Branson
Tom Bower
The sensational critical biography of this phenomenal entrepreneur and his business practices – fully updated to cover Branson’s recent ventures.No British tycoon is more popular, few claim to be richer and none has masterminded a more recognisable brand than Richard Branson. What is behind the success of the buccaneering balloonist, the tabloids’ favourite celebrity nude, the ‘grinning jumper’ and the scourge of corporate goliaths?Helped by eyewitness accounts of more than 250 people with direct experience of Branson, Tom Bower has a uncovered a different tale to the one so eagerly promoted by Virgin’s publicists. Here is the full story of Branson: his businesses, his friendships, his ambition, his law-breaking, his drug-taking, his bullying. From the cockpit of a balloon in the clouds to the centre of Branson’s operations in his Holland Park home this book is an intimate scrutiny of exactly how Richard Branson created himself and sold himself. Tom Bower’s biography reveals Branson to be a single-minded profiteer who, while occasionally generous to others, has a fixed purpose to enhance his family’s wealth in secret off-shore trust funds. Instead of a glittering saint, Branson emerges as a devious actor, proud of plucking for his own profit the good ideas of others.From his quest to acquire the license for the National Lottery to his plans to launch space tourism with Virgin Galactic, this fully updated edition follows Branson’s enterprises and investments up to the recent, failed bid for Northern Rock.
TOM BOWER
BRANSON
Dedication (#ulink_f57e667b-29da-5faa-b1f6-3b4f98f0db6b)
To Jennifer
Contents
Cover (#uefc07459-e04f-5ca9-9c43-d44f628f3d73)
Title Page (#u2ce86186-d5cb-5744-9f97-a5a375377b5e)
Dedication (#u01036e32-eb98-5c2c-b7bc-0dcbd22f68ce)
Preface (#u806dac5f-4b64-58ce-b7c8-e7e761cb5cdc)
Preface to the 2008 edition (#u749d0396-5ed9-5c1c-a87f-63264dc22a30)
Introduction (#u5564ba23-6731-5364-8828-f4f012cdcb8f)
1 The crime (#u66c213d2-bb0a-5b6d-9639-f296be83a355)
2 The beginning (#ub5d79da8-3ec5-5803-9e45-13b09088faf5)
3 Honeymoons and divorces (#u6ac7acfa-f7c8-5eeb-bcad-64c52b16765a)
4 Frustrations (#uec038c54-32d5-59e4-8bb1-3f1a07a1c90c)
5 Dream thief (#ud589998e-333d-5e57-be31-372d97acc211)
6 The people’s champion (#ubfef9dbb-5165-5bb3-b9f1-58d1c93ed6a1)
7 Confusion and salvation (#u1b093793-564b-5cf4-b41a-ce9010ca296f)
8 Returning to the shadows (#u7b746616-87e7-5de5-ad57-c31eb4655aaf)
9 Finding enemies (#uab6352df-0989-5ca8-9d5c-5665ea186d57)
10 War and deception (#u7d9d36b6-ba80-5354-81c3-7c4dacec550c)
11 Sour music (#u36cff134-a37e-5495-be1b-33edebff4e5c)
12 Double vision (#u9b83f92b-02ed-5d34-92fc-f49981c1460d)
13 Unfortunate casualties (#u94abd099-a723-5158-bf1c-f85706c50003)
14 The underdog (#ud69e3dbc-1fee-512d-8216-a1f77b520654)
15 Another day, another deal (#u848046de-0b22-5763-b0c1-2ec89025f39f)
16 Another day, another target (#u7504b25e-7a3b-5b41-8bfd-a3ba0975c5da)
17 The cost of terrorism (#u185af49d-adb1-5a33-9929-59beb06d4dd4)
18 Sinking with dinosaurs (#u9d53ef6c-9c87-5036-aeef-5a47804aa7c8)
19 Honesty and integrity (#u5bc0b776-e1b6-5d61-8ce0-86df4a4cc662)
20 Indelible tarnish (#u71fae620-d917-59f5-b88d-e9b2139b45b9)
21 A slipping halo (#uec88d784-0b0e-5faf-95e8-0d261d199151)
22 Fissure (#u8c59d256-2227-5f91-8ada-4423d3c244a9)
23 Squeezing friends (#u9babf1b0-49c9-5d78-918f-41f9f72fa7ab)
24 ‘House of cards’ (#u634832ed-7275-5b56-b259-075221d6e71f)
25 Seeking salvation (#ufb5ddc82-39ea-55b7-a5bd-f740c882caa0)
26 An enduring suspicion (#u20db6d6f-3b5c-5274-a299-0582d4c76bf6)
Postscript – 2008 (#u86cce433-ab33-5963-8353-7d174c835272)
Sources (#u6a361768-bfe6-536e-9b09-4259bb708e66)
Index (#ua5fe4c98-471c-5c3f-a22c-952a97b3e0ed)
Acknowledgements (#u48527084-a9fd-5940-9d80-c346ceb7b974)
About the Author (#u2c244899-d40d-5020-86db-d305c8f39f30)
Other Works (#u5a50296b-7c4c-55c6-b9b8-8cc1996c3313)
Copyright (#u6336e371-8413-5e89-93a2-99a74b359d46)
About the Publisher (#u69c46aac-b032-5124-b9ed-c2bc9764edf2)
Preface (#ulink_2c9e3275-6924-5699-9f69-93a9f91f3abd)
On 16 December 1998, Sir Richard Branson was preparing to set off from Marrakesh in an attempt to become the first person to circumnavigate the world in a hot-air balloon. Over the previous days I had sought to join his party in Morocco to witness a Branson extravaganza. I was still undecided whether to write a book about Branson but expected that the experience might influence my decision. That morning, my place on Virgin’s chartered jet on behalf of a national newspaper was suddenly cancelled.
To my surprise, at lunchtime the same day, I received a brutal, defamatory and untrue letter from Branson, whom I had never met, faxed by his London office. Branson alleged that he had received ‘a number of calls over the last six weeks from various friends and relatives who have been upset by your researchers/detectives’. He claimed that on my behalf these hired hands had ‘doorstepped’ a woman and uttered ‘untrue accusations that her son is, in fact, my son’. Not surprisingly, he continued, that behaviour had ‘caused a lot of upset to all the people concerned including the real father’. Since those same people were flying to Marrakesh for the launch of the balloon, he felt it would be ‘inappropriate’ for me to be present. ‘To be perfectly honest,’ he added, ‘none of them would particularly welcome it.’ Branson concluded that after the trip was completed we could discuss ‘what exactly it is you are after’.
I was flabbergasted by Branson’s letter. I had never heard of the people he mentioned. I had not employed any detectives nor had I asked or heard of anyone doorstepping these people. In a faxed reply, I immediately protested.
Three days later, I received a response. In an unexpected call to my mobile phone, an unfamiliar voice announced, ‘Tom, I’m sorry about that.’
‘Who is that?’ I asked, puzzled.
‘It’s Richard,’ he replied.
‘Richard who?’
‘Richard Branson.’
‘But I thought you were in a balloon.’
‘I am.’
‘Where are you?’
‘Dunno,’ he replied and could be heard asking about his location. ‘Over Algeria,’ he continued and then said, ‘Look, I’m sorry. When I get back, let’s meet and talk things through.’
His bizarre behaviour persuaded me that the real Branson, his methods and his operation remained, despite all the publicity, unknown.
About ten weeks earlier, a tiny announcement in an obscure part of the Financial Times about a management resignation from Victory, Branson’s new clothing corporation, had alerted my curiosity. The senior director, the newspaper’s four-line report recorded, was departing after just five months because ‘there was no role for an executive chairman’.
Branson’s new company, I knew, was spiralling into debt. The management change could only have been caused by anxiety. Virgin’s official denials of problems fuelled my suspicions.
Hence, in January 1999, I began this book. Despite his suggestion that we should meet, I never heard from Branson personally, though I soon became aware of his attitude. Several people I approached for interviews told me that, ‘after checking’, they would prefer not to meet. I had the distinct impression that Branson or the Virgin press office was discouraging people. From other comments, it appeared that Branson was unwilling to either help or meet me.
On 22 October 1999, having made substantial progress, I nevertheless wrote to Branson asking ‘whether you would reconsider your position and agree to meet?’ On 6 December, explaining that my letter had only just arrived, he replied: ‘I have been called by a large number of people who you have interviewed about me. Most told the same story, namely that you have a fixed agenda and that no amount of persuasion or argument by them to the contrary appeared to have any influence on you. As it would therefore appear that you have pre-judged me, it would seem that little benefit or pleasure would come from our meeting.’
That was, I believed, impolite and inaccurate. By then, I had interviewed over two hundred people. Many were his sympathisers. I had deliberately sought their opinions to produce an objective book. Certainly, I posed as a devil’s advocate in testing his admirers’ opinions. The technique is reliable and is even favoured by Sir Richard himself. But there was no justification for concluding that my questions confirmed prejudice. On the contrary, I had striven to understand a man who declined my attempts to meet to hear his opinions.
In his letter of 6 December 1999, Branson did offer to answer any written questions and also requested to read the manuscript of the book. He would later express himself to be ‘very disappointed’ that I had not allowed him to vet and approve this book prior to publication.
On 11 January 2000, I submitted nine questions. On 18 February, he sent his replies. They contained one serious error, namely about the circumstances and timing of a Japanese investment in Virgin Music in 1989. The significance of Branson’s error will become apparent to the reader at the beginning of this book.
By February 2000, however, the relationship between Branson and myself had become complicated. Branson was upset by an article I had written in December 1999 in the Evening Standard about his bid for the National Lottery. He believed my comments to be defamatory.
As we exchanged letters about the article and I replied to his threat of commencing legal proceedings if I failed to publish an apology, I was reminded about his letter to the Spectator on 28 February 1998 protesting about another journalist, where he recorded, ‘I have never sued anyone to suppress criticism of myself or Virgin.’ Two years later, on 22 March 2000, that boast became redundant.
