RSL New South Wales councillors, including the now national president Rod White, may have broken the law by receiving shares in nearly $1 million in consulting fees while holding voluntary positions in the veterans group, according to legal advice.
The advice, commissioned by RSL NSW, which is being referred to the charities watchdog, airs for the first time allegations that the councillors may have steered local branch donations away from other parts of the RSL and towards its aged care arm, from which they were receiving the consulting fees.
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It says two current NSW councillors, Bill Humphreys and Bob Crosthwaite, should "temporarily stand down pending the resolution of any investigation or board of inquiry".
The advice from law firm Henry Davis York, a summary of which has been seen by Fairfax Media, states that "it appears that the state councillors may have used their positions within RSL NSW and RSL LifeCare to obtained undeclared pecuniary benefits during the 2013 to 2015 financial years".
"It is possible, but not certain, that in doing so they did not meet one or more of their duties and obligations, or contravened the law," the advice states.
It notes they are bound by the Australian Charities and Not-for-profits Commission Act, the Charities Fundraising Act, the Corporations Act and the RSL NSW constitution.
It is understood that RSL NSW is referring the legal advice to the ACNC and is prepared to co-operate with any investigation by the watchdog.
The ACNC does not confirm whether it is investigating individual charities, a spokesman said.
Fairfax Media reported earlier this month that four past and present state councillors received shares in $980,675 in consulting fees from RSL LifeCare, a $1 billion aged care provider that is affiliated with the veterans organisation, between 2013 and 2015.
The councillors included Mr White who became national president in June, as well as Don Rowe who retired in November 2014, and current councillors Bill Humphreys and Bob Crosthwaite.
All four were appointed as directors of RSL LifeCare by the state council on which they sat. RSL LifeCare has said the four received consulting fees not as directors but for additional duties.
Fairfax Media attempted to contact the men on Friday but none responded to messages.
The national council has separately agreed to commission an external investigation into the payments but Mr White has resisted calls to step aside while that happens.
The latest legal advice raises the fact that three of the four councillors were also on the RSL NSW finance and risk management committee. It states that the four councillors "appear to have taken steps to make RSL LifeCare a preferred recipient of … charitable donations … and educate or encourage RSL members to make charitable donations to RSL LifeCare as opposed to other parts of RSL NSW or other charitable enterprises".
"The effect of the above steps was to cause the allocation of more charitable donations to RSL LifeCare than previously, and possibly reduce the allocation of charitable donations to other parts of RSL NSW or other charitable enterprises," it states.
It states that "none of the state councillors disclosed to RSL NSW or the finance committee that he had a consultancy agreement with RSL LifeCare at the time he was also an RSL NSW state councillor … or that he was paid consulting fees".
RSL LifeCare CEO Ron Thompson said the organisation had "received clear and unambiguous legal advice from PwC stating the paid consultancy work was in keeping with the RSL LifeCare constitution".