Former NSW RSL president Don Rowe was forced to resign after he used his corporate credit card to pay around $38,000 in phone bills, an auditor's report has found.
Mr Rowe, who cited health problems while stepping down from the role two years ago, also used the card to withdraw $200,000 worth of cash during his 11-year reign.
The findings, released in a report by firm KordaMentha on Tuesday, come after the RSL National Board last month commissioned an investigation into claims the NSW branch was stockpiling millions of dollars in consultancy payments instead of spending it on veterans.
The report said Mr Rowe incurred about $475,000 in expenses on his RSL credit card from January 2009 to December 2014.
RSL NSW chief financial officer Annette Mulliner allegedly told current national RSL president Rod White she had concerns about the expenses claims "submitted by Mr Rowe as they related to his Optus account" in November 2014, the report says.
After examining the claims, Mr White demanded Mr Rowe resign but failed to inform anyone about the incident, it says.
Mr Rowe subsequently resigned on November 25.
The pair were also among several other RSL directors who received more than $2.5 million in consultancy fees from an aged-care charity within the league, RSL LifeCare, the audit confirms.
There was a "lack of documentation" about how these funds were diverted across RSL sub-branches for the past 10 years.
The senior figures may have broken the law in receiving and failing to disclose the payments given their roles within the organisation are voluntary, the audit found.
The findings could lead to the NSW RSL branch losing its charitable status.
Mr White and NSW RSL treasurer Bill Hardman stood down in November, and two other state councillors were asked to do the same when the claims arose.
The report has made several recommendations including urging RSL NSW to further investigate the consultancy fees and Mr White's handling of Mr Rowe's expenses claims.
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