In an operation seemingly co-ordinated with The Times, a leather-clad motorcyclist served a writ issued by Branson while I was answering questions from a journalist who happened to telephone at the precise moment the writ was served. Branson’s action was considered of such importance that The Times prominently reported the writ on its front page the following day.
Of the many unusual aspects of Branson’s resort to legal action, few were more significant than his decision to sue me exclusively and not, as is customary, also the newspaper which published the article. Branson’s decision to deliberately exclude the newspaper was interpreted by my legal advisers as an attempt to undermine the publication of this book. The plan was obvious.
Confronted by the impossibility of matching Branson’s self-proclaimed fortune to finance a team of lawyers, I would have been forced to capitulate and apologise, and inevitably discredit my own book. Fortunately, Max Hastings, the Evening Standard’s editor, pledged in a prominent article to finance the defence of the piece which his newspaper had published.
At the time I wrote this book, there had been two biographies and one autobiography about Richard Branson. All three benefited from Sir Richard’s vetting and approval. I resisted that blessing. This book is offered as a balanced review of Britain’s most visible entrepreneur, an eager recipient of hero worship, trying to influence practically every aspect of British society, who, in his attempt to market a Virgin lifestyle, seeks the widest possible circle of influence.
Preface to the 2008 Edition (#ulink_7cdbe333-0197-5d7d-8c8a-1510e9ef93a2)
Sir Richard Branson did not appreciate this unauthorised biography when it was originally published in 2000. Indeed, to prevent its publication, he took exception to a critical article which I had written for the London Evening Standard about his first bid for the National Lottery, and decided to issue a writ for defamation against myself, but not against the newspaper. Some interpreted this as an attempt to put me under financial pressure to settle the case in his favour. Had it succeeded, the credibility of this biography would have been destroyed even before its publication. Eventually, without my having offered any concession or agreeing to any of his demands, Sir Richard withdrew his complaint and his case was abandoned. The legacy was twofold. The rulings by Mr Justice Eady and the Court of Appeal during the lengthy hearings of Branson vs Bower have become enshrined as a cornerstone of British libel law. Newspapers, publishers, journalists and authors are, in some circumstances, now protected in publishing critical comment so long as the author wrote in good faith.
The second legacy was the generation of enormous publicity, which propelled the success of this book. Following his recent successes in the libel court, Sir Richard had apparently anticipated another scalp. Yet over the following months many concluded that he had scored a spectacular own-goal.
Throughout the world, those interested in the Branson phenomenon were alerted to an alternative interpretation of a remarkable career. Over the past eight years I have received a steady stream of enquiries and congratulations as a result of this biography of the controversial tycoon. With some nostalgia I recall listening to BBC Radio 4’s World at One and hearing Sir Richard’s triumphant boast outside the Royal Palaces of Justice in Fleet Street after his libel victory against Guy Snowden, the chairman of Camelot, a rival bidder for the original lottery licence. ‘My mother taught me to always tell the truth,’ Branson told his excited audience.
This book was to cast an objective interpretation on his career just as his bid for the National Lottery was being reconsidered after a bitter court case. To Branson’s distress, the original decision to award him the lottery licence was overturned. Partly, he knew, this book’s revelations had turned opinion against him. Now, eight years later, Branson’s recent activities, self-promotion and solecisms, especially during his bid for the distressed bank Northern Rock, have warranted an updated version of the original book.
Over the past eight years I have occasionally been invited to write articles for newspapers about Branson. Each article automatically provokes Branson to complain about ‘multiple inaccuracies’ and demand the publication of his version of the truth. Invariably, identical facts provoke starkly different interpretations. My articles published during his bid for Northern Rock especially provoked his ire. I did not think that his controversial past justified the government’s original decision to entrust over £50 million of taxpayers’ money to the Virgin group. For whatever reason, the government finally agreed with me. The loss of Northern Rock could be as grave a blow to Branson’s fortunes as his failure to win the Lottery licence.
Sir Richard nevertheless remains one of the world’s most popular tycoons. Countless ambitious and intelligent young people, aspiring to become successful businessmen, voraciously read his autobiography and other publications in their attempts to understand the secret of his success. If they believe that his version is the Holy Grail, they are mistaken. During my own career following the lives of other tycoons including Robert Maxwell, Mohamed Fayed, Tiny Rowland, Geoffrey Robinson and Conrad Black, one common denominator has always emerged. An important element of their success has been the myths generated to conceal their aggressive journeys up the greasy pole. Similarly, once they bask in the spotlight, they share a brazen aggression to maintain their version of the ‘truth’ against those posing honest questions. However outstanding a personality Branson may be, he is weakened by his forceful attempts to silence his critics and his victims; and it is the latter, his hapless business partners, who remain frustrated by his remorseless success.
Eight years ago, Branson had reached a precipice, and his empire’s prosperity was endangered. Brilliantly, his juggling snatched victory from possible defeat. Now, once again, his fortunes are challenged. Whether he can stage another resurrection is a tantalising question. The Branson rollercoaster never stops.
Tom Bower
London, July 2008
Introduction (#ulink_8caa4dc9-adf5-5798-9ff8-e9511a307265)
In early June 1988, Ken Berry, a discreet director of the Virgin Group, arrived in Tokyo on a secret assignment. Berry, a deal-maker trusted by Richard Branson, was searching for $150 million.
Although Virgin Music was a publicly owned company, Richard Branson preferred not to reveal Berry’s mission to his British shareholders and his two non-executive directors.
Berry had arranged to meet Akira Ijichi, the president of Pony Canyon, a subsidiary of a giant Japanese media company. Their introduction at the Intercontinental Hotel in the Shinjuku district lasted two hours.
‘This meeting has got to remain secret,’ stipulated Berry. Ijichi nodded his agreement. Berry continued: ‘Virgin needs money to expand. We’re looking for $150 million.’ That was not the complete reason for Berry’s search for money.
Three months later, in September, Akira Ijichi arrived in London with his translator Moto Ariizumi, a junior executive in the company. Both stayed at the Halcyon Hotel, in Holland Park, conveniently close to Branson’s home. By then, their New York bankers had undertaken an external examination of the Virgin Group’s business and finances. Negotiations, the bankers had suggested, should start at $125 million for a 25 per cent stake.
Berry, a natural deal-maker, could sense Ijichi’s enthusiasm. The Japanese was flush with cash. During their discussions in Virgin’s offices on the Harrow Road, Berry emphasised on several occasions, ‘We don’t want any publicity. We don’t want the shareholders to know.’ The secrecy suited the Japanese: they wanted the deal to succeed.
Later, at the end of their second day in London, the two Japanese met Richard Branson for dinner at his home. Their host was charming but firm: ‘The company’s worth $600 million. Not a dollar less.’ Ijichi nodded.
The following morning, the two Japanese were welcomed by Branson on his houseboat in Little Venice. Amid the stripped pinewood floors, cane furniture and leafy plants Branson shone, in Moto Ariizumi’s opinion, as a ‘quite extraordinary but fashionable’ representative of the alternative culture.
Before their departure, Akira Ijichi agreed to pay $150 million for a 25 per cent stake although several important details remained unresolved. Branson and Berry were untroubled by the delay. In the meantime, Branson had dramatically announced his decision to privatise the Virgin Group. His unexpected decision to buy back the shares from the public had caused considerable surprise although everyone was grateful that he valued the Virgin Group at £248 million, double the stock market’s value. However, when Virgin’s shareholders met in November 1988 to formally approve Branson’s proposed privatisation, neither the shareholders nor Virgin’s two non-executive directors were aware of Berry’s continuing negotiations with the Japanese. If the shareholders had known about Pony Canyon’s agreement that the Virgin Group was worth $600 million, or £377 million – £129 million more than the sum offered to shareholders – they might have demanded that Branson buy back the shares at the same valuation.
Pony Canyon’s investment was formalised in May 1989. The public would remain unaware that the relationship had been initiated before Branson’s announcement of the privatisation.
Within two years, Virgin’s status would be utterly transformed. Branson was hailed as a genius after selling Virgin Music for £560 million or $1 billion. Since his deal with Akira Ijichi, Branson had doubled his fortune and become one of a rare breed: a legend in his own lifetime, an icon and a billionaire.
Eight years later, on 8 November 1999, Branson was invited as a British hero to deliver a Millennium Lecture at Oxford University. The Examination Room was packed with admirers, students and elderly academics. Mr Cool Britannia, the blameless face of New Britain, was introduced by Lord Butler, the former Cabinet Secretary, as ‘a lighthouse for enterprise who owns 150 companies and all of them are profitable’. Branson, dressed casually in his characteristic pullover, smiled. He knew that Butler’s praise was inaccurate. With the exception of his airline and rail franchises, all of his major companies in 1999 were trading at a loss.
Branson was rarely asked to face unpleasant contradictions. Voted Britain’s favourite boss, the best role model for parents and teenagers, and the most popular tycoon, he was widely admired by most Britons. Branson, the public believed, was at heart a charitable public servant whose companies just happened to earn handsome profits. Idealism was his business.
The opening of Branson’s sermon to his young idolaters in Oxford emphasised the irrelevance of education. Only those rejecting university would become millionaires, he preached.
His second theme foretold the future of industry: it was dead. ‘Don’t go into industry to make money,’ he urged. Manufacturers with assets would soon be worthless. ‘Focus on customers,’ was his gospel. Only brands would be valuable in the future. ‘I believe there’s no limit to what a brand can do,’ he enthused. Expertise was also worthless: ‘If you can run one business, you can run any business.’ He personally had known little about the music and airline businesses, the sources of his two fortunes, which naturally led to his third article of faith urged on his audience: ‘get the right people around you and just incentivise them’. His secrets of success were bold and liberating to an audience unaware of Branson’s increasing inability to attract and retain the brightest young brains.
