Branson: Behind the Mask (24 page)

Based on Assura’s network, Virgin bid to supply care for dermatology, ophthalmology, ultrasound, podiatry, fractures and back and neck injuries in ten areas across the UK. In 2012, the company won a five-year contract to employ 2,500 NHS staff in Surrey to manage eight community hospitals and provide community nurses and health visitors, breast-cancer screenings, sexual-health clinics, specialist dental work and physiotherapy. The budget was £500 million. Virgin also won an £8.5 million contract in Dorset and a £132 million three-year contract in Devon to provide school nurses, health visitors and care for children with disabilities. An objection by the mother of a disabled child to the tendering process was dismissed by a judge.

The protests, combined with Virgin’s disruption of established services, antagonised some medical professionals. Across the country, NHS trusts rejected Virgin’s bids in favour of in-house providers. Virgin protested. In the East Riding of Yorkshire, Assura’s chairman complained that the local NHS had won a contract for bone treatment by tendering less than Virgin. By selecting the lowest offer, the chairman explained, the NHS had deprived patients of choice. The arbitrator, the Co-operation and Competition Panel, ruled against Virgin. The NHS, the panel stated, could not be expected to pay more for a service just to provide a choice. ‘Virgin’s a bunch of parasites,’ commented Lucy Reynolds, an NHS executive. ‘They even want their surgeries to be located in Virgin gyms so that their red-uniformed doctors can direct patients to use Virgin facilities.’ The original expectation that Branson’s reputation would disarm the critics was misplaced.

The GPs joined the disenchanted. Virgin’s pressure upon them to direct patients to use private services provided by Virgin – the
source of Branson’s anticipated profits – had proved to be a conflict of interest. In 2012, the 329 GPs who were Virgin’s partners in twenty-five polyclinics agreed that their contractual ownership of the community-service companies should be terminated. GPs would continue to provide NHS services inside buildings owned by Virgin Care, but would have no financial interest in the provision of Virgin’s private treatments. Virgin was the sole owner of the business. Virgin Care’s losses in 2011 grew to £8.5 million. The following year, the pre-tax losses rose to £9.9
million, and the company’s revenue was a mere £23 million. Struggling to succeed, in 2012 Virgin invested £11 million of its own money in the business. For a supposedly global, multibillion-pound corporation, these sums were peanuts – unless Branson was pursuing another strategy, as was suspected by his harshest critics.

Over the previous decade, Branson had championed the decriminalisation of drug use. He had argued stridently that the $1 trillion war against drugs had been lost amid corruption and violence. The only profiteers were the criminal cartels. ‘Global drug strategy should be based on evidence not ideology,’ he wrote. In arguing for a change in government policy, Branson disputed that drugs were a ‘menace’ and that the campaign to stop drug use was a choice between ‘good and evil’. His first-hand experience with the Sex Pistols’ Sid Vicious, a heroin addict who murdered his girlfriend and then committed suicide, and watching Boy George struggling with addiction had persuaded him to write, ‘There is absolutely no evidence that the threat of incarceration deters drug use.’ Instead of jailing tens of thousands of users as criminals, he wanted the use of drugs to be decriminalised and the scourge treated as a health issue.

Those opposed to decriminalisation criticised Branson’s campaign for being self-interested. After all, in the past he had admitted taking drugs and agreed that he would sell cannabis if it was decriminalised. Critics dubbed it ‘Virgin Dope’, a term
that had a special ring for those who associated decriminalisation with an explosion in drug use and the legitimate enrichment of the producers and dealers. The social harm, said Branson’s critics, would be incalculable. One beneficiary would be Virgin Care. The health clinics would be ideally suited to bid for NHS contracts to provide treatment. Branson’s proposed model had been described by Jamen Shively, a former Microsoft executive who planned to sell his brand of marijuana across America. Since the use of cannabis for medicinal purposes had been approved in eighteen American states, Shively spoke about opening a Starbucks-like chain of medical dispensaries to satisfy his nation’s $200 billion annual habit. He launched his idea in Seattle alongside Vicente Fox, the former president of Mexico and an associate of Branson on the Global Commission on Drug Policy.

