The cash-strapped national green scheme parastatal, Agribusdev, lost N$800 000, which was paid to buy seedlings for trees that were never received.
News of financial negligence comes at a time when Agribusdev is failing to pay basic outgoings, such as salaries.
Agribusdev paid Cornerstone Nursery Namibia N$800 000 for grape seedlings for its Orange River Irrigation Project at Aussenkehr four years ago.
The Namibian understands that the parastatal only followed up on the nursery purchases this year.
Cornerstone Nursery supplies seedlings and vines to grape farmers in the Aussenkehr area.
The government agency only enquired about the status of its seedlings last month. The N$800 000 was a deposit on a total order worth N$2,1 million.
Cornerstone manager Rudolph Goussard blamed Agribusdev for the lost money, saying "it's their own negligence".
He told The Namibian that the deposit was for Cornerstone Nursery to produce the seedlings and ensure the plants were ready for use in 2016.
"They did not do any development in 2016. They asked us to keep the plants until the next year, which was fine. But to keep plants alive has financial implications," he said, adding that his company was forced to sell some of the plants, about 10% of the stock.
He explained that his company then reproduced the Agribusdev order, in case the parastatal was ready for development in the 2017 planting season. But again, nothing happened.
In Goussard's view, Agribusdev still owes Cornerstone Nursery.
"They did not pay the balance of the amount and defaulted in two consecutive years, not taking the plants. And believe me, the plants were available. They even came to have a look at them," he said, adding that his production costs had to be covered.
An email trail between the two companies details how Agribusdev did not follow up on the order.
One of Goussard's emails to Agribusdev said "The vines are not available anymore. The reason for this is that our production costs regarding vines depleted the deposit paid. Grafting and growing this amount of vines for two consecutive years and not being paid in full, nor (it being) collected, places a huge financial burden on the company".
Agribusdev chief executive Petrus Uugwanga told The Namibian on Sunday that the money is not lost.
"As far as I am concerned, our trees are still there, [ready] to be delivered when needed," he said.
Uugwanga disputed Goussard's version of events.
"I have never received any notification to the contrary," he stated, adding that Agribusdev's material was still waiting to be collected from Cornerstone Nursery Namibia.
He added that he would be interested in knowing on what grounds, within business principles and the law, Cornerstone is making such claims.
Uugwanga said Cornerstone was instructed to sell the initial seedlings to the next customer in line, and to produce Agribusdev's seedlings for the following year since the parastatal had to postpone its development in 2016.
As a result, the Orange River Irrigation Project will yield no harvest this year, despite occupying an area considered a prime location at Aussenkehr.
In contrast, all the other surrounding grape producers in the area look set for a bumper harvest.
News of the lost money comes as Agribusdev is facing a bleak future.
The parastatal's operations at its green scheme projects have not yielded sufficient returns.
The situation is so dire that workers are yet to receive their September salaries, which are more than two weeks overdue. The last time they received their salaries on time was in June.
Agribusdev's workers are paid on the 25th of each month.
The Namibian understands that the agency's finances are drained to such an extent that workers are now being paid without benefits such as pension contributions or medical aid, while individual income tax contributions to the finance ministry have also not been paid over.
The company's 2017 annual report states that it has 130 employees.
The workers threatened to sue Agribusdev if their concerns were not addressed.
Workers wrote a letter to the company's board chairperson, Sophia Kasheeta, last Thursday, in which they expressed their disappointment over the recurring late salary payments, and the non-payment of employee benefits to various service providers.
"We are pleading with you, esteemed board of directors, to resolve the issue on or before Monday, 14 October 2019, and at the same time provide assurance that this situation will not persist," the workers said.
They continued, saying: "We have been patient for too long, but as for now, our patience ran out. We have no other option than registering a case with the labour commission and make this situation public if this matter is not resolved by the due date alluded to above".
Kasheeta declined to comment on Sunday because she was out of the country. She promised to answer upon her return.
Several current and former Agribusdev employees said the lack of funds from the government, poor management decision-making, and the lack of a clear working plan are the reasons the company is struggling.
A primary agriculture employee warned that the country's green scheme programme will collapse if Agribusdev is not saved.