Last Updated | 6:33 p.m.

ICELAND’S PRIME MINISTER, Sigmundur Davíð Gunnlaugsson, resigned on Tuesday, becoming the first leader to be forced from office over the secret financial dealings revealed by the Panama Papers leak.

The prime minister, who was elected to parliament as a reformer in 2009, promising transparency following the ruinous collapse of three Icelandic banks the year before, failed to disclose that his family secretly held bonds worth millions of dollars in the same banks, through a shell company in the British Virgin Islands.

Gunnlaugsson told members of his Progressive Party that he would be replaced by the minister of fisheries, Sigurður Ingi Jóhannesson, according to Reykjavik Media, a local investigative site whose founder, Jóhannes Kr. Kristjánsson, confronted the prime minister during an on-camera interview broadcast on Sunday.

Gunnlaugsson plans to remain as the party leader and wants to keep his seat in parliament.

As The Intercept reported on Monday, more than 20,000 protesters massed outside Iceland’s parliament, the Althing, on Monday to demand new elections. (Reykjavik Media shared remarkable aerial video of that crowd on Facebook.)

The ruling coalition, however, is trying to avoid fresh elections at all costs, no doubt because it already trailed the insurgent Pirate Party in opinion polls before the revelation that the prime minister, and other senior members of his government, held secret offshore accounts.

As Süddeutsche Zeitung reported, the documents leaked to the German newspaper by an unnamed whistleblower in Mossack Fonseca showed that the Panamanian firm had also set up offshore accounts for Iceland’s finance minister, Bjarni Benediktsson, and the interior minister, Ólöf Nordal.

Ahead of another protest planned for Tuesday evening, Benediktsson said he had no intention of resigning, according to Ásta Helgadóttir, a member of parliament for the Pirate Party, and Sigridur Tulinius, a law student.

The chaotic handling of the affair baffled and infuriated many in Iceland, who vented their anger online using the hashtag #cashljós, which is a pun based on the name of the television program that aired the prime minister’s disastrous interview, Kastljós — the Icelandic word for “spotlight.”

Although a smaller number of protesters massed outside the Althing later on Tuesday, opposition parties, including the Pirates, pressed their demand for elections to resolve the crisis.

In a strange coda to a turbulent day, on Tuesday evening, Sig­urður Már Jóns­son, the government’s press secretary, sent an email to foreign journalists, including Richard Milne on the Financial Times, in which he argued that the Gunnlaugsson “has not resigned,” but merely “suggested” that the fisheries minister “take over the office of Prime Minister for an unspecified amount of time.”

Gunnlaugsson is far from the only world leader tied to secret offshore companies by the documents. As The Guardian reports, on Tuesday, British Prime Minister David Cameron “ducked a question about whether his family stands to benefit from offshore assets linked to his late father,” telling Faisal Islam of Sky News that he, personally, has no such accounts.

“I own no shares, no offshore trusts, no offshore funds, nothing like that,” Cameron said. But he failed to respond to the part of the question in which he was asked if he or his family stood to benefit “in the future” from his father’s offshore fund, set up in the Bahamas to avoid paying tax in Britain.

In a statement released on Monday, Mossack Fonseca argued that the firm did not know enough about Rami Makhlouf, Syrian President Bashar al-Assad’s first cousin and childhood friend, to refuse his business.

However, The Guardian reported on Tuesday that the firm had “rejected the advice of its own compliance team to cut ties with the family” in 2011.


Panama Papers Leak Sparks Protests in Iceland Over Prime Minister’s Secret Finances
Like the Snowden Leak, Scandal in Panama Papers Is What’s Been Legalized
Here’s the Price Countries Pay for Tax Evasion Exposed in Panama Papers