After almost a year of poring over the 11.5 million documents which constitute the Panama Papers — the largest leak of sensitive data in history — news outlets around the world are confirming many of our worst fears about the global network of offshore tax havens. So far reputable newspapers have implicated the cronies of Russian president Vladimir Putin and the family of Chinese premier Xi Jinping in egregious tax dodging schemes. Others have exposed corrupt arrangements which dozens of public figures have used to hide vast personal wealth. One story has even prompted Swiss fraud investigators to raid the offices of the Union of European Football Associations. To date, however, no public figure has felt the discomfiting effects of the Panama leak more vividly than the former prime minister of Iceland, Sigmundur Davíð Gunnlaugsson.
The moment at which Mr Gunnlaugsson walked out of his interview with the Swedish television company SVT has now been watched by millions of viewers both on television and online. Unfortunately, only a small fraction of this audience has watched the preamble to the questions before Mr Gunnlaugsson was confronted — in Icelandic, the rest of the interview was conducted in English — with details of his deceptions. The seemingly innocuous questions with which Sven Bergman, the interviewer, opens the exchange memorably illustrate the value of a sceptical, well-informed media that is willing to ask public figures hard questions when there is credible evidence of their hypocrisy.
Before reading the following portion of the conversation, it is worth recalling that Mr Gunnlaugsson became prime minister of Iceland after promising to crack down on the predatory foreign creditors which played a key role in triggering the collapse of the economy in the wake of the 2008 global financial crisis.
Bergman: What do you personally think about people and companies that are using tax havens for hiding assets for example?
Gunnlaugsson: Well, in Iceland like in most Nordic societies — in all Nordic societies I suppose — we attach a lot of importance to everybody paying his share. Because we have a big …well society is seen as a big project that everybody needs to take part in, so when somebody is cheating the rest of society it is taken very seriously in Iceland.
Gunnlaugsson then continues: “Having faith in important institutions is very important, very valuable for society. So we want to show that we are leaving no stone unturned, people can rest assured that the government is doing what it can to look into any misconduct.” When pressed further, for details about his own involvement in any such scheme, Mr Gunnlaugsson cleverly dodges the question by saying that he had always been upfront with any declarations of an interest in such arrangements — an answer which although technically true omitted to mention a highly dubious transfer of his holdings in one of these supposedly detested foreign creditors, to his wife, just before transparency measures would have forced him to disclose the information. Sensing the trap closing, Gunnlaugsson adds that “It’s an unusual question for an Icelandic politician to get. It’s almost like being accused.” The rest of the interview, and its consequences are sufficiently well known to be a minor triumph in the history of modern journalism.
Before the unravelling of its economy, Iceland was a model of stability and predictability. It was, for example, ranked first in the UN 2008 Human Development Index. This gives some sense of what was lost when companies like those which the former prime minister was involved with called for their pound of flesh, and it goes a long way to explaining the current anger in Iceland. It also underscores the importance of Mr Bergman’s intelligence and tenacity in luring Mr Gunnlaugsson into such an embarrassing disclosure. In the five years before the financial crisis, the value of the US stock market doubled; Iceland’s stocks increased nine-fold. Real estate prices in the capital tripled and the country embarked on an orgy of cheap credit and overextended private debts that were soon to prove its undoing. Strangely enough there seems to be more anger now than there was in the immediate aftermath of the 2008 crisis. That is why five minutes of candid journalism were enough to cause the resignation of Mr Gunnlaugsson and to provoke an unprecedentedly passionate response to the fraudulent practices which revamped Iceland’s traditional economy and turned it into a giant hedge fund.
Politicians everywhere should take careful note of Gunnlaugsson’s comeuppance. For in the age of Wikileaks, public figures have become more vulnerable to unexpected transparency than ever before. They should learn to act accordingly.
