Tags: Iceland | Prime Minister | Panama Papers

Iceland's Prime Minister Resigns After Panama Papers Revelations

Iceland's Prime Minister Resigns After Panama Papers Revelations
(Getty Images)

Tuesday, 05 April 2016 12:03 PM

The Panama Papers revelations plunged Iceland into a political crisis on Tuesday with the resignation of Prime Minister Sigmundur David Gunnlaugsson.

Thousands gathered outside the Icelandic parliament in Reykjavik on Monday to protest about what the opposition said was Gunnlaugsson's failure to disclose a conflict of interest over his wife's offshore company, which has big claims on Iceland's collapsed banks.

Gunnlaugsson on Tuesday asked for parliament to be dissolved after the opposition called a vote of no confidence in the government. After a meeting with the prime minister, President Olafur Ragnar Grimsson said he had asked for talks with the main parties before making a decision.

Icelandic government bonds saw their biggest sell-off in five months due to the uncertainty, with yields on 10-year bonds jumping 15.6 basis points to 5.891 percent.

The more than 11.5 million documents leaked from the Panamanian law firm Mossack Fonseca have cast light on the financial arrangements of an array of politicians and public figures and the companies and financial institutions they use.

Among those named in the documents are friends of Russian President Vladimir Putin, relatives of the leaders of China, Britain, Iceland and Pakistan, and the president of Ukraine.

The papers have caused public outrage over how world's rich and powerful are able to stash their cash and avoid taxes while many people suffer austerity and hardship.

In Britain, the leader of the opposition Labour Party deamnded that the government tackle tax havens, saying it was time Cameron stopped allowing "the super-rich elite" to dodge taxes.

"There cannot be one set of tax rules for the wealthy elite and another for the rest of us," Labour leader Jeremy Corbyn said. "The unfairness and abuse must stop."

He said Britain had a huge responsibility since many tax havens, such as the British Virgin Islands and Cayman Islands, are British overseas territories, while others such as Jersey or the Isle of Man are British crown dependencies.

According to media that have seen Mossack Fonseca's files, more than half of the 200,000 companies set up by the firm were registered in the British Virgin Islands, where details of ownership do not have to be filed with the authorities.

Cameron has cast himself as a champion in the fight against tax evasion in British-linked territories. But he was put on the spot by the leaks, which named his late father and members of the ruling Conservative Party among the list of clients who used Mossack Fonseca's services.

Cameron said he did not own any shares or have offshore funds.

"I have a salary as prime minister, and I have some savings, which I get some interest from, and I have a house," he said. "I have no shares, no offshore trusts, no offshore funds, nothing like that."

Other leading figures and financial institutions responded to the leak with denials of any wrongdoing as prosecutors and regulators began a review of the investigation by the U.S.-based International Consortium of Investigative Journalists (ICIJ) and other media organizations.

Britain, France, Australia, New Zealand, Austria, Sweden and the Netherlands are among nations that have started inquiries.

French Finance Minister Michel Sapin said Paris would put Panama back on its blacklist of uncooperative tax jurisdictions. The Central American nation is one of the most secretive of the world's offshore havens and has refused to sign up to a global transparency initiative.

Mossack Fonseca has set up more than 240,000 offshore companies for clients around the globe and denies any wrongdoing. It says it is the victim of a campaign against privacy and that media reports misrepresent the nature of its business.

Mossack Fonseca's Hong Kong office said on Tuesday the firm had never been charged with or formally investigated for criminal wrongdoing in its nearly 40 years of operation.

"We do not advise clients on how to operate their businesses. We don't link ourselves in any way to companies we help incorporate," the firm said in a statement.

"Excluding the professional fees we earn, we don't take possession of clients' money, or otherwise have anything to do with any of the direct financial aspects related to operating these businesses."

 

The famous personalities drawn into the affair also included soccer star Lionel Messi. Spanish tax authorities said they are investigating allegations of tax irregularities involving Barcelona's Argentinian striker after the release of the documents.

Messi's family released a statement denying wrongdoing and saying it "never used the company" involved in the matter.

© 2021 Thomson/Reuters. All rights reserved.


   
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The Panama Papers revelations plunged Iceland into a political crisis on Tuesday with the resignation of Prime Minister Sigmundur David Gunnlaugsson.
Iceland, Prime Minister, Panama Papers
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2016-03-05
Tuesday, 05 April 2016 12:03 PM
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