"I praised Xu Ming to Bo Xilai saying he is a reliable man. We can ask him to handle lots of things," she replied.
"Did you tell Bo Xilai about the money or not?" she was asked.
"Yes," she replied.
Dressed simply in a striped black top and with her hair cropped short, Mrs Gu, who has been accused by Mr Bo's lawyers of being mentally ill, seemed in clear control of her faculties.
However, perhaps in response to the gravity of the situation, she anxiously rubbed her clasped hands together as she spoke.
Mr Bo gave a terse response to his wife's testimony, however.
"Gu Kailai is mad, she lies all the time," he said. "They put a lot of pressure on her to testify against me."
On the first day of his trial, Mr Bo argued that he had little knowledge of the dealings between Mr Xu and his wife, as he tried to salvage some of his integrity and transfer the blame to his wife and son.
The maverick politician, whose path to the peak of Chinese power was abruptly ended with the murder of Mr Heywood, is facing charges of corruption, embezzlement and abuse of power.
On the second morning of his trial, the court heard detailed accounts of how Mr Xu had transferred money to a shell company set up by Mrs Gu in order to purchase a £2 million villa overlooking Cannes in the south of France.
Meanwhile, the Chinese state media took aim at Mr Bo, calling his extraordinary and compelling defence "the last mad act of a hypocrite."
"The trial is fair and objective and it presents very persuasive and objective evidence. The whole process is very transparent and public," said an editorial in the Guangming Daily which was republished by several state media organs.
"But Bo Xilai lied from the beginning to the end. His civilised and elegant wife and smart son have nothing to do with him, according to his testimony, and he cut off his ties to his ex-comrades and subordinates.
"He used one lie after another to cover up his greed and refused to confess. He refused to admit who he really is".
Additional reporting by Adam Wu
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