His admirers in the audience sought from Branson an inspiring vision for his personal and Britain’s future prosperity. ‘What,’ one asked, ‘is your major ambition in the new millennium?’ The hero paused. Bill Gates would have anticipated the next generation of developments of the computer and the internet. Rupert Murdoch, whom Branson once aspired to overtake, would have expounded the future of global communication. But Branson avoided such complicated speculations. The icon’s face assumed the countenance of destiny as he intoned his reply: ‘To run the national lottery.’ Branson gazed thoughtfully across the hundreds of placid faces, unaware of the frisson of disappointment which enveloped his audience.
Aspiring tycoons in the hall, regarding Branson as a model for ‘shaking up industries and offering a better product’, were fed a simplistic, reductive homily from Britain’s greatest entrepreneur. To create real wealth, they were urged by the acceptable face of capitalism, rely on a label. Ignore education, ignore expertise and ignore technology. In a citadel of academic excellence, Branson had preached anti-knowledge. The new generation, he urged, should believe that sustainable businesses could be created without ‘a great business plan or strategy. Just instinct.’
The generational division among those inside the Examination Hall was blatantly evident. To those dozens of students, eager to shake their hero’s hand, proffering scraps of paper for his autograph, Branson’s self-generated image of a buccaneer bestriding his own world was laudable. They admired the champion of the underdog who advertised himself as a product. He was the admirable, fun-loving millionaire.
The older, more sceptical members of the audience, as they slipped out of the hall for a glass of sherry in the Master’s lodgings, mentioned a fallacy. Unlike Bill Gates, they murmured, Branson’s fortune was forged on old ideas that ignored innovation. The result was, they sniffed, self-evident. While Bill Gates’s fortune was valued at $100 billion and constantly rising, Richard Branson’s wealth was a disputed $3 billion and possibly falling.
Three days later, on 11 November 1999, in Leicester Square, London, Branson was sitting on a bright red sofa in a huge Perspex container fixed on a trailer. Six naked young girls were grouped around the master of self-promotion. His latest extension of the brand was Virgin Mobile, a belated bid to join the New Economy developed and dominated for some years by Vodafone, Cellnet and others. Branson never paused to contemplate the relevance of six naked girls clutching mobile telephones to herald his entry into the New Age. Nor was he concerned that his latest marketing stunt technically broke the law. Securing free advertising in the following day’s tabloid newspapers was his sole ambition. ‘Public relations is an important part of running our business,’ Branson once explained. ‘About 20 to 25 per cent of my time is spent on PR.’ No one sold Branson like Branson. His business skills included the publicity skills of a salesman unafraid to yell for attention in a market even if, as he had confided to his Oxford admirers, he lacked any presence or expertise.
Seeing a policeman striding across Leicester Square, Branson abruptly abandoned the naked girls and scurried to a waiting taxi. While the girls were ordered to dress, Branson had time to reflect that it was just another ordinary day, promoting himself and his ambitions.
‘We intend to sell 100,000 telephones by Christmas,’ he pledged that morning, emphasising Virgin’s core values of quality and fun. ‘And one million by Christmas next year.’ By January 2000, just over 100,000 telephones had indeed been sold, although the figure included 20,000 offered at a discount to Virgin employees and their families, but four weeks later Virgin’s telephone network temporarily collapsed. The Virgin brand, promoted by himself as a ‘global business’, was limping. Anti-knowledge, balanced on the edge of a financial precipice, was an uncertain guarantee for success.
Later on the same day as the launch of the Virgin Mobile, Branson was swigging a bottle of beer at a good humoured promotion party for one thousand young men and women advertised as ‘Very Sexy. Very Decadent.’ A constant flow of admirers sought a few minutes in his company and the opportunity for a photograph. All were attracted by his courage, his blokeishness and his social conscience. The ‘daredevil’s’ oft repeated ambition to ‘make the world a better place’ appealed to those attracted by a pleasant, friendly and unthreatening superstar. Calmly, he stood beside his wife, Joan, personifying the Virgin Dream. At 10.15 p.m., his wife signalled their departure. Outside, a car waited to drive the Bransons to their two adjoining houses in Holland Park worth £10 million. One house, after a recent fire, was for sale. A portent, some unkind observers carped, of the fate of a man who, after thirty years within the warm embrace of tabloid headlines, had become unexpectedly imperilled.
Opportunism, luck, energy and genius created Sir Richard Branson, a man of the people, a man of conscience and a courageous adventurer. The same qualities also produced a man of controversy and cunning. Wilfully and repeatedly thrusting himself into the spotlight, the hero seeks public approval but complains about criticism. Proud to be a tycoon of our time, his appetite for profit and power created a conglomerate which he assumed empowered him to write his epitaph in his own lifetime. Instead, his future is jeopardised by his weaknesses. Almost forty years of self-glorification have taken a toll of a man seeking everlasting fame while occupying the shadows. The self-promoting blueprint for Britain’s economic regeneration offers a tawdry example of mixed blessings and unhelpful lessons. Those prying beyond his veil of secrecy find an entrepreneur unexpectedly contemplating an uncertain future. In a juggler’s career, a moment of reckoning periodically re-emerges. There was one in 2000, and another could be glimpsed on the horizon in 2008.
1 The crime (#ulink_581de370-9269-51d3-bf34-c140bd5748c0)
Back in 1969, money was a singular obsession although mention of the subject was impolite. The floppy haired, nineteen-year-old youth wearing black rimmed glasses held together by a plaster, was hunting for profitable ideas.
‘What can we do?’ groaned Richard Branson. Three teenagers sat in the smoke-filled basement of a shabby house in Bayswater, London. ‘We need some bread.’ His audience drew hard on their cigarettes. John Varnom and Tony Mellor regarded the younger man as a friend, host and employer. Living with Branson, a benign sovereign, was an enjoyable self-indulgence.
‘What about records?’ suggested Varnom desultorily. The twenty-four-year-old-writer and publicist was Branson’s Rasputin and jester.
‘We could try mail order,’ sighed Mellor, a hippie with a passion for music.
Branson jerked excitedly, his imagination racing. Mail order records: the idea would fill a gap in the market, a trader’s dream. There was also an angle. ‘They’ve dropped Resale Price Maintenance,’ he said.
‘What’s that?’ asked Mellor admiringly.
‘The record companies can’t fix the shops’ prices any more,’ gurgled Branson. ‘Costs nothing to put an ad in a newspaper,’ he continued, ‘and we could sell them cheaper than the shops.’
The Beatles, the Rolling Stones and the Kinks were just a blur of noise to Branson. Tone deaf and knowing little about music, he rarely listened to records. He was a doer, not a person to wait and listen. But selling cut-price records sounded as exquisite as Cliff Richard singing ‘Bachelor Boy’, his favourite.
The idea had been sequestrated. A new business shimmered. ‘We’ll put an ad in Student,’ he announced. His beloved magazine, tottering towards extinction, might beget his next enterprise. Readers of Student would be offered any rock record at 10 or 15 per cent less than the shop price.
‘What shall we call the company?’ he asked.
Varnom and Mellor brainstormed. Names tumbled out. ‘Slipped Disc’ was suggested and abandoned. Although he was silent, Branson’s demeanour implored his employees to produce more ideas. Varnom, lustfully contemplating the stream of nubile former public school girls who regularly passed through Branson’s squat, departing somewhat wiser about the world thanks to his attentions, laughed. ‘Virgin,’ he chortled. ‘Virgin,’ he repeated, delighted by his idea.
‘That’s it,’ gushed Branson, loving the combination of sex and subversion. ‘Great.’ The new name eventually inherited a new pedigree. ‘I thought of the name Virgin,’ explained Branson twenty-five years later, ‘while sitting in the crypt of a church surrounded by two coffins.’
Virgin Records, a mail order supplier of pop, started trading in April 1970. The advertisement in the last edition of Student magazine produced an encouraging trickle of orders with cash attached. Branson sensed the opportunity. Virgin bought whole-page advertisements in Melody Maker and other music newspapers. Dramatically, the number of orders exploded. Virgin, buzzed the bush telegraph, was cool. Supplying records at discount prices, breaking the record manufacturers’ rigid price cartel, was heroic; and selling bootleg records bought from ‘Jeff in the East End’ for 50 pence to punters for £3 was profitable. ‘I believe in competition,’ enthused the wannabe tycoon, ‘and I believe in helping the young.’ Branson deftly borrowed the language of the Swinging Sixties and student revolution to establish his principal sales pitch. His business was to be cheaper and therefore a service to mankind. Branson was emphatic about his motives: ‘There is nothing phoney about my idealism,’ he would later insist. ‘I had a genuine belief that I should be using my skills and the resources at my disposal to “do good”.’
Doing well by doing good was a beguiling explanation except to the four men isolated in a locked room in St Mary’s Hospital, Paddington. From there they scrutinised Virgin’s new premises in South Wharf Road through binoculars. ‘Dead as a dormouse,’ cursed Mike Knox, the senior investigator for Customs and Excise.
In February 1971, ten months after Virgin advertised cut-price records, Mike Knox knew that Richard Branson’s expanding enterprise was being financed by a crude fraud. Posing as an unassuming government tax clerk, Knox had invited himself into Virgin’s new warehouse. The introduction aroused no suspicion. In that era, it was normal for Her Majesty’s Customs and Excise to provide a clerk every three months to calculate each company’s purchase tax, a 33 per cent levy on all sales. Sitting in Branson’s congested first floor office, watching attractive girls flitting around their unsuspecting tousle-haired employer, Knox glanced through Branson’s accounts, especially those of Caroline Exports trading as an unregistered company. Branson, the director, was too excited by that day’s postbag containing hundreds of cheques, postal orders and cash to care for the grey man as he sifted through the PT 999s, Caroline’s purchase tax returns. His new business, Branson often chortled, was amazing. Punters’ cash was being banked for records he still did not possess. Imported American records, bought for pennies, were sold for pounds. ‘Cash flow,’ he enthused, ‘is great.’ But his aspirations were not financed entirely by conventional means.
