There is no stupidity or oversight involved here. Google knows exactly what is going on.
Unlike smaller advertisers who just use the Google Adwords control panel to set up their promotions this affiliate has an account manager at Google who handles his campaign and ensures there are no editorial rejections of search terms.
This is a common practice at Google and Yahoo search martketing. The fact is when you spend enough each month you are afforded a different level of service then blue collar advertisers.