technology

Virgin Hyperloop One Revamps Board; Director Arrested

Updated on

Attendees walk past a Virgin Hyperloop One XP-1 pod outside at the 2018 Consumer Electronics Show (CES) in Las Vegas. 

Photographer: Patrick T. Fallon/Bloomberg

Virgin Hyperloop One replaced three directors and a fourth was arrested, the latest signs of turmoil at the futuristic transportation startup.

A list of directors that was updated on the company’s website Monday showed three members stepped down from the 10-person board: Jim Messina, a former adviser to President Barack Obama; Jim Rosenthal, a former Morgan Stanley executive; and Peter Diamandis, founder of X Prize.

New board members are Bill Shor of Caspian Venture Capital; Yuvraj Narayan, chief financial officer of DP World; and Anatoly Braverman of Russia’s sovereign wealth fund. A spokesman said Messina remains an adviser to the board; Diamandis is now an observer; and Rosenthal stepped down at the end of last year to focus on his cybersecurity startup.

A fourth board member, Russian billionaire Ziyavudin Magomedov, was arrested in Moscow on charges of fraud and embezzlement unrelated to Hyperloop. Magomedov is appealing the arrest, his lawyer told Russian news agency Interfax. Virgin Hyperloop One declined to comment on the arrest. 

“The new board appointments reflect the changes made when Sir Richard Branson became chairman and the company raised new investment at the end of the last year,” Ryan Kelly, the spokesman, said. “They are not related in any way to Mr. Magomedov’s recent arrest.” He didn’t respond to a question about why Messina and Diamandis aren’t listed as board advisors or observers on the company web site, despite listing another observer, Emily White.

Virgin Hyperloop One’s website also indicates a high-profile executive departure: Alan James, who was vice president of worldwide business development, no longer appears on the site as of Tuesday. James holds extensive global experience in high-speed rail, a field of considerable overlap with Virgin Hyperloop One’s vision for rail-like travel at airplane-like speeds. Marvin Ammori, the general counsel, also left the Los Angeles-based startup recently, people familiar with the matter said. He was replaced by Laura Lariu, now acting general counsel.

The changes come as the Hyperloop startup tries to steer itself out of tumult. Co-founder Shervin Pishevar took a leave of absence in December after Bloomberg reported on multiple claims of sexual misconduct. He denied all allegations of inappropriate conduct. Virgin’s Richard Branson replaced Pishevar as chairman. Earlier this year, Bloomberg reported that chief financial officer Brent Callinicos had left. Carl Jenkins, the senior vice president for hardware engineering, also departed.

“Virgin Hyperloop One has made strong progress on plans to bring our new mode of transportation to the market,” Kelly said, citing feasibility studies in several locations. “While our engineers are developing the commercial phase of our hyperloop technology, the company continues to impress governments and transportation authorities around the world.”

Although the Hyperloop transportation business poses large engineering and regulatory challenges, many companies have been racing to build the technology envisioned by Elon Musk. In addition to Musk’s Boring Co., which is exploring a plan to build an underground route between Washington and New York, tube-based transportation concepts are under development by two other Los Angeles startups, Hyperloop Transportation Technologies and Arrivo.

Building a new mode of transportation is extremely expensive. Late last year, the company raised $50 million as it was running low on cash. It’s now making a big push to win a contract to build the first commercial version of its proposed transportation system. It’s eyeing several possible sites for development, including Dubai. On Sunday, Branson and Chief Executive Officer Rob Lloyd hosted Saudi Arabia Crown Prince Mohammed bin Salman at a Virgin Galactic U.S. facility in the Mojave Desert, where they showed off a Virgin Hyperloop One pod—similar to a train carriage.

The long-term status of Magomedov’s board seat is unclear after his unrest over the weekend. Magomedov was co-chairman with Pishevar before Branson stepped in, and his firm, Caspian Venture Capital, is a major backer. Before the Virgin deal, Caspian made an unsuccessful offer to buy the company.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE