From Iceland — RECAP: What Did Iceland's Prime Minister Do?

RECAP: What Did Iceland’s Prime Minister Do?

Published April 4, 2016

York Underwood

You might have noticed that Iceland is in a bit of a political shit storm. Iceland’s Prime Minister, Sigmundur Davið Gunnlaugsson, made international news when a video of him being confronted by a Swedish journalist about his involvement with an offshore company located in Tortola in The British Virgin Islands was broadcast RÚV, Iceland’s national broadcaster. This information was obtained as part of a leak known as the “Panama Papers.”

It’s surreal seeing Sigmundur Davið situated on the same list as Vladimir Putin and Bashar al-Assad. Watching the video of Sigmundur Davið squirming in his seat and lying to that Swedish journalist was physically difficult to watch, but it felt like it was your duty not to look away–to display, what George Orwell coined, “a power of facing unpleasant facts.”

It’s obvious he was lying, yes, but what did he do? What are the facts? I understand the outrage. He’s a hypocrite. I could see that without any context. I want to understand exactly what’s happening, so I compiled a simple guide for those of us who need a little recap on the situation. 

Here’s a simple guide to the whole thing:

  1. Sigmundur Davið and his wife started an offshore company in 2007 which had bonds in three Icelandic Banks: Kaupthing, Landsbanki and Glitnir. *Owning bonds means you are lending money to the bank, which makes the Prime Minister and his wife “creditors” or lenders to the bank.
  2. In 2008, the economic crash happened. Those three banks go into insolvency–meaning they collapsed and had to start paying off their debts as best they could–starting with people’s savings and then bonds.
  3. In 2009, Sigmundur Davið became the chairman for the Progressive Party and was elected into parliament in April of 2009. New transparency laws stated that Members of Parliament had to reveal any shareholding in a company that was over 25%. At that time Sigmundur Davið was still 50% owner of Wintris inc. with his wife owning the other 50%.
  4. On December 31, 2009, Sigmundur Davið sold his wife his half of the company for $1 USD.

The big issue here and the reason behind Icelanders’ anger, frustration and embarrassment is how Sigmundur Davið gained popularity and trust in the first place. He was part of a grassroots political movement called “In Defence Of Iceland” or “InDefence” for short. His Iceland-comes-first narrative seemed to be in line with many Icelanders in the wake of the financial crash and he was elected Prime Minister in 2013. He was one of the people, supposedly, who was fighting to protect Iceland from the “Vulture” creditors. He also stressed the importance of keeping money in Iceland and staying with the Króna, Iceland’s currency.

He never disclosed his involvement with being a creditor in the past or having money in an offshore account in a different currency. As Prime Minister, he was making decisions which directly affected creditors or, more bluntly, his wife’s company–clearly a conflict of interest. Here is where it gets interesting:

  1. After the crash in 2008, creditors who took their money out of Iceland were charged a 39% “stability tax.”
  1. Last year, in 2015, Sigmundur Davið’s government removed the 39% “stability tax” in favour of a deal which only asked for a “stability contribution,”effectively removing 2 billion Euros that would have gone to the state, but now goes to creditors: Wintris inc., his wife’s company, Wintris inc., being one of those creditors.

Sigmundur Davið has betrayed the trust of the Icelandic people by not disclosing this information in the first place and embarrassed the nation by lying on camera to a Swedish journalist.

He has said he’s not resigning.

There are protests today  at 17:00 outside the Alþingi.

Follow more of our coverage here:

Walls Closing In On Prime Minister In Wake Of Panama Papers Coverage

Opposition Will Also Call For Dissolution, Early Elections

Finance Minister Says Flight Was Delayed

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