Hostplus defends $260k tennis schmooze

The leading industry super fund spent $260,000 of its members’ money wining and dining associates at the Australian Open.

David Elia, leaves court after testifying before the Banking Royal Commission in Melbourne. Picture: Stuart McEvoy.

Big industry super fund Hostplus spent $260,000 of its members’ money wining and dining 120 chief executives and employer representatives at the Australian Open this year as part of an annual pilgrimage to the tennis major, the financial services royal commission has heard.

Hostplus chief executive David Elia, who manages the savings of the country’s hospitality and tourism workers, told the commission yesterday the annual tennis event was necessary to ensure bosses didn’t move worker super away from the $40 billion fund.

Mr Elia’s spending, including tickets to the tennis for his wife and children and his personal use of frequent-flyer points racked up through travel for the fund, was probed by the prudential regulator, the commission heard.

The commission yesterday also heard a senior Commonwealth Bank executive admit the bank committed criminal breaches of the law 15,000 times by failing to move customers into low-fee products that would have cut it off from lucrative trailing commissions.

In a bumper day for Kenneth Hayne’s commission, counsel assisting Michael Hodge QC also extracted an admission from a senior Suncorp executive that the bank might be double-dipping on fees charged to superannuation members as he probed the ­Brisbane-based group’s habit of trousering surplus tax remittances rather than passing them on to fund members.

Hostplus, the best-performing fund in the country, was on the receiving end of the most significant punch landed on a major union-and-employer-backed fund during the royal commission’s hearings into the $2.6 trillion superannuation system so far, after AustralianSuper chief executive Ian Silk sailed through his examination last week.

The commission, which is looking into what kinds of marketing expenses are appropriate and in the best interests of members, heard Mr Elia defend Hostplus’s decision to spend member money lubricating relationships with company executives who had the discretion to cancel their deals with the super fund.

Mr Elia was also forced to defend the $40,000 laid out on tickets at Melbourne’s Etihad Stadium in April and a staff lunch at top-tier Chinese restaurant Flower Drum in December.

While Hostplus is not a corporate sponsor for the Australian Open, unlike National Australia Bank’s superannuation arm MLC and rival Big Four bank ANZ, Mr Elia told the commission the fund regarded taking employers to the tournament as its “flagship entertainment event”.

He told the commission that “unashamedly, unashamedly we utilise entertainment, corporate hospitality in order to strengthen the relationship we have with our employers”.

“I wish I didn’t have to do it. But the reality is it is a competitive landscape,” Mr Elia said.

The fund was always at risk of having default fund status taken away by employers and given to other, higher-cost funds, he said.

Mr Elia said Hostplus lost a contract with one of the largest hotel chains in the country because it did not have a relationship with its chief executive.

“Remember they all have banking relationships as well. They’re being pressured,” he said.

Mr Elia said the money for the event came out of the fund’s $1.50 weekly administration charge, not members’ investments.