Mother Theresa of wealthy runs into trouble

She has been called “The Mother Theresa of capitalism”.
But in the past few years Anita Roddick’s reputation has suffered more
than a few bruises. The founder of Body Shop has been accused of several
unethical business practices including the exploitation of the Brazilian
Kayapo Indians.

Jon Entine*

“I’d rather promote human rights, environmental concerns, indigenous
rights”, whatever, says Anita Roddick breathlessly, as she opens yet
another Body Shop, at a mall near San Francisco, “than promote a bubble
bath.” Roddick is framed by a shelf-full of bubble bath, one of fourteen
varieties of soap suds sold by Body Shop; there is not a hint of irony
in her voice.

“Anita is a myth-o-maniac,” says Mara Amats, a trade consultant
who has worked closely with Roddick. Amats, like many Body Shop observers,
struggles to understand why such a charismatic business woman continues
to make one ethical misstep after another. For years, Body Shop had prospered
because of the squeaky-clean reputation of its founder and CEO. Roddick
even has long posted a sign in her office proclaiming that “we will
be the most honest cosmetic company” in the world. But today, that
rags-to-riches-to-Robin Hood corporate myth is in tatters as Roddick and
her company struggle with scandal and organizational disarray.

The past few years have certainly been a reversal of fortune for the
Body Shop which had known only exponential growth and fawning publicity
for most of its history. With the help of a $6,000 loan, Roddick opened
a tiny cosmetic shop in 1976 in Brighton along England’s south coast,.
She catered to the hippie counter-culture, selling “natural”
shampoos and lotions and offering “one-stop” ear piercing. Much
to her surprise, her cash register rang madly. A decade of spectacular
international expansion followed.

In the late 1980s, Roddick expanded her “green” brand image
by associating herself with social causes including an opposition to animal
testing, recycling, promoting AIDS awareness, human rights. The centerpiece
of Body Shop’s marketing efforts, however, was the rainforest promotion
with the Kayapo from whom she sourced a tiny amount of nut oil for her
hair conditioner. The media loved her. Before long, this eccentric and
outspoken entrepreneur emerged as the world’s best known feminist business
leader. “The Mother Teresa of capitalism,” she was called.

Roddick’s socially responsible reputation became a gold mine. Body Shop
is now a multinational beauty company with 1,407 shops in 45 countries,
and a billion dollars in retail sales. Roddick herself has amassed a fortune
estimated at more than $200 million. She owns a castle in Scotland and
a flat in London, and her husband Gordon, Body Shop’s Chairman, flies his
favorite polo ponies around the world on a chartered airliner. But despite
its enormous financial success, the Body Shop empire is beset by scandal
and losses in its key US market.

Until a few years ago, Body Shop’s generated dozens of enthusiastic
stories every year about its innovative, socially conscious, activities.
Consumers were willing to pay a hefty premium for its commodity products
because they believed its cosmetics were high quality and natural, and
that it practiced social responsibility consistent with what it preached.
But the image shattered irreparably in September, 1994 with the publication
of my article “Shattered Image: Is The Body Shop Too Good to Be True?”
in the US magazine Business Ethics. It detailed dramatic contradictions
between BSI’s idealistic public image and its operational practices, questioned
the company’s ethical reputation and challenged Anita Roddick’ honesty,
if not her sincerity.

“Shattered Image” documented that the company stole the Body
Shop name and marketing concept, fabricated the origins of key products,
misrepresented its charitable contributions and fair trade programs, and
has been beset by employee morale and franchise problems. Moreover, its
lotions, shampoos and fragrances were never “natural.”

The breadth of misrepresentation is startling and covers every dimension
of its operations. A few of the low-lights:

 

"Natural" Products:

 

Despite the green hype, its products are lackluster and drug-store quality.
BSI uses only microscopic and ineffective levels of botanical extracts
and combines them with extensive amounts of petrochemical ingredients such
as isopropyl myristate, petrolatum, and triethanolmine. As recently as
January of 1996, a Danish lab found two of its best selling products filled
with formaldehyde, confirming findings by Oko-Test, a leading German
consumer magazine. In April, the international trade publication Women’s
Wear Daily
quotes an industry consultant as saying “You can’t
offer low-end products at a premium price, which is where they [Body Shop]
are at.”

