Branson. Tom Bower

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СКАЧАТЬ was owned by a trust – or demanding £3 million. Branson’s self-esteem was always bolstered by his stories of success. The purchase of Necker imposed a legal commitment to spend a large sum to build a house on the island and provide a water supply. His enthusiasm coincided with his staff, earning by then about £40 per week, voicing fears of unemployment because his company was once again on the verge of bankruptcy.

      The following year, 1979, Branson knew that Virgin was ‘virtually bust’ yet, confident about his private finances in the Channel Islands trusts, he bought during the next two years the Roof Gardens in Kensington and Heaven, a popular gay nightclub under Charing Cross Station, using interest-free loans from brewers. ‘Those gays are so neat and tidy,’ he mimicked. Owning clubs excited Branson. He could be the host of a perpetual party, they were useful buttresses for the music business, and Virgin would have a permanent cash flow as a smokescreen against his return to debt. The reappearance of that albatross was the climax of a familiar pattern.

      The windfall from the Pistols, the latest Big One, had financed expansion into films, video-editing suites, property, the Venue nightclub, Reggae singers in Jamaica and a music business in America. All of those ventures had turned Virgin’s pre-tax profits of £400,000 in 1977 and £500,000 in 1978 into a projected £1 million loss in 1980. Branson was under pressure from Coutts to repay his debts or declare bankruptcy. Nearly everything, he lamented to his staff, would be offered for sale. To keep up appearances, he sold Denbigh Terrace and moved back on to the Duende, his houseboat.

      Gossip in the pop world about Virgin’s closures and staff dismissals was reported in the New Musical Express. Branson was horrified. The truth about Virgin’s financial plight, he feared, would deter Coutts from continuing their loans. His friendly and unruffled upper-class manner, he trusted, would disarm the suspicious. With equal effectiveness his approach charmed journalists, bankers and on occasion even the police. Twice he had been stopped for speeding along the M4 with John Varnom. On both occasions, to escape prosecution, Branson encouraged Varnom to persuade the police that he was seriously ill and allow the trusting officers to escort Branson’s Volvo to the nearest hospital. Varnom continued his performance until the police had disappeared. On another occasion, Branson produced a driving licence to the police belonging to someone else and successfully escaped conviction. Occasionally, he denied he was driving his white Mini, laughing ‘The police couldn’t have seen me because the car’s got blacked-out windows.’ His similarly fanciful tales to his bankers and staff about Virgin’s finances, relayed in his casual style, were protected by similar black-outs and compartmentalisation. Although he knew that Virgin had ‘no money’, he denied that the company was in financial difficulties. In adversity his resilience and methods were remarkable. New Musical Express was threatened with a writ if the magazine did not publish a correction, whatever truth there may have been in the original article.

      Rebutting Branson’s denials had become complicated. Under the guise of encouraging individual entrepreneurship, Virgin’s different businesses had been spread in small offices around London, preventing his employees understanding his organisation and blurring his juggling of money between companies. In managing his finances, Branson relied partially upon Chris Craib, a Virgin accountant, to follow his directions on both the administration of his funds and the valuation of his assets to secure ever higher loans from the banks. ‘We’ve spent so much on these things,’ he lambasted the accountant, referring to all the new business he had accumulated by 1981. ‘Surely you can get higher valuations. They’re worth a lot more.’ ‘Nothing more we can do,’ replied Craib, unable to produce the values required to persuade the banks to provide extra loans. To escape that squeeze, Branson’s helpline was his fortune secretly accumulating since 1973 in offshore trusts. Although by law, tax-free trusts could not be used under Branson’s direction, he had little problem persuading the trustees to provide guarantees for a £1 million loan to Virgin from the Bank of Nova Scotia. Virgin was again saved but the lifeline fractured Virgin’s benevolent character. ‘The men in suits have arrived,’ Chris Stylianou muttered as staff and artists were dismissed, property was sold and costs were cut during that year.

      Among the minor casualties was Nicholas James of Saccone and Speed, a wine supplier and friend from Stowe who could not recover thousands of pounds from Duveens, Branson’s failed restaurant. ‘I could always get through to Richard until I asked him for my money,’ James would complain. ‘Then he disappeared forever.’

      Branson easily lost his sentiment for those no longer deemed valuable to his fortunes. Tom Newman, the whisky-loving recording manager, was deemed dispensable and his stormy departure, abandoning his share options in the manor, passed unmourned.

      The major casualty in 1981 was Branson’s relationship with Nik Powell. Branson’s childhood friend urged prudence by terminating the contracts with Virgin’s ‘marginal’ groups, the Human League and Phil Collins. ‘Over my dead body,’ snapped Simon Draper.

      ‘You just spend all the money I save in the shops,’ countered Powell as the temperature rose. Powell was too cautious, Branson concluded. He had lost his way. The triangular relationship was irreparably fractured.

      In Branson’s new world, accountability to anyone was an intolerable shackle. The ‘mumbling pullover’ as he had become known to Varnom, enjoyed working in a team only if he was captain. Since Powell, despite their friendship and partnership, refused to compliantly follow, he was unacceptable. The partnership, they agreed, should be dissolved. ‘He’s on his way,’ Branson told Draper, a phrase frequently used to describe excluded members of the family. ‘Nik had no particular skills to contribute to the company as it was at that stage,’ was Branson’s less than affectionate summary. But he was correct. His savvy outclassed his friend’s.

      The unresolved issue was the value of Powell’s 40 per cent share of what Branson called a ‘busted company’. In the final act of severance, even with his oldest friend, Branson wanted to feel that he was the winner.

      Under Branson’s and Powell’s direction to reduce taxes, the accountants had minimised Virgin’s profits and had accumulated huge losses which were, for outsiders, as unquantifiable as the group’s assets. Not included under the rules of accountancy was the value of Virgin’s music catalogue and the rights to the music and records owned by Virgin. Those rights, Branson realised, were worth unquantified millions. Additionally, there was the secret accumulation of money in their offshore trusts which remained unmentioned in Virgin’s accounts. Under Branson’s guidance, it was finally agreed that Powell would receive £1 million in cash and some assets. Branson’s problem was producing £1 million in a way which his accountants would find acceptable.

      Until 1973, Branson had been officially earning just £20 per week. Thereafter, his annual salary had been about £2,000. Producing £1 million from his own resources as declared to the Inland Revenue was impossible. So instead he borrowed money guaranteed by the trusts for a transaction which was senseless without Branson’s private knowledge of Virgin’s true value.

      The divorce was finalised on the Duende. The two school friends sat across a round table. Between them was Heimi Lehrer, a solicitor employed by Virgin since 1973 as their property specialist. Barely a word was spoken as the signatures were scribbled. For Branson it was an unemotional moment. The division of the business, he believed, was a limited risk. His demeanour was a disorienting blend of innocence and cunning. Branson did not appear sad about the divorce from his childhood friend. Powell would be airbrushed into oblivion. The gap-toothed grin, suggesting a heart of gold, was replaced by a hard-fixed stare. ‘We’ll trade out of trouble,’ the thirty-one-year-old quipped. Embracing his gambler’s gospel, every crisis was an opportunity and Powell’s departure left Branson with total ownership.

      One of the few relationships he worked hard to protect was with Mike Oldfield. That was endangered by Tom Newman’s incitement for separation. ‘You’ve got a lousy contract,’ the disgruntled producer of Tubular Bells advised Oldfield. ‘You СКАЧАТЬ