Iceland’s government to remain in office but moves up elections

REYKJAVIK, Iceland – Iceland’s center-right coalition will remain in office, but with a new prime minister, leaders of the two governing parties said late Wednesday, adding that elections would be held earlier than scheduled.

Sigurdur Ingi Johannsson, who until now has been fisheries and agriculture minister, was to be new prime minister, replacing Sigmundur David Gunnlaugsson, said Finance Minister Bjarni Benediktsson.

Gunnlaugsson, of the Progressive Party, was to formally hand in his resignation Thursday.

“We have agreed that we will continue working together,” added Benediktsson, who also is head of the Independence Party.

He said the Progressive Party and the Independence Party would hold the same portfolios as in the outgoing government.

In a concession to the opposition – and thousands of Icelanders who have signed petitions and demonstrated outside parliament in recent days – elections would be moved up to the autumn, Benediktsson said.

The current government’s term is scheduled to end in April 2017.

Gunnlaugsson has been under strong pressure to step down after he and his wife were implicated in a massive data leak from a Panama-based law firm that suggested they had an offshore company in a Caribbean tax haven.

The opposition said it would still move ahead with its no-confidence motion that was made Monday after the revelations of Gunnlaugsson’s interests in an offshore company become known.

Gunnlaugsson has denied any wrongdoing.

The government has a strong majority in the 63-seat legislature but the ruling parties have seen support drop since taking office. Meanwhile, the opposition Pirate Party that gained 5 percent in the 2013 elections has surged and scored 43 percent in a poll published Wednesday.

The leak of 11.5 million documents from Panama-based law firm Mossack Fonseca, detailing how money was funneled to shell companies in tax havens, has called into question the finances of numerous politicians, sports stars and celebrities from across 80 countries.

Among those named in connection with the tax dodging schemes is Gianni Infantino, the new president of football’s governing body FIFA, who is said to have signed a television rights contract with businessmen implicated in a U.S. corruption probe.

Infantino and UEFA dismissed reports based on the Panama Papers saying that Infantino signed the 2006 contract on Champions League TV rights for Ecuador, at $111,000, with offshore company Cross Trading, owned by Argentine brothers Hugo and Mariano Jinkis.

While UEFA has acknowledged the Cross Trading deal, it insists that “there was never any suggestion that anything improper took place,” and Infantino says, he “never personally dealt with Cross Trading nor their owners.”

After obtaining the documents from a Mossack Fonseca employee, German daily Sueddeutsche Zeitung enlisted the help of the Washington-based International Consortium of Investigative Journalists and other media organizations to analyze them.

Mossack Fonseca has rejected any wrongdoing.

Organization for Economic Co-operation and Development General Secretary Jose Angel Gurria accused Panama of failing to act on international financial data exchange, calling the country the last major nation to still allow offshore funds to be hidden from tax authorities and prosecutors.

The country has not stuck to promises to follow international standards for tax transparency, Gurria said in Berlin on Tuesday.

The government of Panama rebutted the OECD’s critique, saying Panama has been made out to be the single scapegoat, even though the so-called Panama Papers mention 21 other countries, Presidential Minister Alvaro Aleman said Tuesday.

Aleman pointed out that Panama recently changed a series of laws related to regulating the financial sector.

In February, the OECD Financial Action Task Force removed the country from the list of states with deficient international exchange of financial and tax information.