ICELAND’S Prime Minister has resigned after the Panama Papers exposed details of his family’s secret offshore investments with multi-million pound claims on Iceland’s failed banks.
Sigmundur Davíð Gunnlaugsson was the first politician forced to stand down because of the revelations in the 11.5m files from offshore law firm Mossack Fonseca leaked to the world’s media on Sunday night.
Those files showed that the Prime Minister’s wife Anna Sigurlaug Pa?lsdo?ttir had bought Wintris Inc in December 2007 to invest money she had gained from the sale of her father’s business. Two years later, after he was elected to parliament, Gunnlaugsson sold his 50 per cent stake to his wife for a symbolic $1.
He did not register an interest in the company with the authorities then or when he became Prime Minister in 2013.
Gunnlaugsson’s office said this was an error made because of the couple having a joint bank account, an excuse not accepted by ordinary Icelanders.
Some estimates suggested that around 22,000 people took to the streets of Reykjavik in one of the biggest protests the country has ever seen.
What provoked much of the anger was that Wintris held millions of pounds worth of bonds in the three big Icelandic banks who collapsed in the banking crisis, Landsbanki, Glitnir and Kaupthing.
That crisis was brought about in part by a small group of bankers using offshore companies to hide their dealings in high-risk financial products. The liabilities were more than 10 times the country’s GDP.
The Prime Minister himself had been involved in negotiations in the aftermath of the crash, characterising foreign creditors looking for their money back as “vultures”. This was all while Wintris itself was a creditor looking for money.
Earlier in the day, Gunnlaugsson had tried to dissolve parliament but was refused permission by the country’s president.
Opposition politicians said they would aim for a vote on no confidence in the Government.Gunnlaugsson’s coaltion partner Bjarni Benediktsson, the country’s finance minister and leader of the Independence Party refused to give the Prime Minister fulsome support.
In the face of a second night of protests in the capital, Gunnlaugsson and his party then agreed that it was in the country’s best interests for him to stand down.
Sigurður Ingi Jóhannsson, currently minister for fisheries and agriculture, has been proposed as new Prime Minister of Iceland.
“People just feel humiliated,” said Bigitta Jónsdóttir of the anti-establishment Pirate party who are now polling better than the two governing parties combined.
“After what happened to this country in 2008 we needed honesty, transparency and integrity from our leaders,” Jónsdóttir said. “None of these things have been evident.
Jónsdóttir and other opposition politicians suggested the resignation would not be enough.
In Washington, Barack Obama addressed the papers during a press conference on the economy saying that more needed to be done to tackle the tax avoidance.
“There is no doubt that the problem of global tax avoidance generally is a huge problem,” he said “The problem is that a lot of this stuff is legal, not illegal.”
“We shouldn’t make it legal to engage in transactions just to avoid taxes,” he added, praising instead “the basic principle of making sure everyone pays their fair share”.
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