Estonia Defence Minister Resigns Over €70 Million Ukraine Ammunition Scandal

Pevkur, who has served as defence minister since 2022, announced his resignation on Wednesday, saying he was taking political responsibility 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.

The controversy dates back to contracts signed in 2024 by Estonia’s Centre for Defence Investments with Datasel SRL, a company registered in Italy that had been acquired by India’s Neco Defence Munitions earlier that year. The contracts were intended to secure artillery shells for Ukraine as Kyiv faced acute ammunition shortages.

According to Estonian public broadcaster ERR and reports by Eesti Ekspress and Postimees, Estonia used funds from the EU’s European Peace Facility for the procurement and paid millions of euros to the company upfront. The total advance payments eventually reached about €70 million.

Estonia signed the first contract in August 2024 and paid about €15 million upfront. Another deal was signed in October, followed by a further advance payment of more than €10 million. By the end of the year, several more contracts had pushed the total amount paid in advance to around €70 million.

The ammunition was initially expected to reach Ukraine within months, but deliveries were repeatedly delayed because of reported production problems. When ammunition was eventually received in 2025, Eesti Ekspress reported that it failed to meet quality requirements.

Datasel, the Indian-owned company at the centre of the procurement dispute, has challenged Estonia’s decision to terminate the contracts and says it delivered €59 million worth of munitions to the state, Eesti Ekspress reported.

The company is suing Estonia, while the dispute over the procurement 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 receiving €59 million in advance payments from the state Center for Defense Investments, known as RKIK. RKIK has valued the procurement at €70 million, prompting Eesti Ekspress to question where the remaining funds are, although the newspaper said it does not yet know where the money went.

“Datasel has supplied a significant quantity of goods and submitted invoices totalling €58 million,” the company said. It acknowledged delays but disputed claims that the munitions were of insufficient quality.

“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 an effort to provide military aid 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, which handles commercial disputes, as it seeks to recover the €70 million paid for the ammunition.

Elmar Vaher, director general of the Centre for Defence Investments, said the deal should not have been signed.

“In my opinion, we should not have signed a contract with them,” Vaher told Eesti Ekspress. “If I start building a house and hire a company that has never built houses before, there is a doubt that the house will not be finished.”

Pevkur’s resignation also follows criticism from Estonia’s National Audit Office over the management of defence funds and military procurement. According to ERR, an audit released on August 28 flagged problems in the use of funds and accounting of assets within the defence ministry, while similar concerns had been raised previously.

The watchdog warned that Estonia could ultimately have to cover about €70 million from its own state budget if the EU funding cannot be recovered.

Pevkur defended the division of responsibilities within the ministry, saying the defence minister does not personally oversee individual procurement contracts.

“Although the minister does not count socks and ammunition or conduct contract negotiations, the National Audit Office’s criticisms, primarily concerning the activities of the defense forces and the Center for Defense Investments, raise the question of political responsibility,” Pevkur said.

The European Commission has also been in contact with Estonian authorities over the disputed funding. Commission spokesperson Christian Wigand said Brussels had safeguards and recovery procedures to ensure EU taxpayers’ money was properly used.

Estonian Prime Minister Kristen Michal had previously said he did not see personal fault on Pevkur’s part but acknowledged that political responsibility could still apply.

Pevkur said his decision came with the conviction that Estonia had made the right choices to strengthen its national defence. He also pointed to the country’s sharp increase in defence spending since Russia’s full-scale invasion of Ukraine in 2022.

“Estonia is better protected than ever before,” he wrote on Facebook, adding that the country must continue supporting Ukraine because doing so also contributes to Estonia’s own security.

Estonia, a small country of about 1.2 million people, is part of both the EU and Nato and shares a border with Russia. Moscow’s war in Ukraine has showed security concerns in the Baltic country, where the conflict is seen as a direct threat. The Estonian government has been a strong supporter of Ukraine.