I doubt they do it just to scare employees. It’s way too expensive to use this tactic without having any real savings to show.
It’s probably more likely that HR is keeping HR busy, because what else are they supposed to do when the company isn’t hiring? The explanation that it supposedly keeps employees in check seems like something HR would say to justify their own purpose.
Any (reasonable) CEO would absolutely take thee easy and actual savings of firing the HR instead of paying them to use this unproven pseudo-tactic.
I have a feeling the officially released footage might also not portray the incident in its entirety…