Branson: Behind the Mask Read online

  His report was delivered in October 2007 to OSHA’s enforcement agency. No one was surprised that Chase blamed the deaths on Scaled’s careless safety procedures and nothing more. Over the previous twenty-eight years, despite hundreds of deaths of workers in the oil, mining and other industries, OSHA had not mounted a single criminal prosecution in the county. Since Chase did not highlight any suspicions, his report went no further. Accordingly, there was no reason for the county sheriff, Donny Youngblood, to launch an investigation or even to hold a coroner’s inquest to publicly ascertain the cause of the explosion. The district attorney was also excluded from any involvement. Conveniently for Rutan, OSHA’s decision automatically prevented the publication of Chase’s report. ‘It’s just another accident,’ Sheriff Youngblood concluded. He felt no reason to cause Rutan more embarrassment.

  The suppression of a public debate sparked criticism among a group of British and American engineers. Led by Geoff Daly, a British rocket engineer, and supported by Carolynne Campbell, a designer of small rocket motors, they voiced their worries about a possible cover-up. Since Scaled refused to engage in any debate with their critics, their comments became strident. Sharing a keen interest in the use of nitrous oxide, both Campbell and Daly were alarmed by the description on Virgin Galactic’s website that the combination of the gas and rubber is ‘benign, stable as well as containing none of the toxins found in solid rocket motors’. In their opinion, that description was inaccurate. ‘Nitrous oxide can explode on its own,’ said Campbell. ‘Unlike oxygen, it’s an explosive. And rockets blow up because that’s their nature.’ Virgin Galactic’s motor, she continued, could be toxic. ‘There’s so much soot coming out the back. That’s burning rubber. That could be carcinogenic’

  In a letter to California’s district attorney, the two Britons described the dangers Virgin’s space tourists would face because of Rutan’s reliance on nitrous oxide and burning rubber. Had, they asked, consideration been given to prosecuting Scaled for criminal negligence or even manslaughter? The engineers were ignored. The fine imposed by OSHA on Scaled, based on a fixed tariff determined by the number of employees and not the fatalities, was $25,000. The company’s appeal was dismissed. ‘A speeding ticket,’ concluded Stu Witt. ‘Not a corporation-closing penalty.’

  Rutan must have been delighted. None of the injured complained. The disaster was forgotten even among those who had bought $200,000 tickets. ‘I’ll be on the first flight with my parents and family in 2009,’ promised Branson, expressing certainty about the timetable. ‘Tests’, he was later told by Witt, ‘should be like sex – behind closed doors with a minimum number of participants.’

  In the weeks after the funerals of the three engineers, the deaths were compared to the fate of the doomed Apollo 1 astronauts in 1967. To re-energise Scaled’s employees, Rutan’s executives appealed to their can-do spirit. Branson was reassured that the rocket motor’s safety was not in doubt. As an insurance, Scaled’s engineers reduced the temperature of the nitrous oxide. However, at lower temperatures the rocket produced less power and the thrust was less smooth. ‘The hybrid could be doomed,’ predicted Campbell and others.

  Branson needed to reassure the ticket-holders that his timetable was infallible. Virgin’s flawless publicity machine, primed to spread confidence and fun, invited Virgin Galactic’s passengers to a party in mid-January 2008 at the planetarium in New York’s Museum of Natural History. Nearly a hundred ticket-holders arrived. Some had paid a $20,000 deposit; others had paid the full $200,000. ‘2008 will be the year of the spaceship,’ said Branson on the soundtrack of an animated film showing SpaceShipTwo blasting into space. Take-off, he said with certainty, would be late the following year or definitely in 2010. After that, said the commentator with conviction, the reusable rocket would be taking off twice every day from the spaceport. The film’s description of the split-second acceleration as the rocket roared into space gripped the audience. Within a minute, pushed deep into their seats by the G force, they would be soaring at 3,000 mph (Virgin’s publicity was never consistent about the speed). About twenty seconds later, the rocket motor would stop and the passengers could enjoy four minutes of weightlessness as the craft glided through space before beginning its descent.

