On the second day of a high-profile trial, the jury were read expletive-ridden extracts from a telephone conversation in which Redknapp told a News of the World reporter that Mandaric was ill-informed about the nature of the payments.
"What is [Mandaric] talking about? It is a bonus," Redknapp told journalist Rob Beasley during a 2009 telephone interview.
In a tense conversation with Beasley, reported by the Press Association, Redknapp said "there ain't nothing crooked" in the payments.
"It's nothing to do with a bung. It's paid by the chairman."
Both Mandaric and Redknapp, who is the favourite to become the next England football manager, deny two counts of cheating the public revenue, an offence which can be punished by either an unlimited fine or a jail sentence.
The prosecution alleges that Mandaric, now chairman at Sheffield Wednesday, paid $295,000 over several years into Redknapp's offshore bank account in Monaco to avoid paying taxes.
Beasley interviewed Mandaric, a Serbian, several days before speaking to Redknapp about the tax evasion allegations.
When Beasley relayed to Redknapp that Mandaric had told him the money transferred to Monaco was investments outside football, Redknapp contradicted this version of events and said it formed part of his bonus at Portsmouth.
"If it was something dodgy I would have gone over there and brought it back in a briefcase," Redknapp said, explaining that part of the Monaco money was profit made on the sale of Peter Crouch from Portsmouth to Aston Villa.
According to the transcript, Redknapp also told Beasley he had "the best accountants in England " and said the Inland Revenue was fully aware of his banking activities in Monaco.
John Black, prosecuting, said Redknapp "feigned" ignorance over his offshore bank account.
"The existence of the bank account was not registered to Revenue and Customs for a period of six years, two months... after Mr Redknapp was first arrested and questioned in the course of this investigation," Black said.
The trial is expected to last two weeks.
