Lifestyle

Who’s Really Benefiting from Your Building’s Service Charges?

by: BTM - Sat, 07 Nov 2026

Real Estate and Property Management are at the core of Bill Grieve’s experience, and in this article he offers his latest thoughts.

Behind seemingly legitimate maintenance contracts and invoices can lie conflicts of interest, undisclosed benefits and opportunities for fraud. This column examines how ordinary transactions become compromised and why property owners should ask difficult questions.

Walk into a well-presented residential building and everything appears reassuringly normal.
Polished floors, functioning lifts and uniformed guards. Contractors come and go, invoices are processed and service-charge demands arrive. Business as usual.

But behind those contracts and accounting entries, who is actually benefiting from the money being spent? And who is checking?
Over many years of working in investigations, I learned something fundamental.

Fraud needs only an opportunity.

It needs inadequate supervision, misplaced trust, a lapse in attention or weak financial controls.

Once recognised, an opportunity can become a mechanism for exploitation, sometimes so comfortably embedded in everyday business that nobody notices.

Fraud is theft dressed in a fine lace gown.

It can arrive with respectable invoices and ordinary accounting entries.

The Invoice That Tells Only Half the Story

Consider a building requiring regular maintenance of its communal air-conditioning systems. A contractor is appointed. Equipment is serviced. Invoices arrive and the management company pays them from the owners’ association’s funds. Everything appears legitimate.

But suppose that contractor also rewards the building manager with an overseas holiday, pays for private repairs at the accountant’s home or quietly offers a commission for continued business.

The maintenance may genuinely have been performed. The invoices may accurately describe the work. The accounts may even balance perfectly. Yet the decision-making process has been compromised.

Perhaps competitors were overlooked, unnecessary replacements authorised or prices increased without challenge. An invoice proves that somebody requested payment. It does not prove that owners received value for money.

Nor do balanced accounts establish that expenditure was necessary or free from conflicts of interest.

There Is No Such Thing as a Free Lunch

Sometimes the warning signs are remarkably subtle. Imagine a maintenance contractor offering the person overseeing a building contract free servicing of the air-conditioning units in their private home.

No invoice. No charge. Whenever required. And, naturally, nothing is expected in return.
Perhaps the offer is well-intentioned. But what happens when the contractor’s next quotation arrives, a competitor offers a better price or workmanship is disputed?

Can the recipient demonstrate complete impartiality? Even if their judgement remains unaffected, can the owners be confident of that? The first favour may cost nothing. The second may cost the owners everything.

A gift becomes a favour. A favour creates familiarity. Familiarity creates expectations. And expectations can influence commercial decisions.

Not every gift is a bribe. Not every generous contractor is dishonest. But why create the opportunity?
My principle is straightforward: if a personal benefit is offered because of your professional position, decline it, declare it and record it.
Legitimate discounts or additional services negotiated for the building should benefit the owners’ association, not individuals.

When the Contractor Suddenly Changes

Why was a long-standing maintenance contractor replaced? Was performance inadequate? Was the new quotation more competitive? Were alternative bids obtained and the decision documented? Or did somebody simply announce a replacement?

There may be perfectly legitimate reasons. But supplier selection can also be influenced by concealed commissions, personal relationships and improper inducements.
Neither price nor familiarity guarantees competence. Supplier choices must be independently evaluated and commercially justified.

If nobody can explain why a supplier was appointed, somebody should be asking.

Follow the Money and the Paperwork

Consider a hypothetical tower containing 100 apartments, each contributing BD1,000 annually in service charges. That is BD100,000 every year, or half a million dinars over five years.

Who scrutinises that expenditure?
Where are the approved budgets? Are the accounts independently audited? Do the bank balances reconcile with the accounting records?
Are invoices supported by job cards, authorisations and satisfactory completion reports?

Was the work necessary, reasonably priced, inspected and actually completed?
What about the reserve fund?
Money set aside for major future repairs should not quietly fund ordinary operating expenditure without proper authority and transparent accounting.

A building can appear healthy until major equipment fails and reserves prove inadequate.
Reports containing outdated figures, inconsistent dates or unexplained balances should invite questions, not automatic acceptance.

A spreadsheet can look impressive and still tell you remarkably little about the truth.

The Conflict Nobody Declared

Every owners’ association should insist upon conflict-of-interest declarations and clear procurement controls. Board members, property managers, accountants and others involved in expenditure should declare relevant personal, financial or business relationships.

They should confirm that they have accepted no undisclosed commissions, gifts, holidays, hospitality, rebates or free private services, whether in cash or in kind.

Offers should be recorded, including those declined. Significant contracts need appropriate quotations and approvals; completed work should be independently verified before payment.

Nobody should have unchecked authority to select a supplier, approve expenditure, certify completion and arrange payment. Declarations cannot stop dishonesty, but they do establish standards and accountability.

Fraud prevention is not about distrusting everybody. It is about creating systems in which nobody needs to be trusted blindly.

Fraud Does Not Always Start as Fraud

Many compromised commercial relationships begin legitimately.
A contractor performs well. Familiarity develops. Then comes a personal favour. Perhaps nobody initially sees anything wrong. But when personal benefit influences professional judgement, an ordinary relationship can become a vehicle for corruption.

Not every discrepancy is fraud. Poor administration, conflicts of interest and dishonesty differ. Establishing wrongdoing requires evidence, not speculation. Nevertheless, misconduct flourishes when nobody examines documents or challenges unexplained decisions.

Where Are the Owners?

Annual general meetings (AGMs) are announced. Few attend.
Financial statements are circulated. Few read them. Budgets are presented. Few question them.
Board positions become available. Few volunteer.

Then, years later, when charges rise, facilities deteriorate, reserves disappear or liabilities emerge, everyone wants to know what happened.

Where were you when the decisions were being made? Ownership does not end at your apartment door. Attend the AGM. Examine the accounts. Question expenditure. Ask about reserves, contractor appointments and payment approvals. Support responsible board members and demand transparent reporting. Bahrain regulates owners’ associations, but regulation cannot replace engaged owners.

Your Building. Your Money. Your Responsibility.

Next time you receive a service-charge statement, don’t simply pay it and forget it.
Ask where the money goes, who approves expenditure and whether the work was necessary and completed.

Ask whether those spending your money can demonstrate that they receive no undisclosed personal benefits from suppliers. The greatest protection against fraud is not another impressive report, management contract or reassuring promise.

It is effective oversight, transparent accounting, independent verification and owners who refuse to look the other way.
The standard you walk past is the standard you accept.

And when it comes to other people’s money, looking the other way can become very expensive indeed.