Archive · 4 Sep 2026
Estonia Minister Resigns After €70M Disputed Ukraine Shell Deal
Estonia wanted to buy artillery shells to help Ukraine during a serious ammunition shortage.
It paid about €70 million in advance to Datasel, an Italian-registered company owned by an Indian defence firm.
The companies had not previously sold the type of shells Estonia wanted.
The deliveries were late, and Estonia said some ammunition was incomplete or did not meet its requirements.
Estonia ended the contracts and is trying to recover the money through arbitration.
Datasel says it supplied much of the promised material and that approvals, paperwork, and Estonia’s decisions caused the problems.
A government audit also raised wider concerns about Estonia’s defence spending and procurement.
Defence Minister Hanno Pevkur resigned because he said he should accept political responsibility.
The dispute has not established proven fraud by Datasel.
Defence Minister Hanno Pevkur resigned on September 2, 2026, accepting political responsibility for problems in Estonia’s defence sector.
Estonia paid roughly €70 million upfront through the European Union’s European Peace Facility for 155mm shells intended for Ukraine.
The contracts went to Italy-registered Datasel S.R.L., acquired by India’s Neco Defence Munitions in March 2024 despite having no established record of selling such shells.
Deliveries were delayed, and Estonia said some ammunition was incomplete, defective, or below required standards; it terminated the contracts and began arbitration.
Datasel disputes Estonia’s account, saying it supplied or invoiced about €58 million in goods and blaming regulatory delays and Estonia’s refusal to accept remaining material.
- Who
- Estonia, Defence Minister Hanno Pevkur, the Estonian Centre for Defence Investments, Datasel S.R.L., and its owner Neco Defence Munitions.
- What
- A roughly €70 million advance-funded purchase of 155mm artillery ammunition for Ukraine became a dispute over supplier selection, delays, quality, contract termination, and recovery of funds.
- When
- Contracts were signed in 2024, Estonia terminated them in 2025 according to the reports, and Pevkur resigned on September 2, 2026.
- Where
- The procurement involved Estonia, Italy-registered Datasel, India’s Neco Defence Munitions, and an international supply chain intended to deliver ammunition to Ukraine.
- Why
- Estonia sought ammunition quickly because Ukraine faced severe shortages, while Pevkur said he was accepting political responsibility after criticism of defence spending and procurement.
Estonia’s account
Datasel’s account
Delivery and quality
Estonia’s account
Estonia says deliveries were delayed and inspections raised concerns that some ammunition was incomplete, defective, unsuitable, or failed to meet contractual standards. Reports said some rejected rounds lacked components such as fuses, propellant charges, or primers.
Datasel’s account
Datasel says inspections did not establish quality problems and that it supplied or invoiced substantial quantities of material. It says some remaining goods were ready for delivery or already in production.
Reason for the breakdown
Estonia’s account
Estonia terminated the contracts after the ammunition did not reach Ukraine as intended and began proceedings to recover its advance payments.
Datasel’s account
Datasel says delayed approvals, authorisations, regulatory clearances, and documentation requirements across several countries disrupted the supply chain. It also says Estonia refused to accept remaining material and ended the contracts prematurely.
Supplier selection and responsibility
Estonia’s account
Estonian procurement officials questioned awarding a major wartime contract to companies without an established record of producing or selling artillery shells. Pevkur accepted political responsibility but said ministers do not negotiate individual contracts.
Datasel’s account
Datasel and Neco Defence Munitions reject allegations of wrongdoing. Datasel describes itself as the victim, disputes the termination, and is seeking damages through a counterclaim.
- Advance payments
- Estonia paid approximately €70 million upfront across multiple contracts.
- Ammunition
- The procurement involved 155mm artillery shells intended for Ukraine.
- Supplier
- Datasel S.R.L. was acquired by Neco Defence Munitions on March 6, 2024.
- Contracting agency
- The Estonian Centre for Defence Investments signed the contracts, beginning with an approximately €15 million agreement in August 2024.
- Funding
- The purchase was financed through the European Union’s European Peace Facility.
- Dispute status
- Estonia terminated the contracts, began arbitration, and is working with the European Commission to recover the funds.
- Datasel’s position
- Datasel says it supplied and invoiced about €58 million in material against approximately €59 million in advance payments, while disputing Estonia’s quality concerns.
- Potential liability
- Estonia’s National Audit Office warned that the country could ultimately have to cover about €70 million from its own budget if the money cannot be recovered.
Sources
Estonia Defence Minister Resigns Over Botched Rs 770 Crore Arms Deal With Indian-Owned Firm
Estonia defence minister quits amid fallout over Rs 770 crore ammunition deal with Indian firm
Estonia’s €70 million Ukraine ammo deal with Indian-owned company explained: What went wrong and why the defence minister resigned
Estonia defense minister resigns over €70M failed Ukraine deal with India linked firm
Estonia’s defence minister quits after €70 mn Ukraine shell deal with Indian-owned Italian firm goes awry