Iceland swears in new PM amid Panama Papers fallout

Updated 4:36 PM EDT, Thu April 7, 2016
Iceland's Prime Minister Sigmundur David Gunnlaugsson, writes during a parliamentary session in Reykjavik on Monday April 4, 2016. Iceland's prime minister insisted Monday he would not resign after documents leaked in a media investigation allegedly link him to an offshore company that would represent a serious conflict of interest, according to information leaked from a Panamanian law firm at the center of an international tax evasion scheme. (AP Photo/Brynjar Gunnarsson)
Brynjar Gunnasrson/AP
Iceland's Prime Minister Sigmundur David Gunnlaugsson, writes during a parliamentary session in Reykjavik on Monday April 4, 2016. Iceland's prime minister insisted Monday he would not resign after documents leaked in a media investigation allegedly link him to an offshore company that would represent a serious conflict of interest, according to information leaked from a Panamanian law firm at the center of an international tax evasion scheme. (AP Photo/Brynjar Gunnarsson)
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German journalists Bastian Obermayer (R) and Frederik Obermaier (L) co-authors of the socalled "Panama Papers" investigation pose on April 7, 2016 in Munich, southern Germany, at the office of the German daily "Sueddeutsche Zeitung".
The Panama Papers are a massive leak of 11.5 million documents allegedly exposing the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona striker Lionel Messi. The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ).
 / AFP / CHRISTOF STACHE        (Photo credit should read CHRISTOF STACHE/AFP/Getty Images)
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German journalists Bastian Obermayer (R) and Frederik Obermaier (L) co-authors of the socalled "Panama Papers" investigation pose on April 7, 2016 in Munich, southern Germany, at the office of the German daily "Sueddeutsche Zeitung". The Panama Papers are a massive leak of 11.5 million documents allegedly exposing the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona striker Lionel Messi. The vast stash of records was obtained from an anonymous source by German daily Sueddeutsche Zeitung and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ). / AFP / CHRISTOF STACHE (Photo credit should read CHRISTOF STACHE/AFP/Getty Images)
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Iceland's Prime Minister Sigmundur David Gunnlaugsson, writes during a parliamentary session in Reykjavik on Monday April 4, 2016. Iceland's prime minister insisted Monday he would not resign after documents leaked in a media investigation allegedly link him to an offshore company that would represent a serious conflict of interest, according to information leaked from a Panamanian law firm at the center of an international tax evasion scheme. (AP Photo/Brynjar Gunnarsson)
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Iceland's Prime Minister Sigmundur David Gunnlaugsson, writes during a parliamentary session in Reykjavik on Monday April 4, 2016. Iceland's prime minister insisted Monday he would not resign after documents leaked in a media investigation allegedly link him to an offshore company that would represent a serious conflict of interest, according to information leaked from a Panamanian law firm at the center of an international tax evasion scheme. (AP Photo/Brynjar Gunnarsson)
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View of a sign outside the building where Panama-based Mossack Fonseca law firm offices are in Panama City, on April 4, 2016. A massive leak -coming from Mossack Fonseca- of 11.5 million tax documents on Sunday exposed the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona forward Lionel Messi. An investigation into the documents by more than 100 media groups, described as one of the largest such probes in history, revealed the hidden offshore dealings in the assets of around 140 political figures -- including 12 current or former heads of states. AFP PHOTO/ Rodrigo ARANGUA / AFP / RODRIGO ARANGUA        (Photo credit should read RODRIGO ARANGUA/AFP/Getty Images)
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View of a sign outside the building where Panama-based Mossack Fonseca law firm offices are in Panama City, on April 4, 2016. A massive leak -coming from Mossack Fonseca- of 11.5 million tax documents on Sunday exposed the secret offshore dealings of aides to Russian president Vladimir Putin, world leaders and celebrities including Barcelona forward Lionel Messi. An investigation into the documents by more than 100 media groups, described as one of the largest such probes in history, revealed the hidden offshore dealings in the assets of around 140 political figures -- including 12 current or former heads of states. AFP PHOTO/ Rodrigo ARANGUA / AFP / RODRIGO ARANGUA (Photo credit should read RODRIGO ARANGUA/AFP/Getty Images)
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Story highlights

NEW: Sigurdur Ingi Johannsson is sworn in as Prime Minister

"We demand new elections after (the) Panama Papers scandal," a protester says

The Prime Minister says he'll step down after documents revealed ties to an offshore company

(CNN) —  

A new Prime Minister took the reins in Iceland Thursday as fallout over the Panama Papers document leak continued

Sigurdur Ingi Johannsson, who had been the country’s agriculture minister, was sworn in as Prime Minister Thursday afternoon.

Sigurdur Ingi Johannsson, Iceland's new prime minister, speaks at the Parliament in Reykjavik, Iceland, on Thursday.
Arnaldur Halldorsson/Bloomberg/Getty Images
Sigurdur Ingi Johannsson, Iceland's new prime minister, speaks at the Parliament in Reykjavik, Iceland, on Thursday.

