The Californian jury hearing the lawsuit between Michael Jackson and his former business partner, Marc Schaffel, decided that Jackson would pay Schaffel $700,000.

Schaffel, who was sacked after the pop star found out about his former work as a gay porn director, had originally filed a lawsuit for breach of contract against Jackson for the $3.8 million that he claimed the singer owed him.

In response Jackson made a counter claim saying that Schaffel was a “swindler” who owed him $660,000.

The jury decided that Jackson should pay Schaffel $900,000, far less than the original figure the producer was requesting. In the counter suit Schaffel was ordered to pay Jackson 200,000.

Speaking outside the courtroom Schaffel said: “We got less than I asked for but considering all the factors on what we were able to present, I’m pleased.”

During the hearing the Santa Monica Superior court heard the singer’s reaction to his discovery of Schaffel’s involvement in gay porn.

“I was shocked by what I saw”, he said.

He described Mr Schaffel directing the shoot; ” he was telling one what to do with the other and he grabbed their penis or something.”

Following this discovery, Jackson told his advisers to sever all ties with the film maker.

He told the court that he thought Mr Schaffel’s association with “that circle” might not go down very well with “mothers”.

The star, who has been twice accused and cleared of sexually molesting teenage boys, worried that further association with Mr Schaffel would be damaging to his career and image.

Jackson is no stranger to pornography himself – police found several heterosexual porn magazines and DVDs in the singer’s house when they searched it in November 2003 before his arrest on child molestation charges.