Panama Papers first major scalp as Iceland's PM resigns

Iceland's Prime Minister, faced with street protests and public outrage over offshore holdings, resigned yesterday, becoming the first major political leader to fall amid global reverberations from millions of leaked documents detailing secret financial transactions.

Sigmundur Gunnlaugsson tendered his resignation and asked Iceland's President to dissolve Parliament after leaked files from a Panama law firm showed that his wife owned an offshore company with links to some of the country's collapsed banks.

Protesters took to the streets in Reykjavik to demand the resignation of Sigmundur Gunnlaugsson. Photo / AP

The moves appeared likely to lead to new elections in the Nordic island nation, a Nato member.

It was the most dramatic fallout to date from the disclosures known as the Panama Papers, a trove of documents that allegedly show how members of the world's elite are able to conceal wealth and potentially avoid accountability and taxes.

Among those who have used offshore companies in private business dealings are at least 140 political figures, including a dozen current or former heads of state, according to news outlets that published a major report on the papers after a year-long investigation.

The report does not make specific allegations of illegal activity, but it raises questions about the propriety of hard-to-trace offshore accounts and other tax havens set up by the Panama-based law firm, Mossack Fonseca.

In a statement released yesterday, Mossack Fonseca said: "While we may have been the victim of a data breach, nothing in this illegally obtained cache of documents suggests we've done anything wrong or illegal, and that's very much in keeping with the global reputation we've worked hard to build over the past 40 years of doing business the right way."

The firm vowed to make sure that "the guilty parties are brought to justice" for stealing its information. In the meantime, it said, it would "continue to serve our clients" and "stand behind our people".

Those named in the documents include associates of Russian President Vladimir Putin, the President of Ukraine and relatives of leaders in China, Britain and Pakistan.

The disclosures have triggered official inquiries worldwide, including in New Zealand, Australia, Britain, France, Italy, Austria, Sweden and the Netherlands.

In Washington, President Barack Obama urged Congress to close "insidious tax loopholes" that allow big corporations to avoid billions of dollars in tax payments by ostensibly relocating overseas. "We've had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem," he said.

"It's not unique to other countries because, frankly, there are folks here in America who are taking advantage of the same stuff. A lot of it is legal, but that's exactly the problem. It's not that they're breaking the laws, it's that the laws are so poorly designed that they allow people, if they've got enough lawyers and enough accountants, to wiggle out of responsibilities that ordinary citizens are having to abide by."

In China, Government censors have been working overtime to scrub references to prominent Chinese named in the papers. Some Russians cited in the documents have political or personal connections to Putin, whose spokesman denied that the Russian President is implicated.

The questions about tax havens have spread beyond politics, touching such renowned figures as Argentine soccer star Lionel Messi, Spanish film director Pedro Almodovar and Russian cellist Sergei Rodulgin.

The Panama Papers stem from a year-long collaboration involving Germany's Suddeutsche Zeitung newspaper, the International Consortium of Investigative Journalists and more than 100 media outlets. Washington Post-Bloomberg