New Delhi: Estonia’s Defence Minister Hanno Pevkur has resigned after his country paid about €70 million advance for artillery ammunition intended for Ukraine to an Italian-registered company owned by India’s Neco Defence Munitions, despite the supplier having no previous track record of manufacturing or selling such shells.
Pevkur announced his resignation saying he was taking political responsibility for problems identified within Estonia’s defence establishment, including the country’s miitary procurement agency, the Estonian Centre for Defence Investments (ECDI).
The company at centre of the scandal is Datasel S.R.L., an Italian firm that was acquired by Nagpur-based Neco Defence Munitions, part of the Jayaswal Group, in March 2024.
According to Estonia’s public broadcaster ERR, neither Datasel nor its Indian owner had previously produced the artillery shells that Estonia sought to procure.
Yet, within months of the acquisition, Datasel became the supplier for a major procurement intended to get ammunition to Ukraine.
Defence Minister Hanno Pevkur has resigned.
Thank you for leading Estonia’s national defence and for your steadfast support for Ukraine.
Hanno Pevkur served as Minister of Defence from 18 July 2022.
During this time, Europe’s security environment has changed significantly, and… pic.twitter.com/3SbelE64Yk
— MoD Estonia (@MoD_Estonia) September 2, 2026
In August 2024, the ECDI signed its first contract with Datasel and transferred €15 million as an advance payment. A second contract followed in October, with another advance payment of more than €10 million. Two further contracts were subsequently signed, taking advance payments to approximately €70 million, according to Estonia World.
The first lot of ammunition was supposed to reach Ukraine in November 2024, but deliveries ran into delays.
The Estonian government has now terminated the contracts and taken the dispute to arbitration. Tallinn is also working with the European Commission over how the money can be recovered.
A company with no shell-making history
The background of Datasel makes the deal particularly striking.
Datasel was founded in 2005 by Italian businessman Sandro Pazzini, whose background was in defence electronics and software rather than ammunition. In 2023, the company had only a handful of employees and turnover of just over €120,000, according to local media reports.
Its registered business activity was changed in January 2024 to include wholesale trading in weapons, weapons systems and military ammunition. The company was then acquired by Neco Defence Munitions on 6 March 2024.
Just five months later, it secured its first ammunition contract with Estonia.
The procurement was taking place amid extraordinary wartime demand as Ukraine was facing a severe shortage of artillery ammunition. This is when European countries were scrambling to increase supplies to Kyiv.
Estonia used money from the European Union’s European Peace Facility (EPF) for the procurement. The facility has increasingly been used to finance military assistance to Ukraine.
Datasel disputes account
Estonia says the ammunition did not reach Ukraine as intended and that inspections subsequently raised concerns about whether some of the ammunition met the required standards.
ECDI terminated the contracts and Estonia launched legal proceedings to recover the money.
Datasel, however, disputes Estonia’s version of events.
In a statement to Euractiv, the company said on Wednesday evening it was “the victim” of the dispute and rejected the grounds for termination. It said it had supplied and invoiced €58 million worth of material against €59 million in advance payments and that no quality problems had been established in inspections conducted under the contracts.
“The contracts between the parties involved a complex international supply chain and, as is typical for projects of this nature, their execution required multiple approvals, authorisations and clearances involving various governments, regulatory authorities and other stakeholders in different jurisdictions,” it added. “During the project, certain governmental and regulatory approvals were delayed due to issues and requirements relating to the relevant documentation and approval processes.”
It said the ECDI subsequently refused to accept remaining material, including goods ready for delivery or already in production, and terminated the contracts prematurely.
(Edited by Gitanjali Das)
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