Well, that didn’t take long. Only two days after the release of the Panama Papers, the first head rolled.
Icelandic Prime Minister Sigmundur David Gunnlaugsson resigned on Tuesday. Gunnlaugsson had been under pressure to step down since leaked documents hacked from a Panamanian law firm revealed his links to an offshore company, triggering protests.
Now the question who’s is next? How far will the damage spread?
The answer could be, quite far. This is the biggest leak in history – one that dwarfs the amount of data released by Wikileaks in 2010. Reports say that 12 current or former heads of state are mentioned.
The more than 11 million documents, which date back four decades, are allegedly connected to Panama law firm Mossack Fonseca. The International Consortium of Investigative Journalists reports that the law firm helped establish secret shell companies and offshore accounts for global power players.
A second question is to what extent, in an era of rising middle-class discontent, this will fuel further anger among those who see themselves as carrying a disproportionate share of the burden in supporting a system that seems to them unfair.
Among those who could be affected:
British Prime Minister David Cameron
Cameron is already in a bit of trouble. His gambit about guaranteeing a referendum in which voters could choose to leave the European Union has split his Conservative Party, and he may yet wind up on the losing side of that vote.
And, in an era of slim budgets and calls for ordinary people to tighten their belts, he is viewed by some as posh and privileged.
Now come reports that, according to the ICIJ, Cameron’s late father, Ian, used the services of the Mossack Fonseca law firm to avoid having his investment fund, Blairmore Holdings Inc., pay any UK taxes.
For a leader who has called on ordinary people to tighten their belts because government does not have the tax revenue delivery everything it used to, the revelation – while not including any allegation of wrongdoing by the Prime Minister – is unwelcome, to say the least.
When asked about the reports, the Prime Minister said, “I own no shares, no offshore trusts, no offshore funds, nothing like that. And so that, I think, is a very clear description.”
Ukraine President Petro Poroshenko
According to the ICIJ, in August 2014, as Russian troops were rolling into Eastern Ukraine, Poroshenko became the sole shareholder of Prime Asset Partners Limited, which Mossack Fonseca set up in the British Virgin Islands.
A Cyprus law firm representing the newly acquired company described it as a “holding company of Cyprus and Ukrainian companies of the Roshen Group, one of the largest European manufacturers of confectionery products.”
The previous president, Viktor Yanukovych, was reviled for having used government money to build a palace on 350 acres or riverfront land, complete with a shooting range, an equestrian venue, a tennis court, and a pier for yachts.
The problem for Poroshenko potentially hiding his holdings and avoiding taxes – even if he did so legally – is that when you replace a kleptocrat you are supposed to be a man of the people.
Besides, Ukraine needs tax revenue; the country is perpetually asking other countries for financial help.
A spokesman for Poroshenko said that creation of the trust and related corporate structures had no relation to political and military events in Ukraine.
Pakistani Prime Minister Nawaz Sharif
Three of the Prime Minister’s children have been named in the documents as linked to offshore companies that owned properties in London, according to local news organizations.
Some opposition leaders have called for Sharif to be investigated regardiing his family’s “wealth stashed abroad.” The Pakistani newspaper The News has reported that Sharif’s sons Hussain and Hasan, and his daughter Maryam, were linked to several offshore companies.
Hussain has said all the business affairs were legal.
But legality may not be the point. For the leader of a country where the average income is less than $5,000 a year – a country that badly needs inward investment – having money stashed abroad probably sends the wrong signal.
Russian President Vladimir Putin
The Guardian newspaper in Britain is reporting that “a network of secret offshore deals and vast loans worth $2 billion has laid a trail to Russia’s president, Vladimir Putin.”
Although Putin’s name is not specifically mentioned, allegedly involved are many members of his inner circle, who have become, the Guardian said, “fabulously wealthy.” And the documents suggest that the Putin’s family has benefited, the newspaper reported.
So is Putin in trouble? You must be kidding. He is exception that proves the rule.
The all-purpose, and generally effective, response has already be trotted out: The Kremlin called the allegations “a series of fibs” aimed at discrediting Putin ahead of elections.
“Putin, Russia, our country, our stability and the upcoming elections are the main target, specifically to destabilize the situation,” said a Kremlin spokesman, claiming many of the journalists involved in combing through the Panama Papers are former officers from the U.S. State Department, the CIA and special services.
Celebrities, movie stars and sports heroes
Those caught up in the controversy include not only politicians but film and sports stars, as well. Among those mentioned are soccer star Lionel Messi, according to reports.
The European football club Barcelona has promised to give Messi legal and financial support as the Argentine international star considers whether to sue over the leak.
But here – more than for politicians – the idea that nothing illegal has been done may save the day. Politicians owe their countries. They ask sacrifices of their citizens.
Star athletes over the years have frequently declared themselves residents of tax havens, without losing any popularity.
Many tennis luminaries, for example, have declared themselves residents of Monaco. One cannot help but wonder whether Monaco’s lack of an income tax plays a role.
Still, the high incomes of top actors and sports starts are essentially a transfer of wealth from from people of generally modest means, who buy tickets or products endorsed by the stars, to people who are in general wealthier than they are. It remains to be seen how much patience the public will have for financial shenanigans, even legal ones.
The old order
There may be one more victim of the Panama Papers scandal – the old order. Politicians like Labour leader Jeremy Corbyn in the UK, and the U.S. presidential candidate Bernie Sanders, among others, have been telling receptive audiences that the system is rigged. It favors the wealthy, they say.
The message is that what the wealthy are doing is not illegal, but it should be.
And it appears that the body politic, or a significant portion of it, is boiling mad. Hearing that many rich people take advantage of legal tax avoidance techniques that are not available to the hoi polloi may not sit well
If the revelations appear to confirm that the system is rigged, that it unfairly benefits the wealthy, that anger could grow and the numbers of disenchanted voters could increase.
The Independent newspaper in Britain ran an article Tuesday headlined, “The Panama Papers could hand Bernie Sanders the keys to the White House.”
That may seem fanciful, and Sanders is still a mighty long way from the Oval Office.
But the larger point is well taken: At least some people these days are fed up with the old order. And these revelations will not make them any happier.