Iceland MPs suspend session over PM tax-haven link

The documents also suggest that he sold his half of the company to her, for $1, on the last day of 2009, just before a new law took effect that would have required him as a member of parliament to declare his ownership as a conflict of interest.

Gunnlaugsson told Iceland's Channel 2 on Monday (4 April) that he had no intention to step down.

"I have not considered resigning nor am I going to resign because of this matter,” he said.

“Now it’s imperative that the government finishes the good work it has been doing. What this matter has really shown us is that my wife has always paid her taxes and not taken advantage of opportunities to not do so.”

The company, Wintris, has claimed some $4.2 million from three failed Icelandic banks.

As prime minister since 2013, Gunnlaugsson was involved in reaching a deal for the banks’ claimants, so he is now being accused of a conflict of interest.

When asked by Swedish and Icelandic television journalists about Wintris before the publication of the leaks, Gunnlaugsson stormed out of the interview, saying that the journalists had obtained the interview “under false pretences”.

Later he admitted his performance during the interview “was terrible”.

No-confidence motion

On Monday, the Icelandic opposition filed a no confidence motion against him and his two-party coalition.

Meanwhile, thousands of protesters rallied outside parliament, demanding the PM to leave office.

Police said it was one of the biggest rallies ever in Reykjavik. According to the event's Facebook page, 10,000 people took part.

The government holds a comfortable 38-25 majority in Althingi (parliament), with each of the two coalition parties having 19 MPs.

Normally, a no-confidence motion would be of no risk to the government, but this time most of the MPs in the PM’s coalition partner, the Independence Party, have remained silent.

To survive, Gunnlaugsson needs the backing of his coalition ally.

Bjarni Benediktsson, the finance minister and the chairman of the Independence Party, has admitted that the government is in a difficult position, but he is not ready to support the PM in the media.

The two are due to meet on Tuesday, after Benediktsson returns from his holidays in Florida.

His name also appears in the trove of leaked documents, known as the Panama Papers, in connection with a Seychelles-based company of which he once owned a third.

The no-confidence vote will be debated in parliament on Wednesday or Thursday.

Tuesday's plenary session has been cancelled, as MPs from the Independence Party needed to regroup and to reach a conclusion on whether they support Gunnlaugsson as prime minister, one MP told EUobserver.

Reputation as nation at stake

Arni Pall Arnason, the chairman of the Social Democratic Alliance, said he is shocked at the Panama Papers revelations.

"We have to realise that the reputation of the nation is at stake and we have more responsibility to save that than to protect some people or some parties,” he said.

“It is about the greater good, not the interest of individuals. We have to show the world that fundamental ethics in politics are working in Iceland and that Iceland is not the only country in the western world where it is acceptable for politicians to have offshore companies.”

Birgitta Jonsdottir, from the opposition Pirate party, called for the prime minister to quit.

“There is great demand for that in society - he has totally lost all his trust and believability,” she said.

The Panama Papers involve more than 11.5 million documents, nearly 215,000 companies and 14,153 clients of Mossack Fonseca, according to the German newspaper Sueddeutsche Zeitung.

The paper got the information from an anoymous source early last year and shared it with some other media outlets and the International Consortium of Investigative Journalists in Washington.