The Icelandic government has agreed to tap Sigurdur Ingi Johannsson as Prime Minister, after Sigmundur David Gunnlaugsson announced he was stepping down, an apparent casualty of the Panama Papers leaks.
Sigurdur Ingi Johannsson, the deputy chair of Gunnlaugsson’s Progressive Party, announced the decision alongside Finance Minister Bjarni Benediktsson on Wednesday.
Johannsson is expected to be sworn in on Thursday, the same day a new government will be sworn in. He and Benediktsson also announced that new elections would be held in the fall.
Gunnlaugsson is expected to remain head of the Progressive Party, which might not go down well with some Icelanders who want nothing to do with him.
The Prime Minister had been under intense pressure to step down since leaked documents from a Panamanian law firm revealed his links to an offshore company, triggering mass protests in the capital. An estimated 22,000 protesters took to the streets of Reykjavik on Monday evening, police said.
Gunnlaugsson’s planned resignation doesn’t mean the dust has settled.
On Tuesday evening, protesters gathered in front of the parliament building once again, demanding a change of government.
“We demand new elections after (the) Panama Papers scandal,” protester Dominika Skwarska told CNN’s iReport. “… There is no other acceptable option. New elections should be held now.”
Government shake-up
Benediktsson, head of Iceland’s Independence Party, said he and Johannsson would discuss the next steps for ongoing cooperation between the two parties, but that this would take several days.
The two parties have been working in a center-right coalition government.
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 was one of numerous world leaders under scrutiny after a group of news organizations jointly published reports Sunday.
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.
CNN hasn’t been able to verify independently the leaked documents, which German newspaper Sueddeutsche Zeitung obtained from an anonymous source 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. During that interview, he said he wouldn’t step down.
“I have not considered resigning, nor am I going to resign, because of this matter,” he said Monday, a day before doing so.
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.”
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 his website 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 journalism 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.
Gunnlaugsson 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.