The law, the first of its kind in Europe, will enable large partnerships to protect their partners' personal assets from litigation.
Price Waterhouse was responsible for setting the law drafting process in motion, suggesting through a letter from its lawyers to the island's finance authority that it would be keen to register as a limited liability partnership (LLP) in Jersey if suitable legislation was enacted.
The letter also intimated that Ernst & Young would also leave the City and re-register in Jersey, prompting the Deputy Prime Minister, Michael Heseltine, to try to persuade the big six accountancy firms to remain in London.
The committee of inquiry approved by the States of Jersey yesterday will also investigate the speed with which the law was drafted. It appears to have been "fast tracked", taking precedence over many other laws waiting to be drawn up.
This fast tracking led to allegations of sleaze being made against a senior politician, Reg Jeune, who is head of the committee responsible for the island's law drafting programme and a consultant to the legal firm that lobbied on behalf of Price Waterhouse.
The allegations, hotly denied and never substantiated, led to the expulsion from the States of Jersey of the young backbencher who made them, Stuart Syvret, but neither the allegations nor the expulsion is to be examined by the committee of inquiry, whose terms of reference restrict it to procedural matters.
Jersey's government does not yet have the legal power to set up an independent committee of inquiry - ironically the legislation that would allow this was one of the items overtaken by the LLP law. The committee will therefore comprise States members, a move that was strongly criticised yesterday.Reuse content