The emotional scene was witnessed at the High Court libel action being brought against Mr Fayed by the former Tory minister Neil Hamilton over the "cash for questions" affair. After six days in the stand,where the Egyptian-born businessman has often angrily defended himself against accusations from opposing counsel, a question from his own QC appeared to shake him to the core.
George Carman QC told the court that the Harrods owner had received a letter from the Home Office in May this year, informing him that citizenship had been refused - despite his charitable works, his employment of over 3,000 people, his "full and substantial" payment of UK taxes and his support for British commercial interests.
The reasons for refusal, Mr Carman explained, were Mr Fayed's responsibility for the employees who opened business rival Tiny Rowland's Harrods safety deposit box, as well as his admitted payments of cash and provision of benefits in kind to MPs.
"How do you feel about that?" the barrister asked.
"It's very sad and very unconvincing. For someone like me who has given 35 years of his life," Mr Fayed replied, his voice trailing off. He shook his head and blinked away tears.
"I think you've answered the question," interjected Mr Carman. However, Mr Fayed groped for his water flask and continued: "And he's insulted, humiliated ... his son can be murdered..." Pointing at Mr Hamilton, he added: "And I have to sit in the face of crooked people. They know they are guilty. He knows he take cash. I have to continue such trauma for the rest of my life."
Mr Hamilton is suing Mr Fayed over a Channel Four Dispatches programme in January 1997 in which Mr Fayedclaimed that the former MP for Tatton demanded and accepted cash, gift vouchers and a free holiday at the Paris Ritz, in return for asking parliamentary questions on Mr Fayed's behalf.
Mr Fayed, who denies libel and pleads justification, has said in evidence that Mr Hamilton received around pounds 50,000 from him through a political lobbyist and direct cash sums of between pounds 40,000 and pounds 60,000.
The businessman, however, could offer only vague answers yesterday when asked about the payments.
Mr Carman: "First of all, were the payments that you made to Neil Hamilton - that's face-to-face payments, man to man when you were alone - confined, or not, to the 12 occasions when there is a diary note?"
Mr Fayed: "There was other occasions ... it's numerous visits which was not recorded in my diary." The payments had continued for a "couple of years", but he admitted he was "not good on detail".
However, when asked "Do you have a clear memory or not of paying Neil Hamilton?", he replied "definite".
Mr Carman: "Are you in any doubt about it?"
Mr Fayed: "No doubt whatsoever."
The case continues.