This is one of many legal terms that came into the English language from Norman French. Malfeasance literally means "wrongdoing." A party who is accused of malfeasance is being accused not only of wrongdoing, but intentional wrongdoing. The alleged act is one that may be illegal, immoral or both, committed with full knowledge that such an act was so considered.
This is distinguished from misfeasance, which is basically an error or violation made out of ignorance, without malice aforethought.
For example, if the management of a corporation orders the use of a toxic substance in the manufacture of a product will full knowledge of its toxic nature, this would be considered malfeasance.
However, if the toxicity of the substance is not known by the corporation's management, and/or they had reasonable assurance that the substance in question of safe to use, it would constitute misfeasance.
There is also what is known as nonfeasance, which is a failure to act when the law requires it.
Here is an example which compares all three: Mr. M, the appointed head of a federal agency, receives instructions from the White House to hire a private contractor for the purpose of providing a particular form of relief to hurricane victims in a major city. Mr. M hires a contractor that is neither competent nor has the resources to carry out the job properly; lives are lost as a result.
If a Congressional hearing later determines that Mr. M deliberately hired an unsuitable contractor for political reasons, it would constitute malfeasance. If on the other hand, the contractor misrepresented himself and Mr. M had had hired said contractor in good faith unaware of any deception, it would constitute misfeasance.
If Mr. M had simply failed to hire anyone, it would constitute nonfeasance. While malice is not assumed in such a case, Mr. M could be held liable for not carrying out an executive order.