When Iceland's PM was caught with his hand in the cookie jar

The leaks from the Panama law firm show that the PM owned an offshore company

Yorva Tsiakara

Published: Updated:

Iceland's prime minister resigned last week after being the first major casualty of the Panama Papers leaks which revealed how the super-rich manage their money. The leaks from the Panama law firm, Mossack Fonseca, show that PM Sigmundur Gunnlaugsson owned an offshore company, and is accused of concealing millions of dollars worth of family assets.

How he got involved in the scandal

The Icelandic PM believes that he has been named unfairly. He says that legally he has done nothing wrong, on the subject of an investment company, called Wintris, set up in 2007 on the Caribbean island of Tortola in the British Virgin Islands, to hold investments with his wealthy partner Anna Sigurlaug Pálsdóttir.

Wintris, has apparently a lot of assets, especially many belonging to his wife, but also seems to have shares of several Icelandic banks that went bust in 2008.

The PM claims to have sold his shares in this company, to his wife, before any of that became relevant to his career as a parliamentarian, and before he would have had to declare them to parliament and to any sort of oversight committee for politicians in Iceland

A huge breach of confidence between Icelandic voters and the government

There are many people in Iceland who say that maybe legally this was all sound but ethically, it’s not something that they want their Prime Minister to be a part of, especially considering all the problems that Iceland had after the 2008 financial crisis, including a huge economic downturn, a surge in unemployment and general economic hardship.

When Iceland “came back” financially, one of its main features being new-found transparency, which makes a lot of people are very angry at the fact that the Prime Minister’s name was even mentioned as part of the Panama Papers investigation. They don’t seem to be willing to tolerate offshore speculation Iceland's parliament anymore.

A lot of political negotiations took place after the revelations. Both the president and the opposition were saying that the prime minister should resign, from the beginning.

Gunnlaugsson, on his part, specifically said “not so fast, if I’m going to resign everybody resigns”. His demand was to dissolve the parliament and create a round of snap elections.

People gather to demonstrate against Iceland's prime minister, in Reykjavik on Monday April 4, 2016. (AP)
People gather to demonstrate against Iceland's prime minister, in Reykjavik on Monday April 4, 2016. (AP)

But after he resigned, the parliament agreed to discuss who is going to succeed him. There is a big chance that elections scheduled to be held next year will be taking place earlier.

Opposition parties

But how could the other political parties take advantage of the fall of the Icelandic PM and the popular discontent?

The anti-establishment parties, like the Pirate party, may consider becoming part of a coalition. A representative of the Pirate party told the BBC that their first point of action, in that case, would be to work towards establishing a better democracy.

The member of the Pirate party disapproved of the way both the PM and the President had responded to the Panama Papers scandal. “People are extremely discontent, they’ve never seen anything like this before, they’re angry; even the people supporting the governmental parties.”

“The first thing we would have to fix,” she continued, “is the constitution, in order for it to make sense for a 21st century democracy. The role of the president, for example, is extremely unclear. There was a loud demand on its revision in the beginning of the financial crisis, in 2008.”