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Magazine Questions Body Shop’s Image

September 2, 1994

MINNEAPOLIS (AP) _ In an article that caused a furor long before its publication, a magazine has accused the Body Shop of trying to sell moldy eye gel, fabricating the exotic origins of some toiletries and other lapses.

An early draft of the article published Thursday led a U.S. ethical investment fund to unload 50,000 shares of the company, based in Britain. Speculation about the accusations has caused the company’s stock to plunge in British trading.

The article by free-lancer Jon Entine says that company founder Anita Roddick’s first business partner, cosmetologist Mark Constantine, and Janis Raven, a public relations expert, say the company made up stories about its products: cocoa butter inspired by Hawaiian natives, peppermint foot lotion mixed on request of the London Marathon, among others.

The article also claimed that franchisees around the world had problems getting the Body Shop to take back spoiled products, such as moldy Elderflower Eye Gel, reported by former Asian head franchisee Anne Downer.

A company official wrote Downer that the product, though moldy, was unaffected and still safe for use, according to the magazine.

The Body Shop issued a statement Thursday calling the piece ″recycled rubbish,″ a ″mish-mash of defamatory and actionable falsehoods″ and said it will defend its reputation and is reviewing its legal position.

The Body Shop has had its defenders, including Ralph Nader and Ben Cohen of the ice cream maker Ben & Jerry’s Homemade Inc. Nader said Entine has ″inclinations toward fiction.″

Cohen resigned from Business Ethics’ editorial advisory board after threatening to do so if the article was published.

″Techniques such as using direct competitors as unidentified independent experts, attempting to create an adverse impression of the company with investors and analysts in advance of his publication, and basing substantive charges on the comments of a handful of ex-employees do not meet the test of responsibility,″ Cohen said.

The furor erupted in Britain two weeks ago when the Financial Times newspaper reported that the U.S. ethical investment fund, Franklin Research and Development Corp., unloaded 50,000 shares of Body Shop, amid concerns that upcoming criticism of the company would hammer the stock price.

The story said Franklin Research’s decision was based on information it saw in a draft of the Business Ethics magazine.

A senior vice president of Franklin Research, Patrick McVeigh, said in a later letter to the Financial Times that although his group was researching a report on the company’s ethical performance, it may buy back stock later.

The Body Shop’s environmental stance brings intense scrutiny from a variety of investment funds that keep tabs on the business practices of companies they invest in.

The company’s stock rose 7 pence (10.5 cents) to 2.31 pounds, ($3.47) in London today, but remained below the 2.42 pounds ($3.63) it commanded at the time the British news coverage began.

Analysts said the Body Shop has weathered the storm, but pointed out it remains open to criticism because of its ethical stance.

″There will always be critics of those which take the position of moral superiority,″ said Robert Snaith, an analyst for Societe Generale Strauss Turnbull Securities Ltd. ″It’s a case of finding the vicar’s weak spot.″

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