Icelandic Prime Minister Becomes Panama Papers’ First Casualty

Sigmundur Davíð Gunnlaugsson stepped down from his position as Prime Minister of Iceland, a position which he had held since May 2013, on April 5. This decision comes after the Panama Papers revealed that his family was hiding money in offshore accounts.

Following public outrage and a mass protest in Reykjavik on Tuesday, April 5, Gunnlaugsson called for Iceland’s President Olafur Ragnar Grimsson to dissolve Parliament and schedule a vote of confidence. Two days later, after the formal approval of both Grimsson and the Independence Party, the other half of the center-right government’s coalition, Sigurður Ingi Jóhannsson, previously the Minister of Agriculture and Fisheries, was sworn in as Iceland’s new Prime Minister. Gunnlaugsson maintains that he is not resigning but merely handing over the office of Prime Minister to Jóhannsson for an indeterminate duration.

The Panama Papers exposed offshore accounts of close to 215,000 companies and over 14,150 clients. According to eleven million documents, leaked to the International Consortium of Investigative Journalists, the Panama-based law-firm Mossack Fonesca has been knowingly helping its clients with tax evasion, avoiding sanctions, and in some cases, money laundering. Hundreds of media outlets from the International Consortium of Investigative Journalists, spanning almost one hundred countries, are in the process of analyzing the documents. Champion soccer player Lionel Messi, many of Russian president Vladimir Putin’s close associates, and British Prime Minister David Cameron are all reportedly on the list, which details where exactly implicated individuals are hiding their money.

Unlike Cameron, who admitted to owning a profitable share of his father’s offshore investment fund, Gunnlaugsson has denied any wrongdoing. The papers uncovered an offshore company which Gunnlaugsson owned with his wife but hadn’t declared before entering Iceland’s parliament in 2009. Wintris, the company that Gunnlaugsson bought in 2007, was used to invest inherited money, according to an official legal document signed by Gunnlaugsson’s wife, Anna Sigurlaug Palsdottir, in 2015.

Since the release of the Panama Papers, many Icelanders have accused the now-former Prime Minister of concealing family assets worth millions. However, Gunnlaugsson argues he sold his shares to his wife and should thus be devoid of any blame. Many analysts consider this ironic, given that Gunnlaugsson’s prowess as Prime Minister was linked to his keen financial ability to successfully rescue Iceland’s economy after its banks collapsed during the 2008 financial crisis.

While Iceland has implemented reforms following the leak, the nation - particularly the left-wing opposition parties - hopes for further change and ethical improvements. All of this unfolds as other Western European countries conduct their own investigations to reveal who else might be implicated in the documents.

Tara Subramaniam is a tiny freshman in the SFS. When she's not knee deep in articles about small French towns for The Caravel,  she can be found running at the back of the GRC pack or talking about diplomacy and shouting weird acronyms at her friends in an HFSC boardroom.