Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson resigned on Tuesday, making him the first ​head of state to fall in the wake of the Panama Papers scandal.

The nation’s minister of agriculture and fishing, Ingi Jóhannsson, told state broadcaster RUV that Gunnlaugsson had stepped down.

Gunnlaugsson and dozens of other world ​leaders and financial ​heavyweights have been linked to leaked documents showing tax shelters and hidden funds by way of Panama.

Jóhannsson said he will become prime minister while Gunnlaugsson would stay on as chairman of the center-right Progressive Party.

Here’s why the leak has such serious consequences: