Accountant Joe Sammut is being held for questioning over allegations he is aiding Libyan nationals obtain a residency permit by creating fictitious companies.

The former Labour Party candidate, whose website vaunts the deep links he has with Libya, was catapulted into international fame during the Libya crisis in 2011 when it transpired that he handled the financial affairs of the Gaddafi family.

However, his name cropped up in court this week when Libyan national Arab Ali Khalefa from Tripoli admitted in front of Magistrate Francesco Depasquale that he gave Mr Sammut false details to help him set up a company in Malta.

In court, immigration officials had said investigations into any wrongdoing by Mr Sammut drew a blank as it resulted that Mr Khalefa had provided false information.

But the case did raise question marks since Mr Khalefa’s application had said he spoke English, something that was not true.

The police also said Mr Khalefa could not tell them how many shares he held in the company.

The case shed light on what sources told the Times of Malta was a new approach by Libyans to gain residency permits in Malta to escape turmoil in their country.

Hundreds were creating false companies, which automatically entitled them to a residence permit.