The device was prepared by an Arab with the same name as an expert alleged to have taught al-Qaeda recruits in Afghanistan in 2000-01.
Mustafa Kamel Mustafa, 56, better known in Britain as Abu Hamza al-Masri has pleaded not guilty in New York to 11 kidnapping and terror counts that pre-date 9/11.
He is charged over the 1998 kidnapping in Yemen of 16 Westerners, conspiracy to set up a jihad training camp in Oregon in 1999, of providing material support to al-Qaeda, of assisting the Taliban and of sending recruits for terror training in Afghanistan.
After Saudi funders pulled the plug on multi-million-dollar projects, he said he helped Arab veterans of the 1980s Afghan jihad against the Soviet Union find jobs with the Pakistan army.
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Those with army tactics and explosives experience were wanted "to help with the army in other areas of conflict," Abu Hamza testified.
In 1993 he said he was designing a steel plate with a Pakistani engineer as part of a wider, unidentified project for which "others were designing explosives."
This Arab had the same name, Abu Khabab, as the man whom British al-Qaeda recruit Saajid Badat said taught explosives at a jihad training camp in Afghanistan in 1999-2001.
The work took place in army issued accommodations in the city of Lahore, close to the Indian border, he said.
"I was very surprised," Abu Hamza said, describing how explosives were tested on empty land between two villas outside on the street.
"I was surprised why the neighbors were not complaining or calling the police. They were all army families," he said.
Abu Hamza said he picked up the device, which was getting hot, but couldn't throw it in the bathroom as previously advised because someone was at the sink.
He said he "felt the explosion" and saw blood before falling into a coma.
He was taken to a military hospital in Lahore, where he spent a month.
He later flew to London to be fitted with a prosthetic before returning to Pakistan to collect his children six months later in early 1994, he told the court.
"The army said look we're not going to make any more arrests, just don't embarrass us about what happened," the preacher said.