Branson’s Virgin Cruises Accused of Pirating Ultra Ship PlanSusannah Nesmith, David Voreacos and Christopher Palmeri
Richard Branson’s Virgin Cruises was accused of pirating business plans and ideas for building “ultra ships,” and in the process exposing the dark side of Virgin.
Colin Veitch, the former head of Norwegian Cruise Line Holdings Ltd., said in a lawsuit that Branson dumped him as the founding partner of what would become Virgin Cruises and used his plan to finance the new venture. Veitch could have made $315 million, he claimed.
“Upon recognizing the potential for Virgin Cruises to be one of Virgin’s biggest, sexiest businesses,” Veitch said in the lawsuit, “the dark side of Virgin quickly emerged,”
Branson is the founder of Virgin Group, which uses the Virgin brand in its telecommunications, fitness chains, airline and space flight businesses. He now wants to take to the seas, building two 4,200-passenger cruise ships aimed at younger travelers.
Branson has a net worth of $5.9 billion, according to the Bloomberg Billionaires Index and ranks as the 233rd richest person in the world. Veitch said he spent a year securing bank financing for Branson’s business and finding a German shipbuilder to construct the vessels.
Once done, Virgin changed the terms of his deal, he said.
Veitch said he went from a “fully vested owner of the business to an employee -- indeed an indentured servant,” according to the complaint.
“Richard Branson and the Virgin Group first looked at the cruise market in the late 1970s, and our current team has been exploring the opportunity for more than a decade,” Christine Choi, a spokeswoman for the company, said in an e-mailed statement. “Over the years, we have been in discussions with a number of parties including the plaintiff, and those discussions ceased in 2012. We strongly believe the claim has no merits.”
Veitch said the partnership between him and Virgin fell apart, and despite non-use and non-compete agreements, Virgin went ahead with the plan anyway. Veitch sought a court order preventing Branson from launching the business.
Virgin used Allen & Co. to raise equity for Virgin Cruises, “the very bank introduced into the project by Mr. Veitch in late 2010, even before he approached Virgin,” according to his complaint. Allen & Co. Chief Financial Officer Kim Weiland didn’t respond to a phone request for comment.
Virgin Group, the investment arm of Branson’s family, announced plans in December to create the new cruise line with backing from Bain Capital Partners. The companies didn’t disclose how much they were investing in the venture.
The line will be competing for passengers in an industry dominated by a handful of players, including Carnival Corp. and Royal Caribbean Cruises Ltd., the two biggest operators. While about 22 million people cruise annually, the industry says it still reaches a small share of its potential customer base.
Branson, known for his publicity stunts and stylish airline amenities, is expected to inject some more fun into the cruise business, travel agents said at the time of the announcement.
“We plan to shake up the cruise industry and deliver a holiday that customers will absolutely love,” Branson said when the new venture was announced. “They’ll be sailing on the latest ships offering a great quality, a real sense of fun and many exciting activities all delivered with the famed Virgin service.”