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