Out of the blue, Gerrard received a call from an ex-BA employee called Sadig Khalifa who had worked in the airline industry since 1974, when he was employed by British Caledonian in Tripoli. When British Airways took over B-Cal in 1988, Khalifa joined a division within BA called Special Services which dealt with any special passenger problems. In 1989 he started work as a check-in agent at Gatwick Airport and then joined the Helpline section, which was ostensibly there to meet BA passengers, help them transfer between flights, and look after elderly people. Another more clandestine activity was to try to poach other airlines’ passengers. There was an equivalent team at Heathrow nicknamed the ‘Hunters’.
In April 1990 the Helpline team was taken over by Sales and Reservations and the new boss, Jeff Day, came into the Helpline office and announced to Khalifa and his team of fifteen staff that ‘money doesn’t come from helping old ladies to the gate. What you have to do is get out and get more passengers from other airlines.’ Khalifa told Gerrard about a second meeting in August which Jeff Day specified had to be a ‘closed meeting’: no non-Helpline staff could attend or were to hear about it.
At this meeting, Jeff Day told Khalifa and his colleagues that Helpline had a new task: to accumulate as much information about Virgin Atlantic as possible. This included flight information: the number of passengers booked on flights, the actual number of passengers who went on board the aircraft, the mix between upper class and economy, and the time of departure. At the end of each shift the Helpliners had to fill out a form on each flight and personally give it to a Mrs Sutton, who gave it to Day. And how were they to get the information? Jeff Day told the Helpliners that they could get it by using the Virgin flight numbers to gain direct access to the British Airways Booking System, known in the trade as BABS. This was something they had assured Virgin that they wouldn’t do. The locks on the Helpline room were changed, and they were to keep the nature of their activities secret. One woman working alongside Khalifa refused to join in these activities since she thought that they were immoral, and the rest of the team covered for her.
Gerrard took a statement from Khalifa, and we sent it across to British Airways. It was set to become one of the main planks of the court case.
Immediately after Khalifa’s affidavit arrived with BA’s lawyers, I received a call from Michael Davis, a BA nonexecutive director who was a long-standing friend of my parents. He asked me whether we could meet for breakfast.
At our meeting, Michael began talking about ‘egg on face’. This was the first hint of apology. He had obviously been singled out as the one nonexecutive who could talk to me. Lord King and Sir Colin Marshall were still clearly unwilling to bring themselves down to my level and acknowledge that there was any truth in my accusations, but Michael Davis – as a family friend – had been designated the person who could best finesse the difficult idea that BA might have made some mistakes.
‘I think the three of us should have a little chat,’ Michael said. ‘A little chat. The three of us – you, me and Sir Colin.’
‘Sir Colin?’
‘Yes, he’s going to be around for the next ten years, you see. You see, the King is dead; long live the Marshall. I think it would be a sensible thing to do to meet up, the three of us, and see if anything sensible can come out of it.’
I watched Michael Davis grope for the appropriate words. Reading between the lines, he was telling me that Lord King’s days at British Airways were over.
‘You see, certain people at British Airways recognise that there’s been a certain amount of egg on face,’ he confessed. ‘There has been an acceptance of that egg, but if we’re going to have a sensible relationship in the future I think you, me and Sir Colin should sit down together.’
As I listened to his tortured syntax and his attempt to offer me a deal, I realised that I was listening to someone talking about somebody else’s money and somebody else’s livelihood. Michael Davis, Sir Colin Marshall, Robert Ayling and Lord King would receive their salaries no matter what they had initiated at British Airways. The BA shareholders would stump up money to pay for Brian Basham, to pay for the detectives, and to pay for their lawyers when I sued them. Perhaps it was a good investment: if they had managed to put Virgin Atlantic out of business it would have been money very well spent. But Virgin Atlantic was primarily my own company. It was a private company and, if BA poached an upper-class passenger to New York, that was £3,000 that Virgin would lose: £3,000 that we couldn’t reinvest in the business. And, unlike BA, I had no vast corporate reserves I could draw on to fund salaries. So, for all his talk of ‘egg on face’, Michael Davis was missing the point: BA had tried very hard to put me out of business and my staff out of their jobs. They had also forced me to sell Virgin Music, which had affected a whole group of other people who had nothing to do with the airline. It made me furious. I was not going to sit back over a gentleman’s breakfast and agree that it was all just a certain amount of ‘egg on face’.