The genesis of his fraud, Branson would say, was accidental. Soon after Virgin Records’ birth, Branson himself had driven a van to Dover with a consignment of records for export. After a Customs officer had placed the official stamp on a PT 999 confirming that the records had been exported and were exempt from purchase tax, Branson had boarded the ferry for Calais. Unexpectedly, the sailing was cancelled because the French port was closed by a strike. Branson had driven off the ferry and, unhindered by officials, returned towards London. During the drive, he realised that the records could now be sold through his mail order company to British customers without adding purchase tax. The extra money would belong to him. Two tax agencies could be deceived. Customs would not receive the 33 per cent purchase tax and the Inland Revenue would be denied the tax on his additional profits.
On his return to Paddington, Branson had confided his discovery to his inner cabal of six. ‘The Customs office is not near the port,’ he explained, ‘so the forms get stamped but they don’t have any barriers or checks to see if you’ve gone on to the ferry or driven back to London.’ His audience was transfixed.
Branson’s conscience was untroubled by the dishonesty. Gambling against discovery was exciting. A pattern had been established that he would later describe with evident pride: ‘I have always thought rules were there to be broken.’ He had cheated in school examinations; he had repeatedly deceived the Church Commissioners, the landlord of his home in Albion Street, by disguising its use as an office; he had defrauded the Post Office by using the telephone without paying; now he was selling bootleg records; and he had just been convicted for poaching game in a magistrates court.
The recent conviction for poaching had been particularly revelatory. Branson had driven in his white Mini with Mundy Ellis, his bubbly, blonde girlfriend, to stay with Caroline and Rob Gold, a music publisher, in a rented cottage in Suffolk.
Branson liked the Golds and the sentiment was reciprocated. The Golds lived on a houseboat in Little Venice and Caroline had become Branson’s paid assistant, although she had become wary after Branson had unsuccessfully invited her father, Frank Gold, a shipping forwarder who owned warehouses, to become involved in his purchase tax operation. Nevertheless, the Golds felt sympathy for the young man whose twin laments were, ‘I didn’t get enough love from my mother’ and ‘How can I make money?’
Rob Gold had told Branson there was ‘some shooting in a public wood’ and Branson had brought two shotguns, an inheritance from his grandfather, Sir George Branson. Gold had never shot before but nevertheless took one of the guns as they walked in the countryside with the women trailing behind. Soon after the two started shooting, they heard yells. A gamekeeper was running from one direction and the landowner from another. Branson realised immediately that they were trespassing and ran off with the women. Gold fell and was caught. Both were charged with poaching.
Two months later Branson and Gold returned to Suffolk by train to attend the Sudbury magistrates court. During the entire journey, Branson carefully read The Financial Times.
At the hearing, Rob Gold noticed the clerk approach Branson. ‘I understand your father’s a magistrate?’ asked the clerk, confirming information which Branson had earlier supplied. ‘Yes,’ nodded Branson gravely. Seconds later, the clerk was whispering in the ear of the Suffolk magistrate. Watching with awe, Gold understood the social chasm separating himself from Branson, and the essence of his friend’s fearlessness. The fine was only £10 and the confiscation of the guns. Branson smiled. This nonchalance was confusing for those unaware that behind the awkward reticence was an acutely self-confident young man, a master of exerting influence.
‘Do you realise who you are dealing with?’ Branson challenged a police officer when, shortly after, he was stopped speeding in Glasgow. A growing sense of invulnerability fed his appetite for recklessness, developed as a boy at Stowe, the public school where he was educated. Lacking any signs of self-doubt or fear of retribution, Branson showed remarkable ability to speedily bypass the truth. For him, the plot to defraud Customs and Excise was just another whacky prank.
‘It’s a great wheeze,’ he buzzed. Cheating Customs, he urged his employees, would be effortless. For a child from Surrey’s stockbroker belt evading taxes imposed by the confiscatory socialist government was an act of principled defiance. The Establishment’s rebels were sure that rules could be ignored, bent or broken. Doubters were swayed by Branson’s enthusiasm for the role of Robin Hood. Helping impoverished students hear their music despite the ogreish government’s taxation, he urged, would constitute a blow for justice. None of Branson’s merry group had ever committed a serious crime but all were mesmerised by Branson’s persuasiveness that his interests and theirs were identical, even if the scheme was illegal. Chris Stylianou, the Charterhouse-educated manager of Caroline Exports, was wary until others nodded agreement. Branson’s genius was to disguise his impatience for fame and fortune by championing the struggle of down-trodden youth.
The white Transit van was driven regularly to Dover. The documents for the export of records were proffered and, after securing the official stamp on the PT 999 form from the Customs officer, driven unseen back to London. The van rarely transported the records specified on the consignment. Instead, a batch of worthless recordings of the Band of the Irish Guards was loaded. Over a period of months, Virgin’s mail-order business attracted gratitude from a growing army of music fans.
By the time Mike Knox reported to his superiors – ‘Virgin looks dicey. It’s worth an operation’ – about twenty young employees, enjoying the permanent party atmosphere encouraged by Branson, were dispatching the ‘export’ records by post from the warehouse in Paddington. Among the thousands of customers were Mike Knox and Dick Brown, his deputy in the Customs investigation team, ordering records as normal customers from their home addresses.
Their investigation had started after a visit to EMI’s head of security in Hayes, west London. Knox had confessed his bewilderment to the record producer’s head of security about Branson’s ability to sell his records cheaper than the shops. The former policeman employed by EMI admitted his own suspicions that ‘Something’s fishy’.
‘I’ll look at his PT 999s,’ thought Knox.
Reading through the thick wodge of Customs certificates accumulated by Branson over the previous ten months, Knox noticed the official stamps at Dover testifying to his regular export of records in batches of at least 10,000 to every country in Western Europe and to the United States. Knox was particularly intrigued by two certificates. On both occasions Branson had, according to the certificate, exported 30,000 records in a Land Rover. Amid the clatter of Branson’s office, no one heard the staid ‘tax clerk’ murmur to himself, ‘You can’t load 30,000 records on to a Land Rover.’ Shortly afterwards, a surveillance unit had been established in St Mary’s Hospital, overlooking Branson’s offices.
Every night at 3 a.m. over the following three weeks, Dick Brown arrived at EMI’s headquarters. Neatly stacked in the record producer’s loading bay were boxes marked for delivery to Virgin, invariably with a note on the invoice: ‘For export’. Regularly, Branson was ordering two hundred copies of ‘She’s a Lady’, Tom Jones’s hit, apparently for export to Switzerland. To monitor the fate of those records, Brown marked on each record a letter of the alphabet with an ultra violet pen, invisible to the naked eye. ‘A’ was given for the first day and consecutive letters were marked on each successive day’s consignment. The copy of ‘She’s a Lady’ delivered by post to Brown’s home from Virgin bore the ultra violet mark.
At the end of the three weeks’ surveillance, Knox gazed down at the building forlornly. No Land Rover had appeared at the warehouse and no large consignment had been loaded on to the white Transit. The report sheets were blank. The only unusual activity was Branson’s departure early that morning by taxi and his return by taxi late in the afternoon. ‘I’ll phone Dover,’ groaned Knox. Unknown to Knox, Branson had refined the mechanics of his fraud. To maximise his profits, he had searched for ways to save costs. Since the frequent passage through Dover had not aroused any suspicion, Branson had avoided the expense of sending the Transit to Dover by dispatching someone to the port by train. Knox’s telephone call to Dover exposed the refinement. That same morning, Branson had presented in Dover an export certificate for 10,000 records. ‘Cheeky chappy,’ smiled the Customs investigator. ‘He went cheap, on an away-day.’
Knox decided to raid the premises after Branson submitted his next purchase tax returns. After a three-month investigation, his schedule, covering dozens of pages, listed ‘hundreds of phoney exports’ which had profited Branson the equivalent of £370,000 in the year 2000. ‘It’s a big case,’ he concluded.
An anonymous telephone call the night before the raid sparked frantic activity inside Virgin’s warehouse. The caller was a disgruntled Customs officer, jealous of Knox, warning about the plan. Before daybreak, Branson and two co-conspirators had transferred the ‘export’ records from the warehouse to the new Virgin shop in Oxford Street. Virgin’s employees arrived the following morning unaware of any tension. Even John Varnom, a member of the ‘family’, would remain oblivious about the tip-off and the night-time transfer. Branson felt no compunction to say more than necessary. He already understood the importance of secrecy in creating successful businesses.
Cool nonchalance greeted the team of determined Customs investigators waving a search warrant at 10 o’clock in the morning. The ‘gangly, laid-back, long-haired lad’ with a mop of fair hair, affecting the nasal tone of Mick Jagger to suffocate his natural upper-class twang, betrayed no hint of concern. He was even, Mike Knox reflected, rather welcoming.
Act One of the performance was perfect. ‘It’s all legal,’ Branson smiled benignly, showing the Customs forms stamped at Dover. ‘You won’t find any export records here.’ The same bluff used successfully at the magistrates court to minimise the prosecution for poaching, he hoped, could disorientate the investigators.
‘We personally bought these records from your mail order company,’ snapped Dick Brown waving his copy of ‘She’s a Lady’. ‘They were marked for export. Here’s the paperwork. And here’s your signature on the PT 999. There’s no doubt. Now where’s the stock?’
‘Oh fuck.’ Branson was stunned. Public humiliation provoked tears. Discovery was not part of the plot. Tears dripped from his cheek on to his blue jumper. For once, his weakness could not be turned into a virtue. The performance was terminated. ‘We hid them in Oxford Street.’ A gulp. ‘Can I phone my mother?’
‘There’s a bit of a problem,’ choked Branson on the line to Shamley Green, deep in the Surrey Jag and gin belt.
‘He’s as good as gold,’ decided Brown as he listened to Ricky explain his plight on the telephone. Their catch was a vulnerable, public schoolboy, ‘not the usual toe-rag but an entrepreneur, and a good bloke’.
‘Look upstairs,’ ordered Brown over the telephone to the team searching through the stock in Oxford Street. Within the hour, Branson was shown the ultra violet markings on the records brought from the West End. ‘If only I’d known,’ he spluttered, secretly angry that the records had not been destroyed the previous night.
