Winner of TV show The Apprentice Stella English was an "untrusting and suspicious person" who was full of "conspiracy theories", Lord Sugar told an employment tribunal.
Stella, 34, who won Series 6 of the BBC One show in 2010, is suing the millionaire business mogul, claiming constructive dismissal.
Reading out his own statement at the East London Employment Tribunal Service hearing, Lord Sugar said he was surprised when she told him she was not enjoying the £100,000 role with him that she had won. "I began to think that perhaps the reality of work rather than the glamour of showbusiness was beginning to bite with her," he said. "Her time in the limelight was beginning to fade."
Lord Sugar went on: "In hindsight, I can now see that she was a very untrusting and suspicious person. It was clear to me now that she thought that everyone was out to trick her. She thought during the whole process that she was being lied to and that the other candidate has been chosen as the winner."
Lord Sugar said Stella confronted him with the idea that semi-finalist Chris Bates had won the competition because she had not filmed a segment of the show showing her leaving his office in a chauffeur-driven car.
Lord Sugar added: "She always came across as quite reserved and detached and, some might argue, cold. At other times she would come to me with some very odd conspiracy theories."
He said she believed the PR agency he himself used had leaked information about her family to the press. Speaking of her suspicions that he had not really chosen her to be the winner, he said: "She assumed the whole thing was a charade and I had no interest in her."
Lord Sugar said it wasn't true that she told him she thought her role at his IT division Viglen was that of an "overpaid lackey," as she claims. Lord Sugar also denied Stella's claims that Viglen chief executive Bordan Tkachuk replied: "Nice girl. Don't do a lot" when he asked what he thought of her during a meeting. "This is typical of her struggling to deal with the truth or facts," he said.
Lord Sugar later gave Stella another role at internet set-top box company YouView after she resigned from Viglen in May 2011.
Lord Sugar will continue to read out the rest of his statement and give evidence on Thursday.