  The party served another serious purpose. Over the previous months, Branson had been under pressure to prove Virgin Galactic’s financial benefits and that it would be environmentally neutral. Virgin’s publicists categorised the six millionaire passengers on each trip as ‘eco-tourists’, but a Washington Post writer had described the venture as an example of when ‘narcissism trumps common sense and pollutes the fragile atmosphere the rest of us must breathe’. The comment, the publicists realised, attacked Branson’s repositioning as a campaigning environmentalist who used his airline’s profits to save mankind. Branson’s reply to his guests was reassuring: ‘James Lovelock has told me that he thinks that what we’re doing is one of the most important industrial projects of the twenty-first century. I consider space to be the final frontier that is so essential to the future of civilisation on this planet.’ The future of industry, communications, energy and even food, continued Branson, depended on man conquering space. The world’s 9 billion population – ‘three times more than when I was born’ – could be sustained only by developments in space. ‘With the end of the oil era and climate change progressing faster than most models predict,’ he emphasised, ‘the utilisation of space is essential to the logistics of our survival.’ Space, he repeated, was the only remedy to the world’s overpopulation and the rapid depletion of oil and minerals. Virgin Galactic would save mankind from starvation.

  Branson’s speech ended in a mumbled anticlimax. Despite his popularity as a speaker, his set-piece public addresses usually lacked fluency or flourish. Hovering behind him was Princess Beatrice, the Queen’s granddaughter. Her presence was assumed to be connected to Branson’s friendship with Sarah Ferguson, the Duchess of York, but it was also linked to Beatrice’s association with Dave Clark, a salesman for Virgin Galactic. Just as Burt Rutan was about to speak, Beatrice and Clark were spotted arguing and then disappearing.

  Branson often feared what Rutan might say, but even he could not have foreseen his partner’s warning. ‘Our goal’, Rutan told his audience, ‘is making spaceships at least as safe as the early commercial airliners which were introduced in the late 1920s … Don’t believe anybody who tells you the entry level of the new spacecraft will be as safe as the modern airliner.’ The warning could have alarmed the audience, but looking around Rutan could see that no one took his pessimism seriously. The only handicap was the timetable. Every deadline Branson had mentioned since 2004 had been missed. In future, to give the impression that Virgin Galactic’s safe launch was on course, he planned to stage regular ‘unveilings’.

  *

  One year after the explosion, on 24 July 2008, a memorial service was held outside the Voyager diner in Mojave for the three dead engineers. In a sheltered space near a model of SpaceShipOne, a motley plaque was unveiled for an event which remained unexplained to the public. Branson’s absence guaranteed the deaths would remain forgotten outside the space community. Four days later, he landed in Mojave in his personal Falcon 900EX jet, called Galactic Girl, with his eighty-four-year-old mother, Eve. The Falcon’s tail fin was decorated with Virgin Galactic’s livery. With a top speed of 662 mph, the private jet carrying fourteen passengers appeared to contradict Branson’s environmental credentials. ‘Richard lives a certain lifestyle,’ explained his aide, ambiguously.

  Virgin Galactic was emerging as a godsend in Branson’s campaign to elevate the Virgin brand in America. Virgin America’s flights between San Francisco and New York had started. To create publicity, Branson arranged for 150 journalists to be flown from San Francisco and Los Angeles to Mojave on the new airline. They would witness the roll-out of WhiteKnightTwo, the specially built plane which would carry the Virgin Galactic rocket to 50,000 feet. Attracting such a remarkable number of jou
rnalists guaranteed global attention.

  Burt Rutan led the visitors along the tarmac to Scaled’s hangar, where he revealed a large shape draped with a white sheet. ‘SpaceShipTwo,’ confided Virgin’s publicists, playing the first of several favourite lines. ‘The rocket will be ready for testing and flying next year.’ Their assertion proved to be untrue, but since, according to the same publicists, 100 people had paid the full $200,000 for a ride and 175 had paid a $20,000 deposit, the promise needed to be kept alive. ‘We’ve already had a number of inquiries’, Will Whitehorn told journalists, ‘from people about whether they could be the first to have sex in space. But we haven’t accepted their bookings.’

