Many thanks for that excellent contribution to the topic.
That was exactly my impression of the `refunding` of the cash; to whom could he give it.
As to N, as you say, either he did not know what was rife under his nose - and as he was so well-informed about so many aspects of life in the corners of his empire, that is well-nigh impossible, or he knew all about it and tolerated it.
I do NOT imply that he demanded a cut from the thieves, but it would not surprise me to hear that he did.
The fish rots from the head.