Iceland PM quits amid Panama Papers controversy

6 Apr 16

Iceland’s prime minister Sigmundur Davíð Gunnlaugsson has stepped down after revelations in the Panama Papers put him at the centre of a dramatic political crisis.

A statement released by his office yesterday suggests that Gunnlaugsson has not resigned, but will be handing over to his party’s vice chair and Iceland’s agriculture and fisheries minister Sigurður Ingi Jóhannsson for an “unspecified amount of time”.

“The prime minister has not resigned and will continue to serve as chairman of the Progressive Party,” the statement said.

Gunnlaugsson has been lambasted by the media and the public since the allegations emerged with the publication of the Panama Papers on Sunday night. He found himself the target of 10,000 angry Icelanders who gathered to protest in Reykjavik to voice their outrage the following day.

The leaked documents showed Gunnlaugsson and his wife, Anna Sigurlaug Pálsdótir, acquired a company set up in the British Virgin Islands to invest her share of the proceeds from the sale of a family business.

At the end of 2009, eight months after being elected to parliament as an MP for the centre-right Progressive Party, Gunnlaugson sold his 50% stake to his wife for $1.

Gunnlaugson has said the shares were never his in the first place. Instead they were placed in his name in error due to the couple having a joint bank account, a mistake he said was rectified with the $1 transaction as soon as it became apparent.

While holding offshore assets in itself is not illegal, Icelanders are furious at what they see as the disgraced prime minister’s attempts to hide money and his failure to declare his interests – both allegations that Gunnlaugson denies.

The offshore company, Wintris Ltd, also held millions of pounds worth of bonds in the big three Icelandic banks – Landsbanki, Glitnir and Kaupthing – that collapsed in the 2008 crisis.

Gunnlaugson has also been accused of a conflict of interest, having overseen the bankruptcies of all three.

Gunnlaugsson has repeatedly said that he broke no laws, held no money offshore personally and that he and his wife have always paid taxes in Iceland.

According to yesterday’s statement, in recent weeks both the former prime minister and his wife have answered detailed questions about the assets. It added they have never sought to hide them from tax authorities and they have been reported on tax returns since 2008.

No parliamentary rules of disclosure have been broken, it continued, and media have confirmed there is currently no evidence to suggest the prime minister or his wife engaged in any actions involving tax avoidance, tax evasion, or any dishonest financial gain.

But in a country rocked by the financial crisis, where a small group of bankers and businessmen used offshore companies to conceal dangerous schemes that eventually brought the country to its knees, much value is placed on transparency and financial forthrightness.

When the crisis hit, Gunnlaugsson sold himself as the man to save Iceland from the collapsed bank’s foreign creditors and was widely applauded for preventing them for taking their claims, which would have resulted in far greater economic strife. Now Icelanders consider him hypocritical.

Yesterday’s statement said that he was “especially proud” of his government’s handling of Iceland’s situation with the banks’ creditors and for resolving the country’s “dramatic balance of payment problem”.

Gunnlaugsson originally staunchly denied any wrong doing and sought to remain in office. However, facing the prospect of a snap election, on Tuesday members of his own party suggested he step down.

The move reportedly still requires approval from a number of officials, including Iceland’s president Ólafur Ragnar Grímsson, and the Independence Party, which governs Iceland in coalition with the Progressive Party. A snap election is not yet off the cards. 

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