Estonia's defense minister resigns after €70 million faulty ammunition scandal for Ukraine

Sep 2, 2026

Estonian Defence Minister Hanno Pevkur resigned on September 2, 2026, following a scandal involving a €70 million EU-funded contract to purchase artillery shells for Ukraine. The deal was signed in 2024 with Datasel S.R.L., an Indian-owned firm with no prior experience producing ammunition. After Datasel delivered faulty, unusable shells in 2025, Estonia terminated the contract and entered arbitration in Strasbourg to recover the funds. A critical National Audit Office report exposed severe oversight gaps in Estonia's military procurement, prompting a criminal investigation and Pevkur's resignation.

Pevkur resignation over procurement scandal

▪Estonian Prime Minister Kristen Michal called for a cabinet meeting on September 3, 2026, to discuss Hanno Pevkur's resignation and the findings of the audit reports.
▪Estonian Defence Minister Hanno Pevkur announced his resignation on September 2, 2026, taking political responsibility for problems in the country's defence sector.

Datasel ammunition contract failure

▪Estonia's Center for Defence Investments terminated the contracts with Datasel S.R.L. after inspections found that some of the delivered ammunition was faulty and did not meet required standards.
▪Datasel S.R.L. disputed Estonia's account, stating it was the victim of the dispute, rejected the grounds for termination, and claimed that no quality problems were established during inspections.
▪Estonia agreed to a €70 million deal in 2024 to purchase artillery shells for Ukraine from Datasel S.R.L., an Italian-registered, Indian-owned company that had never previously sold artillery ammunition.
▪Estonia is disputing the contracts with Datasel S.R.L. in a case before the European Court of Arbitration in Strasbourg to recover between €60 million and €70 million in advance payments.

Estonian defence procurement oversight gaps

▪Estonia's National Audit Office released a report on August 28, 2026, criticizing the defence ministry's military procurement and raising concerns about the Estonian Centre for Defence Investments.
▪Former head of the Estonian Centre for Defence Investments Magnus-Valdemar Saar stated that key procurement decisions were coordinated with and approved by the Ministry of Defence leadership.
▪The Estonian Prosecutor's Office opened a criminal investigation into issues covered in the national defence audit reports from 2025 and 2026.
▪Estonian Defence Minister Hanno Pevkur admitted that he had not reviewed the specific contracts with Datasel S.R.L., although the Estonian Centre for Defence Investments had provided them to him.

EU European Peace Facility funding

▪The European Peace Facility is an EU funding instrument established before Russia's 2022 invasion of Ukraine to prevent conflicts, preserve peace, and reinforce international security.
▪Estonia's procurement of artillery shells from Datasel S.R.L. was financed using funds from the European Union's European Peace Facility.

Ukraine artillery shell shortage context

▪Estonia's defence spending increased from 2% of its GDP in 2022 to 3.4% in 2025, with plans to increase expenditure to 5.4% of its GDP in 2026.
▪The €70 million ammunition deal was initiated as Ukrainian troops faced a severe shortage of artillery shells, exacerbated by delays in U.S. aid and the EU's failure to deliver one million shells by March 2024.

Perspective of Estonian Ministry of Defence

▪Estonian Defence Minister Hanno Pevkur admitted that he had not reviewed the specific contracts with Datasel S.R.L., although the Estonian Centre for Defence Investments had provided them to him.
▪Estonian Defence Minister Hanno Pevkur announced his resignation on September 2, 2026, taking political responsibility for problems in the country's defence sector.