Little could he have imagined that three years later, with a new Nigerian president in power, an acrimonious row with the authorities would break out over whether the terms of the agreement he struck were still valid.

Virgin Nigeria, in which Branson's Virgin Atlantic has a 49 percent stake, was launched to great fanfare in 2005 under then-President Olusegun Obasanjo, an economic reformer with whom the British tycoon enjoyed close relations.

But Umaru Yar'Adua took office in Africa's top oil producer more than a year ago and his administration has been busy scrutinising contracts struck under his predecessor.

From oil giants Royal Dutch Shell and Exxon Mobil to China's Civil Engineering Construction Corp (CCECC), the terms of deals with major foreign investors are coming under the spotlight. Relations with Virgin have soured considerably.

"Over the years, public officials hardly bothered about the interest of our people when entering into contracts and agreements on behalf of the government," presidential spokesman Olusegun Adeniyi told a local newspaper last week.

"But with Yar'Adua many things are going to change ... under his watch, while we want foreign investment and would respect the sanctity of legally-binding contracts, he will not allow a situation in which our country continues to be short-changed."

Foreign direct investment soared to over $5 billion in 2007 from barely a fifth that in 2000, according to World Bank data. Nigeria has also been central to the portfolios of investors seeking to profit from Africa's fastest growth in decades.

Virgin's row is ostensibly over whether Virgin Nigeria can continue to use the international terminal at Lagos airport for internal flights rather than the domestic one, built by businessman and presidential adviser Wale Babalakin.

Virgin wants an easy connection for passengers in transit from its lucrative London-Lagos flights to Virgin Nigeria's routes within the country. The government says Virgin Nigeria must use the same domestic terminal as other internal carriers.

But the spat is about more than airport logistics.

"MAFIOSO" TACTICS

Branson argues that when Virgin was approached to set up a flag carrier for Nigeria, it agreed to do so under strict criteria which included the ability to operate domestic and international flights from the same terminal.

"To my utter dismay, certain authorities in Nigeria have chosen to ignore our contract, sending in heavies a few months ago to smash up our lounge with sledgehammers," the British billionaire said in a statement earlier this month.

"The behaviour of the authorities was similar to the way the Mafioso behaved in the U.S. in the 1930s ... If Virgin Nigeria can be treated in this way, can any company in the world seriously consider investing in Nigeria in the future?"

Adeniyi has accused Virgin of "orchestrating negative propaganda" and says the agreement over the international terminal was a non-binding personal deal with a former minister.

Whatever the rights and wrongs, analysts say the spat smacks of a clash of egos and can only be damaging to Nigeria's image with outside investors, sending the message that contracts are only valid as long as the same personality remains in power.

Virgin is in talks to sell its stake in the business, although it has said the brand name may live on.

"Based on the public spat in Nigeria, Virgin pulling out of an investment would be construed as having an image effect that is far more negative than necessary," said independent analyst Adeyemi Adeleke.

INVESTOR CLIMATE

It is less than a decade since the end of military rule in Africa's most populous nation and some risk-hardened analysts say the Virgin row is typical of the sort of roller-coaster ride that investors in a frontier market should expect.

Changes in administration in African nations have often triggered reviews of deals deemed not in the national interest.

But even long-standing partners in Nigeria's mainstay oil industry are worried by the unpredictable investment climate.

Shell said in May it was "very concerned about the future implications for investor confidence in Nigeria" after it and ExxonMobil were presented with a demand for $1.9 billion which Nigeria said it was owed under the terms of previous agreements.

While some analysts laud Yar'Adua's mantra of strict adherence to the rule of law, others argue it has led to stagnation in the reform process as endless committees are set up to pore over the small print of existing deals.

Uncertainty also still hangs over the political environment with the Supreme Court due to rule later this year on an appeal by Yar'Adua's rivals against his April 2007 election victory and with a cabinet reshuffle -- which he has indicated is in the offing -- yet to take place.