Australian War Memorial head, Brendan Nelson, was warned he would need to tread carefully to avoid “potential conflict” and “adverse comment” after he took a paid role with a multinational arms manufacturer.

The close relationship between the war memorial and companies that profit from war has been criticised in recent years by peace activists and a former AWM director, Brendon Kelson, who says it amounts to an “institutional loss of moral compass”.

Nelson, though, has been staunch in his defence of the AWM’s acceptance of donations and corporate sponsorships from companies such as BAE Systems, which has naming rights for the memorial’s BAE Systems theatre.

Earlier this year, it was revealed that Nelson was personally working for one such company, the French multinational Thales, in an advisory board role. The role entitles Nelson to a fee, which he passes on as a donation to the AWM.

AWM directors are legally barred from taking outside employment unless they have the express permission of the government of the day.

Internal documents, obtained by Guardian Australia through freedom of information laws, show Nelson obtained the required approvals of the then veterans affairs minister, Michael Ronaldson, the chair of the war memorial council, Ken Doolan, the Department of Veterans’ Affairs secretary, and the then public service commissioner, John Lloyd, in early 2015.

But the documents also show the minister, acting on advice from his department, warned Nelson to take care to ensure the dual roles did not come into conflict. Ronaldson said he was comfortable that “there does not appear to be a conflict” but said: “However, where the two roles could potentially be in conflict, I ask that you take the necessary steps to avoid these circumstances”.

The minister’s letter said Nelson should avoid, for example, participating in any discussions about Thales reviewing its corporate sponsorship of the AWM, either through his role on the Thales advisory board or in advice to the AWM Council.

“In managing this issue in the way described, it would avoid any potential adverse comment about the nature of your office as director of the AWM and your role on the advisory board.”

Since then, Nelson has delivered a Legacy Week speech in his capacity as AWM director in which he praised Thales as a “remarkable” company.

He has publicly defended the AWM receiving donations from companies such as Thales.

The AWM has also established the Napier Waller art prize with Thales as a corporate sponsor, and installed a Thales Bushmaster armoured vehicle on AWM grounds, saying in a press release it was “honoured to have the Bushmaster, manufactured by Thales Australia” on its grounds.

In response to a series of questions, an AWM spokesman said:

“Dr Nelson expresses his gratitude to all those companies, benefactors and individuals who support the Australian War Memorial in its mission to tell the stories of those men and women who have served our nation. He does not intend to stop doing so.”

Nelson and the AWM have previously denied the existence of any conflict of interest in the dual roles.

“Having been invited to join the advisory board of Thales Australia in 2015, Dr Nelson sought and received the consent to do so from the chairman of the memorial’s Council, secretary of the Department of Veterans’ Affairs, the minister for veterans’ affairs and the Australian public service commissioner,” a spokesman last month.

“Dr Nelson donates any and all fees for this role to the Australian War Memorial and as such received no financial benefit.”

The FOI documents show Nelson wrote to the minister in February 2015, seeking the approval. He explained that the Thales advisory board role would give him no responsibility for the company’s governance, performance, regulatory compliance, or compliance with contracts with the defence department.

“Instead, the advisory board considers strategic matters such as programs, workforce development and overall future direction within Australia,” Nelson wrote.

The role would require him to attend four board meetings a year, but he said the dates were subject to mutual agreement and would not conflict with his work at the AWM.

“Indeed, my participation in this will complement much of what I do at the AWM where Thales is also a corporate partner.”

“I also stress that any and all fees normally payable to me for this will be instead be made fully payable to the Australian War Memorial as a donation.”

“Naturally I would not proceed with this without your knowledge and agreement for me to do so.”