Estonia has been plunged into a major defence procurement scandal after approximately €70 million was transferred in advance for artillery ammunition intended for Ukraine, with the deal subsequently collapsing and Defence Minister Hanno Pevkur resigning amid mounting political pressure.
The controversy centres on an Italian-registered company, Datasel S.R.L., which entered into contracts with Estonia’s State Centre for Defence Investment to supply ammunition for Ukraine.
Estonia transferred millions of euros to the company in advance, but the promised deliveries were delayed and the ammunition that eventually arrived was reportedly incomplete and failed to meet the required standards.
The scandal has raised serious questions about how the Estonian authorities vetted the supplier before committing tens of millions of euros in European-backed funds to the deal.
The company has been linked to Indian business interests and, according to Estonian media reports, did not have an established track record in producing or supplying the artillery ammunition covered by the contracts.
The failed procurement has become particularly embarrassing for Estonia because the ammunition was intended for Ukraine at a time when Kyiv was desperately seeking artillery shells for its war against Russia.
Estonia eventually terminated the contracts and began efforts to recover the advance payments. The dispute has since moved into legal proceedings, with Estonia seeking to recover money it says is owed to the state.
Datasel, however, disputes Estonia’s account of the affair. The company has maintained that it supplied a substantial quantity of the contracted material and has challenged the termination of the agreements.
The scandal has also triggered questions over the responsibility of senior officials who approved or supervised the procurement process.
Pevkur has denied personally negotiating the contracts but accepted political responsibility for the controversy and resigned as defence minister.
The episode has also attracted attention because some of the money involved came through the European Union’s European Peace Facility, which is used to support military assistance to Ukraine. The possibility of European funds being affected has therefore widened the controversy beyond Estonia.
The case has prompted calls for greater scrutiny of defence procurement procedures and investigations into how a company with questionable capacity to fulfil such a major ammunition order was able to secure contracts worth tens of millions of euros.
While the description of the episode as an “Indian scam” reflects the allegation surrounding the Indian-linked business interests behind the supplier, criminal guilt has not been established against specific individuals. The company has disputed the allegations and insists that it fulfilled significant parts of its contractual obligations.
For Estonia, however, the political consequences are already clear: €70 million intended to secure artillery ammunition for Ukraine became the centre of a procurement disaster, while the country’s defence minister paid the political price with his resignation.