in time for a full meeting—known as a plenum—of the roughly 300-strong Central Committee, which is expected shortly before the leadership transition.
Mr. Bo is thought to be in the hands of the Central Commission for Discipline Inspection, a party organization that investigates members' conduct and decides whether they should be dealt with internally or also face criminal charges. It typically interrogates those in its grasp at a secret location, and forms a special group comprising police, prosecutors, state security officers and any other relevant officials to gather evidence.
It is a highly politicized process, with individual party leaders able to use personal relations or formal powers over the agencies involved to influence decisions on which evidence is selected, and how it is interpreted.
The commission itself is headed by He Guoqiang, one of nine members of the Politburo Standing Committee, China's top decision-making body. Himself a former party chief of Chongqing, like Mr. Bo, he is thought by many party insiders, political analysts and diplomats to favor harsher treatment. But the police, prosecutors, courts and intelligence services are overseen by fellow Standing Committee member Zhou Yongkang, said by some party insiders to have a more sympathetic view of Mr. Bo.
Once the investigation group has completed its work, the commission compiles the evidence and submits a report to the party leadership advising whether to pursue criminal charges. If the leadership decides to refer the case to the courts, the commission also makes recommendations on the verdict and sentence, but may withhold actual evidence and instead summarize its findings.
The process can be slow, judging by the two previous Politburo members to be sacked. In the 1990s, it was three years between the ouster of Beijing's mayor, Chen Xitong, and his trial. Shanghai's Chen Liangyu was brought into court 18 months after his downfall as the city's party secretary.
If Mr. Bo is dealt with internally by the party, a final decision on his fate could be announced by the autumn, but if he is turned over to the courts, many observers do not expect a trial until next year at the earliest.
"In the cases of the two Chens, each man was subsequently turned over for criminal prosecution, resulting in lengthy prison terms," wrote Alice Miller, a research fellow and expert on Chinese politics at the Hoover Institution, in a paper this month on the Bo affair. "A comparable fate likely awaits Bo Xilai."
She continued: "Bo's removal in that respect therefore does not indicate a departure from the 'rules of the game' as played in the last two decades. The reform era initiated by Deng Xiaoping has seen the emergence of a more legalistic exit mechanism for removing high party leaders."