Passport

Something’s Rotten in Iceland, and the Panama Papers Prove It

The Icelandic prime minister is refusing to resign as street protests mount following the release of documents that may implicate him in a corruption scandal.

Some of 2,000 people gather to demonstrate on January 20, 2009 in Reykjavik as members of parliament gathered for their first session of the new year. Police arrested 13 people and used pepper spray to disperse demonstrators protesting today outside parliament to demand the government step down over the country's dire economic crisis. Iceland's once booming financial sector collapsed late last year in the face of the global credit crunch, forcing the government to take control of the major banks as the economy and currency have faltered badly.   AFP PHOTO/ HALLDOR KOLBEINS (Photo credit should read HALLDOR KOLBEINS/AFP/Getty Images)
Some of 2,000 people gather to demonstrate on January 20, 2009 in Reykjavik as members of parliament gathered for their first session of the new year. Police arrested 13 people and used pepper spray to disperse demonstrators protesting today outside parliament to demand the government step down over the country's dire economic crisis. Iceland's once booming financial sector collapsed late last year in the face of the global credit crunch, forcing the government to take control of the major banks as the economy and currency have faltered badly. AFP PHOTO/ HALLDOR KOLBEINS (Photo credit should read HALLDOR KOLBEINS/AFP/Getty Images)

Few things can make a politician look as suspicious as walking away from a television interview when a reporter asks about his role in the creation of a shell company that may have violated his home country’s laws.

Icelandic Prime Minister Sigmundur Gunnlaugsson probably didn’t allow himself time to think about that when he interrupted a conversation with Swedish network SVT in March after a reporter pushed him to comment on allegations he sold a company in the British Virgin Islands to his wife, Anna Sigurlaug Palsdottir, for all of one dollar the night before a new Icelandic law went into effect that would have required him to publicize his stake in the company.

“You are asking me nonsense,” he said as he walked away from the room that had been set up for the televised interview. “You tricked me into an interview under false pretenses.”

Turns out that it wasn’t nonsense. On Monday, 41-year-old Gunnlaugsson faced calls for a no-confidence vote in parliament after documents were released showing that he failed to declare his ownership stake in a shell company called Wintris when he was elected to parliament in 2009 and then effectively handed his share over to his wife.  Documents published Sunday show that Palsdottir then used Wintris to invest millions of dollars the couple had inherited.  The reporters who interviewed him in March were partnered with the International Consortium of Investigative Journalists, which published the documents Sunday.

Gunnlaugsson claimed during that interview that he didn’t understand exactly how the bank helped set up Wintris, but Icelanders do not appear to be sympathetic to his denial of any wrongdoing. Thousands of protesters descended upon Iceland’s parliament in the capital of Reykjavik Monday to call for Gunnlaugsson’s resignation.  Some angry Icelanders reportedly threw tubs of skyr, Icelandic yogurt, at the parliament building’s walls as part of the protests.

Gunnlaugsson came to power in 2013, just as Iceland was struggling to bounce back from the 2008 recession that launched the country into years of economic instability. He ran on a platform that promised tough action against foreign creditors and offered mortgage relief to Icelanders who lost huge amounts of savings during the economic crash.

On Monday, he went on live television in Iceland to announce that wouldn’t step down, that there was “nothing new” in Sunday’s disclosures, and that he did not engage in any illegal behavior.

Some of his colleagues in parliament disagree. Birgitta Jónsdóttir, head of Iceland’s Pirate Party said in a radio interview Monday that “the country’s credibility is ruined” and “one could say an ethical collapse occurred [Sunday] night.”

By Monday evening Reykjavik time, 10,000 Facebook users had RSVP’d to the protests. Watch a livestream of the gathering below:

Photo credit: HALLDOR KOLBEINS/AFP/Getty Images

Siobhán O’Grady is a freelance journalist working across sub-Saharan Africa. She previously worked as a staff writer at Foreign Policy. @siobhan_ogrady

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