When Scandal Rewrites Corporate Partnerships

More than a decade after Brazil's Operation Car Wash began, its consequences are still crossing borders. In April 2026, Singapore's High Court approved a deferred prosecution agreement requiring engineering group Seatrium to pay a US$110 million financial penalty over corruption offences in Brazil linked to the investigation. Up to US$53 million paid to Brazilian authorities can be credited against the penalty, leaving US$57 million payable in Singapore. The Seatrium case is not part of the research discussed here, which ends in 2017. It does, however, capture the long afterlife of a scandal that changed how companies, public institutions and civil society were judged. New research by Marina Gama of Fundação Getulio Vargas and Aline Gatignon of HEC Paris shows that the shock did more than damage the organizations directly implicated. It redrew the map of corporate-nonprofit partnerships across Brazil.

A Scandal That Shifted Public Trust

Operation Car Wash began on March 17, 2014, with a police raid into money laundering. It exposed a bribery scheme in which politically appointed directors at state-owned Petrobras and Eletrobras allegedly manipulated supplier contracts in favor of a cartel of companies in exchange for kickbacks. Over seven years, the investigation unfolded through 80 phases. By 2017, 29 executives from eight publicly traded companies had been charged.

The investigation later became deeply controversial, and convictions were overturned as its own methods came under scrutiny. Gama and Gatignon therefore focus less on whether Operation Car Wash ultimately delivered justice than on what its public disclosure did to social expectations between 2014 and 2017.

Those expectations shifted sharply. Trust in business fell from 43% to 29%, while only 6% of Brazilians trusted the federal government by 2017. Nonprofits moved in the opposite direction. By 2020, 74% of Brazilians considered them essential for addressing social and environmental problems, up from 57% before 2014. Recognition of their transparency in handling donations rose from 28% to 45%.

That change made nonprofits more valuable partners. If government could no longer be trusted to provide education, health care, sanitation or other social infrastructure, companies and civil-society organizations had stronger reasons to work together. Firms could draw on nonprofits' expertise and networks. Nonprofits could gain funding, labor, goods and managerial capabilities.

More Partnerships, But Not for Everyone

To test how this played out, the researchers examined partnerships involving every nonfinancial company listed on the São Paulo stock exchange and registered Brazilian nonprofits from 2010 to 2017. The dataset covered an average of 440 firms a year across 20 industries, 3,776 corporate and foundation annual reports, 39,452 board-member résumés, information on 820,000 nonprofits and more than 300,000 press articles. It produced more than 10.4 million firm-nonprofit-year observations. The statistical analysis was complemented by 54 interviews with businesspeople, nonprofit leaders, investors, academics and political figures.

The overall result was clear: a corporate-nonprofit partnership became 2.32% more likely after Operation Car Wash, equivalent to 246 additional partnerships. The increase was strongest in 2014 but remained above pre-scandal levels in later years, suggesting more than a brief burst of corporate image management.

Yet the surge was uneven. The eight publicly traded firms directly implicated in the scandal were 44.05% less likely to form partnerships after its disclosure, representing 51 fewer partnerships. State-owned enterprises were also 0.7% less likely to form partnerships after Operation Car Wash, equivalent to 14 fewer partnerships among the 21 SOEs in the sample.

This is the paper's central tension. The same crisis that increased the value of collaborating with nonprofits also made some companies far less acceptable as partners. A nonprofit association could offer external validation, stakeholder support or political access. But it could also expose the nonprofit to accusations that it was helping a company clean up its image.

Nonprofits Put Up Their Own Barriers

The study challenges the idea that companies can simply buy legitimacy through donations or partnerships. Nonprofits had their own reputations, missions and political relationships to protect, and many became more selective after the scandal.

One nonprofit director interviewed for the study recalled that companies were approaching organizations to "clean their name". Some proposals were rejected because the corporate motive seemed too obvious. Another respondent described a wider debate over the ethics of donations: organizations that had once accepted money with few questions began asking who they should be willing to receive it from.

Gatignon describes this as "checking" instrumentalization in two senses. The researchers examine whether companies sought to use nonprofit ties for reputational repair or political influence. At the same time, the nonprofits themselves acted as a check on that strategy. They had more agency than accounts centered on corporate decision-making often assume.

This resistance also changed the kinds of partnerships that survived. Organizations vulnerable to accusations of carrying corporate political influence became especially cautious. Trade associations, whose role is closely tied to business interests, recorded 19 fewer partnerships than expected after the scandal. Education and research nonprofits, including universities, think tanks and research institutes, recorded eight fewer. Their claims to independent expertise could be damaged if they appeared to lend scientific or policy credibility to a corporate agenda.

Political proximity also mattered. Nonprofits with stronger relationships to politicians were 2.12% less likely to partner after Operation Car Wash, equivalent to 14 fewer partnerships. A connection that might once have been valuable could now look like a back channel between business and government.

The Price of Being Too Close

The findings show why corporate social responsibility and corporate political activity cannot always be studied separately. A partnership presented as social engagement may also confer political goodwill, regulatory influence or access. Once a corruption scandal makes those connections visible, the benefits and risks change for both sides.

Untainted firms were eventually able to work with a wider range of organizations, including politically connected nonprofits, trade associations and education and research groups. Firms carrying direct or indirect taint faced a more durable decline in such relationships. They shifted more toward cultural, social-assistance and human-rights nonprofits, organizations that generally received less government support and held less political leverage.

The authors treat this as evidence that nonprofits were self-regulating rather than simply following corporate demand. The shift may also have opened opportunities for organizations that companies had previously overlooked. But the study does not observe every rejected proposal or the private reasons behind each decision, so it cannot establish who walked away from a particular negotiation.

From Reputation to Shared Work

The practical lesson is not that companies should avoid nonprofits after a crisis. It is that the partnership must be built around a problem both sides genuinely need to solve, rather than around the company's need for endorsement.

In an HEC Breakthroughs podcast conversation recorded with Gatignon, she distinguishes between companies that are genuinely committed and capable, those that have good intentions but lack experience, and those primarily interested in image. Stronger partnerships begin by identifying a shared problem and the different resources, expertise and networks each organization contributes. They then create governance arrangements that do not leave all decisions, reporting requirements or public communication in corporate hands.

For nonprofits, this means assessing what could be put at risk: their mission, public trust, political relationships or ability to challenge the corporate partner. For companies, it means accepting dialogue, shared decision-making and real interdependence rather than treating the nonprofit as a service provider or reputational shield.

The Brazilian setting is distinctive, and the authors call for research in other countries and other kinds of institutional crisis. Gatignon and Gama are also studying the reverse question: what happens when governments attack nonprofits? Do companies retreat, or do they become allies of civil society?

Operation Car Wash shows that a scandal does not simply stain the organizations named in an investigation. It changes who can credibly work with whom. Partnerships may multiply because society needs firms and nonprofits to tackle shared problems. But once trust collapses, civil-society organizations decide which companies gain access to their legitimacy - and which do not.