Strictly speaking, some of the storyline characters weren’t fools. Including Norrington, some definitely heard of Sheyan’s illustrious reputation as a pirate captain before. As for the reason they closed an eye towards his operations in Port Royal, there were two.
Firstly, they acknowledged that this Seaman had indeed contributed meritoriously to Port Royal and didn’t harm the port. The second reason was due to present time ideologies.
Even the Queen accepted contributions from pirates, and allowed armed merchant ships to become privateers. People who conducted businesses fairly and honestly in this current era was as rare as a phoenix feather or unicorn horn. Even a lawful armed merchant ship could be granted the authority to become privateers. Thus, why couldn’t a pirate renounce his evil ways and become a privateer ship for the government instead?
