The university student, so afraid of repercussions that he would give his name only as "Dave", had been one of three friends out with Ricky Reel, real name Lakhvinder, on 14 October 1997 when they were attacked by two white youths who shouted: "Oi Paki". The attackers first hit one friend, "Manny", before repeatedly punching a second, "Brett".
The group fled and regrouped later only to discover that Mr Reel had disappeared. His body was pulled from the River Thames a week later.
The court heard that the four friends had been drinking together before heading into town, having bought ten beers, a bottle of rum and Jack Daniels from a supermarket. It was unclear how much Mr Reel - who was a moderate drinker - had consumed on that night.
Dave told the coroner's court in Fulham, west London, that the friends had not been fearful for Mr Reel as they had not taken the attack seriously.
Under questioning from Mr John Bevan QC, representing the Metropolitan Police, the young man agreed that he had relaxed because he had been "99 per cent sure" the racist youths had left the area on a bus. Yet earlier in the inquest Dave stated merely that he had seen "youths who looked similar" to the attackers get on the bus. The young man, who insisted he would have recognised his assailants at the time, told the court that investigating officers had never shown him pictures of known local racists or even asked him to put together a photo-fit of them.
Yesterday the inquest jury was shown the last known picture of Mr Reel - security camera footage of him walking through Kingston upon Thames in Surrey shortly after midnight on 15 October - along with pictures of youths who may have been the attackers.
Police diver Sgt Richard Delapole described finding Mr Reel's body in a few feet of water in the Thames. "I nudged him with my foot. He moved. I had this gut feeling this was it," he said. "I had to look. I put my hand down on his back and the back of his head."
Under questioning from Michael Mansfield QC, representing the Reel family, he agreed that police divers had not been called in until almost four days after the young man disappeared.
The inquest continues