I don't buy it. Seems like a waste of everyone's time. Even if you don't respect the candidate's time, it's still a waste of the employee's time, which is valuable to the company.
Certainly we have lots of horrible inefficiencies in my team, but stringing along hiring was not one of them. I understand this is not universal even at our company.
That sounds like it was a terrible place, but it was a good department in a somewhat hard nosed company. He ended up staying there 10 years.