Ms Catherine Butler said Ms Eileen Foy, Mr Haughey's former private secretary, had an "appalling memory" and had become "traumatised" by her experiences in the tribunal.
Ms Butler was responding to questions from Ms Foy's counsel, Mr Richard Nesbitt SC, who said Ms Butler's recollection of events was almost "surreal".
Ms Butler said Ms Foy's memory was so bad she had sent her two presents at Christmas - one for Christmas and one for her birthday which was in July.
However, she agreed with her counsel, Mr Adrian Hardiman SC, that Ms Foy's "integrity and devotion to her duty are second to none".
Mr Nesbitt referred to a meeting in Ballymore Eustace, Co Kildare, last summer between Ms Butler and Ms Foy when Ms Foy asked for Ms Butler's help in jogging her memory about events.
Ms Butler said Ms Foy needed the information to answer queries from the tribunal. Ms Foy asked to see her personal diaries for the period when she was working for Mr Haughey but she had refused.
"When Eileen Foy came to you, she was making the point that she had nothing and needed help to try and answer the questions," said Mr Nesbitt.
"Most definitely, oh yes," said Ms Butler. "I feel so rotten that I didn't help her."
Mr Nesbitt asked Ms Butler why she destroyed her diaries and she said: "I did not want to get dragged into the tribunal."
Mr Nesbitt then referred to Ms Butler's claim that in 1992 she met Ms Foy in Government Buildings and Ms Foy was removing records in two or three bags which were then put in the back of her car.
"You seem to have quite a detailed idea of the sort of bags she was using; they seem to be bags belonging to department stores as opposed to black bags," said Mr Nesbitt.
"What I have to suggest to you is this: given the passage of time, and the lack of importance this event would have had in your life, it's quite possible that you may be confused by what you saw or what it meant," said Mr Nesbitt.
"I am not confused about what I saw, that is my clear recollection," replied Ms Butler. "It seems to me that you have a level of recollection that is almost surreal, you seem to be able to say that she had some personal records in a bag, because you remember a piece of paper sticking out of the top and a cab bill," said Mr Nesbitt.
"I have very good recall as my counsel can testify to," replied Ms Butler.
"See, I have to suggest to you that it's somewhat surreal to now be here 10 years on and be remembering that level of detail, given the important job that you clearly had and the important matters you were dealing with on a regular basis," said Mr Nesbitt.
"I have very good recall. I have no basis for saying that, other than that it is my truthful recollection," replied Ms Butler.