Iceland PM resigns over tax haven documents

  • 06/04/2016

Iceland's Prime Minister Sigmundur David Gunnlaugsson has resigned this morning -- the first major political casualty of the so-called Panama Papers.

He'd fought for two days against calls to go after the leaked documents from Panamanian law firm Mossack Fonseca revealed his wife owned an offshore company with big claims on collapsed Icelandic banks.

Earlier on Tuesday, Mr 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, Sigurour Ingi Johannsson, told reporters the party will suggest to its coalition partners in the Independence Party that he should become the new prime minister.

Mr Gunnlaugsson 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 Mr Gunnlaugsson's wife totalled more than 500 million Icelandic crowns (US$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-fueled 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 percent.

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.

Mr Cameron said on Tuesday he did not own any shares or have offshore funds, after his late father was included in a leaked list of clients using a law firm in the tax haven of Panama.

Mr Cameron's father has been reported to have run a network of offshore investment funds, and when asked on Monday to confirm that no family money was still invested in the funds, Mr Cameron's spokeswoman said it was a "private matter".

"I own no shares. I have a salary as Prime Minister, and I have some savings, which I get some interest from, and I have a house," he said at a question and answer session while campaigning to keep Britain in the European Union.

"I have no shares, no offshore trusts, no offshore funds, nothing like that."

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.