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Case Study: Ethical Stand Against Corruption in Salta

Explore how a refuse collection company in Salta, Argentina, stood against corruption despite pressure, leading to positive moral and financial outcomes. Learn valuable lessons on ethical business practices and the importance of creating preventive networks.

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Case Study: Ethical Stand Against Corruption in Salta

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  1. THE SALTA CASE A 170-person refuse collection company working for the city of Salta, the 700,000 inhabitant state capital of the Salta Province in northern Argentina. In part because of Salta´s economic difficulties, payments for the refuse collection contracts in question had been delayed. These delays in the payment of over 2.0 million dollars which the municipality of Salta owed to company began to pose problems. Total annual sales amounted to roughly 2.2 million dollars and the outstanding debt to the company began to threaten its viability. payroll had been delayed for over two months. the treasurer informed the company’s CEO that by order of the Mayor, 33% of the contract ($660,000) would have to be paid in bribes in order for any payment to be made. the manager takes into considerations: the major is from the same party of the governor and a close friend of the state prosecutor. The governor is the owner of the state newspaper. He also appointed and control all the criminal judges.

  2. FFINANTIAL BENEFITS 1.37 million Dollars ·MORAL BENEFITS Payment of salaries Profit for stockholders Inclusion in public contracting networks (future contracts) Financial viability of firm, including the provision of employment for workers FINANTIAL BENEFITS No short-term financial benefits for the company. MORAL BENEFITS Personal moral satisfaction PAY OR NOT

  3. Mayor Treasurer

  4. Governor Prosecutor Mayor Newspaper Treasurer

  5. Supreme Court Chief Justice Governor Prosecutor Mayor Newspaper Judge Treasurer

  6. Supreme Court Chief Justice Governor Prosecutor Mayor Newspaper Judge Treasurer

  7. RESULTS • The company refused to pay kickbacks and successfully denounced the mayor. • The mayor was fired, jailed and replaced by a new mayor. • 9 months later the company lost its contract. • 5 years later the company had still not received the payment.

  8. The Solution: destroy one node is not sufficient, you have to create a preventive network

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