OTTAWA - Millions of Casino Rama dollars meant to help lift First Nations out of poverty have been swallowed by legal fees, unexplained expenses and payments to at least one band that doesn't officially exist, suggest newly released audits.

Documents obtained under freedom of information outline how a small board of native directors distributes about $60 million a year from the casino near Orillia, Ont. to 133 chiefs in the province.

Between 2002 and 2006, the Ontario First Nations Ltd. Partnership paid out more than $7 million in legal fees to fight two protracted disputes over Rama funds.

The five-member oversight agency also racked up travel costs of $369,172 along with $1.4 million in undisclosed expenses averaging about $300,000 a year.

Those claims were in addition to annual staff and office costs, including $293,635 for salaries and benefits for the year ending March 31, 2006.

The most recent audit available for 2005-06 sheds light on how much is being spent to manage money that's desperately needed in some of Ontario's poorest communities. First Nations received $60.3 million compared with $4.3 million -- just over seven per cent -- paid in legal, administrative and other expenses cited by the management board.

But perhaps the most questionable item is about $3 million paid over the last decade to the Poplar Point First Nation, a so-called "near band'' not officially recognized by Ottawa. It once ran out of a storefront in Thunder Bay, Ont., but the telephone number is out of service.

A relative of the man who claims to be Poplar Point's hereditary chief says he hasn't been around for months.

Calls to the Ontario First Nations Ltd. Partnership near Brantford, Ont., were not returned.

Grand Council Chief John Beaucage of the Union of Ontario Indians says Poplar Point has raised concerns for years.

"We struck them from our list of bands,'' he said of the union representing 42 First Nations. "We've been very upset about the whole thing.''

At issue is Poplar Point's lack of effort to be recognized as a bona fide band through the federal government, Beaucage says.

Nonetheless, the broader Chiefs of Ontario assembly, representing all 133 leaders, has continued to accept Poplar Point as Rama payments flowed.

Beaucage says a majority of leaders have been loath to get involved. "Many of the other chiefs are reluctant to join in the fray in having somebody removed.'' He said he hopes that will change when the issue is once again brought up at an all-Ontario meeting next month.

He'll also be asking about the management board's $1.4 million in undisclosed expenses.

"That's something I certainly will question,'' he said. "There are some chiefs that do actively question some of these things. Sometimes they get good responses. Sometimes the answers are kind of cloudy.''

Beaucage stressed that First Nations must file annual audits to continue receiving Rama funds, money that's to be spent in five approved areas: community development, health, education, economic or cultural development. The partnership in turn must report to the province.

Those spending accounts, however, are not subject to value-for-money scrutiny by provincial auditors under the terms of a complex deal with the Ontario government. That's because the gambling cash essentially never lands in provincial coffers. It's held in trust by the Ontario Lottery and Gaming Corp., before going directly to reserves through the First Nations partnership group.

Public spending watchdogs have repeatedly sounded alarms over the void of accessible Rama reporting. What little has been released so far is worrisome, says Kevin Gaudet, Ontario director for the Canadian Taxpayers Federation.

"These documents raise a tremendous number of questions. There are major transparency and accountability concerns.

"This is a lot of money at play here. ... It is a concern for taxpayers and for those who should be receiving the money to ensure that it's well spent. And I'm not convinced the government has a grip on it.''

A spokeswoman for David Caplan, the Ontario minister responsible for casinos, says it's up to the Chiefs of Ontario to hold the oversight partnership accountable.

"We don't micro-manage how the money is spent,'' said Amy Tang. "We have auditing measures in place to make sure that the money is accounted for.''

Wilfred King, chief of the Gull Bay First Nation in northern Ontario, isn't convinced. He has tried for years to stop Rama payments to Poplar Point and resents how much money has been diverted from his and other cash-strapped reserves.

"This is a real shame. This is a real tragedy. And I think the province of Ontario has to get involved here and say: 'We've got to stop this.'''

King says the Rama cash he has received is helpful, but it hasn't been enough to relieve acute needs for housing, jobs _ even clean water. A federally built $5-million water treatment plant sits on the reserve, useless, because it doesn't meet provincial standards, he says.

"We're still drinking water from the lake. We just add Javex.''

This, while lawyers have gotten rich on Rama litigation, he says.

The legal fights involve Ontario's 20-per-cent grab of Rama monies along with a continuing bid by the host Mnjikaning First Nation near Orillia, Ont., to retain a 35-per-cent share of casino cash.

The 20-per-cent squabble was resolved last February with a deal to give First Nations more than $3 billion in gambling revenue over 25 years starting in 2011.

Chief Glenn Nolan of the Missanabie Cree First Nation says it's "obscene'' that legal fees consumed $7 million in Rama funds. Another $170 million has accumulated in an off-limits account while the Mnjikaning dispute drags on.

Nolan understands that litigation can't always be avoided, and accepts most of the other costs of managing Rama money. But the administrative amounts eaten up by the five-member partnership trouble him.

"I know they get a heck of a lot more money than I get for my community. And sometimes it's frustrating to know that we're trying to do so much with so little.

"What makes them efficient? What makes them want to be better in financing their operations or become more cost-effective? There isn't anything.''