‘You’re under arrest,’ announced Brown. ‘We’d like you to come with us now to Dover.’
‘Oh God,’ blabbed Branson, suddenly aware of his plight. But his good humour soon revived. Searching through his desk, an officer had pulled out a half empty packet of condoms. Glancing at all the pretty young girls in the building, the officer sighed. These were not villains, he realised, but sex-obsessed hippies living on a different planet from Customs officers. His prisoner smiled. The ‘scene’ – sex, music and friendship – mitigated the gravity of his crime. His charm undermined any remaining barriers.
‘I’m starting out in my career,’ explained Branson, as the Customs official’s car crossed the River Thames heading towards the Channel port. ‘I’ve just opened one shop and I’m building a recording studio in a manor I’ve bought in Oxfordshire.’
‘You should open shops in Bristol and Birmingham,’ suggested Brown, warming to the young man. ‘Paying your staff such low wages, you’ll be a millionaire one day.’
‘Do you think so, Dick?’ replied Branson, breaking down another barrier. ‘My bankers are the problem. We’re always short of cash. I need a couple of guys like you in suits to work for me.’ The charm was natural.
The joviality continued during an unscheduled lunch stop in a pub. Distracted by Branson’s manner, Brown allowed his prisoner to drink alcohol, a breach of regulations. An unusually warm relationship had developed despite the Customs officer’s realisation of the fundamental dishonesty of Branson’s financial accounts. Not only were the extra profits which Virgin had earned on the ‘export’ records concealed, but their American imports were deliberately undervalued to diminish import duties.
‘I just want to protect my business,’ soothed Branson, glossing over the dishonesty. ‘I’m just starting. How can I put all this right? We’re all human beings.’ In that strange British guise, his disarming performance and his social confidence bestowed a veneer of decency.
The officers’ procedure could not be changed. Fearful that a hippie would disappear, they had decided upon an arrest rather than a summons. Once in Dover, there was no alternative but to place Branson in jail overnight before his appearance in court the following morning.
At daybreak, the lobbying of Brown and Knox was resumed by Eve, Branson’s forty-eight-year-old mother, and the dominant influence in his life. Sitting with Ted, her husband, introduced as a barrister and stipendiary magistrate, Eve Branson glanced at her dishevelled and depressed son. ‘Now officers,’ cooed the former air hostess, ‘how can we sort this out?’ Eve’s dignity and class confirmed Knox’s and Brown’s opinion that this was an exceptional case. ‘We’d like to arrange bail,’ said Eve, ‘and settle this amicably. He’s only twenty years old. He’s been very foolish and it’s unnecessary that his life should be ruined by a criminal conviction. He’ll repay the taxes and any fine but we’d prefer to keep it out of the court.’ The absence of an aggressive solicitor and the impressive honesty of the Branson family persuaded the officers to consider a deal. ‘Have you got the money for bail?’ asked Brown.
‘No,’ replied Eve, ‘but we’ll put up our house, our only home.’
The normally cynical officers were impressed. ‘And we’ll guarantee the repayment of the taxes and the fine,’ continued Eve, ‘even if we have to sell our home.’ After a suitable pause, she added, alarmed that twenty years of loving ambition were on the verge of disintegration, ‘He’s very young. He should be given a second chance.’
Knox and Brown agreed. This was a genuine, one-off error. There would be a brief court appearance to set bail at £30,000 secured on the family home. The young Branson would be released without further prosecution. ‘No publicity?’ urged Eve.
‘Absolutely,’ promised Knox. Customs were always discreet.
In the following weeks, meeting Branson on the Duende, his houseboat just purchased for £200 and moored in Little Venice, Brown set out the terms of the settlement proposed by his superiors. The investigations had by then revealed the sophisticated nature of Branson’s fraud. Contacting the customers across Europe and America listed on Branson’s export certificates, the investigators discovered that none of those named had ever bought records from Caroline. ‘The scam’s enormous,’ a Customs official declared.
‘You owe us £40,000 in back taxes and we are charging a £20,000 fine,’ announced Brown. Just after Branson’s twenty-first birthday, he owed the modern equivalent of over £500,000.
‘I can’t afford that,’ said Branson. ‘Can I pay by instalments?’ After negotiations interrupted by tea, it was agreed that Branson would pay £15,000 immediately and £45,000 in monthly payments of £3,000.
His crime was too well-known to be concealed, so over the years Branson has presented his illegality as an early watershed in life. The sackcloth and ashes version is: ‘One night in jail teaches you that sleeping well at night is the only thing that really matters. Every single decision since has been made completely by the book.’ That interpretation, however, belied one of his life’s principal credos: ‘I have always enjoyed breaking the rules.’ His prescient headmaster at Stowe had noted that trait, predicting on the eve of the seventeen-year-old’s premature departure from school that Branson would either become a millionaire or go to prison. By twenty-one, he had achieved the latter, albeit briefly. ‘He appears modest,’ Mike Knox would reflect at the end of his investigation, ‘with a disarming personality offering to help everybody. But he’s got this ruthless ambition.’
Once Branson had begun to court celebrity as a millionaire tycoon, he progressively introduced distortions to minimise the gravity of the fraud. In 1984, he mentioned that he was ‘only eighteen’ when the embarrassment occurred rather than nearly twenty-one. The following year he described his ‘eighteen-year-old fraud’ as occurring ‘only three times’ before his arrest at the port on the third occasion. In 1986, he told the Sun that he escaped imprisonment, ‘by convincing the court that he didn’t know it was illegal’. Two years later, in 1988, he chose another variation for Mick Brown, his first biographer, recounting that he personally drove four times through the Customs post at Dover before he was caught. His version in 1992 conjured a sophisticated tale about shipping worthless titles and empty boxes to the Continent for ‘one month’ after discovering himself to be penniless after investing in his mail order business, his shops and the new manor recording studio in Oxfordshire. In truth, the shops and the recording studio were partly financed by the fraud. ‘I had a pile of debt and no real money,’ he truthfully admitted. By 1994, as the owner of a famous international airline, Branson excused himself from the whole enterprise saying: ‘I had not realised the rules.’ In his autobiography in 1998, Branson offered another explanation: there were only three trips, he wrote, starting in spring 1971 to cover debts of £35,000 and ‘big operators’ were far worse. All those variations were a smokescreen. He had simply played the game and, unforgivably, he had lost.
Over Sunday lunch at the manor with his staff after his arrest, Branson expounded his credo. ‘We weren’t doing any harm,’ he said. ‘No one was hurt. Customs is only an organisation. If organisations get robbed, it’s not a problem because they’ve got lots of money. Too much money, which should be handed around.’ Listening to his own espousal of the morality of the righteous underdog, Branson warmed to his theme. Hitting the big boys was justifiable because they were pirates and doing harm to the small people like Virgin. Lying was virtuous if a ‘non-profit’ group helping society was the beneficiary. His cabal did not disapprove. Deceit, they agreed, was acceptable in business. His forgery of a letter and an invoice from a non-existent American company to suggest that he was an innocent victim in the sale of bootleg records defied contradiction. Surrounded by employees who approved his dishonesty, Branson was classed as a rebel thumbing his nose at the Establishment. Taking money from the government, they agreed with Branson, was a lark and, considering all the rogues in the City, lying was not only acceptable but virtuous for the ‘victim’ and the ‘champion of youth’.
2 The beginning (#ulink_c508dbc9-7db4-50cd-8ea4-0595dc486470)
The first ruse was simple and saved money. ‘Operator,’ berated the grating upper class voice, ‘I’ve put money into this pay phone and it hasn’t worked.’
‘Sorry, sir, I’ll connect you.’
The second ruse, spoken from the telephone box, was more sophisticated. ‘I’m Richard Branson. I’m eighteen and I run a magazine called Student that’s doing something really useful for young people.’ The caller was sixteen and Student was no more than an idea.
The third ruse was crude. The impatient bearer of six mediocre ‘O’ level passes, who had cheated in exams by secreting a crib sheet in the palm of his left hand, proposed that his father should write to Stowe’s headmaster explaining that his son wanted to prematurely leave the school to study law at university and enter politics. In fact, unwilling to study either for ‘A’ levels or a university degree, Richard Branson wanted to launch Student magazine. Ted Branson refused to lie but reluctantly agreed his son should leave the school. Thirty years later, journalists would, after interviewing the tycoon, mistakenly believe that the teenager had left Stowe because ‘Student magazine was successful’. The youth’s precocious confidence to make his fortune without an education owed much to an unusually dominant mother’s extraordinary gestures.
‘Find your own way home, Ricky,’ ordered Eve Branson as she pushed her four-year-old son from the car into the Surrey countryside. The mother’s lovingly reckless bravado was intended to ensure that her only son should not emulate her husband’s lacklustre career. Success as a barrister had eluded Ted Branson, despite his father’s bequest of Halsbury’s Laws of England. Eve willed her adored son to surpass Ted’s modest achievements. Maintaining the appearance of Establishment gentility was important. Dressing up and placing herself as the centre of attraction at endless social parties, Eve Branson distracted neighbours from the family’s dependence on second-hand clothes for her children and her sale of wooden tissue boxes to supplement the family’s limited finances. An extrovert and attention-seeker, she taught her son the power of presentation and self-publicity, and gave him the infallibility of fearless independence.
Eve Branson aspired to rekindle the fortunes of her family, the Flindts, one hundred and fifty years earlier. Gustavus Flindt had arrived in Britain from Hamburg to work as a broker on the Baltic Exchange. Julius Flindt, one of his ten children, in turn also became a broker, as did one of Julius’s sons and a grandson, until Eve’s father broke the tradition after fighting in the First World War against his forefather’s kinsmen. In Richard Branson’s parents’ marriage, the Flindts’ trading tradition was blended with the Establishment bias of the Bransons, educated at Bedford Grammar School and in medicine or law at Cambridge. Ted Branson’s father, the Right Honourable Sir George Branson, a High Court judge, had been appointed a Privy Councillor in 1940. His grandfather and great-grandfather had been a publisher and a lawyer in India. Eve had every hope that the combination would guarantee upper-middle class Establishment respectability. Her ambitions for her only son were loftier still.
