Panama Papers cause flutter in Iceland, propel Pirate Party to the top of polls

Reykjavik: Iceland's coalition parties held talks on Wednesday on the government's future, a day after the prime minister's resignation over the Panama Papers scandal that propelled the Pirate Party to the top of polls ahead of a possible snap election.

Prime Minister Sigmundur David Gunnlaugsson stepped down on Tuesday, the first major political casualty to emerge from the massive leak of 11.5 million documents detailing hidden offshore accounts held by world leaders and celebrities.

The documents revealed by the International Consortium of Investigative Journalists (ICIJ) showed that Gunnlaugsson and his wife owned an offshore company in the British Virgin Islands and had placed millions of dollars of her inheritance there.

The prime minister sold his 50-per cent share of the company to his wife for a symbolic sum of $1 at the end of 2009, but he had neglected to declare the stake as required when he was elected to parliament six months earlier.

Gunnlaugsson, of the centre-right Progressive Party, has said he regretted not having done so, but insisted he and his wife had followed Icelandic law and paid all their taxes in Iceland.


Iceland Prime Minister Sigmundur David Gunnlaugsson. AFP

It has not been proven the couple stood to gain financially from the offshore holding, and the ICIJ noted only that Gunnlaugsson had "violated Iceland's ethics rules."

But the issue is particularly sensitive in Iceland, a country marked by the excesses of the 2000s when senior bankers used shell companies in tax havens to conceal their dealings in risky financial products and which ultimately led to the 2008 collapse of the nation's three main banks.

Thousands of protesters demonstrated on Monday, calling for Gunnlaugsson to step down. He finally did so on Tuesday.

But several hours later he denied having formally resigned, saying he had only stepped down temporarily and proposed his deputy party leader, Sigurdur Ingi Johannsson, as acting prime minister.

Political observers noted that ultimately Iceland's president would have to approve any change of premier.

The left-wing opposition, which presented a vote of no-confidence to parliament on Monday, wants early elections to be held ahead of the scheduled April 2017 vote.

Two other sitting cabinet ministers - for finance and the interior, both of the junior coalition member Independence Party - have also been named in the Panama Papers.

Finance Minister Bjarni Benediktsson, the Independence Party leader, was to meet today with the acting prime minister, Sigurdur Ingi Johannsson.

Riding high on Icelanders' anger over the affair, the four-year-old Pirate Party has seen its support soar.

A libertarian movement campaigning for more transparency in politics, Internet freedoms and copyright reform, the Pirate Party garnered 43 percent of voter support in a Gallup poll conducted Monday and Tuesday and published by daily Frettabladid and Channel 2 television.

Updated Date: Apr 07, 2016 07:41 AM

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