I find this fascinating and congratulations on your forensics investigation. As described here it amounts to theft. I think this is just the tip of the iceberg as far as illegal use of common funds across strata goes.
It is in owners best interests to look carefully at accounts and ask lots of questions. A good strata manager will have no problem answering.
I notice that I am up to about 16 posts, so it is timely that I talk a bit about my strata involvement, particularly as it has relevance here.
I am an almost accidental EC member, and now Secretary of a large number of lots that are part of a multi-strata complex ie BMC that functions under a Strata Management Statement (SMS). I have only been on the EC for nearly 3 years – very new, and most definitely still on a steep learning curve.
Why did I get involved? I looked at our account statements for the AGM, and couldn’t understand them. And then when I asked questions I did not get a straight answer. I attended the AGM, there were only 3 people present, all current EC members were absent, so the AGM was deferred and I made a point of attending again. Funnily enough the current EC members turned up and were promptly reelected, I made some pleasant noises and managed to get myself on the committee.
To cut a very long story short, the EC was run behind closed doors without due process, no agenda’s or minutes, the strata manager took instruction from 1 or 2 people only. I struggled to find out what and why things were being done. I started putting agenda’s together and calling meetings – with lots of advice from the OFT help line. Needless to say the strata manager and the EC block were not happy with me. I found a couple of other owners who were also concerned. I was also suspicious that the other strata’s may not be contributing adequately to paying for the shared facilities once I found out what their strata levies were. This later proved to be correct.
I personally wrote to all owners prior to the AGM, I included a motion on the AGM to change strata managers. We got a quorum at the AGM for the first time ever and changed strata managers. We have had a quorum at every EC and AGM since, without the use of proxy farming.
I found out that our strata was paying a significant number of the shared facility (BMC) accounts, including all electricity, a too high a proportion of the building insurance, building manager / cleaning, maintenance, and the list went on. Nearly 2 years later we are still sorting out who should be paying what, with support from a new BMC strata manager – not the same company that our strata has.
Part of the problem is that one of the other strata’s was going directly to the strata manager and basically saying – we are not paying that account, make the other strata’s pay. And the strata manager who was responsible for all, actually did use the wrong funds and the wrong % distribution. Funnily enough like Fchat 55 it was the strata that has the properties worth significantly more that all the rest!!! And therein lies my point, the people who can most afford to pay their fair share are most likely the ones who are not, and who are quite unscrupulous in deliberately manipulating the system to ensure that they do not. 
What is interesting is that the other strata’s are now increasing levies and even needing special levies, while the strata that I am an owner in, is now financially stable. The BMC budget has also had substantial increases, but what our strata pays is similar. Funny about that.
Good luck – I too think that OC should be reimbursed by the owners who have received ‘rebates’ for something that is wholly and solely their own financial responsibility. Problem is – I simply don’t know how you would go about doing this.
But I do consider what they have done to be fraud.
Kind regards
alley cat