  Accompanied by music and melodrama, WhiteKnightTwo was unveiled on the tarmac. ‘One of the most beautiful and extraordinary aviation vehicles ever developed,’ Branson told his guests, all gazing at the twin-fuselaged plane with a 140-foot single wing, powered by four Pratt & Whitney engines. No one doubted the grandeur of the moment. Rutan’s catamaran was three times bigger than WhiteKnightOne, the plane used for the original flight.

  Amid the emotion, the visiting journalists did not notice a small hangar adjacent to Scaled’s rented by XCOR, a rival space-flight developer managed by Andrew Nelson. Unlike Virgin Galactic, XCOR’s Lynx rocket motor had been successfully tested thousands of times. And unlike Rutan’s hybrid engine, which needed to be dismantled and refitted to the spaceship after each flight, XCOR used a fill-up-and-go rocket powered by kerosene ignited by liquid oxygen which could be reused hundreds of times, saving money and time. While Virgin Galactic would be launched from WhiteKnightTwo after an hour’s flight and would take about an hour to return to a runway, XCOR’s cheaper rocket would, according to its designers, reach space from Mojave in just thirty minutes. Unlike Branson’s fascination for space tourism, XCOR aimed to deliver payloads into space and carry a single passenger for $100,000. Some of Virgin Galactic’s customers had also reserved places on XCOR’s rocket. Branson was not unaware of XCOR’s advantages. As he openly confessed, he was wholly uneducated about space technology, so he was equally unaware that Virgin had rejected the offer of a stake in Reaction Engines, a more advanced British rocket venture based in Oxfordshire. ‘We don’t finance the development of new ideas,’ Virgin had explained.

  On the same day as Branson’s party in Mojave, XCOR’s executives had headed to the annual aviation exhibition in Oshkosh, Wisconsin. Alongside their Lynx spacecraft was the Dragon, made by SpaceX, Virgin Galactic’s biggest competitor. The brainchild of Elon Musk, the billionaire inventor of PayPal, SpaceX was negotiating substantial contracts with the American government for delivering payloads to the space shuttle.

  Branson and Rutan appeared oblivious to their competitors when they belatedly arrived in Oshkosh. Amid laughter and applause, they pushed through the crowds in Pavilion 7 describing the previous day’s excitement. ‘The signal that we wanted to get across’, said Branson, ‘is that we are getting ready for business.’ To his audience of believers, he described a new industry and a new way of life – something nearly beyond the imagination. ‘You’ll soon be flying with Virgin around the moon and to a Virgin resort hotel in space,’ said Rutan. ‘Today, I think that can happen in my lifetime.’ Take-off, added Branson, could be the following year – 2009. No one mentioned that Virgin Galactic still lacked a viable rocket motor. And even when it was fully developed, it might never be capable of flying in space.

  Branson had arrived in Oshkosh in Galactic Girl. For a few, the sight of an environmental crusader jetting around in a Falcon promoting his space business was jarring. But the majority applauded the unconventional maverick. Unlike the attitude of American billionaires, his rejection of the vulgar excesses normally associated with vast wealth encouraged confidence. His appearance – modest and genial – during his planned exposure in America would mask the reality of a tough British businessman intent on sealing profitable deals.

