The chief executive of General Tire & Rubber Co. who was running the company when tens of millions of dollars of questionable or outright illegal transactions took place, should be kept in his job for the "best interest of the company," a special review committee has concluded.

The committee report, issue yesterday, was prepared by outside directors of the company, aided by an auditing and a law firm. It was ordered on May 11, 1976, by the Securities and Exchange Commission as part of a settlement of a civil suit.

At that time, the SEC charged General Tire and its president. Michael G. O'Neil, with misusing coporate funds in a variety of ways, such as paying bribes to Chilean leftist, payoffs to Arab financiers and officials, and campaign contribution to American political candidates.

Both O'Neill and the company signed consent decrees without admitting or denying the SEC allegations.

The 233-page report chronicles one of the most extensive cases of questionable or illegal payments by a corporation since the SEC began probing such corporate illegalities some three year ago.

The report, moreover, figures in a challenge to General Tire's TV license in Boston. A group went before the Federal Communications Commission about a year ago claiming that General Tire's management, because of then alleged domestic and foreign illegal payments, does not meet the moral criteria demanded by the commission of license holders.

General Tire's wholly owned broadcasting subsidiary, RKO General, Inc., owns 4 TV and 12 radio stations. The commission deferred deciding on the Boston challenge until it could see the SEC-ordered report.

AMong the revelations in the report was that RKO engaged in so-called barter transactions. This means that station managers exchanged unsold air time for merchandise and services.

The report notes that bartering was an "accepted and widespread practice in the broadcasting industry." But it also notes that, "with minor exceptions," such transactions at RKO, which were estimated at $17.6 million between 1971 and 1975, never were recorded in the general ledger or financial statements.

"Because of the lack of adequate controls . . . and the missing files, the committee cannot be sure either that the amounts attributed to barters are reasonably accurate or that there was no use of funds for illegal or improper purpose," the report said.

From 1968 to 1972, about $222,600 in bonuses and special salary increases were paid to General Tire executives, who passed along most of the money to local, state and federal office seekers. Payments and gratuities, such as meals and transportation, flowed to politicians, government personnel and military officers from such General Tire subsidiaries as Frontier Airline, Inc., and Aeroject-General Corp.

But the company's greatest activity as recounted by the report, was in foreign countries.

In early 1964, a Liechtenstein bank account was set up by the managing director of General Tire's Chilean subsidiary in the name of Fructal Finanz Anstalt. Between 1964 and 1975, some $3.3 million passed through the account and on to government officials and others in Chile and Romania, where General Tire did business.

In Mexico, "at least $239,000 is known to have flowed through" an unrecorded fund set up by a sudsidiary there, the report alleged. It said the largest single payment went to the secretary of a trade association for his help in getting the government to agree to a price boost.

"From at least the 1960s until 1975. General Tire International systematically overbilled . . . foreign affiliates and other foreign companies . . . During the fiscal years 1974 and 1975 alone, direct overbilling credited to GTI income accounts totaled more than $1 million. Rebates received from 1964 through 1975 and credited to income exceeded $4 million," the report stated.

The report said that such overbillings violated GTI's contractual obligations. "Exchange control laws of some foreign countries and, in some cases, regulations of the Agency's for International Development, also may have been violated," the committee found.

General Tire paid $150,000 in 1972 to get its name off the Arab boycott list of companies doing business with Israel. The payments went to an affiliate of Triad Corp., the Middle East concern which is controlled by Saudi businessman Adnan Khashoggi and which is described in General Tire memoranda as a "bagman."

From 1960 until 1976, General Tire International maintained unrecorded accounts in Morocco, Chile, Portugal, Angola and Spain. According to the report, these off-book accounts were used to avoid tough currency restrictions in the countries.