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Icelandic PM quits over offshore firm

BBC News BBC News 5/04/2016
Screengrab taken from video showing Iceland's Prime Minister Sigmundur Gunnlaugsson walking down stairs after a meeting in parliament (5 April 2016): Iceland's prime minister stepped down ahead of a confidence vote in parliament © AP Iceland's prime minister stepped down ahead of a confidence vote in parliament

Iceland's prime minister has resigned - the first major casualty of the leaked Panama Papers that have shone a spotlight on offshore finance.

The leaks, from Panama-based law firm Mossack Fonseca, showed Sigmundur Gunnlaugsson owned an offshore company with his wife but had not declared it when he entered parliament

He is accused of concealing millions of dollars' worth of family assets.

Mr Gunnlaugsson says he sold his shares to his wife, and denies any wrongdoing.

He is one of dozens of high-profile global figures mentioned in the 11.5 million leaked financial and legal records, which were first published on Sunday.

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Pressure on Mr Gunnlaugsson to quit had been building since then, with thousands of people protesting outside the parliament building in the capital Reykjavik on Monday and opposition parties tabling a confidence motion.

Earlier on Tuesday, the prime minister had asked President Olafur Ragnar Grimsson to dissolve parliament and call an early election.

But Mr Grimsson said he first wanted to consult leaders of the Independence Party, which has been in the ruling coalition with Mr Gunnlaugsson's Progressive Party since 2013.

Gudlaugur Thor Thordarson, the chairman of the Independence Party, said the prime minister's request had come as a "total surprise" and was not "the rational thing to do".

Later, ahead of the proposed confidence vote, Mr Gunnlaugsson announced he was stepping down.

The Progressive Party's deputy leader, Agriculture Minister Sigurdur Ingi Johannsson, told reporters after a meeting that the party planned to name him as the new leader and propose that he become prime minister.

Despite the resignation, Katrín Jakobsdottir, head of the Left-Green Movement, told the Reuters news agency that opposition parties still wanted early elections.

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Panama says it is considering retaliatory measures against France, but reiterates that is ready to co-operate with any investigations stemming from the leaks

Chile: the country head of the anti-corruption watchdog Transparency International, Gonzalo Delaveau, steps down after his name emerges in the documents

US President Barack Obama says tax avoidance is a global problem and governments should not make it easy for illegal funds to move around the world

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The documents leaked from Mossack Fonseca show that Mr Gunnlaugsson and his wife bought the company Wintris in 2007.

He did not declare an interest in the company when entering parliament in 2009. He sold his 50% of Wintris to his wife, Anna Sigurlaug Palsdottir, for $1 (£0.70) eight months later.

Mr Gunnlaugsson maintains no rules were broken and his wife did not benefit financially.

The offshore company was used to invest millions of dollars of inherited money, according to a document signed by Mrs Palsdottir in 2015.

Court records show that Wintris had significant investments in the bonds of three major Icelandic banks that collapsed during the financial crisis which began in 2008.

Some of Icelanders' anger is believed to stem from the perceived conflict of interest.

The prime minister was involved in negotiations about the banks' future and had characterised foreign creditors who wanted their money back as "vultures", while Wintris itself was a creditor.

Mr Gunnlaugsson had kept his wife's interest in the outcome a secret.

In a resignation statement, Mr Gunnlaugsson said he had no wish to stand in the way of further government work, such as reform of the financial system.

Addressing the issue of his wife's assets, the statement says the couple have "never sought to hide these assets from Icelandic tax authorities and these holdings in Wintris have been reported as an asset on the prime minister's wife's income tax returns since 2008 and taxes have been paid accordingly in Iceland.

"No parliamentary rules on disclosure have been broken. Even the Guardian and other media covering the story have confirmed that they have not seen any evidence to suggest that the prime minister, his wife, or Wintris engaged in any actions involving tax avoidance, tax evasion, or any dishonest financial gain."

Panama Papers - tax havens of the rich and powerful exposed

Eleven million documents held by the Panama-based law firm Mossack Fonseca have been passed to German newspaper Sueddeutsche Zeitung, which then shared them with the International Consortium of Investigative Journalists. BBC Panorama is among 107 media organisations - including UK newspaper the Guardian - in 76 countries which have been analysing the documents. The BBC does not know the identity of the source

They show how the company has helped clients launder money, dodge sanctions and evade tax

Mossack Fonseca says it has operated beyond reproach for 40 years and never been accused or charged with criminal wrong-doing

Tricks of the trade: How assets are hidden and taxes evaded

Panama Papers: Full coverage; follow reaction on Twitter using #PanamaPapers; in the BBC News app, follow the tag "Panama Papers"

Watch Panorama on the BBC iPlayer (UK viewers only)

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