Yeah this is definitely one of those things that sounds good on paper but has unintended "consequences" shall we say.
I worked for one company about a decade ago where the task was to redesign the corporate homepage. The "about us" pages on the homepage, not the actual product the company was selling. These pages got a few hundred hits a month. The decision was made to create two sub-teams, one would create a custom CMS, the other would "render" the data entered into the CMS to the website visitors. So that was about 10-20 people in total. The project took over a year. All completely unnecessary.
I didn't understand why this was happening. Who gained from this? I couldn't figure it out. I supposed it was just a lack of controls on how long things took, and this was the result, but that didn't really feel right to me. It felt like someone had to really gain from this, but I couldn't work it out.
Anyway, during my leaving drinks, after a few pints, my boss told me "yeah I think I'm going to get promoted, the other managers who are applying for this job manage far fewer people so I think I'm well positioned to get it".
The penny dropped. The purpose of this project was to occupy people, so that more people could get hired, so his headcount increased, so he could get a promotion, and a payrise.