Lies, all lies, says Hamilton. Fayed stopped my rise to the Tory top and wrecked my career

With his nemesis, Mohamed Al Fayed sitting just three feet away, Neil Hamilton told how his political career, destined, he believed, for the top, was destroyed in the cash for questions scandal.

With his nemesis, Mohamed Al Fayed sitting just three feet away, Neil Hamilton told how his political career, destined, he believed, for the top, was destroyed in the cash for questions scandal.

The former MP for Tatton in Cheshire, whose name, the High Court has been told, became synonymous with Tory sleaze, began his evidence yesterday in a Court 13 packed to overspilling, the atmosphere heavy with tension and acrimony.

Soon the word "lies" so much in use in this most vitriolic of libel trials, flew again. Asked by his counsel, Desmond Browne QC, if he had taken cash from lobbyist Ian Greer, for asking questions in Parliament - "Was there any truth in it?" - Mr Hamilton said: "That's a pack of lies from start to finish."

Mr Browne continued. "It's been alleged that you received cash direct from Mr Fayed at face to face meetings?" To which the former MP replied: "Well, that's a pack of lies too."

Mr Browne then asked about allegations of picking up cash in brown envelopes from Mr Fayed's office in Park Lane, central London. Mr Hamilton: "That's an outrageous lie."

Mr Browne said: "Receiving Harrod's gift vouchers?" Mr Hamilton replied: "That's a pack of lies too." Mr Browne asked about going shopping at Harrod's at the invitation of Mr Fayed? Mr Hamilton: "That is completely untrue. I have never even seen a Harrod's gift voucher until a friend of mine won one in a raffle."

Mr Hamilton, a former minister for corporate affairs in John Major's government, is suing Mr Fayed over allegations in a Channel 4 programme, Dispatches, that he took money, gifts and free holidays, including one to the Paris Ritz, in return for asking questions favourable to Mr Fayed.

Mr Hamilton, 50, claimed the allegations ruined his chance of high political office. Before the claims appeared he had become a "very popular" minister at the Department of Trade and Industry. He said: "I think it's fair to say I had developed a niche for myself and, if it doesn't sound too immodest to say so, I think I had every prospect of political advancement and promotion.

"But for the devastating impact of the constant repetition of Mr Fayed's lies, I think I could have expected to take a front rank position in the Conservative Party with every possibility that I would have been in the shadow cabinet."

He now finds it "virtually impossible" to get work apart from occasional writing or broadcasting, much of it connected with the allegations.

Mr Hamilton began his evidence on the 14th day of the case wearing his "lucky" grey suit dating from a successful libel action against the BBC in 1986. He had shed a stone and a half for the gruelling legal battle and looked trim and fit as he answered his counsel, Mr Browne. The only time his voice rose or fell was when he looked at Mr Fayed.

The millionaire owner of Harrod's, making his first appearance in court since his flamboyant performance in the witness box a week ago, sat hunched in a dark grey chalk- stripe suit. He would sometimes look up at Mr Hamilton when his name was mentioned, and sometimes the muscles would be working in his jaw.

Behind him sat his QC, the formidable George Carman, looking intently and long at Mr Hamilton, as if sizing him up. It was an unnerving sight. It will be Mr Carman's turn to question Mr Hamilton next.

Mr Hamilton's wife, Christine, wearing a red checked jacket and black skirt, is also due to give evidence. Yesterday she sat nodding vigorously at times to the answers given by her husband.

Mr Hamilton described his reaction to the Dispatches programme. "It was a deeply unpleasant experience to see claims of that kind broadcast to the entire country - millions of people might have been watching them at the same time - and to know you had no effective means of counteracting them.

"My wife was devastated, just as I was. It's not very pleasant to see your wife in a state of distress and extremely upset. The timing of this programme was particularly important because it was known that there was a general election in the offing. And this, as a starting shot of the campaign, caused particular difficulties to me."

Mr Hamilton lost his seat at Tatton to the journalist Martin Bell. Mr Hamilton said Mr Bell had wanted to stand as the "anti-corruption candidate". But, he added: "He was prevented by the obvious threat of a defamation action if he used that label because if he was the anti-corruption candidate, the irresistible inference was that I was the corrupt candidate."

The former MP was asked how he felt about Mr Fayed repeating the claims of Mr Hamilton's corruption from the witness box. "Well, of course, it made me extremely angry, but also it's a huge blow to one's self esteem to know that all this garbage, to use one of his words, is being repeated in this court and reported day after day in all the newspapers in this country. And every time this is repeated, not only in national newspapers but in local newspapers in the place where we live, I have to endure walking about knowing that in people's minds this is the way they are looking at me and this is the reputation I have acquired."

Mr Browne asked: "Mr Fayed has said he's sure it is true you had rented boys for Ian Greer and you were a homosexual prostitute. What is the impact on your feelings of these allegations?"

Mr Hamilton said: "It is deeply offensive and absurd, but nevertheless it compounds the hurt to our feelings of all the other allegations of corruption that he has made as well. So, it is a further layer on top."

About the visit that he and his wife paid to the Fayed-owned Paris Ritz in 1987, Mr Hamilton said the Harrod's owner had suggested the couple stop by in Paris during a holiday in France to see the former home of the Duke of Windsor that Mr Fayed had restored, and stay at the Ritz. Mr Hamilton said: "I regarded him as a bit of a friend by then. He is a personable individual, convivial with a highly developed sense of humour. I was absolutely delighted because I was fascinated to have the opportunity to see the Windsor villa and spending a few days at the Ritz Hotel.

"I said in a rather self-deprecating way that I didn't want to take up the space of a paying customer and he (Mr Fayed) responded by saying, "Don't worry about that, there are always rooms or apartments for use of me and my family and friends."

Mr Hamilton agreed he had never ordered caviar and only had the lobster as a starter rather than as a main course. He and his wife never had a full bottle of wine, although one of the half bottles, Leoville Poyfree, a Bordeaux Rouge, came to £28. The champagne they chose was a 1979 Bollinger for £64 and not the more expensive one at £75.

At this point, in an acrimonious exchange, Mr Carman accused Mr Browne of not giving the jury details of cheaper champagne available. Mr Browne said this had never been made available to his side and accused Mr Carman of "withholding documents". He also complained to Mr Justice Morland that he still has not been given the full list of white burgundies on the menu.

Mr Hamilton said he had been introduced to Mr Fayed by Ian Greer, and sympathised with Mr Fayed and his family being "vilified" through The Observer, then owned by the Lonrho boss Tiny Rowland. He said: "I felt very strongly that anyone who was the victim of what on the face of it was a very serious and highly defamatory campaign should not allow the matter to go by default and deserved my support."

Mr Hamilton said Mr Greer had been engaged by Mr Fayed to combat the offensive by Mr Rowland over the purchase of Harrods and House of Fraser. He added: "I had never heard of any questions about Mr Greer's integrity until Mr Fayed came on the scene."

The case continues.