Iceland PM resigns over Panama Papers, parliament dissolved

Obama says tax avoidance has become a global problem; revelations pile pressure on European leaders; two retired Indian SC judges to probe leaks; Cameron denies offshore holdings; Beijing restricts coverage of leaks; France puts Panama back on blacklist

LONDON/REYKJAVIK: Iceland’s Prime Minister Sigmundur David Gunnlaugsson is to resign, his party said on Tuesday, becoming the first casualty of leaked documents from a Panamanian law firm which have shone a spotlight on the finances of an array of politicians and public figures worldwide.

The Panama Papers showed the premier’s wife owned an offshore company with big claims on Icelandic banks, infuriating many in his country who joined mass street protests calling for him to resign. The more than 11.5 million documents, leaked from the Panamanian law firm Mossack Fonseca, have caused public outrage over how the world’s rich and powerful are able to stash their wealth and avoid taxes while many people suffer austerity and hardship.

Mossack Fonseca denies any wrongdoing and on Tuesday, Panama President Juan Carlos Varela’s chief of staff told a news conference that the government could retaliate after France announced it would put the Central American country back on its blacklist of uncooperative tax jurisdictions. The official, Alvaro Aleman, said that no Panamanian company had been found to have committed a crime. He added: “We are not going to allow Panama to be used as a scapegoat by third parties. Each country (implicated) is responsible.”

Among those named in the documents are friends of Russian President Vladimir Putin, relatives of the leaders of China, Britain and Pakistan, and the president of Ukraine.Gunnlaugsson quit ahead of a planned vote of no-confidence, hours after asking the president to dissolve parliament, a move which would almost certainly have led to a new election. The deputy leader of his Progressive Party, Sigurdur Ingi Johannsson, told reporters the party will suggest to its coalition partners in the Independence Party that he himself should become the new prime minister. Opposition parties said, however, that they still wanted a snap general election.

With the fallout from the leaks reverberating across the globe, British Prime Minister David Cameron also came under fire from opponents whohim of allowing a rich elite to dodge their taxes. 

And in China, the Beijing government dismissed as "groundless" reports that the families of President Xi Jinping and other current and former Chinese leaders were linked to offshore accounts.

US President Barack Obama said the Panama Papers showed tax avoidance was a major problem and urged the US Congress to take action to stop US companies from taking advantage of loopholes allowing them to avoid paying taxes.

"We´ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem," he told reporters. "It´s not unique to other countries because frankly there are folks here in America that are taking advantage of this same stuff. A lot of it´s legal, but that´s exactly the problem." 

 Meanwhile, The Special Investigation Team (SIT) on black money today said it will investigate thoroughly the reported secret list of about 500 prominent Indians including actors, politicians and businessmen who have allegedly stashed money in offshore entities in tax haven Panama.

 "Investigations are being carried out. We are going to investigate it (the list) thoroughly," SIT Chairman Justice (retd) MB Shah told PTI.  Asked if the SIT had any information on these names, he said the panel got it today.

"No. We got the information just now," he said. The Vice Chairman of the panel, Justice (retd) Arijit Pasayat, said they have asked agencies like the Enforcement Directorate, IT Department and the Directorate of Revenue Intelligence to make an assessment of the list and prepare a report in this regard.

"We want to know what is the truth behind these. The SIT did not have these reports. Maybe, the investigative agencies had. So, once they submit a report to us then we can take the required action," Mr Pasayat said.

The list has been brought by the International Consortium of Investigative Journalists (ICIJ) in collaboration with news publications across the globe including India and pertains to offshore investments made by Indians between a period of 1977 and 2015.

The latest list, after similar ones came in the past like 'Swiss leaks' and the HSBC-list related to Indians, claims it has sourced data in connection to millions of documents which show heads of state, criminals and celebrities using "secret hideaways" in tax haven country of Panama. However, ICIJ adds a disclaimer that there are also "legitimate uses for offshore companies".

 According to media that have seen Mossack Fonseca´s files, more than half of the 200,000 companies set up by the firm were registered in the British Virgin Islands, where details of ownership do not have to be filed with the authorities.

Cameron has cast himself as a champion in the fight against tax evasion in British-linked territories. But he was put on the spot by the leaks, which named his late father and members of the ruling Conservative Party among the list of clients who used Mossack Fonseca´s services.

Cameron said he did not own any shares or have offshore funds. "I have a salary as prime minister, and I have some savings, which I get some interest from, and I have a house," he said.

"I have no shares, no offshore trusts, no offshore funds, nothing like that." Other leading figures and financial institutions responded to the leak with denials of any wrongdoing as prosecutors and regulators began a review of the investigation by the US-based International Consortium of Investigative Journalists (ICIJ) and other media organisations.

Britain, France, Australia, New Zealand, Austria, Sweden and the Netherlands are among nations that have started inquiries. Panama is one of the most secretive of the world´s offshore havens and has refused to sign up to a global transparency initiative.

The Hong Kong government said its tax department would take "necessary actions" based on any information it received. Credit Suisse and HSBC, two of the world´s largest wealth managers, dismissed suggestions they were actively using offshore structures to help clients evade tax. Both were among the banks that helped to set up complex structures that make it hard for tax collectors and investigators to track the flow of money, according to ICIJ.

The famous personalities drawn into the affair also included soccer star Lionel Messi of Barcelona and Argentina. Spanish tax authorities said they are investigating allegations of tax irregularities involving Messi after the release of the documents. A Messi family statement denied wrongdoing and said it "never used the company" involved in the matter. -