I will tell you that I use all reasonably (and legally) available information in evaluating a prospective senior hire. That includes looking through my network for anyone who may have overlapped and getting their take on the candidate.

I will sometimes make an exception to that policy (hurting myself and my company) to not ask a current employer in cases where I probably wouldn't weigh that input very highly anyway.

I sure wouldn't expect that if you're applying to a company for an important position that they will entirely confine themselves to your list of references. Why on Earth would they? I'm going to check my network, your public Google/github/twitter/FB presence, etc.

To me, it's not about doing a reference check with my friend the CEO of the other company to whitewash unethical colluding behavior nor to threaten a candidate, but rather because doing reference checks with people who know the candidate well is good business.

I should perhaps provide the following color to the above: I will also aggressively recruit from a friend's company, and I've been on the other side, with startups/spin-outs aggressively recruiting top talent from within my organization. I never took it personally, and am happy to see the success that allows them to hire great employees, and happy to see employees go on to a job they prefer. My job is to make my own company a great place to work and retain top employees that way, not try to cultivate some quid-pro-quo social obligation to prevent the prison warden next door from hiring my prisoners.