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Lit., "that which they were earning has covered their hearts with rust": implying that their persistence in wrongdoing has gradually deprived them of all consciousness of moral responsibility and, hence, of the ability to visualize the fact of God's ultimate judgment.
The heart of man, as created by Allah, is pure and unsullied. Every time that a man does an ill deed, it marks a stain or rust on his heart. But on repentance and forgiveness, such stain is washed off. If there is no repentance and forgiveness, the stains deepen and spread more and more, until the heart is scaled (ii. 7), and eventually the man dies a spiritual death. It is such stains that stand in the way of his perceiving Truths which are obvious to others. That is why he mocks at Truth and hugs Falsehood to his bosom.