Throughout the entire dirty-tricks episode I had been accused of being ‘naive’: naive to believe that British Airways could behave in such a manner, naive to think that British Airways would ever stop behaving in such a manner, naive to believe that I would ever be able to bring British Airways to court, naive to think for a moment that I could win a court case. The word ‘naive’ echoed round and round in my head and at some points had almost undermined my resolve to go on. Sir Michael Angus told Sir Colin Southgate that I was naive to take on British Airways ‘as if it was a Boy’s Own story’; Jeannie Davis told my parents that ‘Ricky should learn to take the rough with the smooth’; and even people like Sir John Egan of the BAA told me ‘not to shake the money tree’. Perhaps I was naive in fighting for the justice I wanted; perhaps it was idealism; or perhaps I was just plain stubborn. But I knew that British Airways’ activities were unlawful and I wanted compensation. I was determined to make all those people, who had dismissed my stance as ‘naive’, eat their words.
I called Gerrard Tyrrell after the breakfast and told him how sympathetic and persuasive Michael Davis had been.
‘Rubbish,’ he retorted. ‘BA had the chance to settle at the beginning but they didn’t. It’s only because their lawyers are now looking into a black hole of guilt that they’re being forced to consider settling.’
I had never heard Gerrard sound so angry.
‘You’ll never have a better opportunity than now to nail them,’ he went on. ‘Don’t cave in now.’
‘Just testing you,’ I said. ‘Of course I won’t cave in.’
The next week we met George Carman, our formidable QC who was preparing our case. With his white hair and impeccable manners, George seemed like everyone’s favourite uncle outside the courts. Inside, he had the subtlety, tenacity and killer instinct of a praying mantis. People went to extraordinary lengths to avoid him.
‘What do you think of my opening line of address?’ George asked us. ‘The World’s Favourite Airline has a favourite pastime. It’s called “shredding documents which are liable to be misconstrued”.’
I called Michael Davis and told him that I couldn’t agree to let my accusations slip under the carpet. The court case was set to start in January and the British Airways directors would be cross-examined by George Carman. I didn’t even need to hint at how much George Carman would relish this. Sobered by this prospect, Michael Davis put down the phone.
By now I felt really confident that we could beat BA. Not only had we discovered so much about their dirty tricks, we had also found out details of an extraordinary BA undercover operation.
Someone contacted my office to say that he had some information about an undercover operation set up by BA involving various private detectives. He said that he had a computer disk containing a diary of everything the private detectives had done. He insisted that I meet him personally before he handed over the disk.
I felt rather strange as I climbed into the car with one of my assistants, Julia Madonna. This was partly due to the fact
that I was wearing a microphone hidden in my crotch area so that I could tape my conversation with the contact. I knew how vital the tape of Brian Basham’s meeting with Chris Hutchins had been, and I wasn’t going to leave anything to chance with this meeting. When I set up Virgin Atlantic I had no idea that I would have to resort to James Bond-style activities in order to run it!
I scribbled in my notebook as our contact talked:
Trying to find out what we were up to [but] didn’t want to give that impression. Not at Lord King’s level … Being careful not to be seen to do any investigation only putting up defences.
