As the SA Council of Churches opined last week, in a “normal” democracy SA President Jacob Zuma would have resigned after the lashing he received from the Constitutional Court. But even in an “abnormal” democracy, there is only so much citizens will tolerate. Sunday night’s leak of 11.5m emails, spreadsheets and other documents generated by a secretive Panama-headquartered law firm is continuing to reverberate around the world. Yesterday the #PanamaPapers expose’ – a worldwide collaboration by 370 investigative journalists including SA’s amaBhungane – landed its first big fish with the resignation of the Prime Minister of Iceland. He had bought and secretly stashed away bonds whose value rocketed when his Government struck a favourable deal affected Icelandic banks. From a local perspective, the #PanamaPapers investigation provides proof backing assertions that the Zuma family derived massive financial gain following an agreement to send a 400-strong SA Defence Force contingent (including Rooivalk helicopters) to the DRC. As a rather obvious quid pro quo, a DRC Presidential Decree gifted the Zumas were gifted massive oil-bearing blocks of land – assets “reassigned” from their legal owner, LSE-listed Tullow Oil plc. In scale and impact, the Zuma family’s DRC dealings make the Iceland PM’s crime almost petty. At least Mr Gunnlaugsson didn’t put countrymen’s lives at risk for his personal profit. The ANC is already struggling to defend its leader against more traditional political attacks. You have to wonder how it will spin the family’s sudden ownership of massive DRC oil blocks when its energised political opposition picks up these cudgels? – Alec Hogg
(Bloomberg) — The Panama secrecy leak claimed its first casualty after Iceland’s Prime Minister Sigmundur David Gunnlaugsson resigned following allegations he had sought to hide his wealth and dodge taxes. The decision was announced in parliament after the legislature had been the focus of street protests that attracted thousands of Icelanders angered by the alleged tax evasion efforts of their leader. Gunnlaugsson, who will step down a year before his term was due to end, gave in to mounting pressure from the opposition and even from corners of his own party.
“What this exemplifies more than anything else is that there’s a growing lack of tolerance over the way that the international financial system has been gamed and rigged by corrupt elites,” Carl Dolan, director of Transparency International’s EU division, said in a phone interview from Brussels.
The Panama files, printed in newspapers around the world, showed that the 41-year-old premier and his wife had investments placed in the British Virgin Islands, which included debt in Iceland’s three failed banks. The leaked documents therefore also raise questions about Gunnlaugsson’s role in overseeing negotiations with the banks’ creditors. Ironically, the offshore investments were held while Iceland enforced capital controls.
Gunnlaugsson is the second Icelandic premier to resign amid a popular uprising, after Geir Haarde was forced out following protests in 2009.
TV Appearance
Gunnlaugsson always looked to be the most vulnerable of the politicians implicated in the documents. From Moscow to Islamabad and Buenos Aires, most public figures have managed to beat off the revelations with either outrage, denial or indifference. None of those tactics worked for Gunnlaugsson, whose first response was to walk out of an interview with Swedish TV, a clip that went viral after the leaks were published on Sunday.
“The Iceland PM is the tip of the iceberg in terms of how much political instability we’ll see long-term on the basis” of the leaks, Ian Bremmer, president of the New York-based Eurasia Group, said by phone on Tuesday.
First casualty of #PanamaPapers: Icelandic PM Sigmundur Gunnlaugsson resigns.
— Hala Gorani (@HalaGorani) April 5, 2016
Iceland’s electorate balked at the alleged tax evasion and Gunnlaugsson’s initial refusal to budge. Police on Monday erected barricades around the parliament in Reykjavik as protesters beat drums and pelted the legislature with eggs and yogurt. Almost 10,000 people gathered, according to police, while organizers said the figure was twice as high. Thousands more had signed up on Facebook to attend a second round of protests that was due to take place on Tuesday afternoon.
Other political leaders have also been forced to defend themselves since the leaked documents surfaced. U.K. Prime Minister David Cameron said he has no offshore funds or trusts amid demands for an inquiry from opposition leader Jeremy Corbyn.
Who Else?
Dolan said that if the situation in Iceland is replicated, whereby a politician “has a secret stake in a company that has benefited from the decisions of his government,” then he would expect “more heads to roll.”
In recent years, “we’ve had prime ministers in Slovenia and the Czech Republic who have resigned over these kinds of issues,” Dolan said. “The only difference with the Panama papers is the source of the information — it came from a massive data leak.”
Gunnlaugsson is one 12 world leaders to be singled out after the International Consortium of Investigative Journalists, or ICIJ, uncovered that he and his wife had an offshore account to manage an inheritance. His wife, Anna Sigurlaug Palsdottir, previously revealed the account in a Facebook posting in March after the premier was questioned about the money.
5 charts on the #PanamaPapers leaks https://t.co/KjN2WyA2dA pic.twitter.com/Pedc3DuIgJ
— World Economic Forum (@wef) April 6, 2016
PM’s Wife
According to the ICIJ report, Palsdottir says she has always paid all her taxes owed on an account by the name of Wintris, which was confirmed by her tax firm, KPMG. ICIJ cited a leak covering documents spanning leaders and businesses across the globe from 1977 to 2015 from Panama-based law firm Mossack Fonseca, a top creator of shell companies that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the world.
Gunnlaugsson put his agriculture minister forward as his proposed replacement. The outgoing prime minister will remain chairman of the Progressive Party, which has governed in a two-party coalition since 2013.
Elections?
Finance Minister Bjarni Benediktsson, who is also the leader of the Independence Party, said he is looking into whether the coalition that has existed between his group and Gunnlaugsson’s party can continue. He will also ask the opposition to withdraw the motion of no confidence it brought on Monday. He said the main focus of the government should remain an orderly unwinding of the capital controls that have shielded Iceland’s markets since late 2008.
“We will also have to discuss when we’ll eventually call elections, whether we’ll complete this term which ends in April next year or not,” Benediktsson said.
The coalition would stand to lose an election were one held today. A March MMR poll showed the government getting only 36.2 percent backing. Meanwhile the opposition Pirate Party, which among other things targets splitting up the investment and retail operations of banks, would get 37 percent.
Birgitta Jonsdottir, a spokeswoman for the Pirate Party, which is also behind the no confidence motion against the government, said there are no plans to withdraw it. If the current coalition holds, it will still have 40 of the 63 seats in Iceland’s parliament until an election is called.
