Iceland premier resigns as Panama Papers scandal widens

Iceland premier resigns as Panama Papers scandal widens
PHOTO: AFP

Iceland's prime minister resigned Tuesday, becoming the first political victim of a mushrooming global scandal over hidden offshore financial dealings exposed in the so-called Panama Papers.

Prime Minister Sigmundur David Gunnlaugsson was the biggest casualty of a worldwide media probe into 11.5 million leaked documents that purportedly reveal the offshore financial activities of 140 political figures, including 12 current or former heads of state.

"The prime minister told (his party's) parliamentary group meeting that he would step down as prime minister and I will take over," the Progressive Party's deputy leader Sigurdur Ingi Johannsson told a live broadcast.

A series of other leaders and celebrities fingered in the papers leaked from a Panamanian law firm have hit back at the allegations, denying any wrongdoing despite the international furore.

Those named include Russian President Vladimir Putin's associates, Chinese President Xi Jinping's relatives, British Prime Minister David Cameron's late father and stars such as Argentine footballing great Lionel Messi.

Iceland's leader had been under immense pressure after it emerged he and his wife invested millions of dollars in an offshore company that had stakes in three Icelandic banks that collapsed in 2008, tipping the country into a deep recession.

Though the prime minister denied any wrongdoing, he was forced to bow out Tuesday after thousands of protesters took to the streets to demand his departure.

Around 1,000 people maintained their protest outside parliament after he resigned.

"We want a new government," said Katrin Thorvaldsdottir, 63, adding: "We want to be governed by people who pay their taxes in Iceland, and for that we need a new vote as soon as possible." The vast stash of records from Panama's Mossack Fonseca law firm was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with more than 100 media groups by the International Consortium of Investigative Journalists (ICIJ).

The journalists published their first findings Sunday after a year-long probe.

Offshore financial dealings are not illegal in themselves, though they may be used to hide assets from tax authorities, launder the proceeds of criminal activities or conceal misappropriated or politically inconvenient wealth.

In Beijing, there was no official reaction to ICIJ allegations that eight current or former members of the ruling party's most powerful body concealed their fortunes through offshore havens, as well as relatives of Xi Jinping, who has overseen a much-publicised anti-corruption drive.

Asked whether China would investigate those named in the reports, foreign ministry spokesman Hong Lei said: "For such groundless accusations, I have no comment." Pakistani Prime Minister Nawaz Sharif's family has also been ensnared by the leaks.

On Tuesday, Sharif announced the formation of a commission to investigate "how much weight these allegations should be given" after three of his children were named as owning London real estate through offshore companies administered by Mossack Fonseca.

The Kremlin on Monday suggested a US plot after the leaks put a close friend of Putin's at the top of an offshore empire worth more than $2 billion.

Messi's family, for their part, denied any wrongdoing after the footballer and his father were named as owners of a Panama company that was not disclosed during a Spanish probe into their tax affairs.

Australia, France and the Netherlands have announced investigations into revelations contained in the papers. A judicial source said Spain had opened a money-laundering probe into the law firm.

France's Finance Minister Michel Sapin said his country would put Panama back on its list of countries that do not co-operate in efforts to track down tax dodgers.

Panama, which has pledged to investigate the revelations contained in the leaks, reacted angrily to France's announcement.

Alvaro Aleman, the minister for the presidency, a post similar to prime minister, threatened "retaliation measures against countries that include Panama in 'gray lists' " of tax havens.

Among the latest allegations from the Panama Papers investigations: - A North Korean front company used to help fund the country's nuclear weapons programme, Pyongyang-based DCB Finance Ltd, was among Mossack Fonseca's clients, according to the BBC and The Guardian.

- Prime Minister David Cameron's father ran an offshore fund that paid no tax in Britain for 30 years, according to the Panama Papers probe. Cameron's Downing Street office insisted it was a "private matter" although a government source later told AFP that the prime minister himself did not have any such funds.

- Aides to French far-right leader Marine Le Pen put in place a "sophisticated offshore system" to hide money, according to Le Monde newspaper.

- Syria used Mossack Fonseca to create shell companies to help it break international sanctions and fund its war effort, the French paper said.

The papers, from around 214,000 offshore entities covering almost 40 years, also name the king of Saudi Arabia and the president of Ukraine, Petro Poroshenko, who denied any wrongdoing but may face an attempt to impeach him.

One of the Panama law firm's founders, Ramon Fonseca, told AFP the leaks themselves were "a crime, a felony" and "an attack on Panama".

Mossack Fonseca is subject to investigations in Germany and also in Brazil, where it is part of a huge money laundering probe that has threatened to topple the current government.

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