Icelandic PM Refuses to Resign amid Panama Papers Leak

Iceland's prime minister on Monday faced calls to resign after leaked "Panama Papers" tax documents showed he and his wife used an offshore firm to allegedly hide million-dollar investments.

Financial records published by the International Consortium of Investigative Journalists showed that Sigmundur David Gunnlaugsson, 41, and his wife Anna Sigurlaug Palsdottir bought a company in the British Virgin Islands in 2007.

He sold her his 50-percent share for a symbolic sum of one dollar at the end of 2009.  

But when he was elected to parliament for the first time in April 2009, as a member of the center-right Progressive Party, he neglected to mention his stake in his declaration of shareholdings.

The issue is particularly sensitive in Iceland, a country marked by the excesses of the 2000s when senior bankers used shell companies in tax havens to conceal their dealings in risky financial products.

Iceland's big banks collapsed in October 2008 after borrowing beyond their means to fund ambitious investments abroad. Before their collapse their liabilities were worth more than ten times Iceland's total GDP. 

The crash led to an unprecedented financial crisis, a deep recession and a bailout from the International Monetary Fund.

Gunnlaugsson insists that despite the financial turbulence he was never tempted to move his money offshore and that his wife paid all her taxes in Iceland. 

"She has neither utilized tax havens nor can you say that her company is an offshore company," Gunnlaugsson said on his website, noting that, unlike offshore companies, his wife's company paid its taxes in Iceland.

In an interview with Swedish public television SVT recorded last month, excerpts of which were aired in Iceland on Sunday, he became visibly upset after being repeatedly asked about his wife's company, eventually storming out of the room.

"It's like you are accusing me of something," he declared.

Gunnlaugsson, who started out as a journalist and whose father was also a lawmaker, entered parliament in 2009 after the economic meltdown.

Elected prime minister in 2013, he was seen as a refreshing change from the political old guard, which was accused of having turned a blind eye to the banks' reckless investments. 

Gunnlaugsson's wife Palsdottir, also 41, is the daughter of a businessman who made a fortune from having Iceland's only Toyota dealership.

On March 15, before the "Panama Papers" leaks, she took to Facebook to acknowledge the existence of Wintris, the company that she and Gunnlaugsson acquired in 2007 to manage her inheritance from her father. 

She said that with the help of international consultancy KPMG, she had made sure to pay all her taxes in Iceland.

- 'Lack of faith' in Iceland -

But the pressure on Gunnlaugsson continued to mount, with a rally calling for his resignation planned for Monday evening in Reykjavik and the left-wing opposition expected to table a motion of no confidence in him in parliament this week.

"The prime minister should immediately resign," former Social Democratic prime minister Johanna Sigurdardottir said in a message posted on Facebook.

Gunnlaugsson had "displayed his lack of faith in the Icelandic currency and economy by placing his money in a tax haven," she wrote.

While the opposition would likely back the call for his resignation, Gunnlaugsson's Progressive Party would probably oppose it, leaving the junior member of his governing coalition, the right-wing Independence Party, holding the balance of power.

Gunnlaugsson insisted Tuesday he would not resign.

"I have not considered quitting because of this matter, nor am I going to quit because of this matter," he told Iceland's Channel 2 television.

A source of particular embarrassment for the politician who led a public revolt against the drastic repayment conditions initially imposed on Iceland by countries whose citizens lost money in the banking collapse is the fact that Wintris is listed among the banks' creditors, with millions of dollars in claims.

"It is sad that those who...say they will lead by example (and) say that the big plan is to believe in Iceland then decide that their money is better kept elsewhere," well-known Icelandic historian and intellectual Gudni Johannesson told public broadcaster RUV.