Iceland PM resigns over shell company
Offshore company criticized as conflict
LONDON — The leak of millions of records on offshore accounts claimed its first highprofile political casualty Tuesday as Iceland’s prime minister stepped aside amid outrage over revelations he had used such a shell company to shelter large sums while Iceland’s economy was in crisis.
Icelandic leader Sigmundur David Gunnlaugsson is the first major figure brought down by the publication of the names of rich and powerful people linked to the leaks, dubbed the Panama Papers.
China and Russia, meanwhile, took the opposite approach, suppressing the news and rejecting any allegations of impropriety by government officials named in the leak of more than 11 million financial documents from a Panamanian law firm.
Officials in Ukraine, Argentina and other countries are also facing questions about possibly dubious offshore taxavoidance schemes.
The reports are from a global group of news organizations working with the Washington-based International Consortium of Investigative Journalists. They have been processing records from the Mossack Fonseca law firm that were first leaked to Germany’s Sueddeutsche Ze i tung newspaper.
One of the f irm’s cofounders, Ramon Fonseca, said late Tuesday it had filed a complaint with Panamanian prosecutors, alleging that the data was stolen by a hacking attack from somewhere in Europe, but he declined to give any details.
The announcement that Gunnlaugsson was stepping down as leader of Iceland’s coalition government came from his deputy, Sigurdur Ingi Johannsson, who is also the country’s agriculture minister. It followed the refusal by Iceland’s president to dissolve parliament and call a new election, and after thousands of Icelanders protested outside the parliament building in Reykjavik.
Gunnlaugson has denied any wrongdoing and said he and his wife have paid all their taxes. He also said his financial holdings didn’t affect his negotiations with Iceland’s creditors during the country’s acute financial crisis.
The leaked documents allege that Gunnlaugsson and his wife set up a company called Wintris in the British Virgin Islands with the help of the Panamanian law firm. Gunnlaugsson is accused of a conflict of interest for failing to disclose his involvement in the company, which held interests in failed Icelandic banks that his government was responsible for overseeing.
Iceland, a volcanic North Atlantic island nation with a population of 330,000, was rocked by a prolonged financial crisis when its main commercial banks collapsed within a week of one another in 2008.
China, on the other hand, dismissed as “groundless” reports that the Panamanian law firm had arranged offshore companies for relatives of at least eight present or past members of the Communist Party’s Politburo Standing Committee, the apex of power in China.
Among those named in the leaked documents was the brother-in-law of President Xi Jinping. State media have ignored the reports and searches of websites and social media for the words “Panama documents” were blocked.
Meanwhile, Ukraine’s president was accused of abusing his office and of tax evasion by moving his candy business offshore, possibly depriving the country of millions of dollars in taxes.
Shell companies aren’t in themselves illegal. People or companies might use them to reduce their tax bill legally, by benefiting from low tax rates in countries like Panama and the Cayman Islands. But the practice is frowned upon.