Hola Jane

The sentence is:

Claro que esto no deja de mostrar esta institución como lo que era, extraordinariamente cruel.

Translated as:

But of course this does not stop this terrible institution being seen for what it was, an enormous cruelty.

If you try a literal translation, although less natural, you'll see more clearly what that "lo" means:

But of course this does not stop showing this institution as what it was, an enormous cruelty.

That "what" is "lo que" - See lesson on "lo que". 

I hope it clarified it.

Saludos