Most importantly, our contact gave us the computer disk. When I had it printed out it was a revelation. The private detectives had kept an extremely detailed log of what they had been up to and who they had been reporting to at British Airways. The log revealed that the operation had been codenamed ‘Covent Garden’. The first entry, dated 30 November 1991, stated, ‘First sight of Project Barbara report seen in S1’s office in Enserch House [BA’s central-London HQ].’ ‘S1’ turned out to be the codename for David Burnside, and ‘Project Barbara’ was the report on Virgin that Basham had given to Chris Hutchins.
Most of BA’s top management had been named, but they had been given alphanumeric references so that their real names never appeared in print. I found it relatively easy to establish who was who: Lord King was ‘LK’ or ‘C1’; Colin Marshall was ‘C2’; and Basham was ‘S2’. There were others, ‘R1’ and ‘R2’, who were unknown to us. They turned out to be the private detectives, Nick Del Rosso and Tom Crowley, who were leading the team under the guise of trying to find the mole inside BA who was leaking information to us. Operation Covent Garden was supposedly run by Ian Johnson Associates, ‘international security management consultants’. The log detailed how Johnson and Del Rosso briefed BA’s director of security, David Hyde, and the legal director, Mervyn Walker, on the progress of operation Covent Garden. It also recorded meetings with Robert Ayling and Colin Marshall.
The log contained astonishing details of how the team of detectives had convinced some of BA’s senior management that we were running an undercover operation against BA. The amount of money they estimated we were spending on our nonexistent operation was £400,000. We later found out that BA was spending £15,000 a week on Covent Garden.
The sheer absurdity of the operation was revealed by details of how the detectives had staked out the Tickled Trout Hotel in Lancashire with secret cameras and sound-recording equipment. The idea was to secretly record a meeting between Burnside and an ‘agent’ that the Covent Garden team had convinced themselves was working for Virgin. The log recorded how their plans came unstuck when Burnside failed to turn on his bugging device! I could have spared BA the trouble: I never have employed private detectives and never will. That is not how I or Virgin operate.
When I had finished reading the Covent Garden log I felt as if I had returned from a parallel universe – one created in the imaginations of BA’s hired conspiracists and senior management at the cost of thousands of pounds. I really began to look forward to the libel case, which was being heralded as the ‘mother of all libel trials’.
7 December 1992
‘BA have collapsed,’ George Carman told me. ‘They have today paid just under half a million pounds, £485,000 to be precise, into court. They’ve admitted in effect that they’re entirely guilty as charged.’
We later discovered that, just before the court case was due to start, BA’s lawyers had told them that they had no hope of winning. If they wanted to avoid the humiliation of having to stand in the witness box and be cross-examined by George Carman, and seeing all their activities written up in the press, then their only option was to make a payment into the court and start negotiating an out-of-court settlement.
At first I was in two minds over whether to accept the money. I was innocent, and we could put all the BA directors in the witness box and destroy them. But then, as we talked about it, I realised that, although this was tempting, such a move could be seen to be vindictive and was highly risky.
‘You’ve got to remember why you brought this case,’ George Carman advised me. ‘You wanted the dirty tricks to stop and you wanted to clear your name. BA have admitted that you are totally right. You’ve cleared your name.
‘If you persist with the case, then two things may go wrong. The jury might award you damages but they might think that you were such a rich man that you didn’t need £500,000 and just award you £250,000. That would be seen as a failure for you and a triumph for British Airways. If the jury award you less than British Airways have paid into court, then you will have to pay both sets of costs. So you may win the case but lose a lot of money, and people will be confused as to why Virgin Atlantic has to pay £3 million of costs.’
This last part of George’s advice was very persuasive. Although in some ways my decision to settle out of court could be something of an anticlimax, in that we wouldn’t have the satisfaction of watching George Carman cross-examining the directors, by deciding to accept BA’s offer we won a completely clear-cut victory with no risks attached and were immediately free to get on and run the business.
‘What do we have to do now, then?’ I asked.
‘We have 21 days in which to take the money out of court if we’re going to accept it.’
‘So we’ll do that?’
