Bankers Revenge? | Iceland’s Prime Minister Sigmundur David Gunnlaugsson Steps Down Amid Panama Papers Scandal

– Justin

In China, where the figures identified in the leaked papers include a brother-in-law of President Xi Jinping, the government denounced reports about them as a groundless attack. Its media censors purged mentions of Panama and blocked Internet search inquiries with that word.

And in Russia, where officials also dismissed the leaked documents as a baseless political attack on Mr. Putin, the prosecutor general’s office said Tuesday it would look into the reports that high-profile Russian individuals were beneficiaries of offshore companies.

The ripple effects from the documents extended across continents, from a West African diamond mogul to relatives of a former South Korean president and soccer celebrities in Latin America. Even the Chilean head of Transparency International, a prominent anticorruption advocacy group, was forced to step down after his name appeared in the leaked papers as an agent for offshore companies in the Bahamas.

None of the published leaks have identified American officials so far. Nor do they necessarily show evidence of crimes. But anger and reproach about the revelations have started to swell nonetheless.

“Corruption, whether private or public, is enabled by secrecy,” said John Marti, a former federal prosecutor who is a partner at the international law firm Dorsey and Whitney, based in New York. The revelations, he said, are “kind of pulling back the curtain on the secrecy that exists.”

President Obama, while not commenting directly on the leaked documents, said money shielded by tax avoidance “is a huge problem” and could be in the trillions of dollars.

“A lot of this stuff is legal, not illegal,” Mr. Obama said. “And unless the United States and other countries lead by example in closing some of these loopholes and provisions, then in many cases you can trace what’s taking place but you can’t stop it.”

Gabriel Zucman, a professor at the University of California, Berkeley, and the author of “The Hidden Wealth of Nations,” said in an interview with National Public Radio that the Panamanian law firm represents a fraction of the total in riches obscured from public scrutiny.

“You know, it’s just one firm in one tax haven, and there is much more going on,” Mr. Zucman said, calculating that about 8 percent of the world’s financial wealth is held in tax havens. “So that’s about $7.6 trillion today, a huge amount of wealth.”

It was not immediately clear how Mr. Gunnlaugsson’s decision to step aside would affect Iceland, a tiny island nation of 323,000 that is still recovering from the global financial crisis eight years ago.

In a reflection of the political turmoil and maneuvering that the Panama Papers have created, the prime minister’s office issued a statement on Tuesday night saying that he had proposed stepping down in favor of his deputy “for an unspecified amount of time” — as a sort of indefinite leave of absence — and not a formal resignation. It was unclear whether Mr. Gunnlaugsson, who would remain leader of his party, would succeed in his effort to avoid a formal resignation in the face of significant public anger.

Mr. Gunnlaugsson had insisted on staying in office after the leaked documents revealed that he and his wealthy partner, who is now his wife, had set up the company in the British Virgin Islands in 2007 through Mossack Fonseca. The documents suggested that he sold his half of the company to her for $1 on the last day of 2009, just before a new law took effect that would have required him as a member of Parliament to declare his ownership as a conflict of interest.

Mr. Gunnlaugsson had said that the leak contained no news, adding that he and his wife, Anna Sigurlaug Palsdottir, had not hidden their assets or avoided paying taxes.

But the company, Wintris Inc., lost millions of dollars as a result of the 2008 financial crash, which crippled Iceland, and the company is claiming about $4.2 million from three failed Icelandic banks. As prime minister since 2013, Mr. Gunnlaugsson was involved in reaching a deal for the banks’ claimants, so he was accused of a conflict of interest.

The controversy of the leaks was also loud in Britain, in part because it illustrated the outsize role of British-governed territories as tax havens.

The leader of Britain’s opposition Labour Party, Jeremy Corbyn, called for an independent investigation into the tax affairs of all Britons linked to the Panama revelations — including Mr. Cameron’s family — and for Britain to impose direct rule on its overseas territories and dependencies, if necessary, to get them to comply with British tax law.

“The government needs to stop pussyfooting around on tax dodging,” Mr. Corbyn said.

The focus of anger in Britain centered on Mr. Cameron’s late father, Ian, a stockbroker and investment manager, who was among those named as having used the Panamanian law firm to set up a company based in the British Virgin Islands, a British territory.

While there was no suggestion of illegal activity, the overseas investment fund paid no British tax. The Labour Party wants to know if the prime minister retained any interest in the offshore fund, which Mr. Cameron denies, and wants him to publicize his tax returns.

With economic inequality a growing political issue in Britain, Mr. Cameron’s privileged upbringing and personal wealth make him vulnerable to such attacks, particularly at a time when his government is reducing spending on welfare payments to the poor.

In a further embarrassment to Mr. Cameron, who has claimed leadership in the global fight to crack down on tax havens, the documents also reveal that Britain’s self-governing overseas territories, especially the British Virgin Islands, proved a favored location for companies handled by Mossack Fonseca.

The political temperature over the leaked documents has been rising in Britain since Monday, when, asked whether Mr. Cameron’s family still had money offshore, his official spokeswoman, Helen Bower, described this as a “private matter.” Mr. Cameron’s denial came only on Tuesday.

Holding money offshore would not be illegal, providing interest earned was declared to the authorities. Despite saying that he is “very relaxed” about calls to publish his tax returns, Mr. Cameron has not done so.

Reports about the Cameron family’s Panamanian connections first surfaced in 2012 when it emerged that Ian Cameron was a director of a fund established in Panama in 1982 called Blairmore Holdings, named after a family mansion in Scotland.

The leaks have shown how the company used bearer shares, which do not identify owners by name, to conceal who was investing in Blairmore Holdings.

Mr. Cameron said: “I own no shares, no offshore trusts, no offshore funds, nothing like that.” His office said later that neither he, his wife nor his children benefit from “any offshore funds.”

Steven Erlanger and Stephen Castle reported from London, and Rick Gladstone from New York. Reporting was contributed by Salman Masood from Islamabad; Choe Sang-hun from Seoul, South Korea; Alissa J. Rubin from Paris; Dionne Searcey from Dakar, Senegal; Neil MacFarquhar and Ivan Nechepurenko from Moscow; Michael Forsythe and Austin Ramzy from Hong Kong; Alison Smale from Berlin; James Kanter from Brussels; Sewell Chan from London; Michael D. Shear from Washington; Simon Romero from Rio de Janeiro; and Pascale Bonnefoy from Santiago, Chile.

Sources:

http://www.nytimes.com/2016/04/06/world/europe/panama-papers-iceland.html

Image Source – http://media.gettyimages.com/photos/prime-minister-of-iceland-sigmundur-david-gunnlaugsson-attends-a-of-picture-id499435904

Image Source – http://www.mossfon.com/