It is avoiding the cap. Basically there is an off the books salary payment that is accounted for in cash but not cap room.
I would have the payer released, the team takes any interest or loyalty hits as a penalty. Put the money or most of it back in the teams coffers.
That contract is designed to avoid the salary cap. Because of that I think the commissioner is free to resolve the situation as a cap violation or more severe. I view my role as commissioner as also overseer? of the league. I do not make decisions based on 1 GMs ability to circumvent the rules.
... on the other hand if the league finds oddball situations like this fun and a part of the league then let it ride.
To me it really depends on how the league functions. I have been in leagues where this would be viewed as funny.