Panama paper leaks: what made Iceland PM quit?

April 5, 2016 4:02 PM (UTC+8)

 

Iceland’s Prime Minister Sigmundur David Gunnlaugsson resigned on Tuesday, becoming the first casualty of leaked documents from a Panamanian law firm which have shone a spotlight on the finances of an array of politicians and public figures worldwide. Gunnlaugsson quit ahead of a planned vote of no-confidence, hours after asking the president to dissolve parliament, a move which would almost certainly have led to a new election.

The Panama Papers showed the premier’s wife owned an offshore company with big claims on Icelandic banks, infuriating many in his country who joined mass street protests calling for him to resign. The more than 11.5 million documents, leaked from the Panamanian law firm Mossack Fonseca, have caused public outrage over how the world’s rich and powerful are able to stash their wealth and avoid taxes while many people suffer austerity and hardship.

Mossack Fonseca denies any wrongdoing and on Tuesday, Panama President Juan Carlos Varela’s chief of staff told a news conference that the government could retaliate after France announced it would put the Central American country back on its blacklist of uncooperative tax jurisdictions. The official, Alvaro Aleman, said that no Panamanian company had been found to have committed a crime.

Documents leaked by a law firm in Panama revealed that his wife had a secret offshore account with millions of dollars. This money is housed in a shell corporation, Wintris, to which Icelandic banks owed money after the financial sector collapsed during the global financial crisis. Gunnlaugsson won the prime ministership in 2013 on a platform of taking a hard negotiating stance on Iceland’s remaining creditors. This remains a major issue for him, so many people in Iceland see his wife’s account as an incredible conflict of interest.

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