Estonia Defense Minister Resigns Over €70M Fake Ukraine Arms Deal Scandal

Estonia’s defense minister has resigned after a €70 million Ukraine ammunition program collapsed into a criminal investigation, exposing how state funds were advanced to an unproven Italian company that turned out to be a shell for an Indian scam.

Hanno Pevkur stepped down after Estonia’s national audit office disclosed problems with a contract awarded to Datasel SRL, an Italy-based company run by an Indian business family that had not previously manufactured or sold artillery ammunition.

€70 Million Paid in Advance

Estonia awarded the contract in August 2024 using money from an EU military fund, with Datasel tasked with supplying munitions to Ukraine’s front line by November that year.

The government transferred €70 million in advance payments under the arrangement.

Datasel repeatedly missed delivery deadlines. When ammunition was eventually supplied and inspected in 2025, officials found the rounds faulty and incomplete.

None of the ammunition was sent to Ukraine.

The episode has raised questions over how a company without an established record in ammunition production secured one of Estonia’s Ukraine-related defense contracts.

Audit Triggers Criminal Probe

Estonia’s national audit office disclosed the case in a report last week.

The prosecutor’s office has since said it is opening a criminal investigation into the affair.

Estonia has also taken the dispute to the European Court of Arbitration in Strasbourg, while the government and Datasel remain locked in legal proceedings over the failed shipment.

Pevkur Takes Political Responsibility

Pevkur said he had not known about the problems surrounding the deal but accepted political responsibility for what happened.

“A leader must possess the stature and courage to take responsibility even when that responsibility is not personal but serves a greater purpose for the protection of the country,” he wrote in a Facebook post announcing his resignation.

Prime Minister Kristen Michal called a cabinet meeting on Thursday to discuss Pevkur’s departure and the audit findings.

Scandal Hits Amid Defense Spending Surge

The controversy comes as Estonia sharply increases military expenditure over fears of a possible Russian attack across the two countries’ shared 183-mile border.

Defense spending reached 3.4% of GDP last year, compared with 2.4% in Britain and 3.2% in the U.S.

Estonia has redirected money from areas including education and hospitals to finance the military buildup through its Center for Defense Investments.

Security concerns have also intensified around Narva, the predominantly Russian-speaking Estonian border town separated from Russia by a narrow river.

Pro-Kremlin Telegram accounts have recently called for an attack on the city, while Estonian officials have described the eastern frontier as NATO’s first defensive line.

“In Narva and the eastern part of Estonia, the message is quite clear: we are starting the protection of NATO and that of the EU from the eastern border, from the first meter,” Michal previously said.