Branson frequently paraded his relationship with the well-funded international movement to decriminalise drugs. In June 2011, he had joined George Soros, Kofi Annan, George Shultz, Paul Volcker, Carlos Fuentes, Mario Vargas Llosa and the former leaders of Colombia, Greece, Mexico and Switzerland at New York’s Waldorf Astoria hotel to launch a campaign in favour of legalisation. Against the backdrop of the ferocious drugs war in Mexico, Branson quoted statistics allegedly published by the United Nations showing that, despite the war against drugs, consumption had increased between 1998 and 2008. ‘Stop criminal penalties for people who use drugs but do no harm to others,’ he wrote. ‘A focus on education and treatment will be much better for society than locking people up for drug use.’ He cited Portugal’s 2001 decriminalisation as proof that drug use falls after criminal sanctions are removed and users receive health treatment. ‘Portugal is the best example,’ he wrote. ‘The amount of heroin addicts has dropped by half … The amount of cannabis use is the lowest in Europe.’

Many of Branson’s arguments were contradicted by those opposed to decriminalisation. In Portugal, they replied, decriminalisation had caused an increase in consumption and deaths caused by drug abuse. Similarly, his citation of UN statistics showing a dramatic increase in drug consumption between 1998 and 2008 was described by his critics as inaccurate. The actual United Nations Office on Drugs and Crime World Drug Report showed that the use of hard drugs had declined around the world. On one interpretation, the UN’s report suggested that the use of cannabis was only rising because of decriminalisation. The British government’s own statistics also showed that hard-drug consumption had declined since 1996. The American figures were comparable. Cocaine use had fallen by 75 per cent over the previous 25 years; cannabis consumption, however, had risen because of legislation to decriminalise its use. Branson did not engage with those figures, instead focusing his arguments on the benefits resulting from Portugal’s drug laws. His opponents countered that the Portuguese government’s statistics contradicted Branson’s assertions: drug use among schoolchildren had increased since decriminalisation, and greater availability had encouraged greater use. They accused him of wishful thinking.

Inconvenient facts did not trouble Branson but, in criticising the drugs war, he refused to address why drug use had fallen wherever the criminal law was applied. In his own words, ‘I dislike silly rules,’ and in his opinion the criminal laws he disliked ranked as ‘silly rules’.

His critics replied that criminalisation is society’s warning that drugs are dangerous. Opinion polls showed that the public was consistently against Branson’s argument, believing that drugs ruin lives. The fall in consumption in Britain, the critics argued, partly reflected the effect of the law but also an understanding that hospital admissions for mental disorders linked to cannabis use, especially schizophrenia, had increased.

There was no doubt, however, that the laws had failed to put an end to drug use. But all wars against crime have been lost because crime continues, yet no one has suggested that the state abolish all criminal laws. Branson ignored that argument. Drugs, he said, were different. He could not, however, explain away the fact that in Britain, cigarette smoking has declined dramatically ever since the prohibition of smoking in public places, yet alcohol consumption and its associated illnesses have soared as prices have fallen and it has become more readily available. The correlation suggested that relaxing the drugs laws risked increasing consumption. In January 2012, Branson was quoted as saying that if cannabis was decriminalised, he would agree to sell it.

Regardless of those arguments, Branson’s opinions were supported by some in Westminster. In particular, he attracted the sympathy of Keith Vaz MP, the chairman of the House of Commons Home Affairs Committee. In 2012, Vaz decided to chair an inquiry into the decriminalisation of drugs. Branson’s critics were shocked. In their opinion, Vaz had lost much of his credibility after his suspension from the Commons for one month in 2002 for breaking parliamentary rules. They did not believe his professions of independence and his denial that he was influenced by Branson’s Global Commission on Drug Policy. In a letter to Kathy Gyngell, a campaigner against decriminalisation, Vaz insisted that his committee was open-minded and had not prejudged the issue. Ultimately, the committee’s report in 2013 agreed with the argument of its first witness – namely Richard Branson – that Britain’s drug war had failed and the country should follow the successful Portuguese model. On 6
June 2013, Vaz and Branson signed a letter to
The
Times
declaring that the war on drugs was ‘lost’ and the government should change its policy. Branson’s ideas were rejected outright by the government.

Rejection did not embarrass him, however. ‘Virgin Dope’, his
critics believed, was a long-term punt, and for the time being his focus was on Virgin Care’s struggle to earn profits. All his new ventures since Virgin Mobile’s launch thirteen years earlier had been patchy and Virgin Care, his principal investment over the previous decade, was no better. But its losses were trivial compared to Virgin Galactic’s.

