Panama Papers: Iceland PM implicated in massive tax avoidance scheme

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Sigmundur Davíð Gunnlaugsson has been called to resign as his links to a tax avoidance scheme have been revealed in the Panama Papers leak.

German newspaper Süddeutsche Zeitung has obtained more than 2.4 terabytes of data concerning the activity of Panama firm Mossack Fonseca from an unnamed source, including emails and documents that implicate many high-ranking officials and celebrities across the globe in tax avoidance schemes, among other alleged abuses of the financial system.

The company sets up offshore “shell” companies, that individuals use to funnel money through to avoid paying taxes in their respective home countries.

Gunnlaugsson was brought to power after the late-2000s economic crisis, which hit Iceland particularly hard. In 2014, he rallied the Icelandic parliament to crack down on tax avoidance schemes.

After the economic crisis, he headed a group called InDefence that criticised the British legal treatment of Icelanders in the wake of the economic crisis, and also pressure those who had helped create the recession.

But the Panama Papers suggest Gunnlaugsson had been part of a scheme to shelter his wealth.

Panama Papers show Iceland PM’s personal stake

Gunnlaugsson became prime minister of Iceland in 2013. part of his platform was to help out everyday Icelandic citizens during the economic crisis, and he shaped an image for himself as being tough on the international banking system.

But the Panama Papers reveal that he and his wife, Anna Sigurlaug Pálsdóttir, had been involved in hiding money in companies linked to the Icelandic banks that were bailed out.

According to the Panama Papers, Gunnlaugsson purchased Wintris Inc. in 2007. It is a “shell company” set up by Mossack Fonseca via a Luxembourg-based brank of Landsbanki, an Icelandic bank.

Millions of krona that had come mainly from Anna Sigurlaug Pálsdóttir’s inheritence was then pumped into the shell company, and used to buy bonds in three of the major Icelandic banks – all of which were bailed out by the government.

During his time campaigning and rise to power, Gunlaugsson did not disclose his connections to Wintris, and in December 2009 he sold his stake in the company to his wife – for just $1USD.

Gunnlaugsson then gave an interview in March 2016, one that he promptly abandoned after facing questions over his involvement in Wintris.

“… there has never been any, any of me, my assets hidden anywhere. It’s an unusual question for an Icelandic politician to get. It’s almost like being accused of something, but I can confirm I have never hidden any of my assets.”

Despite this vague denial, the Panama Papers suggest that by never disclosing his interest in Wintris, Gunnlaugsson had breached Icelandic ethical rules.

Iceland’s Minister of Finance and Economic Affairs Bjarni Benediktsson has also been implicated in the scheme, and is a close ally of Sigmundur Davíð Gunnlaugsson.

In the wake of the Panama Papers revelation, there are already calls for the Icelandic prime minister to step down.

Iceland, unlike many other countries, aggressively pursued bankers in the wake of the financial crisis and eventually jailed several top bankers.