Hi tracer – While I don't know the details of your strata plan, I'm not sure I agree with your take on the role of a special levy. Others can talk here about the legal issues.
Our complex was neglected for many years… leaving predictable long term maintenance undone. Now there's a huge backlog of works to be done and not much in the sinking fund to pay for it. We sacked and replaced our strata manager, contracted engineers to review the main problems and are currently getting quotes and investigating whether a levy or strata finance is more appropriate/affordable to finance necessary repairs and maintenance.
Most of the repairs we have to do were predictable. Most are not emergencies, but if they're not fixed asap they will become more expensive and some could become urgent. Since the OC is legally responsible to maintain the premises, repairing the problem(s) will help us avoid the cost of someone taking legal action over works which should have been done. Plus there's the side benefit of improving the value of everyone's property investment by having a better maintained unit complex.
Your EC is answerable to all owners – the OC did elect them after all. If you're questioning their actions, hold an EGM and discuss your complaints. But an attempt to defraud?
There has to be a reason why your sinking fund was/is inadequate. In our case, it was poor management, poor advice and an obsession by owners in the past (and individuals controlling a non-democratic EC) with keeping strata fees so low that there was never enough money to fix the essentials.