Icelandic PM to resign amid offshore holdings controversy

Iceland's embattled prime minister has resigned amid a controversy over his offshore holdings, a Cabinet minister said Tuesday as outrage over the accounts roiled the North Atlantic island nation.

REYKJAVIK, Iceland — Iceland’s embattled prime minister has resigned amid a controversy over his offshore holdings, a Cabinet minister said Tuesday as outrage over the accounts roiled the North Atlantic island nation.

Prime Minister Sigmundur David Gunnlaugsson, who had denied wrongdoing, is stepping down as leader of the country’s coalition government, Agriculture Minister Sigurdur Ingi Johannsson told Icelandic broadcaster RUV.

No replacement has yet been named, and Iceland’s president has not yet confirmed that he has accepted the prime minister’s resignation. Crisis meetings continued as several hundred protesters gathered outside parliament Tuesday in Reykjavik to protest the offshore accounts set up by Gunnlaugsson and his wife.

Opposition lawmakers say the holdings amount to a major conflict of interest with his job. If his resignation is accepted, Gunnlaugsson would be the first major figure brought down by a leak of more than 11 million financial documents from a Panamanian law firm showing the tax-avoidance arrangements of the rich and famous around the world.

Gunnlaugsson said he and his wife paid all their taxes and have done nothing illegal. He also said his financial holdings didn’t affect his negotiations with Iceland’s creditors during the country’s acute financial crisis. Those assertions did little to quell the controversy.

The prime minister sought at first to dissolve parliament Tuesday and call an early election, but President Olafur Ragnar Grimsson said he wanted to consult with other party leaders before agreeing to end the coalition government between Gunnlaugsson’s centre-right Progressive Party and the Independence Party.

“I need to determine if there is support for dissolving (parliament) within the ruling coalition and others. The prime minister could not confirm this for me, and therefore I am not prepared at this time to dissolve parliament,” Grimsson said.

The president met with Independence Party lawmakers later Tuesday to discuss the governmental crisis. Gudlaugur Thor Thordarson, chairman of the Independence Party, criticized the prime minister for unilaterally seeking to dissolve parliament.

“It was a total surprise for us to see that. I don’t think it was the rational thing to do. I’ve never seen it done before in Icelandic politics and I hope that I will not see it again,” he said.

The impact in Iceland from the leaks has been the most dramatic, but leading officials in Russia, Ukraine, China, Argentina and other countries are also facing questions about possibly dubious offshore schemes used by the global elite.

The leaked documents allege that Gunnlaugsson and his wife set up a company called Wintris in the British Virgin Islands with the help of Mossack Fonseca, the Panamanian law firm. Gunnlaugsson is accused of a conflict of interest for failing to disclose his involvement in the company, which held interests in failed Icelandic banks that his government was responsible for overseeing.

Arni Pall Arnason, leader of the opposition Social Democratic Alliance, said Gunnlaugsson’s position was not tenable.

“I think it’s obvious that we cannot tolerate a leadership that is linked to offshore holdings,” he said. “Iceland cannot be the only western European democratic country with a political leadership in that position.”

Iceland, a volcanic island nation with a population of 330,000, was rocked by a prolonged financial crisis when its main commercial banks collapsed within a week of one another in 2008.

Since then Icelanders have weathered a recession and been subjected to tough capital controls — another reason the prime minister’s offshore holdings rankle many.

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