Panama offshores: what's common between Ukraine and Iceland?

Author : Yuriy Panchenko

Source : 112 Ukraine

Prime Minister of Iceland supported the banks, defending their own interests; without this support the value of his assets would fall
15:00, 7 April 2016

Read the original text on Evropeiska Pravda.

World scandal connected with "Panama archives" brought the first results. April 5, Prime Minister of Iceland Sigmundur Gunnlaugsson announced about his resignation. The decisions of the President is also needed, and there is no doubt that it will be received. Especially in terms of the mass protests of citizens who demanded the resignation of the prime minister, implicated in corruption.

The resignation of a young prime minister - he headed the government in his 38 years, this is a record for democratic country - will be the first political consequence of publishing the Panamanian offshore.

However, whether this will be a precedent for other countries? This issue has become urgent for Ukraine, but not just for it. And in particular, EU countries whose policies are also featured in "Panama papers" and the requirements for financial transparency officials are extremely high.

There are no reasons to talk about massive retirement, not only in Ukraine but also in the EU. The fact that the publication of financial documents Sigmundur Gunnlaugsson showed that

offshore was just a tool to cover a far greater violation - the use of official position for personal gain.

And that's another level of violation! So, what actually happened in Iceland?

As it turned out, Icelandic politician (then - not a politician and a journalist) in 2007 bought Wintri fund, registered in Panama, for capital management of the family. The origin of the capital is completely legal - it is heritage received by his wife Anna Sigurlaug Palsdottir.

Family Foundation invested by buying debt securities of Icelandic banks.

The fundamental point - all of the above steps is not a violation.

Actions of Sigmundur Gunnlaugsson seemed to be doubtful after his "political breakthrough" in 2009.

Related: Umland: Offshore scandal before referendum in the Netherlands doesn’t benefit Ukraine

This year Sigmundur has not only became a member of the Althing - the Icelandic Parliament, but also led the Progressive Party. Following the elections, the party won 9 seats (of 63) in parliament, making Gunnlaugssoninfluential politician.

However, he has not adequately declared the 50% stake in Wintri. Soon these shares will be sold to his wife for a nominal amount - one dollar, but the situation does not change.

Perhaps this violation is comparable to a key prosecution put forward to Ukrainian President.

This is the fundamental difference between the situation in Iceland and Ukraine - concealment of information during the transition to civil service much more complicated offense. The global financial crisis has hit the Icelandic banking system. Accordingly, the authorities of the country faced the dilemma: to support the national financial system by injecting the budget or prevent its bankruptcy.

Related: Anti-Corruption Bureau won’t investigate Poroshenko’s offshore activity

Failure of the government to support banks would lead to their bankruptcy. And accordingly - to the depreciation of their debt securities, which accounted for the bulk of private fund policy.

Sigmundur Gunnlaugssonwas a staunch supporter of rescuing banks by the state. This principle he defended as an MP and then as head of government.

In principle, the financial crisis has shown that this policy is correct - such a strategy was followed by other countries affected by the crisis (including Ukraine).

However, in this case the decision caused a conflict of interest.

Prime Minister of Iceland supported the banks, defending their own interests - because without this support the value of his assets would fall

Now it does not matter whether it was correct in terms of the country's economic decision to support banks.

The seriousness of the offense is seen by the reaction of Icelanders - people in the country, occupying 13th place in terms of corruption (Ukraine is in the 130 th place), nervously responded to this fact.

Wall Street Journal

This breach is so serious that it is unlikely to end just with the resignation. Rather, the politician might face the criminal investigation, which might result into imprisonment.

Related: MP: Offshore scandal is part of hybrid war

In fairness, it should be noted that

This politician from the very beginning was in a situation where a conflict of interest was impossible to be avoided.

The traditional way of European politicians who have come from business - transfer of assets in trust (the same "blind trust") - in this case does not solve the problem.

In this situation, the only solution would be urgent sale of assets (despite the loss) or rejection of political activity.

Perhaps if the history of Europe had similar precedents Icelandic policy decision would be different. In any case, he took the risk, hoping that information on the offshore would never come in public.

Maybe, this fact would lead to mitigation of punishment for Sigmundur Gunnlaugsson.

However, the case of Icelandic premier and the fund would become a lesson for the whole Europe. It showed that normal precautions apply businessmen going into politics, do not protect against conflicts of interest.

That is why the scandal in the far northern island may have important implications for all of Europe, including Ukraine. It is possible that soon we will see tightening of requirements for the politicians and their business.

While this increase is too fantastic, but in the case of new scandals likelihood of this scenario will increase significantly.

Meanwhile the investigators promise to publish new package of compromising…

Related: Panama Papers: Ukrainian politicians involved in offshore operations

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