Aloysius gathers enough evidence of police malfeasance to blackmail the mayor. The cabby (Peter Falk) says "The cops in this town are morons. Retarded. I'm dealing with retarded people!" He then refers to an unseen cop as "that fat Nazi". Capt. Cullpepper turns out to be as greedy and dishonest as everyone else. Algernon Hawthorne says "Even for a policeman, your behavior was ruddy outrageous."
The fact that the Captain had this infatuation with a 15-year-old robbery shows the ineptitude of the force. The sole purpose seemed to be the recovery of the hidden money, which the tuna factory's insurance surely covered 15 years beforehand.
Also when the Crumps are locked in the hardware store, Culpepper wants to let them out, but the fat sergeant (Alan Carney) says "it ain't fair" to help them and not help the others. So it's decided to leave the Crumps locked up, which will likely cost the police department a ton of money to repair the hardware store and the Chinese laundry next door.
Not to mention their treating Secretary Schwartz as a sex object and making her get coffee (of course this was the 60s when all women were treated that way).
Aloysius seemed the only sane cop in the place, though even he threatened to blackmail the mayor for Culpepper's pension.
Peter Falk improvised that, from what I heard. As for Culpepper, he might've been pushed over the edge by his personal life, which was why he decided to take the money himself. And as for Algernon's line at the end, he is a foreigner, so maybe he doesn't like cops either.
I remember a lot of people in the audience laughed and applauded when Falk said "the cops in this town are morons!" That surprised me as I didn't see it as a joke. I wondered what kind of experiences they had had with the police.
Anyway, for years it was prohibited for movies to depict cops as crooks due to the Production Code, so maybe having the freedom to do that was just being celebrated in the anti-cops jokes. But maybe I'm wrong.
"All necessary truth is its own evidence." - Ralph Waldo Emerson