Estonia’s Defence Minister Hanno Pevkur has resigned following the collapse of a €70 million (more than Rs 768.50 crore) ammunition deal intended to support Ukraine, which has since turned into a procurement controversy involving an Indian-owned company with no prior experience in supplying artillery shells.
Pevkur, who had been defence minister since 2022, announced his resignation on Wednesday, saying he was accepting political responsibility after Estonia’s National Audit Office raised several concerns about the deal.
“Estonian security is not a one-man project. It is our joint responsibility,” Pevkur said in a social media post, adding that he believed he needed to take responsibility for the wider defence sector and eventually hand over the ministry to the prime minister.
The controversy centres on contracts signed in 2024 by Estonia’s Centre for Defence Investments with Datasel SRL, an Italy-registered company that had been acquired earlier that year by India’s Neco Defence Munitions. The agreement was designed to obtain artillery ammunition for Ukraine amid severe shortages on the battlefield.
Estonian public broadcaster ERR, along with Eesti Ekspress and Postimees, reported that Estonia used funds from the EU’s European Peace Facility for the purchases and made substantial advance payments to Datasel. By the end of 2024, the total amount paid upfront had reportedly reached around €70 million.
The first contract was signed in August 2024, with Estonia paying roughly €15 million in advance. A second agreement followed in October, accompanied by another advance payment of more than €10 million. Several additional contracts later increased the total advance payments to approximately €70 million.
The ammunition was initially expected to be delivered to Ukraine within a few months, but shipments were repeatedly delayed amid reported production difficulties. When ammunition was eventually delivered in 2025, Eesti Ekspress reported that it failed to satisfy required quality standards.
DATSEL DISPUTES ESTONIA’S DECISION TO END CONTRACTS
Datasel, the Indian-owned company at the centre of the controversy, claims it supplied Estonia with munitions worth €59 million before the contracts were terminated, according to Eesti Ekspress.
The company has launched legal action against Estonia, with the dispute now proceeding through international arbitration.
Datasel said through its lawyer that it was the party that suffered losses from the supply agreements and accused Estonia’s Centre for Defence Investments of giving inconsistent reasons for terminating the contracts.
The company confirmed that it had received €59 million in advance payments from Estonia’s Centre for Defence Investments, while RKIK has valued the procurement at €70 million. Eesti Ekspress questioned the whereabouts of the remaining amount, although the newspaper said it had not established what happened to the funds.
Datasel said it had supplied a substantial amount of goods and submitted invoices worth about €58 million. While acknowledging delays, the company rejected allegations that the ammunition it supplied was of inadequate quality.
The company said it was eventually informed that RKIK could not accept the remaining goods, but maintained that it was prepared to fulfil the contract if Estonia met its own obligations.
According to Eesti Ekspress, RKIK terminated its agreements with Datasel last autumn and demanded that the advance payments be returned.
Estonia has taken the dispute to the European Arbitration and Mediation Centre in Strasbourg, France, as it seeks to recover the €70 million paid for the ammunition.
Elmar Vaher, director general of the Centre for Defence Investments, acknowledged that the agreement should not have been signed.
“In my opinion, we should not have signed a contract with them,” Vaher told Eesti Ekspress, comparing the decision to hiring a company with no previous experience to construct a house.
AUDIT HIGHLIGHTS CONCERNS OVER DEFENCE PROCUREMENT
Pevkur’s resignation came after Estonia’s National Audit Office criticised aspects of defence spending and military procurement. An audit published on August 28 identified problems involving the management of funds and accounting for assets within the defence ministry, with some concerns having been raised earlier as well.
According to ERR, the watchdog warned that Estonia could eventually have to cover around €70 million from its national budget if the EU funding used for the procurement cannot be recovered.
Pevkur defended the existing division of responsibilities, noting that the defence minister does not personally manage individual procurement contracts.
He said that while ministers do not oversee every detail of military supplies or negotiate individual agreements, the National Audit Office’s criticism of the armed forces and Centre for Defence Investments raised broader questions about political accountability.
The European Commission has also engaged with Estonia over the disputed funding. Commission spokesperson Christian Wigand said the EU had safeguards and recovery mechanisms designed to ensure that taxpayer money was properly accounted for and recovered when necessary.
ESTONIAN PM SAYS PEVKUR WAS NOT PERSONALLY RESPONSIBLE
Prime Minister Kristen Michal had previously said he did not believe Pevkur was personally at fault, while acknowledging that political responsibility could still apply.
Pevkur said his resignation was made with the belief that Estonia had taken the right steps to strengthen its national defence. He highlighted the country’s significant increase in defence spending since Russia launched its full-scale invasion of Ukraine in 2022.
“Estonia is better protected than ever before,” he wrote on Facebook, while stressing that continued support for Ukraine remained important because it also served Estonia’s own security interests.
Estonia has a population of around 1.2 million and is a member of both Nato and the European Union. The Baltic country shares a border with Russia and views Moscow’s war in Ukraine as a serious security threat. Estonia has remained one of Ukraine’s strong supporters since the start of the full-scale invasion.
