Icelandic PM faces no confidence vote over Panama Papers disclosures

Protests outside parliament after documents show Sigmundur Davíð Gunnlaugsson’s wife owned offshore firm with large claim on collapsed banks

Sigmundur Davíð Gunnlaugsson, Iceland’s prime minister, in parliament. Photograph: Halldor Kolbeins/AFP/Getty Images

Up to 10,000 people gathered during a protest on Austurvöllur in front of the Icelandic parliament. Photograph: Birgir Þór Harðarson/EPA

Protests in Reykjavik – video

Jon Henley in Reyjkavik-Monday 4 April 2016

Iceland’s prime minister is under fierce pressure to step down after leaked documents showed his wife owned a secretive offshore company with a potentially multimillion-pound claim on the country’s collapsed banks – representing what opponents said was a major conflict of interest.

As opposition parties called a vote of no confidence in Sigmundur Davíð Gunnlaugsson for later this week, as many as 10,000 protesters – in a country of 330,000 – gathered outside parliament in central Reykjavik for an evening protest, chanting, banging drums and barricades, and blowing whistles. Some waved bananas, symbolising the belief of many that they were living in a banana republic.

“He’s just lost all credibility,” said Arntho Haldersson, a financial services consultant. “Our prime minister, hiding assets in offshore accounts … After all this country has been through, how can he possibly pretend to lead Iceland’s resurrection from the financial crisis? He should go.”

“He lied,” said Anna Mjöll Guðmundsdóttir, a tourism researcher. “These people, they say they’ve learned the lessons from what happened to us in 2008, but they’re still just hiding our money.” Tinna Laufey Ásgeirsdóttir, a university professor, agreed: “He’s not been forthright. If people had been informed of this they might have voted differently. The size of this demonstration shows how disappointed people are.”

The Panama Papers, released on Sunday, revealed that Gunnlaugsson and his wife, Anna Sigurlaug Pálsdóttir, bought a British Virgin Islands-based company from Mossack Fonseca, the Panamanian law firm at the centre of the leak, in 2007 to invest money from the sale of Pálsdóttir’s share of her family’s business.

Gunnlaugsson sold his 50% of the company to Pálsdóttir for $1 at the end of 2009, soon after he was elected as an MP for the first time and a year after the financial crisis that plunged Iceland into a devastating depression. He has never declared an interest in the company.

The prime minister’s office now says his shareholding was an error due simply to the couple having a joint bank account, and “it had always been clear to both of them that the prime minister’s wife owned the assets”. The transfer of ownership was made as soon as this was pointed out, a spokesman said.

Since he became prime minister in 2013, Gunnlaugsson has overseen sensitive negotiations with the creditors of the three big Icelandic banks that collapsed during the 2008 crisis – while knowing, the leaked documents show, that his wife’s offshore company, Wintris Inc, which lost 515m kronur (£2.8m) in the crash, was owed a sizeable sum from their bankruptcies.

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