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Iceland Leader Resigns after 'Panama Papers' Release

Iceland's Prime Minister Sigmundur Gunnlaugsson speaks during a parliamentary session in Reykjavik on Monday April 4, 2016. He resigned Tuesday after documents leaked in a media investigation allegedly link him to an offshore company. (AP Photo/Brynjar Gunnarsson)
Iceland's Prime Minister Sigmundur Gunnlaugsson speaks during a parliamentary session in Reykjavik on Monday April 4, 2016. He resigned Tuesday after documents leaked in a media investigation allegedly link him to an offshore company. (AP Photo/Brynjar Gunnarsson)
Iceland Leader Resigns after 'Panama Papers' Release
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The prime minister of Iceland, Sigmunder Gunnlaugsson, resigned Tuesday. On Monday, thousands of protesters had gathered outside the Icelandic Parliament to call for his resignation.

The opposition grew after a report that he and other world political and business leaders used their power and wealth to avoid paying taxes.

The group Consortium of Investigative Journalists looked at 11 million documents belonging to Mossack Fonseca, a law firm in Panama. The firm helps companies and wealthy people set up foreign businesses to avoid paying taxes. A computer hacker got the documents from the firm’s network.

The reporters found nearly 130 current and former government leaders across the world, wealthy business owners, performers and sports stars used the Panamanian law firm to avoid paying taxes.

One report said a musician friend of Russian President Vladimir Putin had accounts with the law firm. The musician’s name is Sergei Roldugin.

The BBC said some records show Roldugin made hundreds of millions of dollars in profits. But another document shows that may not be the case. The document said the company is protecting the identity of “the ultimate beneficial owner,” the BBC reported.

It does not say if the “beneficial owner” is Putin, or someone else.

A reporter who researched the offshore accounts said only a minority are illegal.

Reporter Will Fitzgibbon said the problem is more about “what is allowed by the laws of countries where these companies are created.”

He is one of the reporters looking at the law firm’s records.

The Organization for Economic Cooperation and Development (OECD) works on stopping tax evasion.

It was surprisingly upbeat about the leaked documents.

Almost all governments are now working together to avoid tax evasion, said OECD Secretary-General Angel Gurria.

But an exception is Panama, where the Mossack Fonseca law firm is based.

“Panama is the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities,” Gurria said.

Panama’s President Juan Carlos Varela called for an investigation.

The consortium’s reporting shows people investing in offshore companies. Investments were made by the prime ministers of Iceland and Pakistan, the King of Saudi Arabia and children of the presidents of Azerbaijan, it said.

The consortium said 33 people and companies accused by the United States of illegal business opened offshore accounts with the Panamanian law firm. The charges against the 33 include doing business with Mexican drug lords, terrorist organizations and two nations under international sanctions -- North Korea and Iran.

Among those found to have offshore accounts were former top government leaders of Georgia, Iraq, Jordan, Qatar, Sudan, Abu Dhabi, and Ukraine.

In India, the Associated Press said 500 people were connected to offshore accounts. They include Indian superstars Aishwarya Rai Bachchan and Amitabh Bachchan.

India’s Finance Minister said those who did not declare illegal overseas assets by last year’s deadline would face “extremely costly” penalties.

In France, President Francois Hollande said the leaked documents are “good news” because it will help the government recover money hidden in offshore accounts.

And in Australia, officials said they are investigating more than 800 wealthy residents for possible tax evasion related to off-shore accounts.

On Tuesday, Mossack Fonseca said it obeys all laws.

“The facts are these: while we may have been the victim of a data breach, nothing in the illegally obtained cache of documents suggests we’ve done anything wrong or illegal,” it said in a statement.

I'm Caty Weaver.

Chris Hannas reported on this story for Bruce Alpert adapted this story for Learning English. Kathleen Struck was the editor.

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Words in This Story

accountn. a record of money that has been paid and money that has been received

firmn. a business organization

hackerv. a person who secretly accesses a computer or network in order to get information

starn. the most important people in a movie, play, concert or sporting event.

ultimateadj. happening or coming at the end of a process, series of events, etc.

beneficialadj. producing good or helpful results or effects

consortiumn. a group of people who agree to work together

journalists n. people who collect, write and edit news stories for newspapers, magazines, television and radio

evasionn. to avoid doing something, such as paying taxes

holdoutn. someone who is refusing to go along

offshoreadj. located in a foreign country

datan. information, often from a computer

breachn. an occurrence in which someone is able to get into a place that is guarded or is able to get secret information.

cachen. a group of things that have been hidden in a secret place