That came two days after former Prime Minister Sigmundur David Gunnlaugsson announced he was stepping down amid mounting protests and calls for his resignation after leaked documents from a Panamanian law firm revealed his links to an offshore company.

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Gunnlaugsson’s resignation doesn’t mean the dust has settled. He will remain head of the Progressive Party, which might not go down well with the throngs of Icelanders who have taken to the streets in protest and want nothing to do with him.

New elections are slated to take place at the end of 2016, according to public broadcaster RUV.

Government shake-up

Prime Minister Sigmundur David Gunnlaugsson resigned Tuesday.
HALLDOR KOLBEINS/AFP/AFP/Getty Images
Prime Minister Sigmundur David Gunnlaugsson resigned Tuesday.

Since the Panama Papers were leaked, senior Icelandic political figures have scrambled to hold emergency talks.

Gunnlaugsson’s critics said the revelations involving the offshore company, which allegedly had holdings in Iceland’s collapsed banks, shattered public confidence in his leadership and could harm the country’s international reputation.

Gunnlaugsson had led the island nation of 330,000 people since 2013. The accusations involving him are especially painful for many Icelanders who remember the 2008 financial crisis, which resulted in the collapse of Iceland’s currency, stock market and several major banks.

Elected leaders implicated

Gunnlaugsson is one of a number of world leaders facing scrutiny since a group of news organizations jointly published reports Sunday drawing on millions of documents hacked from Mossack Fonseca, a Panamanian law firm that allegedly helped elected leaders and top officials set up secret shell companies and offshore accounts.

Those reports stemmed from millions of documents from Mossack Fonseca, a Panamanian law firm that allegedly helped elected leaders and top officials set up secret shell companies and offshore accounts.

The reports accuse Gunnlaugsson of having ties to an offshore company, Wintris Inc., that were not properly disclosed.

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CNN hasn’t been able to verify independently the leaked documents, which were obtained from an anonymous source by German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists.

Gunnlaugsson has not responded to a request for comment from CNN.

But he told Iceland’s TV2 on Monday that he felt “betrayed and disappointed” by the accusations. He also offered an explanation to the broadcaster about why he’d abruptly left an interview with a Swedish network that questioned him over the allegations.

“I was surprised because I didn’t really know what they were talking about. They started talking about tax havens and such. Then they made the impression that I had been involved in that,” he said. “It is very important to remember that my wife’s company has never been a tax haven. And it isn’t really an offshore company since it has always been taxed in Iceland.”

Opinion: Panama Papers and America’s problem

Mossack Fonseca said in a statement to CNN on Monday that while the firm “may have been the victim of a data breach, nothing we’ve seen in this illegally obtained cache of documents suggests we’ve done anything illegal, and that’s very much in keeping with the global reputation we’ve built over the past 40 years of doing business the right way.”

The murky world of offshore tax havens

Questions over declaration of interest

Gunnlaugsson and his wife, Anna Sigurlaug Palsdottir, purchased Wintris from Mossack Fonseca in 2007, according to the journalism group, which conducted a yearlong investigation in cooperation with more than 100 news organizations.

The journalism organization alleged the shell company was used to invest millions of dollars in inherited money, and that Gunnlaugsson did not disclose, as required by parliamentary rules, that he co-owned Wintris when he entered Parliament in April 2009.

But in a statement attributed to Gunnlaugsson and Palsdottir published on the Prime Minister’s website on March 27, he denied having breached the rules, saying that only companies with “commercial activity” had to be reported, while Wintris was simply a holding company for his wife’s assets.

He had “therefore followed the rules for declarations of interests ever since he took a seat in Parliament in 2009, regardless of how you look at this case,” the statement read.

On the last day of 2009, Gunnlaugsson sold his half of the company – headquartered on Tortola in the British Virgin Islands – to Palsdottir for $1, the International Consortium of Investigative Journalists reported, citing the leaked documents.

In a statement later provided to the investigative journalist group, his office said that, as a holding company for his wife’s assets, Wintris brought no tax advantages and had been created to avoid conflicts of interest in Iceland.

“It’s been clear since before I began participating in politics that my wife had a considerable amount of money,” he wrote in a post on his website Monday.

“Some people find that in itself very negative. I can’t do much about that because I’m neither going to divorce my wife nor demand that she relinquish her family inheritance.”

Collapsed banks

The journalism group reported that among Wintris’ more notable holdings were bonds of three major Icelandic banks that collapsed in 2008. It said it was not clear how Gunnlaugsson’s political activities could have affected the bonds’ value.

The Prime Minister said in his statement on his website that his wife had never benefited from his political activities – “quite the contrary.”

“My political participation and the policies I have fought for have resulted in her wealth being decreased,” he wrote.

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CNN’s Inga Thordar, Annie Rose Ramos, Jethro Mullen, Bharati Naik, Vasco Cotovio, Laura Perez Maestro, Catherine E. Shoichet and David Williams contributed to this report.