Iceland Prime Minister quits over Panama Papers tax haven scandal

The Prime Minister of Iceland has resigned after the Panama Papers revealed that he has been using an offshore firm to allegedly hide investments worth millions of pounds.

Prime Minister Sigmundur David Gunnlaugsson's resignation follows intense pressure in Iceland after he was named in the leaked documents which apparently reveal tax evasion attempts. Yesterday, thousands of locals surrounded the Icelandic parliament to demand that Mr Gunnlaugsson resign as head of the coalition government. Opposition parties had called for a vote of no confidence against the politician, saying he had lost all public trust following the scandal. He initially denied any wrong doing but reportedly resigned this afternoon amid mounting pressure.

The Panama Papers are a huge cache of leaked files which name individuals allegedly linked with a law firm which specialises in shell companies for the purposes of avoiding tax payments.

Mr Gunnlaugsson is one of dozens of leaders of former leaders around the world to be named in the documents and is the first major figure to resign following the revelations. Leading officials in Russia, Ukraine, China, Argentina and other major countries have also been named.

He is accused of setting up a ‘shell company’ along with his wife in the British Virgin Islands with the help of a Panamanian law firm. The company, which was based in the British Virgin Islands, is worth millions of pounds.

There is no suggestion that he has acted illegally by his involvement in the scheme. However, critics have suggested that it amounts to a conflict of interest. The documents suggest that while Mr Gunnlaugsson was overseeing negotiations with the creditors of Icelandic banks, his company was owed considerable sums from their bankruptcies.

Gunnlaugsson has denied any wrongdoing and insists that he and his wife have paid all appropriate taxes. He insists his financial holdings didn't affect his negotiations with Iceland's creditors during the country's acute financial crisis.

Iceland, which has a population of just 330,000, suffered under prolonged austerity following the economic crash and as a result there is considerable anti-establishment feeling and frustration towards people perceived as not paying their fair share of tax.

A replacement Prime Minister has not yet been named.