Anita's £652m sell-out

Dame Anita Roddick, once hailed as the champion of ethical consumerism and the darling of capitalism-with-a-conscience, has been forced to defend herself against allegations of abandoning her principles after the Body Shop was sold to L'Oréal, the world's largest cosmetic company.

The 64-year-old entrepreneur and her husband, Gordon, who founded the company in 1976 with a £4,000 bank loan and £3,000 from a friend, will earn £130m from the £652m sale. The friend, Ian McGlinn, will be rewarded for his early faith in the project with a £137m pay out.

Announcing the deal in London, Dame Anita, who has said she will give away the fortune raised from selling her 18 per cent share, denied she was getting into bed with the "enemy" and insisted she was not compromising her principles. In 2003, Dame Anita condemned L'Oréal in particular and the beauty industry in general, saying that it promoted "unattainable ideals and sabotages self-esteem". L'Oréal was embroiled at the time in a court case with a Californian manager who said she was sacked because she refused to dismiss one of her employees, who wasn't "hot" enough. But yesterday Dame Anita praised the corporate-citizenship record of the French giant, saying: "I don't see it as selling out. L'Oréal has displayed visionary leadership in wanting to be an authentic advocate and supporter of our values."

Campaigners immediately hit out over L'Oréal's track record on animal testing and its links to the Swiss multi-national Nestlé, recently voted the world's least responsible firm. Calls were made for shoppers to boycott the Body Shop.

The "cruelty free" slogan became one of the rallying cries behind the Body Shop's march to international domination of the ethical cosmetic trade and a central plank of Dame Anita's much-celebrated value system. She placed the environment, women, human rights and the needs of small producers alongside that of a company's need for profit.

There was also anger after it emerged that Nestlé, the world's most boycotted company, owns a 26 per cent stake in L'Oréal. Nestlé has been demonised by campaigners for its alleged role in promoting powdered baby milk in the developing world. The World Health Assembly estimates that 1.5 million infants die each year as a result of mothers giving up breastfeeding and using dirty water in their bottles.

Mike Brady, of Baby Milk Action, told supporters to e-mail Dame Anita, urging her to rethink. "Many Nestlé boycott supporters will abandon Body Shop if the takeover goes ahead and buying its products puts money in Nestlé's pockets. How could the Body Shop, with its stated values, have fallen into its hands?" he said.

L'Oréal strengthened its relationship with Nestlé in 2004 when the founding Bettencourt family, one of the richest in France, merged with Gesparal, in which Nestlé owned a 49 per cent stake. A spokesman at L'Oréal declined to comment on Nestlé's activities but insisted its own record on animal testing was sound. "Our policy is clear - we have not carried out or commissioned tests of products or ingredients on animals since 1989," he said. The spokesman conceded that a "very small amount" of ingredients used in the manufacture of its products had been tested on animals in order to meet safety standards.

However, the British Union for the Abolition of Vivisection (BUAV) said many within the animal rights movement believe L'Oréal had lobbied the French government to press for a delay in imposing a European-wide ban on the sale of cosmetics tested on animals. While testing on products was banned in 2004, L'Oréal is accused of seeking to delay an outright ban beyond the projected date of 2009. This means, it is claimed, many cosmetics still purchased in the UK have been tested on animals.

BUAV also said L'Oréal had declined to follow the Body Shop in signing up to the Humane Cosmetics Standard, a benchmark which allows consumers to verify if products have been tested on animals. People for the Ethical Treatment of Animals (Peta), which has been behind several high-profile attacks on senior figures in the fashion industry, moved L'Oréal to its "do-test" list in November 2000 after being presented with evidence of a possible link to animal testing. However, a Peta campaigner, Yvonne Taylor, said consumers should still keep faith with Dame Anita's creation. "We would still urge people to continue shopping at the Body Shop. We want the public to show L'Oréal they still oppose animal testing," she said.

Mary Rayner, of the pressure group Ethical Consumer, said the sale of Body Shop to L'Oréal would result in its ethical rating being downgraded by the magazine from 11 out of 20 to 2.5 once the deal is formalised.

It is the latest in a long line of examples of big corporations buying out smaller, more ethical companies, she said. In May last year, the chocolate maker Green & Black's was bought for £20m by Cadbury Schweppes. Founded in 1991 by Craig Sams and his wife, Josephine Fairley, the couple used Fairtrade cocoa bought direct from Mayan farmers. The organic food-maker Seeds of Change was taken over by the Mars Corporation, while the Vermont ice-cream maker Ben & Jerry's fell to Unilever, and the UK's pioneering organic producer Rachel's Dairy was sold to the US giant Deans Foods. All of the brands continue to maintain an independent presence on supermarket shelves.

However, Dame Anita insisted there was much L'Oréal could learn from the company she founded. "They understand what a maverick the Body Shop was in the business world and how we helped change the language of business, incorporating the action of social change," she said.

The L'Oréal chairman, Sir Lindsay Owen-Jones, said: "I can't use overnight the Body Shop approach in all of the L'Oréal companies, but our long-term commitment is to join Body Shop on this issue. I cannot be clearer than that."