‘Ricky’s going to be prime minister one day,’ she frequently glowed. ‘Nothing but the top,’ the aspiring parent would assert, ‘is good enough.’ Neighbours recall her position under a high tree in the centre of Shamley Green which had attracted stern warnings by all the other parents, forbidding their children to climb beyond a low height. ‘Right to the top,’ urged Eve Branson as her son perilously balanced on the highest branches. ‘Higher,’ shouted the woman famous for hyperactively urging, ‘Do something, Ricky.’ Eve Branson’s emotional exhortations created an obedient son convinced he could do no wrong and that self-doubt was a sin. ‘Shyness is very selfish,’ the mother regularly admonished. ‘It means you are only thinking of yourself.’ Her son, born on 18 July 1950, was not shy but he was awkward and inarticulate. Unable to express himself, he disguised his limitations with nervous gestures and stunts to attract attention, usefully camouflaging his lust for fame and fortune. Earning money, an unmentioned topic in the polite society of the early sixties, became his dominant preoccupation. He disdained authority and intellectuals. So long as his adoring mother approved of his behaviour, he was impervious to criticism.
‘Books, no way,’ Branson laughed, reflecting the family’s lack of interest in culture and education. ‘I don’t listen to music either.’ Ricky was a doer, not an observer excited by intellectual stimulation. Full of his mother’s forceful prediction of his destiny, he naturally dreamed of glory. ‘Bringing him up was rather like riding a thoroughbred horse,’ chuffed Eve Branson. ‘He needed guiding but you were afraid to pull the reins too hard in case you stamped out the adventure and wildness.’
Some of her son’s contemporaries at Stowe were intolerant of his exceptional qualities. The most critical lampooned ‘Greasy Branson’ as a self-centred big-head suffering oily, pimply skin with a smarmy manner towards teachers. But the majority accurately surmised that Branson’s diffident charm was exceptional. Since Stowe was a second-rate public school, it was not difficult to shine, especially after the sixteen-year-old boasted about his introduction to a prostitute by his father. Thirty years later, the former schoolboys could still recall Branson’s vivid account of a trip to Soho and the introduction to a woman paid by his father to remove the stigma of virginity. Sex, in every sense, was his obsession.
He suffered only two genuine handicaps: a knee injury which destroyed his enjoyment of sport, and slight dyslexia. Despite those impediments and his rejection of books, Branson surprisingly won the school’s Gavin Maxwell prize for writing the best English essay. Gavin Young, a well-known newspaper journalist, personally awarded the prize to Branson. Over lunch, Branson listened to Young’s description of a journalist’s glamorous lifestyle: a good income earned by interviewing celebrities in exotic locations. It was an attractive cocktail which matched his preoccupations: money, sex and fame. Branson was reminded of his discussions with a school friend about Student, their proposed magazine for sixth formers, similar to two new magazines, International Time and Oz. While others only talked about the idea, Branson’s energetic self-confidence could make Student a reality.
Daily, the schoolboy dispatched dozens of letters appealing for interviews to celebrities culled from Who’s Who. In the late 1960s, youth was tolerated and even lauded by the famous who were intrigued by the turbulence of their children’s generation. Unprotected by a screen of press officers, their replies were surprisingly positive.
To the bewildered admiration of his contemporaries, Branson regularly carried into the classroom stacks of correspondence. He regaled his audience with the words addressed to him by writers, musicians, actors and politicians including Harold Wilson, the Prime Minister, and Ted Heath, the leader of the Conservatives. His success encouraged volunteers to write appeals for advertising and cajoling pleas to the famous for free articles. Richard Branson’s gift was his genial enthusiasm which disarmed those whom he approached for help. Even sceptics were seduced to espouse his ambition after listening to his bold account of a return to Soho to interview prostitutes for a sensational article in the new magazine. Soon, for the unusually worldly seventeen-year-old, Stowe had become insufferably parochial.
In 1967, Branson left the school and settled in the squalid basement of a friend’s house in Connaught Square, near Hyde Park, a desirable address in London, where, chanting the fashionable lure of ‘doing something really useful for young people’, he strove to complete the first edition of Student.
In an era when public schoolboys, even from Stowe, were still regarded as members of a rather staid Establishment, Branson was careful to present himself as a benign hybrid: part hippie and part charitable businessman. Controlling his awkward stutter when necessary, his telephone manner concealed his age to recruit a respected magazine designer for no fee; to secure paid advertising from major corporations; and to negotiate a printing contract for 50,000 copies of the magazine. In a testament to his style, during his sales patter, he would inaccurately boast of selling 100,000 copies but, if challenged, would switch from talking circulation to readership to conceal his exaggeration. Salesmanship relied upon a quality performance and Branson was a notable actor. The appearance of the slick first edition, a good imitation of many established glossy magazines, more than justified his confident sales pitch.
His unusual success in 1968 enticed other ex-public school teenagers seeking entertainment to join him. The attraction was his easy lifestyle inhabiting part of a four-storey house at 44 Albion Street in Bayswater which his parents had leased to share with their son. United by the safety net of parental wealth, Branson and his guests enjoyed the liberation of ‘Peace and Love’ in ‘Swinging London’. In a polite reciprocation for his hospitality, they agreed to sell their host’s magazine on the streets. The prospect of permanent parties in rent-free accommodation was fun.
Branson’s unthreatening self-confidence attracted people older than himself seeking spiritual liberation in an uninhibited atmosphere. Attractive girls, eager to experiment, camped on his floors to escape their parents, and in turn welcomed a stream of ex-public school boys equally willing to produce and sell Student magazine. Without questioning their host’s authority, they enjoyed music, drugs and sex and ate food collected at the end of the day from the dustbin of a local delicatessen. Their presence reassured Branson of his popularity and guaranteed an escape from solitude. Paying his guests just £12 per week for selling the magazine on the streets, he none the less retained their loyalty by blurring the stigma of their status as employees. Money, he emphasised, was irrelevant; his fun party glued his new ‘family’ together. In the spirit of the era, they were all contributing towards the good of mankind although no one quite understood how.
‘He plucks,’ Eve Branson admitted innocently, ‘what he wants out of you.’ From his office on the top floor, Branson was part of the gang yet avoided immersion in his own party. While the guests played downstairs, he was focused on the fortunes of his magazine. ‘He was like a country squire,’ recalled Sue Steward, an early employee. ‘We were having a party and all living together but it was always on his estate. You always knew he owned it all. He wasn’t really a hippie, ever.’ Enjoying the sex, ignoring the music, occasionally living in a haze of marijuana, he acknowledged expressions of loyalty and developed the notion that his magazine should become the vehicle for his financial independence.
Profiting from the magazine could have presented a dilemma. After all, he touted Student to contributors and advertisers as a philanthropic venture to help poor youth. Among articulate students at the end of the 1960s, the public good rather than personal benefit was the only justification for business. Profits were incompatible with ideals. But Branson was not plagued by the self-doubts infecting so many students of the sixties revolution. He believed in profit and any contradictions were easily brushed aside by fluent self-invention. Sensitive to the mood of the time, Branson convinced himself and others that all his commercial ventures were for society’s ‘good’. The rebellious public school boy adhered to the credo that his ambitions were for his employees’ benefit. Earning money was not a sin, if conducted in the proper manner. But it was preferable to always pronounce, ‘I haven’t gone into business to make money. I like the challenge.’ Combined with his blokeish ordinariness, it was a disarming performance. Connaught Publications, his unregistered company, never published accounts. None of the blissed-out party-goers in Albion Street were sure whether their employer earned profits, let alone how much. Secrecy, Branson learned to appreciate, was preferable to public disclosure and even the existence of that secrecy required concealment. His guests witnessed a performance in which the magazine became the passport to his next incarnation.
Influenced by violent agitation across Europe and America, especially against the war in Vietnam, the baby boomers were trashing traditions in confrontations with university administrators, police and politicians. Students, congregating around the London School of Economics, were immersed in an extraordinary political revolution. Although younger than the undergraduates and not having enrolled as a student, Branson purposefully attached himself to the politicised and articulate agitators as an equal. Among the real activists, the serious-looking youth disguising his comfortable background as the grandson of a judge appeared no different from the thousands of other protestors. Understandably, Branson did not reveal that he was neither left-wing nor understood the political feuds raging among the multitude of student factions in the midst of the Cold War. Branson’s natural style implied that he sympathised with the spirit of the times and that he shared the common goal of an egalitarian, classless meritocracy. For Tariq Ali and the other leading Marxists who were preoccupied by endless political arguments and organising perpetual demonstrations, the credentials or motives of any young person hovering silently on the fringe of their turbulence passed unquestioned. But while Ali and others would remain permanently oblivious to Branson, the interloper himself, searching for a niche, exploited his presence at a decisive moment of history.
Unmoved by politics or history, Branson none the less spotted a financial advantage which eluded those participants preoccupied with moral conflicts. Skilfully, by walking with the leaders of London’s huge demonstration against the Vietnam War, he positioned himself in 1968 as the editor and owner of Student magazine, and as a ‘Students’ Spokesman’. Newspaper photographs recorded Branson among the leaders of the march. While most demonstrators ended that day of protest bitter about police violence and frustrated by the state’s inhumanity, he had absorbed an invaluable insight into the new fickleness of the era.
Journalists dispatched by middle-aged Fleet Street editors to report and explain the student revolt, searched for a spokesman. Branson was discovered in Albion Street. Stepping over rubbish, unsold copies of Student magazine and couples sleeping on the floor, one grateful reporter bestowed credibility on his interviewee by lazily repeating Branson’s self-description as a ‘student leader’ and faithfully quoting his utterances in a London newspaper.
