IBTimes UK

Iceland's Prime Minister Sigmundur David Gunnlaugsson resigned on Tuesday, the first high-profile casualty in the offshore finance scandal unleashed by the leak of the Panama papers.

The Panama Papers -- a heap of 11.5 million documents that detail how Panamanian law firm Mossack Fonseca helped the rich and powerful avoid tax and launder money -- showed the prime minister owned with his wife an offshore company.

The banks that had links to the offshore company owned by the prime minister's wife had collapsed during the 2008 financial crisis.

Iceland witnessed the most heated public protests in the wake of the leak of the Panama papers.

Apart from Gunnlaugson, the family of UK Prime Minister David Cameron, Pakistani Prime Minister Nawaz Sharif, Russian President Vladimir Putin and current and former Chinese leaders also figure in the leaked papers.

The files also reveal the names of Egypt's former President Hosni Mubarak, former Libyan leader Muammar Gaddafi and Syria's President Bashar al-Assad.

How was the document leaked and who did it?

Chinese leader Xi Jinping, Malaysian Prime Minister Najb Razak, former Chinese PM Li Peng, South Africa President Jacob Zuma and former UN secretary-general Kofi Annan also feature in the list through their children or close relatives.

Public fury erupted in Iceland following the leak, as Gunnlaugsson had not declared his offshore finance interests when he entered parliament. The prime minister, however, initially said he had sold his shares to his wife, denying any wrongdoing.

Protesters marched in capital Reykjavik in their thousands even as the opposition parties tabled a confidence motion in the parliament.

According to the documents leaked from Mossack Fonseca, Gunnlaugsson and wife bought the company Wintris in 2007 but did not declare this when he was elected to parliament in 2009.

The Chinese take on Panama papers

The papers showed Wintris was used to funnel millions of dollars of inherited wealth. Wintris also had sizeable investments in the bonds of the big three Icelandic banks that collapsed in 2008, triggering the global financial crisis.

In his resignation letter, Gunnlaugsson said he did not want to obstruct any further reform of the financial system by continuing as the prime minister.

However, he said he and his wife did not hide these assets from Icelandic tax authorities, adding that these "holdings in Wintris have been reported as an asset on the prime minister's wife's income tax returns since 2008 and taxes have been paid accordingly in Iceland."

He also said no po parliamentary rules on disclosure were broken. "Even the Guardian and other media covering the story have confirmed that they have not seen any evidence to suggest that the prime minister, his wife, or Wintris engaged in any actions involving tax avoidance, tax evasion, or any dishonest financial gain."

IBTimes UK