A "luxury" prostitution network supplied women to rich Middle Eastern clients during the Cannes film festival, a French court was told on Monday.

The alleged ringleader, a Lebanese businessman, was also allegedly linked to one of former Libyan dictator Muammar Gaddafi's playboy sons.

The vice ring engaged the services of escorts, models and beauty queens to entertain wealthy men at five-star hotels, palatial villas and yachts in Cannes and in other cities according to prosecutors at the trial of eight people – seven men and a woman – in Marseille.

Only three of the accused were present in the dock. The others failed to turn up for the hearing and were said to have fled the country. One of them, Micheal Orsowitz, a Miami resident, is in custody in Britain contesting his extradition.

The accused include Elie Nahas, a 48-year-old Lebanese businessman who detectives believe was behind the prostitution network. In 2004, Nahas organised a €1.1m (£895,000) birthday party in Marrakesh for Mutassim Gaddafi, the dictator's fourth son, who was killed with his father on 20 October last year. The celebration was attended by film stars and models including Kevin Costner, Carmen Electra and Enrique Iglesias, the court heard.

The three who appeared were Sabrina Samari, described as a local "escort " who had admitted procuring women; Félix Farias Leon, a 35-year-old Venezuelan national described as director of the Caracas branch of a model agency run by Nahas; and Lebanese chauffeur Antoine el-Khoury, considered a minor player in the alleged ring.

The court heard Farias Leon caused a scandal in May 2007 when he arrived at Charles de Gaulle airport in Paris while the Cannes festival was on, accompanied by eight females, one of whom was a minor. They were refused entry.

The eight were heading for a yacht moored in the Mediterranean resort, the 136-metre Savarona, that had been hired for the week at a cost of €350,000. "The event [arrest] caused panic in Cannes," Patrick Ardid, the president of the court, said.

From phonetaps, investigators for the central office for the repression of trade in human beings had identified eight key members of the alleged vice ring and 50 women of assorted nationalities, including Lebanese, Venezuelan, US and French. Police also photographed Nahas – whose Style modelling agency based in Beirut was allegedly a cover for the prostitution ring – on the red carpets at Cannes and boarding luxury yachts in the Mediterranean port.

Ardid said the vice ring was "gigantic" and that the women had been promised to "rich princes from the Middle East".

He said their services were paid for by "businesses … and sometimes the Libyan embassy".

He said Nahas's "enviable" address book contained numbers for "the Gaddafi family and several sons of presidents and Arab princes".

But Franck De Vita, one of the defence lawyers, said: "Those who are really responsible are absent or have fled … We might at the very least ask why Mr Gaddafi was not interrogated when his links with Elias Nahas were known."

Patrick Rizzo, lawyer for an anti-prostitution charity that is a civil plaintiff in the trial, said the "political context" in 2007 and 2008 had hampered the legal investigation. In December 2007, Gaddafi was invited to France by the former president Nicolas Sarkozy, who allowed the Libyan dictator to pitch his bedouin tent in a garden near the presidential palace in Paris.

"Colonel Gaddafi was received at the Elysée at the time. He was France's good friend. All this context did not favour international investigations," Rizzo told journalists.

He added that when the case was transferred from the legal jurisdiction of the courts in the Côte d'Azur to Marseilles it was "written in black and white" that the reason was because of the "presence of important personalities, namely Gaddafi's son".

The inquiry found that young women of various nationalities, including models, beauty queens and escort girls were recruited during Cannes and at other times for clients from the Middle East, Saudi Arabia and Kuwait, who paid thousands of dollars for their services.

Rizzo said some of the woman were not prostitutes. "They were led to believe they might be photographed [in Cannes] and they they fell into the trap of violence and threats."

The trial is due to last until Thursday.

• This article was amended on 23 October 2012 to remove an "kicker headline" in the picture caption - "Festival frolics", which was at odds with the serious nature of the allegations