Marion Kinley told a court: "They were vindictive. They were just set out to cover up for himself with absolutely no regard for what effect it would have on me."
Ms Kinley was formerly employed as the constituency officer manager by the former Labour MP for Livingston, in West Lothian, Jim Devine, who was jailed for 16 months in 2011 for fraudulently claiming expenses She is now suing him at the Court of Session in Edinburgh after raising an action for £75,000 for defamation after claiming that he made a number of false allegations about her.
Mr Devine, who like Miss Kinley is appearing on their own behalf without legal representation, is defending the action.
In his defences the former MP maintains that he made no comments such as those alleged and also maintains that had he said the things claimed he would have been speaking truthfully.
Ms Kinley told the court that it had been said she was being investigated by the police and Special Branch.
She said: "He also stated I had helped myself to bonus money I was not entitled to. I had stolen significant sums of money while office manager and the reason I did this was because I had a serious gambling addiction."
The judge, Lord Bannatyne, asked Ms Kinley: "Have you ever been investigated by the police?" She replied: "Never."
He also asked whether she had any contact with Special Branch and she said: "No."
He asked whether she had ever made a fraudulent claim for bills about phones and she said: "No."
Lord Bannatyne asked if she had suffered from a gambling addiction and was told: "No."
She told the judge: "Mr Devine made the defamatory statements before, during and after his criminal trial which was widely reported by the media."
She said she accepted that what he said during the trial has absolute privilege and that the media were entitled to report it.
Ms Kinley said she had no comeback on them for the lies during his evidence.
Lord Bannatyne asked her at one stage: "You are saying the purpose of these defamatory allegations was as a smokescreen to what?" She replied: "Mr Devine's fraudulent claims he was found guilty of."
She said that on the day of his sentencing the MP's barrister said his client accepted Miss Kinley was not to blame.
Ms Kinley, of Bishopbriggs, Glasgow, said that before Mr Devine was elected as an MP she had worked beside him previously at the trade union, Unison.
"All in all, I have known him for about 20 years. Up until 2008 I did consider him my friend," she told the court.
But she said in March that year she received a phone call from an acquaintance of Mr Devine pretending to be a newspaper reporter who said she was doing an article on MPs expenses and in particular her salary. When she subsequently found emails linked to the hoax call she went home sick and later put in a grievance letter, she said.
She said a return to work certificate was handed in in October but told the court that Mr Devine had told a colleague: "She will not be f--ing back."
She was suspended before later resigning and pursued a case at an employment tribunal which went ahead undefended, she said.
Ms Kinley said he was ordered to pay her £35,000, but she had received only "a goodwill payment" from the House of Commons for £17,500.
She was asked about the effect on her and said she could not sleep at night and had found it difficult to get another job and spent a period unemployed.
She said: "It didn't just affect me. It affected the whole family."
Mr Devine asked her whether it was fair to say people in the constituency, local party and friends thought they were having an affair. She replied: "No."
During his cross-examination he asserted that she did not have the authority to sign for claim forms that she personally benefited from.
The hearing continues.