Well, that's not always true. In case of small companies, that might be the case. That is because if I have a position open, I may have to o the necessary arrangements to get the position filled in case of small companies.

But in most of the bigger companies and corporates, there will be a saparate set of people dedicated for getting people in. And the recruitment process is run as defined by the corporate policy. Most of the big guns have very good policies set for recruitment.

In corporates, there is something called as "Employee Refferal Schemes" where in an employee can recommend people. For reccomendation, every employee of the company will be eligible. It is very easy to get employee refferals. If you know one employee in the particular company, any number of people can go though him. This is one of the very popular methods of recruitment these days.

in most of the cases Recruiter means a company/organization not just an individual. In dividuals change every day but company lasts for quite a long time (If running successfully ofcourse.) Hence the "Human" recruiter becomes irrelevant yet times, in fact most of the times.

Now, during interview among the candidates if the recruiter knows somebody then there is a possibility that he will be biased. Otherwise, no such thing like "Recruiter Recruiting Known People Only" doesn't occur.