James Taylor, a former assistant director of ammunition procurement at the ministry, was said to have accepted the money from his former boss, Gordon Foxley.
Foxley is due to be sentenced next month for taking huge bribes from foreign firms in return for awarding lucrative arms contracts, Middlesex Guildhall Crown Court was told.
Mr Taylor, 67, of Otford, near Sevenoaks, Kent, who retired from the MoD in 1986, denies five counts of taking bribes from Foxley and one count of accepting free holiday accommodation from a foreign arms firm.
Victor Temple QC, for the prosecution, said 'the two liaised for about two and a half years'. Books at Foxley's home also linked the pair. The trial continues today.