A clash of American law and Persian culture unfolded yesterday in Alexandria's federal court as Reza Pahlavi, son of the late shah of Iran, defended his decision two years ago to turn his longtime bodyguard and friend out of his Great Falls home.

Pahlavi said it was only after learning that all the money his father had left him was spent that he told Ali Haydar Shahbazi that he could no longer provide for him. "I'm sorry to say this, but I'm afraid I have to let you go," Pahlavi said he told Shahbazi.

But Shahbazi countered that Pahlavi's offer of $9,000 in severance was a breach of Persian tradition that requires royal families to provide for a servant's well being for life.

Shahbazi, 58, filed suit last year in U.S. District Court accusing Pahlavi of knowingly misleading Shahbazi when he told the bodyguard that a financial adviser would take care of Shahbazi's income tax obligations while they lived in the United States.

The former bodyguard has demanded compensation for the $30,000 in taxes and penalties on income he said he was told not to declare since the Pahlavi family moved to Great Falls in 1984. Shahbazi also has asked that Pahlavi pay him an undetermined amount of money for retirement.

Shahbazi, who also served the late shah, said that when the shah died he was taken in by Pahlavi, who he said assured him, "I'm going to pay your expenses and everything. I'm going to take care of you better than my father {did}."

Pahlavi, 30, testified before U.S. District Judge Albert V. Bryan Jr. that his servants were like family members, and that the relationship "was not an 'Upstairs, Downstairs situation.' " He called Shahbazi a friend, and said their relationship was intensified by the political diversity that closed in around Pahlavi after his father's death in 1980.

"It is much harder than people think, not only living in exile but fighting for a cause" to free a homeland, said Pahlavi, who still calls himself the shah of Iran.

Shahbazi said he was first appointed to the Iranian Imperial Guards in 1953. In 1979, when the shah was forced from power and fled Iran, Shahbazi gave up his property and homeland to help protect the shah's family, he testified.

For several years, Shahbazi said, Pahlavi treated him very well, giving him a good salary, helping to pay bills from an accident suffered by his wife and even offering $20,000 to help Shahbazi's son through college.

Despite the gifts, Pahlavi did no more than he was supposed to under Persion tradition, Shahbazi said. "He take care of me and the family for everything. That was part of his responsibility," he said.

Pahlavi agreed that Shahbazi was a loyal bodyguard during a period in the 1980s when Islamic fundamentalists threatened to kill Pahlavi. He also agreed that he offered to care for Shahbazi as long as possible. "That's something I've said to Mr. Shahbazi and others in my household, that I would try to take care of them as long as I could," Pahlavi told the judge.

But Pahlavi said he entrusted all of his financial matters to an economic adviser, and that he was stunned in 1989 to learn that the trust account given to him by his late father had run dry.

"I was not involved in the day-to-day handling of my financial affairs," Pahlavi said. He added that he found himself at the financial mercy of his mother and other family members, and with "nothing left," agreed to trim his spending by cutting back in travel and staff.

Pahlavi said he deeply regretted the loss of his friendship with Shahbazi, who had followed him as he moved from country to country in the early 1980s, trying to find ways to win back leadership in his homeland.

"Mr. Shahbazi was pleased and honored to be one among very few people to be close to a person like me," Pahlavi said. "He wanted to help me. He cared for me. I don't know about now, but he did then."