Icelandic
PM faces no confidence vote over Panama Papers disclosures
Protests
outside parliament after documents show Sigmundur Davíð
Gunnlaugsson’s wife owned offshore firm with large claim on
collapsed banks
Jon Henley in
Reyjkavik
Monday 4 April 2016
23.05 BST
Iceland’s prime
minister is under fierce pressure to step down after leaked documents
showed his wife owned a secretive offshore company with a potentially
multimillion-pound claim on the country’s collapsed banks –
representing what opponents said was a major conflict of interest.
As opposition
parties called a vote of no confidence in Sigmundur Davíð
Gunnlaugsson for later this week, as many as 10,000 protesters – in
a country of 330,000 – gathered outside parliament in central
Reykjavik for an evening protest, chanting, banging drums and
barricades, and blowing whistles. Some waved bananas, symbolising the
belief of many that they were living in a banana republic.
“He’s just lost
all credibility,” said Arntho Haldersson, a financial services
consultant. “Our prime minister, hiding assets in offshore accounts
… After all this country has been through, how can he possibly
pretend to lead Iceland’s resurrection from the financial crisis?
He should go.”
“He lied,” said
Anna Mjöll Guðmundsdóttir, a tourism researcher. “These people,
they say they’ve learned the lessons from what happened to us in
2008, but they’re still just hiding our money.” Tinna Laufey
Ásgeirsdóttir, a university professor, agreed: “He’s not been
forthright. If people had been informed of this they might have voted
differently. The size of this demonstration shows how disappointed
people are.”
The Panama Papers,
released on Sunday, revealed that Gunnlaugsson and his wife, Anna
Sigurlaug Pálsdóttir, bought a British Virgin Islands-based company
from Mossack Fonseca, the Panamanian law firm at the centre of the
leak, in 2007 to invest money from the sale of Pálsdóttir’s share
of her family’s business.
Gunnlaugsson sold
his 50% of the company to Pálsdóttir for $1 at the end of 2009,
soon after he was elected as an MP for the first time and a year
after the financial crisis that plunged Iceland into a devastating
depression. He has never declared an interest in the company.
The prime minister’s
office now says his shareholding was an error due simply to the
couple having a joint bank account, and “it had always been clear
to both of them that the prime minister’s wife owned the assets”.
The transfer of ownership was made as soon as this was pointed out, a
spokesman said.
Since he became
prime minister in 2013, Gunnlaugsson has overseen sensitive
negotiations with the creditors of the three big Icelandic banks that
collapsed during the 2008 crisis – while knowing, the leaked
documents show, that his wife’s offshore company, Wintris Inc,
which lost 515m kronur (£2.8m) in the crash, was owed a sizeable sum
from their bankruptcies.
Protesters
demonstrate against Gunnlaugsson in Reykjavik. Photograph:
Stringer/Reuters
The Guardian has
seen no evidence to suggest tax avoidance, evasion or any dishonest
financial gain on the part of Gunnlaugsson, Pálsdóttir or Wintris.
On Monday
Gunnlaugsson, 41, who was elected on a pledge to fight demands from
the banks’ foreign customers – including British depositors –
for full repayment, insisted he had broken no laws and had no
intention of resigning.
“I have not
considered quitting because of this matter nor am I going to quit
because of this matter,” he told Icelandic television before facing
an angry parliamentary session. “The government has had good
results. Progress has been strong and it is important that the
government can finish its work.”
He has said the
assets were not “hidden in a tax haven” but were fully declared
and taxed in Iceland, and insisted he and his two-party centre-right
coalition government had always put the interest of the public before
his own in dealing with the financial claims – even, he said, when
it might disadvantage his own family.
Gunnlaugsson’s
political opponents, local media and many ordinary Icelanders still
struggling to recover from the crisis – which halved the value of
the country’s currency, and required a bailout from the
International Monetary Fund – feel he should have been open about
his family’s overseas assets and the existence of Wintris.
“What would be the
most natural and the right thing to do is that he resign as prime
minister,” said Birgitta Jónsdóttir, of the opposition Pirate
party. “There is great demand for that in society; he has totally
lost all his trust and believability.”
The former Social
Democrat prime minister Jóhanna Sigurðardóttir said Gunnlaugsson
should go because he had “displayed his lack of faith in the
Icelandic currency and economy”.
The coalition
between Gunnlaugsson’s Progressive party and the Independence party
of the finance minister, Bjarni Benediktsson – whose name also
appears in the Panama Papers in connection with a Seychelles-based
company of which he once owned a third – holds a comfortable 38 of
the 63 seats in parliament.
But there were signs
late on Monday that Gunnlaugsson might not be able to count on the
automatic support of his coalition partners. Flying back from a
holiday in Florida, Benediktsson declined to give his backing to the
prime minister and said the Panama Papers revelations were “a heavy
blow” for the government.
Tuesday’s
parliamentary session has been cancelled, possibly giving the
coalition partners time to sit down and see if the government can be
saved. However one leading opposition figure said: “We think it is
increasingly likely that the Independence party will pressure
Sigmundur Davíð to resign to save their own skin, avoid elections,
and hope that things calm down.”
Even if he is not
forced to resign, rising public indignation could harm Gunnlaugsson’s
future chances in a country still profoundly shocked by the way a
small group of bankers and businessmen used shell companies in
offshore tax havens to conceal their dealings in high-risk financial
products, creating a financial bubble that, when it burst, brought
the country to its knees.
Thor Tomasarson, a
software engineer, said at the protest: “It just looks like he
doesn’t have the interests of ordinary Icelanders at heart. He
doesn’t care. He doesn’t see it matters that he hasn’t come
clean. We don’t want someone like that representing our country.”
Wintris’s
investments – bonds in Landsbanki, Glitnir and Kaupthing, banks
that failed within days of each other in 2008 with liabilities of
more than 10 times Iceland’s GDP – have reportedly shrunk to
15-30% of their original value, but are allegedly still worth several
million pounds.
Benediktsson told
the Guardian the company of which he had owned a third had been set
up with two co-investors to buy a property in Dubai, but the deal had
fallen through in 2009 and he had had no dealings with the company
since.
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