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Panama Papers: Iceland's Prime Minister Says He Won't Resign After All

Prime Minister Sigmundur Gunnlaugsson previously said he would step down after leaked documents revealed that he hid millions in an undisclosed tax haven.

by Olivia Becker and Tess Owen
Apr 6 2016, 4:00pm

Birgir Por Hardarson/EPA

Iceland's prime minister Sigmundur Gunnlaugsson clarified that he won't be resigning after all, just hours after he said he would step down in the wake of the Panama Papers leak that revealed he had about $4 million of undisclosed assets tied up in an offshore tax haven.

Sigurdur Ingi Johansson, Iceland's deputy prime minister, said he would be taking over for Gunnlaugsson on Tuesday, two days after the massive disclosure of confidential documents.

But then later the same day, Gunnlaugsson's office issued a press release clarifying that he is actually just stepping aside "for an unspecified amount of time."

"The Prime Minister has not resigned and will continue to serve as Chairman of the Progressive Party," the release added.

The prime minister's office also disputes that those assets were undisclosed. Gunnlaugsson and his wife "have never sought to hide these assets from Icelandic tax authorities," a spokesperson said in a statement to VICE News, and reported them "as an asset on the Prime Minister's wife's income tax returns since 2008 and taxes have been paid accordingly in Iceland."

That echoed a statement from Gunnlaugsson, who flatly denied that he was guilty of any shady business.

The prime minister and his wife, "have never sought to hide [his wife's] assets from Icelandic tax authorities" and "no Parliamentary rules on disclosure have been broken," the release read.

Gunnlaugsson's will-he-won't-he resignation comes in response to a massive trove of confidential documents from the notorious Panamanian law firm Mossack Fonseca that were leaked to the public on Sunday. The Panama Papers revealed, among other things, that Gunnlaugsson and his wife and business partner Anna Sigurlaug Palsdottir, set up a shell company called Wintris Inc. with Mossack Fonseca in 2007 in the British Virgin Islands. The company was used to invest millions of dollars of inherited money, according to a document signed by Palsdottir last year, the BBC reported.

When Gunnlaugsson entered parliament, he did not, however, disclose the fact that he had $4 million in bonds tied up in an offshore shell company. He has also denied having an offshore account in the past. "Myself? No," he reportedly said when questioned recently about his links to Mossack Fonseca. "Well, the Icelandic companies I have worked with had companies with offshore companies."

Related: The Panama Papers: Massive Leak Reveals the Global Elite's Secret Cash Havens

The revelations sparked massive protests in Iceland's capital on Monday, with demonstrators calling for Gunnlaugsson to step down.

Earlier on Tuesday, Gunnlaugsson asked the president to dissolve parliament, and took to Facebook to express his preparedness in the event of an early election. "I told the leader of the Independence Party that if the party's parliamentarians think they cannot support the government in completing joint tasks, I would dissolve parliament and call a general election," he wrote.

Other senior Icelandic government officials and businesspeople were also implicated in the leak, including the chairman of Gunnlaugsson's Progressive Party, at least one senior government adviser, prominent former bankers, and a handful of tycoons. The documents were sent to German newspaper Süddeutsche Zeitung by an anonymous source over a year ago and the first batch of papers were was released three days ago. The leak contains 11.5 million documents and is being widely touted as the biggest data dump in history.

Iceland is still recovering from the 2008 world financial crisis, which hit the country particularly hard and drove three of its top banks out of business. Gunnlaugsson took office in 2008, vowing to defend the country from foreign creditors whom he described as "vultures."

Gunnlaugsson's statement on Tuesday said that he "was very proud of the success of his government policies" and "especially proud of his government's handling of Iceland's situation with the creditors of the failed Icelandic banks."

Police estimated there were about 10,000 people at the protests on Monday, which is a relatively large number in a nation of about 320,000. "What would be the most natural and the right thing to do is that (he) resign as prime minister," Birgitta Jonsdottir, the head of the Pirate Party, one of Iceland's biggest opposition parties, told Reuters on Monday. "There is a great and strong demand for that in society and he has totally lost all his trust and believability."