In bigger firms, the practice is common -- It's a hard request to turn down, especially if it comes from a key account: "As a favor, could you have a look at my brother/son/cousin, who really needs a break. . ."
In a big company, even if the prospective new hire is a loser, there are likely enough corners of the company in which to stash him or her until boredom leads to resignation. And company secrets are much harder to find than in small businesses.
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