Offshore corporations - The secret shell game
The first political casualty of the offshore investments scandal known as the Panama Papers occurred Tuesday: The embattled prime minister of Iceland stepped aside, perhaps temporarily.
Prime Minister Sigmundur David Gunnlaugsson said he was stepping aside following the largest anti-government protests in modern times in Iceland, a sign of the public anger over his family’s offshore holdings.
Iceland’s fisheries minister announced that Gunnlaugsson had stepped down, according to state broadcaster RUV.
In a statement late Tuesday, Gunnlaugsson’s office said he “has not resigned” and was merely stepping aside “for an unspecified amount of time” and would remain as chairman of his ruling Progressive Party. It said the party’s deputy leader, Sigurdur Ingi Jóhannsson, would take over as prime minister. Whether disgruntled Icelanders would allow Gunnlaugsson to return to the post in the future was far from clear.
Gunnlaugsson became the first global leader to see his grip on power fail because of revelations in the Panama Papers, a massive leak of records from a Panama law firm that is a global leader in setting up and maintaining offshore companies and trusts.
McClatchy reporters and journalists from 76 other countries sifted through the records in recent months as part of the largest global collaborative investigation ever undertaken. The probe found that 12 current or former world leaders and scores of other politicians and family members had links to offshore entities through the Mossack Fonseca law firm.
McClatchy and other news organizations continue to release findings of the lengthy investigation each day this week, but barely a day after learning of their prime minister’s offshore holdings, Icelanders decided they’d had enough.
The prime minister’s announcement came hours before thousands of Icelanders planned for a second day to gather in front of parliament to demand the ouster of Gunnlaugsson, who came to office in 2013, riding a wave of anti-bank anger over the collapse of the nation’s top financial institutions in the global banking crisis of 2008.
Gunnlaugsson owned an offshore company, Wintris, with his wife. The company was set up in the British Virgin Islands, a major offshore haven.
Gunnlaugsson sold his share of Wintris in 2009 to his wife for a symbolic payment of $1.
But he never disclosed to the public that the company held millions of dollars in bonds of the three major collapsed banks, even as he negotiated the paying off of bank creditors while serving as prime minister.
Tim Johnson: 202-383-6028; @timjohnson4