UPDATE: Prime Minister Sigmundur David Gunnlaugsson resigned suddenly Tuesday, walking out of Parliament shortly after 3:00 pm local time — less than a day after publicly declaring he would not succumb to protesters’ demands that he leave office, and less than 12 hours after his attempt to dissolve Parliament was rebuffed.
After leaks exposed the owners of a web of offshore shell companies this weekend, Icelandic Prime Minister Sigmundur David Gunnlaugsson is facing large-scale protests, calls to resign, and airborne yogurt.
Hours before a crowd of thousands rallied outside Parliament on Monday, one goateed man launched “a number of tubs of Iceland’s famous skyr at the walls and windows” of the building and was later arrested. While the protester’s choice of weapon might seem amusing, the controversy threatening to topple Iceland’s current administration is not.
Documents leaked from the Panamanian law firm Mossack Fonseca reveal that Gunnlaugsson set up an offshore company to manage assets tied to three banks in Iceland in 2007, giving him a personal stake in the institutions shortly before they became government-owned during his country’s financial meltdown. The massive records leak, known as the Panama Papers, reveals the secret international system of bank accounts and on-paper companies the world’s elite use to conceal their dealings.
Gunnlaugsson and his partner, Anna Sigurlaug Palsdottir, incorporated an offshore shell company hired Mossack Fonseca in 2007 to incorporate a shell company called Wintris, Inc. in the British Virgin Islands. The new company issued two ownership shares: one to Gunnlaugsson and one to his partner. Wintris then purchased an estimated $4 million in bonds from three insolvent Icelandic banks that were nationalized during the Icelandic Financial Crisis in 2008, right before Gunnlaugsson was first elected to Parliament.
By failing to disclose his offshore holdings when assuming his new role in government, Gunnlaugsson covered up a conflict of interest. While making deals with the international financial community regarding Iceland’s banking system, the prime minister held secret personal interests that didn’t necessarily align with the interests of the Icelandic public.
There is no smoking gun just yet to show that Gunnlaugsson’s official actions benefited him personally. An army of reporters are still slogging through the 11.5 million documents from the Panama Papers leak. “It is unclear whether Gunnlaugsson’s political positions benefited or hurt the value of the bonds held by Wintris,” the International Consortium of Investigate Journalists writes. At the same time, Gunnlaugsson lobbied for a controversial deal in 2015 that limited penalties for creditors attempting to move their assets outside the country. Such a change could have benefited Gunnlaugsson’s offshore holdings, even as it cost the Icelandic government an estimated 2 billion euros.
The Panama Papers revelation is particularly damning to Gunnlaugsson, who rose to power following the Icelandic financial crisis by promising to protect the interests of the Icelandic people.
The Icelandic public first learned of the conflict of interest when his partner revealed via Facebook last month that she owned stock in Wintris, prompting public frustration. When asked about his involvement with Wintris during a television interview, Gunnlaugsson declined to comment and abruptly ended the interview. The Panama Papers now confirm the extent of the business involvement, putting the Prime Minister in a difficult position.
The Icelandic public is understandably outraged that their leader lied to them and potentially benefited from decisions he made while in office. The island’s small population has been ferocious in pursuing the culprits behind its financial collapse. It stands out as one of the few nations to actually jail financiers for their role in the global downturn, and the populace has engaged in mass protests on numerous occasions to impose its will on elected leaders.
Today, some Icelanders are calling for snap elections to replace Gunnlaugsson’s government. Major protests are planned in Reykjavik for this week, and opposition lawmakers are pushing for a vote of no-confidence.
Thousands of protesters gathered around the parliament building on Monday. An online petition calling for Gunnlaugsson’s resignation has already gathered over 29,000 signatures — a large figure for a country of just 330,000 people.
Despite the public’s outrage, Gunnlaugsson is refusing to step down. “I have neither considered resignation nor do I intend to resign over this matter,” Gunnlaugsson said in a Monday television interview. A spokesman for Gunnlaugsson said in a statement that “the Prime Minister and his wife have adhered to Icelandic law, including declaring all assets, securities and income in Icelandic tax returns since 2008.”
In addition to refusing to simply quit his post, Gunnlaugsson suggested Tuesday he would dissolve the entire parliament and call for new elections if he lost support. President Ólafur Ragnar Grímsson rejected his request for new elections, the Associated Press reports, leaving the future of Gunnlaugsson’s coalition government just as uncertain as it was Monday night.
Bryan Dewan is an Intern at ThinkProgress.
Update:
Gunnlaugsson reversed course suddenly on Tuesday, resigning during