Mr Elia and the Hostplus executive team used to receive frequent flyer points from their corporate credit card use however following a review by Hostplus of Mr Elia’s spending this was stopped.

“As a consequence of … the whistleblower complaint that was made to APRA, the chairman of Hostplus and the chairman of the audit risk and compliance committee suggested to me that maybe this is something that we should probably stop,” Mr Elia said. “And I agreed to that.”

Mr Elia said the entertainment at the Open was important to keep up with competitors.

“It’s probably our flagship corporate entertainment event that we do,” Mr Elia said at the banking royal commission on Tuesday.

“We have key employers, key stakeholders, alliance partners flying in from all over Australia to participate in that…It’s a great time of the year for us to do that.”

Hostplus chief executive David Elia leaves the Financial Services Royal Commission on Tuesday.

Hostplus chief executive David Elia leaves the Financial Services Royal Commission on Tuesday.

Photo: Daniel Pockett

‘Everyone is doing it’

Mr Elia said corporate hospitality was for the sole purpose of retaining the membership of Hostplus.

“It’s a great way certainly from my perspective and the executive team’s perspective to establish very early on and retain the relationships that are absolutely critical in terms of retaining the default fund status of our members and therefore retaining members,” he said.

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“It’s a competitive market out there. Our competitors are doing exactly the same thing. In fact they were there.”

Counsel assisting the commission, Eloise Dias, asked Mr Elia whether it concerned him to spend so much money on hospitality.

“It does,” Mr Elia said. “And I wish I didn’t have to do it, but the reality is that it is a competitive landscape that we are dealing with. Unashamedly we utilise entertainment and corporate hospitality in order to strengthen the relationships we have with our employers.”

“In other words everyone is doing it so you have to do it too?,” Ms Dias asked.

Ms Dias asked whether this was the best use of the hospitality fund’s money.

“With 161,000 accounts with less than $6000 in them… many of them are being eroded by premiums and fees down to zero,” she said. “Do you consider it’s the best use of the trust money to purchase these sorts of corporate packages?”.

Mr Elia defended Hostplus’s expenditure, saying “We are not dipping into investment reserves in order to fund the entertainment expenditure or marketing expenditure. It’s not an insignificant amount of money. You’re 100 per cent right. It’s a lot of money. But it’s done for the right purposes.

“If we ban marketing that’s perfectly fine by me but the reality is that in my world my competitors are doing just that,” he said.

Hostplus is not a sponsor of the Australian Open but spent $260,000 on entertainment at the event last year.

Hostplus is not a sponsor of the Australian Open but spent $260,000 on entertainment at the event last year.

Photo: AP

The commission heard that section 68A of the Superannuation Industry Supervision (SIS) Act prohibits a trustee of a superannuation fund or any of its associates offering goods or services to a person on the condition that the person’s employees will become a member of the trustees superannuation fund.

Mr Elia denied the entertainment was in breach of the act.

“It’s not an inducement in any shape or form,” he said.

Medallion Club and Flower Drum

Hostplus’ entertainment and marketing is not confined to the Australian Open.

The fund spent $21,440,832 on marketing in 2017 and an additional $266,964 on entertainment in the same year, a significant increase from 2013 when it spent $13,123,372 on marketing and $177,140 on entertainment.

Hostplus chief executive David Elia's spending was the subject of an APRA investigation.

Hostplus chief executive David Elia’s spending was the subject of an APRA investigation.

Photo: Arsineh Houspian

Mr Elia told the commission the superannuation fund spent $40,000 last year on Medallion Club tickets at Ethiad Stadium and Mr Elia also took staff for dinner to Melbourne’s Flower Drum restaurant in December last year.

“That was a very special night for them and their partners,” Mr Elia said. “These guys give me 60 to 70 hours a week. To me it’s a fantastic investment in these extraordinary individuals.”

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