Mention as a ‘student leader’ in one newspaper brought invitations to appear on television and feature in Vogue magazine as a representative of Britain’s student rebellion. To enhance his apparent importance for visiting journalists, he arranged for friends to telephone the house from call boxes, creating an illusion of successful activity. Journalists, Branson realised, were unlikely to challenge his exaggerated claims for Student’s success or his personal importance. On the contrary, the more outrageous his assertions the better. A single pose alongside Tariq Ali during the demonstration had taught Branson the value of hype.
At eighteen Branson possessed star-quality. His jocular celebrity persuaded the unambitious living in his basement and seeking justification for their fun-seeking lifestyle to accept his argument for their common goals. Their dependence upon him was gratifying to Branson but also troubling. Student’s circulation remained low and static. It was his first taste of a recurring predicament throughout his life: a cash crisis. His solution was to borrow an idea.
To save Student he imitated Private Eye. Regularly, the satirical magazine promoted its Christmas edition by attaching a record on to its cover. Branson’s idea for his magazine’s issue in spring 1969 was inspired. In October 1968, he approached Derek Taylor, the Beatles’ press officer, requesting an interview and a special song recorded by John Lennon dedicated to Britain’s students. Ingratiating himself by focusing polite charm on his targets was Branson’s particular skill and Taylor agreed. But by early December, after commissioning an expensive cover design and placing a large printing order, the record had still not materialised. Sitting in Taylor’s office, helping him address Christmas cards, Branson pressed for delivery. Taylor, proud of fulfilling his pledges, had a problem. Lennon had been prosecuted for the possession of cannabis and Yoko Ono, his girlfriend, had just miscarried. Traumatised, the couple had isolated themselves in their house outside London. Impulsively, Taylor scribbled on a card, ‘Trust me, Derek.’ Carefully, Branson pocketed the card.
At the beginning of January 1969, the promised record had not been delivered. Branson’s own despair deprived him of any sympathy for Lennon. After consulting his father, he issued his first writ: Connaught Publications v. John and Yoko Lennon and Derek Taylor. The official document, alleging breach of contract, was served on Taylor in the street outside his office. Listed as proof of an agreement was Taylor’s scribble on the Christmas card. The writ established that sentiment would never interfere with Branson’s urge to earn money. His verbal awkwardness, his long hair and his broken glasses might have suggested a hapless, easy-going hippie but they were just the natural props in a well-marketed performance. At dinner that night John Varnom asked about the writ. ‘My father’s a judge,’ replied Branson inaccurately, suggesting that the mighty ranks of the British Establishment endorsed his behaviour. Varnom withheld any correction. Branson’s grandfather was a judge and, ever since an old gamekeeper on the family’s lost estate had tugged his forelock to the young boy, Branson had mirrored his mother’s determination to regain his family’s lost social status: for the next fifteen years he would not correct newspaper quotations that ‘My father is the sixth in line in a family of judges.’
In April 1969, Branson, Taylor and their lawyers met in Savile Row to finally take delivery of a tape provided by Lennon. It was the heartbeat of Yoko’s baby which ended in silence. ‘That’s when it died,’ announced Taylor. Branson never used the recording and abandoned his writ. By then, Student had flopped. Outsold by his more original competitors, Branson had exhausted his charitable sales patter to contributors and suppliers.
Marooned in Albion Street, Richard Branson was a trader in search of a commodity. Downstairs were the friends and tenants who enjoyed the loose lifestyle and, while talented, shared none of his material ambition. Which was precisely why they were partying untroubled by their low wages. But they had provided ideas and thanks to John Varnom and Tony Mellor, Branson switched his full attention to the newly created Virgin Records.
‘We’re not selling Andy Williams,’ suggested Al Clark, a contemplative journalist and Virgin’s director of publicity, recruited to Virgin Records after the launch. ‘We need an underground feel,’ suggested the enthusiast who was more perceptive than most in the company. The records offered by Virgin, Branson meekly agreed, would reflect the lifestyle lexicon of the sixties. Like a sponge, he willingly learned from others, hiring people to perform tasks he could not have undertaken. Those arriving at Albion Street in 1969 included Steve Lewis, a North London schoolboy on the eve of going to university. Lewis enjoyed finding more obscure records, buying them at discounts from record shops and dispatching the packages. Lewis and the other employees never recognised Branson as an aspiring tycoon. Even when he moved the business in 1970 to a warehouse in South Wharf Road in Paddington after the Church Commissioners, the landlords of Albion Street, had exposed his repeated deception that the premises classified for domestic occupation were being used contrary to the lease for business, Lewis and the others never thought of themselves as the underpaid employees of a fame-seeking buccaneer.
The alchemy of his personal relationships had been learned in Surrey and at Stowe. Charm and respectfulness covered an elusive character whose ambitions and class were well disguised. Unlike the majority of entrepreneurs, Branson enjoyed deep roots in English society – he had not had to scramble out of the gutter – but he saw commercial value in shedding that pedigree and veering in the opposite direction. Commercial success was connected, he considered, to classlessness. The informality generated loyalty but his agenda, shrouded behind contrived ambiguity, was quite specific. ‘People thought,’ he explained, ‘that because we were twenty-one or twenty-two and had long hair we were part of some grander ideal. But it was always 99.5 per cent business.’ Uncluttered by Sartre or Marx, he could motivate his public school cabal and the working class aspirants by infectious enthusiasm. His dominance was asserted imperceptibly; his genial decisiveness arrived without shouts or threats. Only the astute perceived his insensitivity to the disillusionment bedevilling the sixties generation. While the Class of 1968 unsuccessfully struggled in the early 1970s to disengage from their youthful preoccupations of socialist revolution and free love, Branson suffered none of their emotional turmoil. He had always stood apart from the soul-searching idealists. Free of their self-destructive agonising which eventually constrained the revolutionaries’ professional ambitions, Branson breached the moral code of that era and pursued wealth.
The compartmentalisation began early. One Branson sat behind a desk in the warehouse playing hardball on the telephones as a tycoon; while another Branson, doing ‘good for society’, established the Student Advisory Centre to help young people solve their problems. The unemployed, the suicidal and pregnant girls were invited to telephone for assistance. Although Branson would some years later say that ‘The Advisory Centre was dealing with 3–4,000 people a week at the time’, Jenny Bier, whom he recruited to answer the single telephone, recalls between ‘ten and twenty-five people calling every week’. Of those, about four sought help for abortions. Among the callers in spring 1970 was Jennifer Oliver
(#ulink_bcf7b04a-afa7-53f8-ac83-aba4de16a5b6), a twenty-year-old undergraduate desperate to terminate a pregnancy. ‘Come and see me,’ offered Branson.
The following day, Jennifer Oliver sat on the other side of the desk in South Wharf Road explaining her predicament, dismayed by the frequent interruption of telephone calls including one from Ted Branson speaking from a golfing holiday in the Algarve. Turning to Oliver, Branson was reassuring. ‘Leave it with me,’ he said. ‘I’ll sort it out for you. I’ll ring you within a week.’ Two weeks later, Oliver was in despair. Branson had not called and her pregnancy was approaching the ten-week deadline allowed under the new Abortion Act. Oliver’s call to Paddington was again answered by Branson. ‘Oh gosh, I forgot. Did I say that? Come and see me immediately.’
Once again in his office, speaking again between telephone calls, Branson admitted there was a problem. ‘It’s so close to the deadline I can’t arrange it in the time. It normally takes three weeks.’ Oliver became visibly distressed. ‘But I could pull some strings,’ offered Branson, ‘if you would do a favour for me.’ The businessman’s proposition was simple.
‘BBC TV,’ he explained, ‘are featuring me in a programme called “Tomorrow’s People”. They want to feature my Student Advisory Centre. If you agree to be filmed visiting me, I’ll pull strings and fix up your abortion.’
‘But I don’t want anyone to know about me,’ said Oliver. ‘I want secrecy.’
‘Well, wear a disguise,’ suggested Branson.
‘Is there no other way?’ she asked.
‘There’s nothing else I can do. Think about it.’
Four days later, Oliver believed she had no option but to agree. ‘Great,’ said Branson. ‘Come to my office. We’ll be filmed and then we’ll go straight to Birmingham.’ Their destination was the Pregnancy Advisory Centre, a respectable organisation which had agreed to the filming. The documentary, celebrating Branson as a rising personality, was transmitted shortly afterwards. Oliver’s disguise, a wig, was ineffective. Branson appeared unaware of her embarrassment. His name, though, was increasingly mentioned among the lists of fashionable youth.
Benefiting from other people’s labour and ideas hardly matched the image of the sixties rebel but his style encouraged Branson’s trusting tenants and employees to literally plonk ideas on his bed. One morning, as he sat in bed with Mundy Ellis talking simultaneously on two telephones and reaching for papers, Tom Newman entered. Tall, long haired with a hint of cool mystery which attracted women, Newman was the stereotype rock guitarist: an uneducated rake immersed in drugs, sex and rock and roll. Bobbing on the fringes of the music world after graduating from bruising battles with bikers at the Ace Café, he relied upon others to pull his life together after fleeing his home and his father, a drunken Irish salmon poacher. Newman felt socially inferior to the younger Branson described by his girlfriend, an employee of Virgin Records, as ‘fascinating but tyrannical’.
‘Why don’t you build your own recording studio?’ asked Newman. ‘You could make a lot of money from that. I’ll run it.’
‘Sounds good,’ stuttered Branson as Mundy dropped a grape into his mouth. Quickly Branson warmed to the idea. He encouraged Newman’s trust. ‘He was the first bloke I ever spoke to who spoke posh,’ Newman told a friend. ‘But he was approachable, charming and keen.’
‘Let’s find a studio,’ Branson agreed, conjuring visions of a music empire.
Like generals in battle, putative tycoons also rely upon luck. In January 1971, Simon Draper, a twenty-one-year-old second cousin, introduced himself in South Wharf Road. ‘I’ve just arrived from South Africa,’ he smiled. Over breakfast, as Branson excitedly unveiled his ambitions to own a record label and a chain of record shops, Draper revealed his encyclopaedic knowledge of modern music. Even better for Branson, his unknown cousin, like Steve Lewis, was more interested in music than money. Branson, who confessed that his favourite tune that week was the theme from Borsalino, recognised that Draper’s arrival was a godsend. Draper was invited to join the empire and work with Nik Powell, a childhood friend of Branson’s and his neighbour in Surrey. In return for leaving university prematurely, Powell had negotiated with Branson a 40 per cent stake in Virgin Music which embraced Virgin Records.
