The contracts saw Estonia advance about €70 million for artillery ammunition intended for Ukraine, but deliveries were delayed and supplies later failed quality checks, triggering a legal dispute.
BY PC Bureau
September 4, 2026: Estonia’s Defence Minister Hanno Pevkur has stepped down after taking political responsibility for a botched ammunition deal involving an Italy-registered company acquired by India’s Neco Defence Munitions, leaving tens of millions of euros at risk and raising questions over Estonia’s handling of defence procurement.
Pevkur, who has served as defence minister since July 2022, announced his decision on September 2. He said Estonia’s security was a collective responsibility rather than the project of any single politician, and that he would hand over the defence portfolio to Prime Minister Kristen Michal at the appropriate time.
“A leader must have both the courage and the stature to take responsibility,” Pevkur said, while stressing that ministers do not personally negotiate procurement contracts or oversee every item purchased by the armed forces.
The controversy centres on an emergency effort launched in 2024 to secure artillery ammunition for Ukraine. Estonia’s Centre for Defence Investments (RKIK) signed four contracts with Datasel S.R.L., an Italy-registered company acquired in March that year by India’s Neco Defence Munitions. Neither Datasel nor its new owner had a track record of supplying artillery shells.
The first contract was signed in August 2024, with about €15 million paid in advance. A second agreement in October involved more than €10 million. Additional contracts signed later that year brought the total advances to about €70 million, or more than Rs 768 crore.
Much of the funding came through European Union mechanisms, including the European Peace Facility and arrangements linked to profits generated from immobilised Russian assets.
Deliveries were expected to begin within months but were delayed. When ammunition was eventually delivered in 2025, Estonian officials said it failed quality checks and was incomplete. Pevkur later said ammunition worth tens of millions of euros was being held in a European warehouse and could not be sent to Ukraine because Tallinn had agreed that supplies would not proceed until they passed inspection.
Estonian Defense Minister Pevkur resigned after getting scammed out of ~€60-70 million by Indian company.
Advance payments went to Datasel, a tiny Italian shell company bought by an Indian family business with zero artillery experience.
Neither had ever sold an artillery… pic.twitter.com/fDEkQaYOGK
— Clash Report (@clashreport) September 3, 2026
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RKIK terminated the contracts last autumn and demanded the return of the advance payments. The dispute has since moved to international arbitration before the European Arbitration and Mediation Centre in Strasbourg.
Datasel, however, disputes Estonia’s account and says it is the injured party. Through its lawyer, the company told Eesti Ekspress that it received about €59 million in advance payments and supplied and invoiced goods worth roughly €58–59 million. It also said inspections conducted under the contracts had not established quality defects.
The company described Estonia’s grounds for the extraordinary termination of the agreements as “contradictory and illogical” and said it remained prepared to complete the contracts if the Estonian state fulfilled its own obligations.
The discrepancy between the Estonian government’s figure of €70 million in advances and Datasel’s figure of €59 million has not been fully explained in public reporting.
RKIK Director General Elmar Vaher was particularly critical of the original decision to select the supplier. He compared signing a contract with a company that had never carried out such work to hiring a builder who had never built a house.
The ammunition controversy emerged alongside a critical report by Estonia’s National Audit Office, released on August 28. Auditors said they were unable to verify Defence Forces inventories valued at about €1.2 billion. The report also criticised contract management, procedures for checking goods received and the way financial risks were reported.
The auditors warned that if EU funds cannot be recovered, Estonia could ultimately have to cover about €70 million from its own budget. That possibility is particularly significant because parliament had previously been told that the brokerage arrangements posed no risk to the state budget.
Pevkur said most of the National Audit Office’s findings concerning RKIK had already been addressed. He also argued that the actions of one contractor should not be allowed to define an organisation that processes thousands of invoices every year.
Prime Minister Michal said he did not believe Pevkur had committed a personal wrongdoing, but he did not rule out political responsibility. His criticism was directed instead at former RKIK managers who approved the contracts and made payments without adequately identifying potential liabilities.
The European Commission has also been in contact with Tallinn over the issue. Commission spokesperson Christian Wigand said the EU has safeguards and recovery mechanisms designed to protect European taxpayers’ money.
Pevkur leaves office maintaining that Estonia is now better prepared to defend itself than at any point since Russia launched its full-scale invasion of Ukraine in 2022. He has also argued that continued military support for Kyiv is directly linked to Estonia’s own national security.
Estonia, a country of about 1.2 million people on NATO’s eastern flank and sharing a border with Russia, has sharply increased defence spending. Its defence budget is planned to reach 5.4 per cent of GDP in 2026.
Pevkur’s resignation closes one chapter of the controversy, but the underlying dispute is far from over. The legal battle over the ammunition contracts continues, while questions remain over how the deals were approved, how the risks were assessed and who should ultimately bear the financial consequences.