Charity:

Rather than giving away “an inordinate amount of pre-tax profits
to charity” as Roddick claimed, the company had given zero dollars
to charity over its first 11 years and gave far less than the average company
over its entire history.

Franchising:

Ninety percent of Body Shop’s stores are franchised. In effect, it is
an international wholesale operation in which its franchisees assume most
of the risk of expansion. It’s also led to huge problems: Recent franchise
suits in Israel, Singapore, France, Canada and Norway have resulted in
more than $10 million in settlements. The US Federal Trade Commission launched
a 16-month fraud investigation of Body Shop. While the probe was ongoing,
Body Shop revamped its franchise financial documents and all but ended
expansion in the United States, where it has lost money for two years running.

The Body Shop’s vaunted Trade Not Aid promotion is particularly misrepresented.
Gordon Roddick calls fair trade the “cornerstone” of the company.
It is a tiny cornerstone indeed: according to its own statistics, fair
trade represented less than 0.16% of turnover when my exposés appeared.
Kirk Hanson, a Stanford University business lecturer hired by the company
as a consultant characterizes its trading schemes as “small and few
in number” and says they have not been forthrightly promoted.

The problems with the Brazilian Kayapo project described by Saulo Petean
are just the tip of the iceberg. Its micro-projects with the Pueblo Indians
in the US and with natives in Tanzania and the Solomon Islands have been
grossly exaggerated and beset by problems. Pauline Tiffen, who linked the
Body Shop up with the Mexican Indian natives who were the subject of Body
Shop’s advertising campaign with American Express, has a harshly blunt,
but not uncharacteristic observation. She calls Roddick “schizophrenic”
and “sociopathic… She took the project we set up and tried to subvert
it,” according to Tiffen.

In January, its shea butter project in Ghana became BSI’s latest trade
scheme to hit the headlines. The Toronto Globe and Mail, in an article
entitled “Grief in Ghana” reports that Body Shop contracted to
buy huge amounts of shea butter, only to renege, leaving the local economy
devastated. Trade experts say it’s a now familiar pattern.

These problems are not just the mistakes of over-enthusiastic idealists.
A particularly revealing story is Body Shop’s first fair trade program.
In 1987, Roddick began sourcing foot massagers, which she calls “footsie
rollers”, made in India at the Boys Town orphanage. In the early 1980s,
when Richard Adams was head of the fair trade company Traidcraft (UK),
he sourced a different Boys Town product, wood carvings. He soon discovered
that Joe Homan, the project’s director, was sourcing the carvings from
sweat shops and was molesting the boys. He kept the police at bay by using
a slush fund kept full by church agencies that were innocently sending
him money.

When Adams found out that the Roddicks had linked up with Homan, he
was horrified. He immediately advised them of the problem. “I never
heard back,” he says. Two alarmed members of the Catholic order which
had kicked out Homan years before also visited Roddicks at their home.
Still, nothing was done.

“Gordon was aware of Homan’s reputation,” writes Anne Downer,
the former Body Shop head franchisee in Singapore, in a signed, legal affidavit.
At the Roddicks invitation, Downer had accompanied the family in India
for the dedication of Boys Town. “I slept in accommodations close
to where some of the boys lived,” writes Downer. “I was approached
by one of the assistants to the project. He informed me about Homan’s behavior
and the sexual molestation. He was concerned and extremely anxious that
I inform Gordon and Anita. I remember Gordon saying: “We’ve heard
those rumors, but I don’t believe it.” Downer continues: “He
didn’t seem unduly concerned and didn’t seem to take it seriously.”

Over the next few years, as Homan went about stealing charity funds
and buggering orphan boys, the Roddicks sent out glowing reports to their
franchisees. One idyllic account in 1989 reads: “Joe’s work in Boys
Town is ceaseless; he cares for the boys and girls and they really appreciate
what he is doing for them.” The roof caved in the next year when the
story broke in the English and Indian press. The Roddicks first tried to
suppress the story and then tried to turn it into a public relations advantage.
“This story has not hit the.press yet, but could erupt at any time,”
read one memo to employees and franchisees. “It is important that
you know your facts. Anita….blew the whistle on Joe.”

Many journalists, trade experts and social activists who have interacted
closely with Body Shop have come away shaken. Geoffrey Brooks, president
of Brooks Pharmaceuticals, which has processed the corn protein bought
from the Pueblo Indians for use in Body Shop’s blue corn `Trade Not Aid’
line, calls Roddick “a modern day colonialist.” Stephen Corry,
director of Survival International which once had a joint promotion with
Body Shop, now calls the company “sleazy” and “no more ethical
than heap of beans.”

