In California, most statements made in documents filed with the courts in the course of litigation are generally privileged and this privilege shields the party making those statements from a defamation claim. But not all such statements are protected. In order to be protected, the statements must have some relevancy to the litigation that is taking place. A California appeals court explained the California Supreme Court’s limitation on the litigation privilege as follows:
The [Supreme] court also addressed the nature of the communications protected by the privilege: “The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” (Silberg, supra, 50 Cal.3d at p. 212.) Later in this opinion, however, the court effectively conflated the last two factors into one: “The requirement that the communication be in furtherance of the objects of the litigation is, in essence, simply part of the requirement that the communication be connected with, or have some logical relation to, the action, i.e., that it not be extraneous to the action. A good example of an application of the principle is found in the cases holding that a statement made in a judicial proceeding is not privileged unless it has some reasonable relevancy to the subject matter of the action.” (Id. at pp. 219-220.)
Nguyen v. Proton Technology Corp., (1999) 69 Cal.App.4th 140 at 146-147.
So, if you make a potentially defamatory statement in a court pleading, motion, or other paper that has no reasonable relevance to the current litigation you are not protected by the litigation privilege and thus could be sued for the alleged defamatory statement. Here, your statement that he claimed to have taken kickbacks while working for the state is not at all relevant to your present dispute and thus I think it extremely likely the California courts would say you would not be protected by the litigation privilege here.
Note that while you may make the distinction that he only said he did it and not assert that he actually took kickbacks, that will make little difference in the harm to his reputation. You still have the problem that you need to show that what you said was true to successfully defend the claim. If all you have is your testimony on that, you’d be rolling the dice that the jury would find you more believable than him. The issue of why you are only bringing this to light now, 10 years later, would likely work against you there as the jury may well ask “if this was true, why didn’t cwb report this a decade ago and expose the corruption?” If you don’t supply a good answer to that in your case, you’d have a problem.