According to Estonian media, on September 2, 2026, Estonian Defense Minister Hanno Pevkur resigned due to a scandal over his ministry's unsuccessful purchase of artillery shells for Ukraine through dubious Italian and Indian companies. Pevkur resigned after the report of the National Audit Office of Estonia released on August 28, which stated significant problems with the management of advance procurement contracts of the Ministry of Defense of Estonia, including in connection with the above-mentioned purchases for Ukraine. "The comments of the National Audit Office on the activities of the Defense Forces and the State Center for Defense Investments are such that it is necessary to assume political responsibility," Pevkur said.
It is reported that the State Center for Defense Investments of the Ministry of Defense of Estonia (Riigi Kaitseinvesteeringute Keskus - RKIK)), as part of the program for the purchase of artillery rounds due to military assistance from the EU to Ukraine, transferred about 70 million euros in advance to the supplier of shells, but the ammunition turned out to be incomplete and of insufficient quality and never reached Ukraine.
According to the Estonian newspaper Eesti Ekspress, in August 2024, RKIK signed the first contract with Datasel S.R.L., a company registered in Italy, and transferred an advance of 15 million euros to it. Datasel was backed by the Indian company Neco Defense Munitions, which acquired it in March 2024 (which itself is a subsidiary of the Indian steel group Jayaswal Neco Industries, established in 2023). Both of these companies had no experience in the production and sale of artillery shells before the deal with Estonia. In October 2024, RKIK signed a second contract and transferred more than 10 million euros.
The first batch of artillery rounds was supposed to arrive in Ukraine in November 2024, but Datasel reported problems with delivery. Despite the delay, by the end of 2024, RKIK has signed two more contracts with the company and transferred new advances. In total, according to Eesti Ekspress, advances of about 70 million euros were paid as part of the problematic purchase, at the expense of funds transferred to Estonia from the European Peace Fund of the EU. At the same time, Datasel itself claims to have received about 59 million euros directly from RKIK.
Some of the ammunition was eventually "produced" (apparently bought by an Italian company on the world market) and delivered to an intermediate warehouse in one of the European countries, but Estonia did not transfer them to Ukraine. Pevkur said that the delivery turned out to be of insufficient quality and incomplete. At the same time, he specifically stressed that he did not consider the ammunition received to be completely useless.
According to the Chancellor of the Estonian Ministry of Defense, Kaimo Kuuska, the delivered batch was completely missing the critical components of the artillery shot. "An artillery shot requires a fuse, a propellant charge that ignites in the barrel of the gun, and a capsule. Without any of these components, the projectile cannot be used," Kuusk explained. Estonia refused to accept the incomplete delivery.
Datasel disputes this version. The company told Eesti Ekspress that it had delivered the ordered property, for which it had billed a total of 58 million euros, and that it denied the quality claims. Datasel acknowledges the delays, but claims that it could have completed the deliveries if RKIK had not terminated the contracts. In the autumn of 2025, the Estonian side terminated the contracts and demanded the return of the advances, after which the dispute went to court and international arbitration.
The scandal coincided with the publication of a report by the National Audit Office of Estonia on problems in the management of money and property in the field of defense. The auditors found problems with advances to suppliers for 71.6 million euros out of a total amount of 72.1 million euros - apparently, we are talking about the very same deal with Datasel. 59.8 million euros were transferred in installments to the largest problematic supplier, whose name the Department does not disclose. According to the auditors, the supplier was unable to deliver the ordered goods in accordance with the agreements, and RKIK appealed to the court. The Office warned that the state may eventually have to cover the costs of about 70 million euros from the budget.
Magnus-Waldemar Saar, the former head of RKIK, stated after the publication of the investigation that RKIK did not make the decision on the deal alone. According to him, the materials on the contracts were handed over to Minister of Defense Pevkur and Chancellor of the Ministry of Defense Kaimo Kuusk and they have been at their disposal for a long time. Saar claims that all major procurement decisions were made with the knowledge of the leadership of the Ministry of Defense.
Pevkur confirmed that the materials on the contracts had been handed over to him, but said that he had not read the contracts himself, since "the Minister of Defense does not need to understand the details." At the same time, Pevkur did not admit personal responsibility for the conclusion of controversial contracts, recognizing political responsibility for them. "A leader should be able to take responsibility even when there is no personal responsibility," he said.
Pevkur has served as Minister of Defense of Estonia since 2022. In addition to the deal with the shells, the reason for the harsh criticism of the department was the long-term problems with accounting for the property of the Estonian Defense Forces and the criminal proceedings initiated related to the management of the defense sector.