(#ulink_182d4487-9234-5779-88b8-46de4f5e69bc)
Powell was a perfect complement to Branson. Quiet, cerebral and unimpulsive, he imposed order on the chaos of Branson’s stream of initiatives, restrained his friend’s excesses and managed the ramshackle finances of a business not even incorporated within a company. Carefully set apart from other employees, Branson, Draper, Powell and a few other public school friends formed a tight cabal.
Powell’s organisation, Branson acknowledged, had saved Virgin’s mail-order business from the destruction threatened when the postal workers went on strike. Together, they had rapidly opened a record shop in Oxford Street. ‘We’ll put an ad in Melody Maker,’ suggested John Varnom, ‘about lying on the floor, listening to music, smoking dope and going home.’
‘Great,’ laughed Branson. Nothing more was said or expected. Branson often communicated only in monosyllables. Miraculously, dozens of admiring customers regularly queued to enter the first-floor shop. Long-haired hippies slouched on waterbeds listening to music on headphones while others waited outside to enter. A truth had dawned on Branson. Most people were born to be servants and customers. He would be master, provider and richer.
The increasing flow of cash from the record sales and the growing popularity of Virgin among music fans encouraged Branson’s dreams of expansion. Profiting from his employees’ agreement to earn just £12 per week, Branson was secretly accumulating a fortune. Rifling through Branson’s desk, John Varnom had discovered a building society cash book showing a £15,000 deposit in the name of Richard Charles Nicholas, Branson’s three Christian names. ‘Cheeky bastard,’ whispered Varnom. Even in 1970 Branson’s finances were attracting controversy. Private Eye reported that Branson had received £6,000 for advertisements in Student but only admitted to £3,000, which Branson vigorously denied. Indeed there was no evidence that he had. Varnom said nothing about the cash book. The amount was too large to envy and the notion of equality, Varnom knew, was bogus. Besides, he knew no better alternative to working and living in Branson’s kingdom, especially after the realisation of Tom Newman’s idea.
The search for a recording studio had terminated in March 1971 at a seventeenth-century Cotswold manor house in Shipton, five miles from Oxford. The price was £30,000. ‘How are you going to pay for it?’ asked Newman, mystified. Branson smiled enigmatically. ‘You’re an imperialist,’ Newman, a rocker without a bank account and unaware of overdrafts, grunted. He remained puzzled how a twenty-one-year-old hippie could find the present-day equivalent of £275,000 while his employees were earning £12 per week. The unspoken explanation was Branson’s unique fearlessness about debt. Money was unthreatening to a man certain of success who assumed that risk would be rewarded.
To buy and convert the manor and outhouses into bedrooms and a recording studio required capital. Branson approached an aunt for a gift. She was advised by her stockbroker to offer only a loan. Branson received £7,500, a sufficient sum for an application to Coutts, the bank shared by the Bransons and the royal family, to advance a mortgage for the remainder. The trusting bankers, reassured by the Branson family’s reputation, did not question Virgin’s cash flow from the shop and mail-order business, or discover the purchase tax fraud and the sale of bootleg records. Even after his arrest, there was no unpleasantness between the bankers and their client.
As for the £60,000 tax payments and fines, his cabal assumed the same Masonic relationships which had saved Branson from conviction and public humiliation would arrange the money. None could imagine that his imminent collapse could be forestalled only by a bravura performance.
‘On my life,’ Branson bluffed to his creditors, ‘Virgin’s finances are fine.’ The company, he repeated, was not in financial peril. The flow of cash from fifteen new Virgin record shops opened across the country substantiated the denials of fragility. Branson and Powell precisely timed the opening of each shop in a different town to secure interest-free cash for two months before payments were required. Other sources of income remained undisclosed. Walking a tightrope was intoxicating but the chaos had become perilous. Virgin Records was not incorporated as a company. Branson had forgotten the legalities. His employees paid neither tax nor national insurance. For four years, he had been trading without proper financial accounts. Bereft of cash, Branson was perplexed how to equip Tom Newman’s recording studio at the manor. ‘Let’s play roulette at the Playboy Club in Park Lane,’ he suggested to Newman. ‘I’ve got a winning system.’ Using £500 taken that night from the till of Virgin’s shop in Notting Hill Gate, he and Newman shuttled between two tables as Kristen Tomassi, his blonde American girlfriend, gazed with increasing bewilderment. ‘It’s the last bet,’ Branson gritted at 5 a.m., clutching a few chips. He had risked everything; his system had failed. The flick of the wheel was lucky. ‘Great,’ he sighed as he stepped into Park Lane with £700. Before the shop opened later that morning, the original money was restored and the profits divided with Newman. Twenty-five years later he could speak from experience that the National Lottery compared to the roulette wheel was ‘a licence to print money’.
Tom Newman’s enthusiasm, Branson discovered, was not matched by his technical expertise. The guitarist knew little about the technology of recording music. For reassurance, Branson consulted George Martin, the Beatles’ producer. Martin laughed. Branson was proposing a four-track studio while Martin was installing sixteen tracks and much more. ‘We can’t afford all that,’ Branson told Newman. ‘We’ll have to busk it.’ They would buy second-hand equipment and Newman would learn on the way. ‘I’ve found some cheap mixers and old speakers,’ announced Newman proudly. ‘But the acoustics won’t be much good.’
‘Keep quiet about it,’ ordered Branson.
‘The best sound you can get,’ Branson boasted to musicians and their managers in a frenzy of telephone calls and personal visits to lure the unwary. ‘Sell them the image,’ suggested John Varnom, the inventor of the Virgin name. ‘Act the part of the alternative. No suits and ties like Decca.’ Compared to the unfriendly basements hired by the big studios in London, the manor offered a party. Unlimited meals and alcohol served in manorial splendour by four attractive girls, with the promise of huge bedrooms upstairs, created the illusion of a sex hotel with nightly orgies where drugs were served with the cornflakes. In truth, there was less actual sex at the manor than occurred in London nightclubs but Branson calculated that the promise of a party would conceal the inferior quality of the sound and enhance his profits. His intuition proved shrewd.
Branson persuaded Newman and the eager girls to accept low wages. Newman’s screaming protests when Branson frequently failed to send any money were brushed aside. ‘I’m also not being paid,’ lamented Branson, the victim. None of the uninquiring spirits enjoying his company realised that the principal beneficiary of their own low wages was Branson, focused entirely on his own agenda.
Circulating among his staff in the Sun in Splendour, the local pub on Portobello Road, puffing their cigarettes, sipping their beer and groping the girls amid jovial banter eased suspicions about an ambitious businessman. Touchy-feely embraces, pecking at cheeks and spasms of generosity defused the impression of a hierarchy and encouraged the notion of the Virgin family. Employment at Virgin, Branson had persuaded himself and his loyal staff, was benign, generous and equitable.
Occasionally providing a company car, invitations for meals in restaurants and organising holidays for some staff, he was the life and soul of his own party. Acting the fool in front of big audiences, skiing naked down alpine slopes and hosting hilarious mystery away-days terminating in Croydon solidified loyalty and trust in him. For those condemned to dreary office lives, Branson offered the chance to sense magic. Only the cabal, those close to Branson, understood that their garrulous host had created the family as protection from loneliness. Branson required perpetual company to protect himself from boredom. The anti-intellectual was incapable of self-entertainment. But his permanent party could not continue unchecked.
One year after the exposure of his purchase tax fraud, Branson was compelled to abandon the convenience of concealment through chaos. ‘You’ll have to become directors of proper companies,’ Jack Claydon, an accountant, told Branson. In September 1972, Virgin Records was incorporated and over the following months ten other companies were created. Legal compartmentalisation suited Branson’s instinct for secrecy and provided the machinery to transfer money from one company’s account to another’s, giving the appearance of solvency and preventing bankruptcy in one activity infecting the whole business. ‘I’m spending a lot of my time,’ Jack Claydon told a friend, ‘juggling banks and creditors in order to play one off against the other and help Branson to stay solvent.’ Claydon, an inconspicuous character, was ideal for many discreet shuffles.
Telephoning early in the morning, Branson summoned the accountant to his houseboat. Unlike a previous call when Branson had even had to ask for advice where to find a hooker for an American contact, Claydon was asked to give respectability to Branson’s latest venture. ‘I’m going to sign a deal and I need a letter to the bank to borrow more money.’ Claydon’s task was to bestow credibility on Branson’s optimistic financial projections of sales and profits. ‘Make it look good,’ urged Branson.
‘The bank wants to meet us,’ Claydon reported later that day.
Lunch with Peter Caston, his bank manager, at Simpsons was Branson’s opportunity to shine. Wearing a suit and tie, his enthusiastic projections of wealth were only marred, despite Claydon’s warning glances, by excessive talking. The conservative banker was bewildered and became cautious, especially after Branson’s cheque for lunch was rejected. The guest from Coutts reluctantly paid. Branson’s strength was his robust refusal to accept defeat. ‘You’re never morose,’ said Claydon in grudging admiration of a man whose energy exceeded conventional business talent. ‘You’ll always find an escape.’ Branson laughed. Claydon even urged him to ‘stop interfering in the business’ to avoid creating chaos. The accountant, whose audit validated the Virgin business, thankfully did not understand that chaos was an essential to Branson’s appearance as a classless wealth creator. Parroting the sixties mantra about ‘helping to make the world a better place’ concealed a more straightforward ambition: that it should be a better place for Richard Branson.
(#ulink_b3a490e8-6bc1-51cc-a2cd-fc693fe0ccf3) Not her real name.
(#ulink_446619bc-386a-56a1-abb8-214b65aaf3f1) Throughout the book Virgin Records is not distinguished from the Virgin Music Group.
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