Hi Stratafied,
If the principle of a managing agency have misappropriated the owners corps funds then they should be held accountable. I think there are government assurances in place also which will cover any losses per the Property Stock and Business Owners Act.
Remember that it is not the strata engineers and strata managers whose shoddy building practices caused the defects however you should expect a good manager to provide advice regarding processes in place to follow up and rectify defects in a timely manner. Unfortunately owners corporations sometimes ignore this advice and elect not to engage lawyers / engineers / consultants etc to adequately address the issues as it appears costly at the time.
Check previous minutes of committee and general meetings as the OC may have elected to not follow the legal pathway.
If the OC was not provided with advice from the agent then they may not necessarily be negligent, just a poor agent…