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What is Corporate Malfeasance?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 06 April 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
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Also known as corporate crime, corporate malfeasance is the incidence of illegal acts committed by a company or by individuals who utilize the resources of the business in the commission of illegal actions. Crimes of this type may involve intentional acts, a failure to perform duty or duties associated with a position within the corporate hierarchy that trigger a breach of current laws, or include situations where organized crime syndicates operate or in some manner control a corporation.

One of the more common examples of corporate malfeasance is known as white collar crime. In this instance, executives and other key individuals within a corporate office utilize their authority to engage in activities that are considered outside the scope of laws relating to the activities of the company. This can include the use of inside information for personal gain or in order to allow the company to gain access to the assets of another business entity.

White collar crime can also take the form of willful negligence. This form of corporate malfeasance takes place when persons in roles of authority fail to perform their duties in a responsible manner that is in compliance with current laws and regulations. As a result of their negligence, the business may suffer some type of censure such as fines, loss of government contracts, or even a suspension of the ability to do business within a given jurisdiction.

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Corporate malfeasance may take place due to some sort of ongoing relationship between a local or national government and the corporate entity. In most cases, this type of activity arises when the terms and conditions that govern the relationship are not specific enough to prevent broad interpretations of what constitutes legal transactions. As a result, the company may take advantage of the vague nature of the working agreement and make use of information or resources in a manner that is questionable and quite possibly illegal.

Organized crime presents a third example of corporate malfeasance. Companies set up as fronts for criminal activity such as laundering funds or resources may also engage in legitimate and perfectly legal business transactions in order to mask the illegal activities as well as provide an explanation for the apparently healthy nature of the company.

Corporate malfeasance can include any type of activity that is against prevailing laws. In some cases, the illegal behavior can lead to damage to the environment, create serious problems within an industry or the economy of a country, and even lead to a loss of human life. As the incidence of corporate malfeasance seems to increase over time, more and more countries are passing laws and taking preventive measures to minimize the amount of corporate crime taking place around the world.

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