Iceland’s PM Replaced in Panama Papers Fallout

The first of many world leaders has been replaced as the result of the Panama Papers leaks. Sigmundur Gunnlaugsson quit as prime minister, and his successor is Sigurdur Ingi Johannsson. Both are the top men in the Progressive Party, but the President of Iceland Olafur Ragnar Grimsson has said there will be elections in the autumn. Mr. Johannsson appears to be leading a caretaker government only, and it will be surprising if the Progressive Party isn’t obliterated at the polls.

The BBC reports, “The leaks, from Panama law firm Mossack Fonseca, showed Mr Gunnlaugsson owned an offshore firm with his wife. It was not declared when he became an MP. Mr Gunnlaugsson says he sold his shares to his wife and denies any wrongdoing. But he is accused of concealing millions of dollars’ worth of family assets.” The Beeb adds, “The documents leaked from Mossack Fonseca show that Mr Gunnlaugsson and his wife bought the company Wintris in 2007. He did not declare an interest in the company when entering parliament in 2009. He sold his 50% of Wintris to his wife, Anna Sigurlaug Palsdottir, for $1 (£0.70) eight months later.”

Perhaps, Mr. Gunnlaugsson is right, that there is absolutely nothing illegal about what he has done. That isn’t the point. The people of Iceland have been particularly hard on those committing financial fraud or who look like that is what they did. In the financial crash of 2008, many countries bailed out their bankers; Iceland sent 26 of them to prison for a combined sentence of 74 years.

The anger felt in the country stems from a sense of betrayal because Mr. Gunnlaugsson and his government were champions of the little guy. Professor Eirikur Bergmann, a political scientist, wrote in The Guardian, “In the classical style of contemporary European populists, he claimed to speak on behalf of the deprived ordinary man against the wealthy elite — while belonging himself to the world;s richest 1%. In this guise he led the fight against the creditors of the fallen banks and was instrumental in the deal that was struck.

“Now that the Panama Papers have exposed that his wife was one of the foreign creditors of the fallen banks, through a firm registered on Tortola in the British Virgin Islands, which held his wife’s inheritance, many Icelanders feel betrayed.

“People are angry that Gunnlaugsson was in effect sitting on both sides of the table . . . .”

Icelanders are not alone in feeling betrayed by their elites. There is a general dissatisfaction in many countries with the way economies are now run for the benefit of the well-to-do at the expense of John Q. Public. The release of the Panama Papers will serve to focus attention on the abuses in the financial system. The argument in defense of those with off-shore accounts and money in tax-havens will be that what was done was perfectly legal. That may well be true. Yet that begs the question of whether what was done should ever have been legal in the first place.

Thus far, there are very few American names that have been released in the 11.5 document data dump. Those involved in the research say that there will be American names that come out in the near future. Perhaps when that occurs, the American media will take up the story. Thus far, the most interesting piece on the Panama Papers was an explanation in the New York Times as to why it has done so little coverage of the documents. Lamely, it claimed it hasn’t seen the documents.

Surely it could pay the Suddeutsche Zeitung something to run the stories the German press has printed. One hates to be a conspiracy theorist, but whenever the NYT walks away from a story like this, one recalls it did the same with Watergate.