So much depended on Virgin Galactic – not just the brand and Virgin’s finances but also Branson’s credibility.

Originally, Branson had committed himself to starting commercial space flights in 2007, but since the fatal explosion there had been repeated delays. To mask the technical problems, he staged events to signal the imminence of take-off. Usually, he hosted a celebration. Most were successful, but his party on 7 December 2009 in California was peculiarly timed.

Gusts of cold wind were blowing across the dark Mojave desert into the faces of 400 people waiting to see WhiteKnightTwo trundle along the runway. To shelter from the howling winds, the guests squeezed into a silver marquee. The majority were journalists, but scattered among the crowd were prospective passengers. Standing at the front was Branson. Peering into the darkness, he wanted to share the first public glimpse of SpaceShipTwo – or the VSS
Enterprise,
as it was named – suspended beneath the catamaran-type plane. The ceremony was carefully choreographed. Purple lasers and the booming soundtrack from
Close
Encounters
of
the
Third
Kind
flashed and rolled across the runway. Governor Arnold Schwarzenegger was standing beside Branson as the guest of honour. ‘Chuck Yeager broke the sound barrier right here,’ Schwarzenegger reminded his audience. Branson enjoyed the governor’s allusion to
The
Right
Stuff
heroes. Thanking an ‘astronaut’ for a mock ray gun, he encouraged everyone to drink Vodka martinis at the Absolut ice bar – a free promotion organised by Virgin’s publicists.

‘Isn’t that the sexiest spaceship ever?’ Branson cried out, as the twin-fuselaged plane appeared, crawling towards the marquee. ‘This’, he told the journalists standing near an ice sculpture of an Apollo spaceman, ‘will be the start of commercial space travel.’ Smiling by his side, Schwarzenegger did not begrudge Branson’s moment of glory. ‘This is a truly momentous day,’ continued Branson. ‘The team has created not only a world first but also a work of art.’

Branson’s magic conjured for his guests a grandiose vision. Within a decade, competing spaceship companies would be shuttling into space from spaceports dotted across the globe. With unhesitating certainty, he described rockets flying passengers in 2019 from Los Angeles to Australia and on to the Middle East. No fewer than 50,000 people, he promised, would be flown by Virgin during the first decade. Prices would be low and Virgin would be safer than NASA. Even his disclosure that his ninety-two-year-old father and eighty-five-year-old mother would accompany him on the first flight caused no surprise. He was the master of projecting total credibility. Branson was acutely sensitive about the effect of his words on his audience. Although he often mumbled and looked downwards, his eyes rose at appropriate moments to judge his performance. His hesitations were interpreted charitably. Despite the unusual secrecy imposed upon the venture, no one showed any doubts about the inevitable eventual triumph of his project, which so far had cost $400 million. ‘There is this pent-up demand for access to space,’ Will Whitehorn chipped in during one of his employer’s pauses. ‘We’ve had very rapid growth in the past months because people are seeing something coming to fruition and the breakthroughs coming in the next two years are going to game-change that.’ Virgin had collected $42 million from about 300 people, he said, including $4 million within the last few months. Just weeks earlier, Virgin publicists had said that 430 aspiring astronauts
had signed up. The numbers do not appear to have been independently verified, and none of the hand-picked guests embarrassed Whitehorn by countering that Virgin’s income was insignificant compared to the billions of dollars NASA had offered other private operators for flights to the International Space Station. Any doubts were dispelled by Schwarzenegger’s blessing: ‘This is the stuff of science-fiction movies and now it has become a reality.’ Hollywood’s mythology made him an ideal choice to unveil the VSS
Enterprise.
‘It’s really amazing. It opens up the space experience to ordinary people around the world.’

To seal Virgin’s credibility, a publicist read the roll call of those who had signed up – by then a familiar list including Victoria Principal, the former
Dallas
star, Professor Stephen Hawking and James Lovelock, the ninety-year-old environmentalist who had been promised a ride on the inaugural flight. Although Lovelock preached a doom-laden warning that the world’s growing population was creating excessive carbon dioxide, he had spoken emotionally five months earlier about his anticipation of gazing down on ‘my first love Gaia, our blue planet, later this year’.

