The punishment, reward system doesn't always work. Sometimes owners are to lazy and neglect is the cruelty. Sometimes it's upbringing/environment, feeling a need to show that you are the hard guy sort of thing. Sometimes people just like to see pain and suffering and to inflict it to something themselves. We see a lot of suffering on the news and people like to watch.
You have to report it. If an authority threatens to do something if you do report it just ignore and report anyway. If the authority does do something then take it to the papers, make it high profile, you might get some form of settlement from it.
I don't believe in taking people/institutions to court simply to get a settlement but that authority deserves some punishment for covering it up, maybe it would learn a lesson and won't try such a thing again in the future.
The best deterrent would be making the identity of the person public but it would only work if the local people are so against animal cruelty that they themselves start to shun the person, make the person feel outside, make him lose his popularity so that it becomes such a taboo thing to do. Although that wouldn't stop everyone