This premise reminds me of the plot of a movie, I think it was The Cube. From what I remember, it dealt with how bureaucracy could be used to perpetuate evil, without those involved thinking that what they're doing is wrong.

Once the machinery is in place, inertia makes it very hard to stop: the cogs don't need to worry about the bigger picture, they can just keep on turning.

http://www.imdb.com/title/tt0123755/