‘Good Lord, no,’ George said, looking shocked. ‘I’m not going to accept it. I’m going to get them to give us at least £600,000. If they’ve given £485,000 they can go up to £600,000. Every £100,000 makes an inch bigger headline.’
George spent a week negotiating over the payment. On 11 December 1992 we agreed the terms of the highest uncontested libel payment ever made in British legal history: £500,000 to me personally to compensate for the personal libel, and £110,000 to Virgin Atlantic to compensate for the corporate libel.
11 January 1993
‘VIRGIN SCREWS BA’ was the Sun’s headline. There wasn’t much room for anything else on the front page.
‘I’d have preferred it the other way round,’ Kelvin MacKenzie, the Sun’s editor, told me. ‘It would have made a better headline.’
I was in George Carman’s chambers with Gerrard Tyrrell and my father, whom I was delighted to share in the triumph. We walked round to the High Court in the Strand and jostled our way through the mass of photographers outside. The corridor outside court eleven, where the hearing would take place, was teeming. Inside the court it was very quiet. British Airways were noticeable by their absence: Lord King, Sir Colin Marshall and Robert Ayling, the three main protagonists, weren’t there. David Burnside was absent. Brian Basham had gone abroad, but his lawyers were there making a last-ditch attempt to have his name removed from the statement of apology. The judge listened to the plea and then asked British Airways’ counsel their opinion. They agreed with Virgin that Brian Basham’s name should be included in the apology. The judge ruled that the apology should stand as prepared.
George Carman stood up and read the agreed statement. When he came towards the end, there was complete silence in court:
‘British Airways and Lord King now accept unreservedly that the allegations which they made against the good faith and integrity of Richard Branson and Virgin Atlantic are wholly untrue. They further accept that Richard Branson and Virgin had reasonable grounds for serious concerns about the activities of a number of British Airways employees, and of Mr Basham, and their potential effect on the business interests and reputation of Virgin Atlantic and Richard Branson. In these circumstances, British Airways and Lord King are here now by leading counsel to apologise and to make very substantial payments to the plaintiffs by way of compensation for the damages and distress caused by their false allegations. They also seek to withdraw their counterclaim against Virgin Atlantic and Richard Branson.
‘In addition, British Airways and Lord King have agreed to pay Richard Branson and Virgin Atlantic’s legal costs in respect of the claim and
the counterclaim and have undertaken not to repeat the defamatory allegations which are the substance of this action.’
George Carman paused and took a breath. The court held its breath.
‘British Airways and Lord King are to pay Richard Branson £500,000 damages and are to pay Virgin Atlantic £110,000 damages.’
George had to raise his voice to make himself heard above the sudden noise in the court:
‘In the light of the unqualified nature of the apology and the payment of a very substantial sum by way of damages, Richard Branson and Virgin Atlantic consider that their reputation is publicly vindicated by agreeing to settle the action on those terms.’
I saw tears running down my father’s cheeks as he listened to the settlement. He had a large silk handkerchief in his breast pocket and he took it out to wipe his eyes. I clenched my fists under the table to stop myself from jumping to my feet.
The single jarring note was in the British Airways apology when, although they apologised unreservedly, they then went on to absolve themselves of any blame:
‘The investigation which British Airways carried out during the course of this litigation revealed a number of incidents involving their employees which British Airways accept were regrettable and gave Richard Branson and Virgin Atlantic reasonable grounds for concern. I should however like to emphasise,’ their counsel said, ‘that the directors of British Airways were not party to any concerted campaign against Richard Branson and Virgin Atlantic.’
A number of people in the court snorted with derision. It had been the one phrase that British Airways had refused to take out of the apology.
‘Let them leave it in,’ George Carman had finally advised me. ‘People will see exactly what it really means. We haven’t heard the last of that word “concerted”.’
Then, with the judge’s permission, Basham’s counsel stood up to point out that his client did not accept that the references to him in the foregoing statement were an accurate summary of his actions on behalf of BA.
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