Estonia’s Defence Minister Hanno Pevkur has resigned after a €70 million (over Rs 768.50 crore) ammunition procurement deal intended to support Ukraine became embroiled in a scandal involving an Indian-owned company with no previous record of selling artillery shells.
Pevkur, who had served as Estonia’s defence minister since 2022, announced his resignation on Wednesday, saying he was taking political responsibility for the controversial procurement deal following a series of critical findings by Estonia’s National Audit Office.
"Estonian security is not a one-man project. It is our joint responsibility. That is why I must take political responsibility for the entire defence field today and pass on the baton of the minister of defence to the prime minister at a suitable time," Pevkur said in a social media post.
What is the controversy?
The controversy stems from contracts signed in 2024 by Estonia’s Centre for Defence Investments with Datasel SRL, an Italy-registered company that had been acquired by India’s Neco Defence Munitions earlier that year. The contracts were aimed at securing artillery shells for Ukraine at a time when Kyiv was facing severe ammunition shortages.
According to Estonian public broadcaster ERR and reports by Eesti Ekspress and Postimees, Estonia used funds from the European Union’s European Peace Facility for the procurement and paid the company millions of euros in advance. The total advance payments eventually reached about €70 million.
Estonia signed its first contract with Datasel in August 2024 and paid around €15 million upfront. A second agreement was signed in October, followed by another advance payment of more than €10 million. Several additional contracts later pushed the total advance payments to approximately €70 million by the end of the year.
The ammunition was expected to reach Ukraine within months, but deliveries were repeatedly delayed amid reported production problems. When some ammunition was eventually received in 2025, Eesti Ekspress reported that it failed to meet the required quality standards.
Firm disputes defence minister’s claims
Datasel, the company at the centre of Estonia’s defence procurement controversy, has disputed allegations surrounding the contracts and said it delivered €59 million worth of munitions to the Estonian state before the agreements were terminated, according to Eesti Ekspress.
The company is now suing Estonia, while the procurement dispute has moved to international arbitration.
"Datasel is the party that has suffered losses in connection with these supply contracts," the company told Eesti Ekspress through its lawyer. "The actions of the Estonian Center for Defense Investments, particularly the reasons given for the extraordinary termination of the contracts, are contradictory and illogical."
Datasel confirmed that it received €59 million in advance payments from Estonia’s Centre for Defence Investments, known as RKIK. However, RKIK has valued the overall procurement at €70 million, prompting Eesti Ekspress to raise questions about the remaining funds, although the newspaper said it was not yet clear where the money had gone.
"Datasel has supplied a significant quantity of goods and submitted invoices totalling €58 million," the company said.
The company acknowledged delays in the supply of ammunition but rejected allegations that the munitions failed to meet quality standards.
"Eventually, Datasel was given to understand that the RKIK was unable to accept the remaining goods," the company said, adding that it remains willing to complete the contract if RKIK fulfils its own obligations.
Eesti Ekspress reported on Wednesday that Estonia had sought to procure artillery shells from Datasel as part of its military assistance to Ukraine. RKIK terminated its contracts with the company last autumn and demanded the return of the advance payments.
Estonia has since 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.