  Since 1967, when he was seventeen, Branson had concealed his single-minded pursuit of money behind successive charades. Using seduction and salesmanship, he had charmed countless talented musicians, journalists, engineers, inventors, financiers, businessmen and women of all backgrounds. From student publisher to shopkeeper to music producer to airline owner and then simultaneously to investor in dozens of different ventures, his unthreatening manner rarely ceased to win his admirers’ trust and their sacrifice. Few remained unimpressed by his successful sale of Virgin Music and the launch of Virgin Atlantic, combined with his dazzling feats in speedboats and hot-air balloons. His victories and glory attracted universal worship – except from his victims. Many former friends, partners and advisers resented the small reward for their contribution to Branson’s ventures, especially those in the music business. Few properly understood his instinct to spot their personal weaknesses and his skill at concealing his own. None had grasped that the embrace of the Virgin family implied ownership by the proprietor. Enthusiastically, each offered unqualified loyalty to Virgin executives acting as creative catalysts. Then, the relationships soured. Collaboration meant subservience, not equality. Occasionally, their joint businesses crashed. The consequence of their misjudgement was debilitating. Talented men complained that their trust had been abused. They had flocked to team up with a famous hero only to be disappointed. Betrayal left a sour taste. While telling their stories, grown men became tearful. They slunk silently away, bruised and defeated. Scattered across the world, they blamed misplaced faith in Branson for signing contracts tilted in his favour. They were bewildered by their misjudgement, and their self-esteem had plummeted. In public, nothing was said; confessions of failure were not a good advertisement for future business projects. Any reservations they dared to utter about the global hero were invariably swept aside by a man who, even when defeated, elicited sympathy rather than rebuke.

  In 1999, Branson’s financial crisis and his failure the following year to land the national-lottery licence could have provoked carping. Instead, he was praised for selling a 49 per cent stake in Virgin Atlantic to Singapore Airlines in a turbulent market; and in 2002, he was admired for pocketing a huge profit from Virgin Blue, a new Australian airline. Overlooked was Virgin Atlantic’s weak management, lumbered by rising costs and falling revenue. After 2004, his airline’s finances were again threatened. Taking risks to survive was Branson’s gospel but, to save Virgin Atlantic, the corporation’s cure had been perfidious: Virgin executives broke the law. And the fuse of their criminality had been lit, the British government’s prosecutors would claim, with Branson’s knowledge.

  5

  Virgin’s Crime

  Seven months before Branson stood on the podium in Manhattan with Bill Clinton to pledge $3 billion to the environment, senior executives employed by the world’s major airlines were enjoying a gala dinner in Hong Kong as guests of IATA, the industry’s global representative. Gradually, conversations on every table were interrupted as the executives – one by one – answered incoming calls or read messages on their mobile telephones. Dark-suited men paled, stood up and left the atrium with phones still clasped to their ears. Their reaction was replicated across the world.

  At 6 a.m. New York time on St Valentine’s Day 2006, police in America, Europe and Asia had waved search warrants and entered airline offices, seizing records and computers. Shortly after, lawyers arrived to serve subpoenas demanding that the airlines’ executives answer questions regarding an illegal cartel. According to the subpoenas, since the late 1980s the airlines had secretly fixed the price of cargo shipped across the world. By removing competition, the airlines had profited at the public’s expense.

  The tip-off about the crime had been passed to the Department of Justice in Washington DC by lawyers representing Lufthansa, the German airline. By confessing, the company hoped to avoid a massive fine. At the direction of the department’s lawyers, over one hundred FBI agents in New York had raided offices at Kennedy airport, including those of British Airways and Virgin Atlantic. Si
multaneously, buildings were raided in other countries, including BA’s offices at Heathrow. In every country, the police departed with files, computers and downloads of emails.

  Sifting through the evidence, the US Department of Justice’s lawyers found proof implicating BA and Virgin Atlantic in the cargo cartel. With limited resources, the lawyers decided to focus on twenty airlines, including BA. By virtue of its size, Virgin was classified as a fringe participant and excluded from the investigation.

  Unaware of their client’s escape, Virgin’s lawyers continued to scrutinise the information submitted by the department about the conspiracy. The potential penalty for each guilty airline was 10 per cent of their annual revenue: BA was facing a fine of £850 million; Virgin’s fine would be £180 million. For BA, buffeted by a pension-fund deficit, rising oil prices and industrial problems, the financial penalty was crippling. For Virgin, it could be fatal.

  In June 2006, the department’s lawyers asked each airline: ‘Was the same price-fixing happening on the other side of the house – on the passengers’ side of the business?’ Unanimously, the airlines replied, ‘No.’ Cargo, the airlines including BA explained, was a self-contained village on the far side of airports staffed by different people. The Department of Justice accepted those denials, without specifically noting that the only airline failing to deny the suggestion was Virgin.