The Panama Papers just brought down a PM

Sigmundur David Gunnlaugsson has resigned. Picture: Getty Images

Iceland’s prime minister, Sigmundur David Gunnlaugsson, has reportedly resigned over revelations contained in the Panama Papers that he and his wife hid millions of dollars worth of investments in an offshore shell company.

Iceland’s minister of fisheries and agriculture, Sigurdur Ingi Johannsson, will take over from Gunnlaugsson, the Financial Times reported.

A statement released by the Prime Minister’s office early Tuesday afternoon said that Gunnlaugsson had recommended that the Progressive Party Vice Chairman “take over the office of Prime Minister for an unspecified amount of time.” It added that “the Prime Minister has not resigned and will continue to serve as the Chair of the Progressive Party.”

Roughly 10,000 Icelanders took to the streets on Monday to call for Gunnlaugsson’s ouster, CNN reported. His Progressive Party has governed a center-right coalition with the country’s Independence Party since 2013.

Reports that the prime minister had resigned over the revelations emerged late Sunday, when a giant leak of documents from the internal database of a global law firm based in Panama, called Mossack Fonseca, showed the offshore holdings of 140 politicians, public officials, and athletes around the world.

These reports turned out to be premature, however; as of Tuesday morning, Gunnlaugsson was still trying to hold on to his position, saying he would dissolve parliament and call a new election if he did not receive the backing of his coalition party to remain in office.

The leaked data has not been released to the public, but it shows that Gunnlaugsson and his wife, Anna Sigurlaug Palsdottir, bought the offshore company, Wintris, in 2007 to invest millions from the sale of Palsdottir’s family business, according to The Guardian. Gunnlaugsson failed to declare his 50% stake in the company and sold his share to his wife for $1 eight months later.

Gunnlaugsson’s critics claim that because he used Wintris in part to invest in the bonds of three major Icelandic banks that collapsed during the financial crisis, the company posed a conflict of interest to his leadership.

Gunnlaugsson walked out of an interview with the Swedish television company SVT in March when asked about his and his wife’s relationship to Wintris.

The leaks — a collaborative effort by the International Consortium of Investigative Journalists — were obtained by the German newspaper Süddeutsche Zeitung and contain over 11 million records dating back 40 years.

They amount to about 3 terabytes of data, including corporate records, financial filings, and emails. It is roughly 1,500 times as big as the 1.7 gigabytes of data dumped in 2010 by Wikileaks.

While anonymous company structures hidden in offshore holdings are not illegal, the leaks reveal the extent to which many high-level political figures have relied on shell companies to conceal their wealth, launder money, or evade taxes.

A memorandum from a Mossack Fonseca partner contained in the leak reads, “Ninety-five per cent of our work coincidentally consists in selling vehicles to avoid taxes,” according to The Guardian.

To that end, offshore companies can also be used for more nefarious purposes, such as to do business with blacklisted firms or people.

Among those implicated are Argentine President Mauricio Macri — who was listed as a director of a Bahamas company that dissolved in 2009 known as Fleg Trading Ltd., which did business in Brazil — and the king of Saudi Arabia, who evidently used shell companies in the British Virgin islands to take out $34 million worth of mortgages for properties in London, Fusion found in a review of the documents.

Harrison Jacobs contributed to this article.

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