Icelandic leader resigns over Panama Papers revelations on wife’s holdings

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Iceland’s Prime Minister Sigmundur David Gunnlaugsson is to step down after leaked
documents from a Panamanian law firm showed his wife owned an offshore company with big claims on collapsed Icelandic banks, his party said.

Gunnlaugsson became the first prominent casualty from the revelations in the so-called Panama Papers, which have cast light on the financial arrangements of an array of politicians and public figures across the globe and the companies and financial institutions they use.

Earlier on Tuesday, Gunnlaugsson had asked Iceland’s president to dissolve parliament in the face of a looming no-confidence vote and mass street protests over the revelations.

Such a move would almost certainly lead to a new election.

The deputy leader of his Progressive Party, Sigurdur Ingi Johannsson, told reporters the party would suggest to its coalition partners in the Independence Party that he should become the new prime minister.

With the fallout from the leaks reverberating across the globe, British Prime Minister David Cameron also came under fire from opponents who accused him of allowing a rich elite to dodge their taxes.

And in China, the Beijing government dismissed as “groundless” reports that the families of President Xi Jinping and other current and former Chinese leaders were linked to offshore accounts.

The more than 11.5 million documents were leaked from the Panamanian law firm Mossack Fonseca.

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

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

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.

The prime minister has stressed his wife’s overseas assets were taxed in Iceland.

A government spokesman has said the claims against Iceland’s collapsed banks held by the firm owned by Gunnlaugsson’s wife – totalled more than 500 million Icelandic crowns ($4.1 million).

Iceland’s main commercial banks collapsed as the global financial crisis hit in 2008 and many Icelanders have blamed the North Atlantic island nation’s politicians for not reining in the banks’ debt-fuelled binge and averting a deep recession.

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 per cent.

In Britain, the leader of the opposition Labour Party demanded 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. The unfairness and abuse must stop,” Labour leader Jeremy Corbyn said.

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. (Reuters/NAN)

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