Iceland's Prime Minister resigns amid Panama Papers fallout

After widespread calls for his resignation, Icelandic Prime Minister Sigmundur David Gunnlaugsson stepped down Tuesday -- an apparent casualty of the Panama Papers leaks.

Sigurdur Ingi Johannsson, the deputy chair of Gunnlaugsson's Progressive Party, announced the resignation on national public broadcaster RUV.

Johannsson said he will take over. But he said Gunnlaugsson will remain head of the Progressive Party -- which might not go down well with some Icelanders who want nothing to do with him.

Gunnlaugsson had been under intense pressure to step down since leaked documents hacked from a Panamanian law firm revealed his links to an offshore company, triggering mass protests in the capital.

But Gunnlaugsson's resignation doesn't mean the dust has settled.

Protesters gather Tuesday outside Iceland's parliament building.

On Tuesday evening, protesters took to the streets of Reykjavik, demanding a change of government. They decried Johannsson's new role as Prime Minister, saying he was not elected.

"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

Prime Minister Sigmundur David Gunnlaugsson resigned Tuesday.

Finance Minister Bjarni Benediktsson said that he and Johannssson would discuss the next steps for ongoing cooperation between the two parties, but that this would take several days, he told reporters.

Benediktsson, head of Iceland's Independence Party, said he planned to meet with Johannsson to seek cooperation. 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.

The Panama Papers: 7 things to know

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 since a group of news organizations jointly published reports Sunday.

Political elites and super rich deny hiding billions offshore 

Those reports stemmed from 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.

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

Opinion: Panama Papers 'a very big deal'

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.

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

 

Leaked Panama Papers allege corruption by world leaders 

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.

News Courtesy: www.cnn.com