In a blistering series of exchanges in the libel action between the two men Mr Fayed, making his first appearance in the witness box, attacked Mr Hamilton, saying: "He has no honour, no dignity, nothing ... he thinks he had discovered a golden goose."
Mr Fayed described how he gave the former MP for Tatton bundles of cash and Harrods shopping vouchers, and entertained him on luxury holidays at the Paris Ritz Hotel and his castle in Scotland.
He told the jury that the scope of corruption had been revealed to him by the lobbyist Ian Greer "who told me you can rent an MP like a taxi driver". Mr Fayed continued: "It completely changed my perception of the way they behave .. they're there to make money. "
Mr Fayed gave his evidence in the libel case in which Mr Hamilton is suing him over claims that he accepted cash, gifts and other favours for asking parliamentary questions that were favourable to the Harrods owner.
Mr Hamilton, a former minister for Corporate Affairs, would come to Mr Fayed's office to ask for cash, the jury was told. Mr Fayed said: "Always in my briefcase I carry pounds 10,000 to pounds 15,000 in cash or I have it in my office. I would hand the money over in bundles of pounds 2,500 in pounds 50 notes. Sometimes he would collect the money himself from my offices in Park Lane or it would be sent to him. He spoke about his power in the House of Commons, and how he had good relations with a lot of ministers and had a lot of colleagues to mount a campaign to counter Tiny Rowland's campaign against me."
He said that the former MP also received other gifts. "We always have nice large Christmas hampers. Christmas time or birthday, he would ask for gift vouchers and four times I give him vouchers, twice pounds 1,000 and twice pounds 3,000 because sometimes I didn't have cash in my briefcase and he came and he wanted to go shopping, he say he wanted to buy something for his house. He say he has incurred other expenses and needed cash to pay some of his colleagues. All the time baloney, excuses, because he thinks he has discovered a golden goose."
The extent of Mr Hamilton's "greed" became clear to Mr Fayed when the former MP and his wife stayed at the Paris Ritz, the Harrods owner said. Mr Fayed said he told his general manager that the couple could stay as his guests for a maximum of one or two nights.
"This is again another proof to see the greed of the man. You give him your hospitality and he go and put everything on my bill, tips to the doorman and porters, a drink and a sandwich, all go on my bill, even stamps.
"You can't just believe that somebody like that has no integrity inside him but just wants to take advantage. He puts his hand in my pocket and takes out pounds 5,000 ... drinking vintage wine and champagne....He take me for a big ride. It was so embarrassing for me in front of my people that I have people like that, my people never see anything like it. Does this type of human have any dignity or honour, capitalising on my generosity?"
Mr Fayed said that Mr Hamilton wanted to stay at the Paris Ritz again with his wife, Christine, on his way back to London after a holiday in France. Mr Fayed said: "I said `never again'. After the manager told me what he had done I gave him instructions to say `we are fully booked'."
Mr Fayed said he told Peter Preston, then editor of The Guardian, about Mr Hamilton and the cash for questions, in June 1993, but was advised by his lawyers that it was not the right time to publish the allegations. He gave the newspaper permission to go ahead and publish in 1994.
Mr Fayed was then asked if he sought revenge on the former MP. The Egyptian tycoon, jabbing his left forefinger towards Mr Hamilton, said: "Why I have to take revenge? For me he is nothing. He is not human, he is someone who would sell his mother for money - no dignity, no honour, nothing."
At this, Mr Hamilton, again wearing his "lucky" grey suit, which he had worn at a previously successful defamation action against the BBC, visibly flinched, as if he had been slapped. His wife, in red, shook her head furiously.
Mr Fayed agreed with Mr Carman that some time in 1996 he was asked to appear in the Channel 4 programme about Mr Hamilton. Mr Carman said it was as a result of that programme, broadcast in January 1997, that Mr Hamilton started proceedings against him.
In scenes that reduced the packed courtroom to laughter, Mr Hamilton's counsel, Desmond Browne QC, questioned Mr Fayed about his family background, disputing his right to the prefix "Al".
At the end, an exasperated Mr Browne said: "It's like a German calling himself Von Braun, instead of Braun, don't you understand?" Mr Fayed, leaning back in his chair in the witness box, said: "OK, OK, I call myself Von Fayed, it is better ... call me anything you like, call me Al Capone." The questioning of Mr Fayed's veracity by Mr Browne led to almost slapstick exchanges. At one stage, Mr Fayed called out in the middle of a question: "You are confusing me, you are confusing the jury and, please, you are confusing yourself."
Earlier, Mr Browne asked how Mr Fayed could say that he had integrity when he was saying that he had made corrupt cash payments to MPs. Mr Fayed replied: "I didn't say I corrupted them. They are the people who corrupted themselves because they only live their life out of cheating and behaving this way."
As the afternoon was drawing to a close, Mr Fayed hit out. "Why should I take this. I have paid millions in taxes, millions to charity. I own Harrods, the greatest department store in the world. Fulham Football Club, in two years I created a great football club for London. The Ritz Hotel is the greatest hotel. Just look at my accomplishments, why should I be here ...?" But Mr Fayed will have to stay on the witness box next week as the brutal libel battle continues.