Re-elections looming close as Iceland hits a political scandal

Re-elections looming close as Iceland hits a political scandal

The recent release of the #Panamapapers has already resulted in startling revelations spanning the globe. The “leak” reveals that several people, previously beyond suspicion (as well as those already subject to blacklisting and criminals), set up off-shore companies within more than 20 tax heavens worldwide. The Panamanian law firm, Mossack Fonseca, helped individuals set up off-shore companies and bank accounts in these tax heavens.

Political scandal in Iceland

October 2007, the Prime Minister of Iceland, Sigmundur Davið Gunnlaugsson, created an off-shore company (Wintris Inc.) together with Anna Sigurlaug Pálsdóttir (his current wife). They shared a 50/50 ownership in Wintris Inc.

April 2009, Sigmundur Davið was elected to parliament but failed to disclose his shareholding in Wintris Inc.

December 2009, according to Icelandic law it’s mandatory to report any company that you own more than 25% stock in. However, Sigmundur Davið sold his 50% share of Wintris Inc. to his wife for one US dollar, a day before the law was enacted.

May 2013, Sigmundur Davið Gunnlaugsson is elected  Prime Minister of Iceland.

Some weeks ago, a Swedish reporter (part of the collaborative journalist network on #panamapapers) confronted  Sigmundur Davið in an interview about Wintris Inc. An interview the PM ended walking out on because he was unable to answer questions.

March 17, the Prime Minister’s wife made a facebook post disclosing her off-shore account. This post surprised everyone in Iceland and was created to limit damage from the release of the above interview.

April 3rd, the #panamapapers were released and shows evidence that Sigmundur Davið owned shares in Wintris Inc. and how he had lied earlier. They also show that the current finance minister on Iceland, Bjarni Benediktsson, and the Interior Minister, Ólöf Nordal, had similar off-shore companies. The finance minister is currently in the US and claimed he couldn’t return in time for parliament session today because of flight delays, despite airport not showing any signs of this. The scandal also implicates several Reykjavik city councilors.

April 4th, The Prime Minister refuses to admit owning assets in a tax haven and claims that Sweden has also been called a tax haven. The opposition MP’s are united in a demand that he resigns and that new elections are held. Sigmundur Davið Gunnlaugsson says he will not resign saying that “Surely not everybody is going to the protests”. The protests outside the parliament draws out 22,500 persons (~7% of the Iceland population), possibly the largest per capita protests the world has ever seen. Crowd chanted “Vanhæf ríkisstjórn” (incompetent government) and on social media the hashtags #panamapapers and #cashljós (cash-out) are being used.

Transparency and Whistle-blowing

The Panama Papers are revealing many secrets that were meant to be hidden. Not all off-shore accounts are illegal (or set-up to hide shady deals) but most of them promise that details will not be revealed, including who owns the companies. Porter McConnell, the director of the Financial Transparency Coalition, calls the role of shell companies, in funneling illicit financial flows, for the 3 C’s (Corporate tax avoidance and evasion, government Corruption, and Criminal activity):

“If there is a vehicle that is allowing for the criminal to get away now, that vehicle is the shadow financial system and the ability to go to anonymous companies to launder your money.”

Julia Reda, MEP for PPDE in the European Parliament, also spoke out on the situation:

The impact of the leak shows the importance of encouraging and protecting whistle-blowers worldwide as well as on the European level. On the contrary, plans are now underway to instead increase the ability of corporations to keep secrets.

The Trade Secrets Directive to be passed by the European Parliament next week provides only inadequate protection for whistle-blowers and investigative journalists, because it drastically extends trade secrets protection to any kind of secret information and puts the burden of proof on whistle-blowers and investigative journalists that they were revealing trade secrets in the public interest. Instead, we need a European directive to protect whistle-blowers. The Greens/EFA group in the European Parliament will present a draft of such a directive on 4 May 2016, the last day of Antoine Deltour’s Luxleaks trial.

A new Icelandic Government?

Pirate Times will continue to report on the progress of events on Iceland. The chair of the parliament closed today’s session early. Tomorrow all parliament sessions and meetings are cancelled, with no reason given.
For now the Prime Minister refuses to resign, despite massive protests from the streets and inside the parliament. In summer a new president will be voted in, someone that will have the theoretical power to dissolve government.


Pirates discuss possible scenarios for the coming days Arnaldur Sigurðarson CC BY_SA


Edit: 5/4 Correction made about the law that mandates you report any company that you have more than a 25% share in. The prime minister sold off his part for 1 USD the day before the law was enacted.

Featured image: CC BY-SA Ásta Guðrún Helgadóttir