Tom Fox, the Compliance Evangelist, explains in detail the transformative power of compliance in making companies stronger, more resilient, and ultimately more profitable.

In this edition of The KAJ Masterclass LIVE, we had the privilege of interviewing Tom Fox, the compliance evangelist and founder of the compliance podcast network. With his extensive expertise and passion for the subject, Tom sheds light on the transformative power of compliance in making companies stronger, more resilient, and ultimately more profitable.

Compliance as a Business Process: Tom explains that compliance has evolved from a legal response to a business process over the years. It originated as a means to comply with laws such as the Foreign Corrupt Practices Act, which prohibits US corporations from engaging in bribery and corrupt practices abroad. However, compliance now goes beyond mere legal obligations. It is based on internal controls, particularly financial controls, that drive business efficiency. Companies subject to accounting reporting and oversight must have these controls in place to prevent fraud, waste, and abuse.

The Global Scope of Bribery and Corruption: Highlighting the gravity of the issue, Tom emphasizes that bribery and corruption pose significant challenges worldwide. The United Nations estimates that an astonishing three trillion dollars is lost annually due to these practices. Beyond financial implications, bribery and corruption lead to criminality, terrorism, and even loss of innocent lives. As a lawyer and compliance professional, Tom is dedicated to fighting against this international scourge, viewing compliance as a powerful tool in this battle.

The Intersection of Business Interests and Compliance: Tom addresses the dilemma faced by companies seeking to balance compliance with their business interests, especially in competitive global markets. He advises companies to assess the overall risk involved in conducting business in certain regions. If the risk of needing to pay a bribe to secure contracts is high, companies should consider alternative markets. Compliance, therefore, involves making ethical business decisions while pursuing Growth opportunities.

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Transparency and Responsiveness: When questioned about companies using intermediaries or commissions in their business transactions, Tom emphasizes the importance of transparency. If a middleman is employed, it is essential to ensure that the proposed spending and profit margins align with reasonable business proposals. Compliance requires thorough monitoring and traceability of payments, avoiding offshore accounts and maintaining visibility.

The Role of Company Culture: Tom highlights the significance of fostering a culture of compliance within organizations. When American companies expand to other countries, their country managers must understand the importance of achieving business targets ethically and in compliance with regulations. By instilling a culture of compliance, supported by effective internal controls, companies can navigate the complexities of global operations while upholding ethical standards.

Compliance for Reputation and Long-Term Success: Tom underscores the reputation risks associated with engaging in bribery and corruption, emphasizing the long-term consequences for a company’s growth and sustainability. Engaging in illicit practices may yield short-term gains, but the negative impact on a company’s reputation can be devastating in the long run. Upholding ethical business practices, even in challenging environments, helps build trust, credibility, and enduring success.

Conclusion

Tom Fox’s insights into compliance as a catalyst for business growth shed light on its far-reaching impact. Compliance, once seen as a legal requirement, has evolved into a powerful business process based on internal controls. By embracing compliance, companies not only enhance their efficiency and profitability but also contribute to the global fight against bribery and corruption. Transparency, ethical decision-making, and a culture of compliance are the keys to harnessing the true potential of compliance and driving sustainable business growth in today’s interconnected world.

Originally published at https://khudania.substack.com.

Khudania Ajay Content Entrepreneur, Podcast Host & Ind. Journalist

Khudania Ajay is a writer, podcast host, and independent journalist. In his 20-plus years in the media, he has worked with renowned organizations such as CNBC (India), Reuters, and Press Trust of India (PTI). Now, he is dedicated to helping his audience succeed through his LIVE Masterclasses.