Appealing to both civic duty and to the pocketbook, a one-cent bounty was paid for each rat tail brought to the authorities (it was decided that the handing in of an entire rat corpse would create too much of a burden for the already taxed municipal health authorities). Unfortunately, this scheme backfired. Despite initial apparent success, the authorities soon discovered that the best laid plans of mice and men often go awry. As soon the municipal administrators publicized the reward program, Vietnamese residents began to bring in thousands of tails.
While many desk-bound administrators delighted in the numbers of apparently eliminated rats, more alert officials in the field began to notice a disturbing development. There were frequent sightings of rats without tails going about their business in the city streets. After some perplexity, the authorities realized that less-than-honest but quite resourceful characters were catching rats, but merely cutting off the tails and letting the still-living pests go free (perhaps to breed and produce more valuable tails).
Later, things became even more serious as health inspectors discovered a disturbing development in the suburbs of Hanoi. These officials found that more enterprising but equally deceptive individuals were actually raising rats to collect the bounty. One can only imagine the frustration of the municipal authorities, who realized that their best efforts at dératisation had actually increased the rodent population by indirectly encouraging rat-farming. Evidently, this was not what the French had in mind when they encouraged capitalist development and the entrepreneurial spirit in Vietnam. Faced with such fraudulent schemes, the colonial regime scrapped the rat bounty program.
http://www.freakonomics.com/media/vannrathunt.pdf
If an organization is judged by how many "terrorists" they arrest, one should not be surprised if that organization comes up with a counterproductive means of increasing the number of terrorists arrested.