Iceland’s Prime Minister “Steps Down” Amidst Panama Papers Scandal

Iceland's Prime Minister "steps down" after Panama Papers leak reveals he has millions hidden in offshore account.

Credit: TVC News

Credit: TVC News

Iceland’s nation is falling apart before our eyes—again—in the wake of the Panama Papers leak, which revealed that their own Prime Minister Sigmundur David Gunnlaugsson had a shell company with the implicated Panamanian law firm and used it as a tax haven. Some are even suggesting that his investment in three Icelandic banks has affected his policy decisions since he became prime minister.

The Icelandic Prime Minister stepped down “for an unspecified amount of time” on Tuesday after protestors had gathered and called for his resignation. Gunnlagsson claimed that he did not want to resign because his involvement with the shell company Wintris, Inc. was not a way for him to hide his assets nor cheat his taxes.

In the meantime, Sigurdur Ingi Johannsson, the deputy chair of Gunnlaugsson’s Progressive Party, has announced that he will take over as prime minister and Gunnlaugsson will continue to head the party. This has led to further outcry from citizens, who say that they never elected Johannsson and that a new election should be held immediately.

These protests are strangely reminiscent of similar protests held in Iceland during the 2008 financial collapse, in which their three biggest banks went bankrupt within 2 weeks, resulting in a major economic crisis. Citizens gathered in a country known for little protesting to demand that the Prime Minister resign and new elections be held, which both eventually occurred after much hesitation from the government.

 

Credit: BBC

Credit: BBC

Investigators, who spent over a year conducting research into every document in 11.5 million document leak, allege that Gunnlaugsson first started Wintris, Inc. in 2007 to hide millions of dollars. Since Wintris has notable bonds in the three major Icelandic banks that collapsed in 2008, the “company” lost millions in the financial crisis, but claimed $4 million once the government had decided to bail out its citizens rather than the bank.

In 2009, Gunnlaugsson sold half of the “company” to his wife, Anna Sigurlaug Pálsdóttir, for only $1 because a new law was to take effect that would have forced him to publicly claim the assets if he owned the whole company. Though he started the company in his own name, he continues to claim that the tax haven was a safe place to hold his wife’s family inheritance. He also said that only companies with “commercial activity” had to be reported, but only his wife’s money was being held in the company, and in a statement claimed that he “therefore followed the rules for declarations of interests ever since he took a seat in parliament in 2009, regardless of how you look at this case,”

Additionally, Gunnlaugsson ran for prime minister on a platform of supposedly being tough on bank creditors, but many are now questioning whether his political decisions have actually benefitted him personally because of his stake in the banks. The former-prime minister was even involved in settling a deal with the banks’ claimants in 2013.

Iceland has found itself in yet another political scandal, but luckily this time its citizens aren’t suffering nearly as much as with the financial collapse, the cost of which is immeasurable. Their outcries for resignation and a new election are about forcing their government to be exemplary citizens and not continue to cheat the system for their own personal gain. Gunnlaugsson’s stepping down is certainly a big first step in holding the government accountable for their actions.


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