Lovelock had no reason to doubt Branson’s timetable for take-off. At the beginning of 2009, Whitehorn had denied that Peter Siebold, the WhiteKnightTwo pilot, had any difficulty keeping the plane on the runway. On the contrary, Whitehorn told
Flight
International,
‘We will begin testing SpaceShipTwo rocket planes in August and are optimistic that we will be flying into space with passengers by the end of the year.’

Months later, Whitehorn was unashamed that his confident prediction remained unfulfilled. He even repeated his unequivocal description: ‘It’s a trip of a lifetime. Reserve your place in space now. Travelling at over four times the speed of sound to a distance of around 360,000 feet above the Earth’s surface, experience weightlessness and enjoy the breathtaking view.’
Whitehorn and Branson should have known that their confidence was misplaced.

Branson’s guests could not imagine the problems troubling Virgin’s designers: the risk of the expanded hybrid motor exploding had not been ruled out; the metal used to build the craft, designed to resist cracking during the rapid temperature changes, required constant retesting; and the safety of rubber burnt by nitrous oxide needed to be confirmed. Above all, firing the motor at full thrust for one minute had so far proved to be impossible. The uncertainty was dispelled by the combination of Branson’s enthusiasm, Schwarzenegger’s endorsement and the constant repetition about the dream.

Aspiration rather than certainty had attracted many invited to Mojave, including Governor Bill Richardson of New Mexico. Richardson’s support added integrity to Branson’s venture. The politician’s trust in Branson had so far cost the state $203 million in building America’s first spaceport. The justification, said Richardson, was the guaranteed $150 million income for New Mexico. Virgin’s version disputed that certainty. Although the company had at the end of 2008 signed a twenty-year lease for using the spaceport, the terms allowed Branson to escape any commitment at the cost of a minuscule penalty. Those details were ignored when the politician and Branson agreed jointly to attend the dedication of the two-mile runway in October 2010. The concrete strip – to be completed within two years – would be called the ‘Governor Bill Richardson Spaceway’.

Another guest at the party represented Aabar Investments of Abu Dhabi. Principally owned by the emirate’s government and controlled by Sheikh Mansour bin Zayed Al Nahyan, Aabar owned stakes in major German and Swiss industries and Manchester City Football Club. Branson had visited the Gulf on many occasions to seek finance for Virgin’s projects, and in 2008 had dispatched Stephen Murphy to elicit an investment
in Virgin Galactic. Murphy pitched a scenario of Abu Dhabi enhanced by a spaceport, a facility to launch satellites, an Earth Observation Space Centre and a technical college. At the end of July 2009, Aabar bought a 32 per cent stake in Virgin Galactic for $280 million.

The agreement coincided with Branson’s first flight in WhiteKnightTwo, the Virgin mother ship. ‘This has been one of the most incredible experiences of my life,’ said Branson, after the plane landed in Wisconsin. Five months later, WhiteKnightTwo, with VSS
Enterprise
suspended underneath, was rolling down the runway. ‘When I saw it,’ Branson beamed later, ‘I was as near to being reduced to tears as is possible without actually crying.’ Moved by that confession, one journalist would ascribe those words to ‘Virgin’s gleaming entrepreneur, Richard Branson’.

Branson’s credibility was enhanced by the announcement that Virgin had ordered five SpaceShipTwos and three WhiteKnightTwo mother ships from Scaled Composites, which had recently been bought outright by Northrop Grumman, the giant aircraft manufacturer. ‘Virgin Galactic is the world’s first commercial spaceline,’ Branson exclaimed.

‘When will you do the first trip into space?’ he was asked on Sky TV.

‘2011,’ he replied with certainty.

Virgin’s publicists later quietly explained to the interviewer, ‘Richard really meant 2012. That’s more likely.’

The party in Mojave was abruptly halted – the storm was about to hit the airport. Everyone was ordered on to buses and headed back to Los Angeles. The evacuation was completed just as the storm hit. The marquee was uprooted and wrecked.

Three months later, Reuters headlined a dispatch from Los Angeles, ‘Virgin Galactic Almost Ready for Space Tourists’. Shortly after, the news agency reported the ‘first flight’ of VSS
Enterprise
,
the ‘spaceship’. The casual reader would have imagined that Virgin Galactic was on the verge of carrying passengers into space. In reality, WhiteKnightTwo had taken off for a three-hour flight around Mojave with the spaceship strapped under neath, and then returned to the spaceport. ‘We’re eighteen months away from taking people into space,’ Branson told journalists six months later in Kuala Lumpur. Take-off in 2012, he ought to have realised, was impossible, but his brand depended on optimism.