The ethical contradictions begin with the very founding of the company.
According to Anita Roddick’s friends and colleagues, she stole the company
name, many of its product ideas, and its marketing tactics from a California
company, also called The Body Shop. The California store was founded at
the height of the hippie revolution in 1970 six years before Anita started
her Body Shop, and the same year that the Roddicks visited the San Francisco
bay area where the stores were located.

The misrepresentations don’t end there. Two of Roddicks earliest partners,
cosmetologist Mark Constantine and Janis Raven, head of Bubble Publicity
who ran the Body Shop’s public relations for seven years, contend that
almost every one of Roddick’s romantic stories about how she “discovered”
her ingredients in visits to native lands was fabricated.

“What we were looking for was unusual ingredients,” Raven
remembers. The [pineapple] facial wash, you know, we talked about Anita
Roddick going to Sri Lanka and seeing the women rubbing pineapples over
them. You know, that kind of nonsense.” Why was it nonsense? “Because
it wasn’t true. That was Mark’s information and we just decided to make
it a bit more romantic.”

Michael Johnson, former editor of International Management magazine
calls Body Shop a marketing fraud. He was threatened by Gordon Roddick
in 1986 when he provided the first public details of its California hijack.
“The Body Shop is a gangsterish operation hiding behind a veil of
social responsibility,” says Johnson.

That veil is there no longer. Today, the ethical realities of the Body
Shop have been the subject of media and academic reports around the world.
Moreover, Body Shop has lost many of its once loyal backers who remember
the earlier, more innocent days.

“I was the first person who would have remained loyal, says Janis
Raven with almost no bitterness in her voice. “It was a company we
all built together. But Anita Roddick has no loyalty to anybody. Everybody
is a slave, a new slave of the month comes around and you get dumped in
favor of them.”

“You know,” Raven says, “Anita’s gone a little bit over
the top. She just disappeared up her own backside. She started to believe
her own publicity and this is always the death knell to anybody. We used
to joke that I’ve created a Frankenstein. If you start believing all this
stuff that is written about you, you have got to go dotty, haven’t you?”

Mark Constantine is sad about the turn of events. “I used to say
to Janis, `can’t you do something about Anita?'” He erupts in a characteristic
laugh then sighs, thinking back to those bloody fun early days, mixing
weird potions in his kitchen while Anita and Gordon looked on like eager
kids in a candy store. “There is still a mass of innocence to those
two despite it all.”

Even with all the mounting problems, no one can take away Anita Roddick’s
success in building her cosmetic empire. She has amassed a fortune of almost
unimaginable proportions. But when the history books are written, she is
not likely to be remembered by today’s public persona as the world’s most
socially responsible entrepreneur. Even if the Body Shop should retool
its ethical framework, it is a company built on the shaky financial prospects
of its franchisees and the betrayed expectations of its idealistic employees
and customers. Anita Roddick never could decide whether she wanted to practice
her social vision or merely exploit it.

“She stands full square between Esteé Lauder and Elizabeth
Arden,” says Constantine. “They all wrote their own stories.”
Anita Roddick is one more beauty baroness who created her own myth to make
her entrepreneurial dream come true. So ultimately, Anita is the baby boomers
New Age queen of bubble bath? “That is exactly it. That’s exactly
it.”

*Jon Entine is a maverick journalist who specializes in
business ethics, race and sports. His investigation of UK-based The Body
Shop cosmetic company was awarded a National Press Club award in 1995.
He has also written extensively on Ben & Jerry’s Homemade for
deceptive marketing and for sourcing Brazil nuts for its flagship Amazon
“rainforest” ice cream from some of Latin America’s most notorious
agri-businesses.

His recent articles have focused on cause-related marketing,
ethical investing, corporate governance and social responsibility for both
the popular and academic press. Entine has also won more than a dozen major
awards for his television reporting with ABC News and NBC News, including
two Emmys for documentaries on reform movements in China and former Soviet
Union. Entine lectures on business and journalism ethics. He is also finishing
a book for Macmillan on why blacks dominate sports, based on his award
winning NBC documentary Black Athletes: Fact and Fiction.

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