Ostentatiously wealthy CEOs more likely to run problematic companies

Remind you of anyone?

A new working paper (pdf, £) from the American National Bureau of Economic Research finds that while ostentatious displays of wealth by CEOs don't make them more likely to commit crimes, the companies they run are more problematic:

We examine . . . executives’ behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") . . . We do not find a relation between executives’ frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs' reign, including the appointment of an unfrugal CFO, an increase in executives’ equity-based incentives to misreport, and a decline in measures of board monitoring intensity.

So "unfrugal" bosses run a "loose control environment" with "high probabilities of unintentional... errors". If only there were some story this week that neatly illustrated the theory:

Jubilee stewards boss led 'champagne lifestyle' while guarded by trainees

  • Trainees used as “bodyguards” while she hit the town
  • Treated as VIP while she shopped, wined and dined
  • On one trip bought Hummer car worth £30,000+

Director of Jubilee stewards firm had five companies "struck off"

The director of a security company who forced unpaid jobseekers to sleep rough before assisting at the Jubilee pageant has had a string of previous companies "struck off" by regulators after a failure to submit accounts.

Manager at Jubilee stewards firm and "illegal access to police files"

A senior manager for Close Protection UK — the firm at the centre of the Jubilee stewards scandal — was passed highly sensitive information from the police national computer, it has been claimed.

 Oh yes, that's right. Well, don't say we weren't warned.

A stretch Hummer. If you see a CEO with one, steer clear. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Nobody's bargaining chips: How EU citizens are fighting back against Theresa May

Immigration could spike after Brexit, the Home Affairs select committee warned. 

In early July, EU citizens living in Scotland received some post from the First Minister, Nicola Sturgeon. The letters stated: “The immediate status of EU nationals living in Scotland has not changed and you retain all the same rights to live and to work here. I believe those rights for the longer term should be guaranteed immediately.”

The letters were appreciated. One Polish woman living on a remote Scottish island posted on social media: “Scottish Government got me all emotional yesterday.”

In reality, though, Sturgeon does not have the power to let EU citizens stay. That rests with the UK Government. The new prime minister, Theresa May, stood out during the Tory leadership contest for her refusal to guarantee the rights of EU citizens. Instead, she told Robert Peston: “As part of the [Brexit] negotiation we will need to look at this question of people who are here in the UK from the EU.”

As Home secretary in an EU member state, May took a hard line on immigration.  As PM in Brexit Britain, she has more powers than ever. 

In theory, this kind of posturing could work. A steely May can use the spectre of mass deportations to force a hostile Spain and France to guarantee the rights of British expat retirees. Perhaps she can also batter in the now-locked door to the single market. 

But the attempt to use EU citizens as bargaining chips may backfire. The Home Affairs select committee warned that continued policy vagueness could lead to a surge in immigration – the last thing May wants. EU citizens, after all, are aware of how British immigration policy works and understand that it's easier to turn someone back at the border than deport them when they've set up roots.

The report noted: “Past experience has shown that previous attempts to tighten immigration rules have led to a spike in immigration prior to the rules coming into force.”

It recommended that if the Government wants to avoid a surge in applications, it must choose an effective cut-off date for the old rules, whether that is 23 June, the date Article 50 is triggered, or the date the UK finally leaves the EU.

Meanwhile, EU citizens, many of whom have spent decades in the UK, are pursuing tactics of their own. UK immigration forms are busy with chatter of UK-based EU citizens urging one another to "get your DCPR" - document certifying permanent residence - and other paperwork to protect their status. More than 1,000 have joined a Facebook group to discuss the impact of the referendum, with hot topics including dual nationality and petitions for a faster naturalisation process. British citizens with foreign spouses are trying to make the most of the "Surinder Singh" loophole, which allows foreign spouses to bypass usual immigration procedures if their British partner is based in another EU country. 

Jakub, a classical musician originally from Poland, is already thinking of how he can stay in the UK, where there are job opportunities for musicians. 

But he worries that although he has spent half a decade in the UK, a brief spell two years ago back in Poland may jeopardise his situation.“I feel a new fear,” he said. “I am not sure what will happen next.”