On 10 October 2010, Branson returned to the desert to watch SpaceShipTwo glide back to the runway after being released at 45,000 feet from the mother ship. News of the successful ten-minute glide was intended to reassure any of his customers concerned by the escalating delays. One week later, he joined Governor Richardson, whose chances of a presidential appointment had been tarnished by a scandal over contributions to his re-election campaign – allegations he contested – at Las Cruces to celebrate the start of the ‘spaceway’s’ construction. ‘We’ll be flying from here in nine to eighteen months,’ Branson told his audience. Glancing around, no one could fail to notice the bare shell of what should have been the spaceships’ hangars and the rough concrete foundations of the unbuilt spaceport terminal.

Outbursts of confidence had become necessary to balance the successes recorded by Branson’s competitors. XCOR, the small neighbouring space-flight outfit in Mojave, had announced a $28 million contract with a South Korean company to take passengers and cargo into space. More importantly, SpaceX, owned by Elon Musk, the inventor of PayPal, had launched a Dragon spacecraft from a Falcon 9. After orbiting the globe, the rocket was recovered from the Pacific. SpaceX’s safe return triggered Musk’s negotiations with NASA for a $1.6 billion contract to shuttle twelve payloads to the International Space Station. In the future, he hoped to ferry astronauts to the orbiting station for $20 million a trip, compared to the $65 million charged by the
Russians. Unlike Virgin Galactic’s sub-orbital tourism, Musk’s venture was a serious orbital business replacing wasteful government spending. Even Branson understood the distinction between Musk and himself. ‘Now I know what $1 billion looks like going up in smoke,’ he had texted after watching the launch of a NASA rocket from Cape Kennedy. Virgin was not in Musk’s league on several counts. Over 2,000 people were employed in SpaceX’s Los Angeles factory to build a rocket that had already flown in space and returned.

To prove Virgin Galactic’s commercial credibility, Branson needed NASA’s imprimatur. Along with other private corporations, Virgin had bid for space contracts. In late 2010, NASA distributed about $270 million between Boeing, SpaceX, Sierra Nevada and Blue Origin – the four principal non-governmental space contractors. Virgin was not included. An emissary was dispatched to extract a morsel from NASA, and returned with a booking to fly a payload on SpaceShipTwo for $4.5 million. The gesture was announced by Virgin and embellished with legends about Branson’s past.

Branson no longer regarded reminiscences to journalists about his remarkable career as a journey around his memory. Rather, his narrative had become a tool to project the brand. The businessman coloured his story to refashion his image and justify his investments, not least in Virgin Galactic.

‘It’s just like launching Virgin Atlantic,’ he explained to a journalist comparing his journey into space with his love for new adventures. ‘I had a record company and I went to my partner and said, “I’m fed up flying on those awful airlines,” and listed the bad food, unsmiling crews, no entertainment and “horrible” lighting. I said, “I want to buy a second-hand 747 and start an airline.”’ His stories were rarely consistent. Myths were embellished with the anecdotes of an accomplished storyteller. The demeanour was hesitant, but his control never slipped.

A year later, he told another interviewer that Virgin Records ‘wasn’t focused on making money, but on an urge to do something new. I only tried to make money to pay bills.’ In truth, Virgin Records was created by Branson, his cousin and a group of friends, and they did enrich themselves. As some of his friends and employees discovered to their cost, their contribution was ultimately ignored by Branson.

Warming to his theme, Branson presented another version of Virgin Atlantic’s invention to a
Forbes
interviewer. ‘The idea for Virgin Airways came when he got bumped from an American Airlines flight,’ reported the magazine. ‘He was already wealthy so he went back to the UK, called up Boeing, and told them he’d like to buy a 747.

‘“What did you say your company’s name was again?” he was asked.

‘“Virgin,” he repeated. There was a pause.

‘“Well, with a name like that, we certainly hope you plan to have this new enterprise go all the way,” the Boeing rep quipped.’

The pay-off line was: ‘Today he runs 300 different companies and he says he employs 60,000 people.’