Nice saying. Another one I just remembered is "We don't have enough money to do it right, but we have enough to do it twice."
This was a CTO burning funds, and that does not even cover the maintenance costs, especially as the original library changes and becomes drastically more modern.
You argumentation assumes that the goal was saving money.
On the other hand, if the company's goal is to become a little bit more independent of this library (and their licensing fees), this approach often makes a lot of sense.
On the other hand, if the CTO's goal is to grow his empire with no regard to the well-being of the company, this approach makes a lot of sense.