Panama Secrecy Leak Claims

Iceland’s prime minister became the first casualty of the global revelations on offshore companies as he resigned on Tuesday.

In a day of high drama in Reykjavik, Sigmundur David Gunnlaugsson first tried to hang on to his office by seeking the dissolution of parliament.

But after Iceland’s president refused to grant the request, Mr Gunnlaugsson decided to step down as prime minister but carry on as the head of his Progressive party. Sigurdur Ingi Johansson, the current minister of fisheries and agriculture, will become prime minister.

But it remained unclear how other political parties in Iceland would react and early elections could still be called.

The Nordic island of 320,000 people has been shaken by revelations that the prime minister once owned an offshore company, now controlled by his wife. The scandal brought up to 22,000 Icelanders on to the streets of Reykjavik on Monday evening in one of the biggest protests ever seen in Iceland.

Mr Gunnlaugsson leads a two-party coalition government between his Progressive party and the Independence group of finance minister Bjarni Benediktsson. Mr Benediktsson, who has himself admitted to once owning part of an offshore company, has refused to give Mr Gunnlaugsson his support, admitting that the government may not survive the revelations disclosed by the International Consortium of Investigative Journalists.

Mr Gunnlaugsson wrote on Facebook on Tuesday that if the Independence party declined to back him he would “break up parliament and call for early elections”. Already on Monday, councillors from his own Progressive party in Akureyri, Iceland’s second-largest town, called for Mr Gunnlaugsson to step down.

The centre-right prime minister continued to insist that neither he nor his wife had done anything illegal and argued that his government had helped advance Iceland.

But although Iceland’s economy has recovered strongly from the shocks of its banking system collapsing in 2008, the country’s population remain bitterly divided politically and socially.

The two government parties combined enjoyed less support than the anti-establishment Pirate party, according to the last polls before the revelations emerged from documents leaked from the Panamanian law firm Mossack Fonseca.

“People are boiling with anger here,” said Stefan Olafsson, a professor in sociology at the University of Iceland.

Mr Gunnlaugsson is facing a no-confidence vote in parliament on Thursday, which he would lose if the Independence party refused to back him.

Mr Gunnlaugsson came to power promising to make the “vultures” — as he called the creditors of the failed banks — pay and use the money to reduce the burdens of Icelanders’ mortgages.

But, according to the ICIJ documents, Wintris, the company that is now solely owned by his wife, was in turn a creditor of the failed banks, exposing the prime minister to sharp criticism and claims of a conflict of interest.

The Panama secrecy leak claimed its first scalp after Icelandic Prime Minister Sigmundur David Gunnlaugsson resigned following revelations about his personal finances.

The decision was announced in parliament after the legislature had been the focus of street protests that attracted thousands of Icelanders angered by the alleged tax evasion of their leader. Gunnlaugsson, who will step down a year before his term was due to end, gave in to mounting pressure from the opposition and even from corners of his own party.

The Panama documents leak, printed in newspapers around the world, showed that the 41-year-old premier and his wife had investments placed in the British Virgin Islands, which included debt in Iceland’s three failed banks. Gunnlaugsson is the second Icelandic premier to resign amid a popular uprising, after Geir Haarde was forced out following protests in 2009.

Gunnlaugsson always looked to be the most vulnerable of the politicians implicated in the documents. From Moscow to Islamabad and Buenos Aires, most public figures have managed to beat off the revelations with a combination of outrage, indifference and semi denial. None of those tactics worked for Gunnlaugsson, whose first response was to walk out of an interview with Swedish TV, a clip that went viral after the leaks were published on Sunday.

The electorate balked at the alleged tax evasion and Gunnlaugsson’s initial refusal to budge. Police on Monday erected barricades around the parliament in Reykjavik as protesters beat drums and pelted the legislature with eggs and yogurt. Almost 10,000 people gathered, according to police, while organizers said the figure was twice as high. Thousands more had signed up on Facebook to attend a second round of protests due to take place on Tuesday afternoon.

Other political leaders have also been forced to defend themselves since the leaked documents surfaced. U.K. Prime Minister David Cameron said he has no offshore funds or trusts amid demands for an inquiry from opposition leader Jeremy Corbyn.

Gunnlaugsson put Agriculture Minister Sigridur Ingi Johannsson forward as his proposed replacement. The outgoing prime minister will remain chairman of the Progressive Party, which has governed in a two-party coalition since 2013.