Joseph Muscat has insisted he was merely "a guest" at an exclusive 'billionaire' club in Sardinia where he was spotted dining with a US celebrity watchmaker. 

The former prime minister appears in a video advertising the Billionaire Porto Cervo, which describes itself as a "multi-dimensional playground for the elite" offering luxury dining and live performances.

In the footage, Muscat can be seen dining with Jacob Arabo, a wealthy US jeweller who in 2008 was sent to prison in a plea deal as part of an investigation into money laundering.

Responding to questions on Monday afternoon, Muscat described Arabo as a “top entrepreneur” but said he had been placed next to him by chance at a business event at the club last year.

Nestled away in the countryside outside of Porto Cervo, a luxury resort on Sardinia's north-east coast, the club restaurant offers luxury dining, live performers and a "billionaire experience", according to its website.

The establishment is owned by Italian businessman Flavio Briatore, a flamboyant restauranteur and former Formula 1 manager known for his playboy lifestyle and drawn-out court battle fighting charges of tax fraud, of which he was later acquitted.

The club is part of a chain of similar offerings in Dubai and Monaco.

But on Monday, it became the focus of attention in Malta after eagle-eyed internet users spotted the former prime minister in a video advertising the establishment's grand opening next month.

Muscat appears briefly in the video which features a variety of performers and shots of guests partying, dining and drinking champagne.

In the footage, Muscat can be seen dining and apparently conversing with Arabo, a Soviet-born New York jeweller and celebrity watchmaker known as 'Jacob the Jeweler' in hip-hop circles.

In 2008, Arabo was sent to prison for two-and-a-half years for lying to federal prosecutors in a plea deal as part of a multi-state investigation into a conspiracy to launder €270 million of drug profits, according to CBS.

The video comes at an awkward time for the former PM, who stands accused of corruption in relation to the 2017 hospitals privatisation deal branded “fraudulent” by a court last year, and whose private wealth has been subject to intense media scrutiny in recent years.

In a highly publicised court arraignment last month, Muscat pleaded not guilty to charges of bribery, trading in influence, money laundering and various other crimes.

He is due to appear in court again on Thursday.

The former PM said he and Arabo were “guests together with several scores of people at a private business-related event last year and happened to be seated next to each other at the same table”, adding he had "no further relation with him.”