Estonia terminated seven weapons contracts for Ukraine worth €71.6 million: five disputes have already reached court
The scandal surrounding Estonian purchases of ammunition for Ukraine turned out to be broader than one problematic contract worth €70 million, after which Defense Minister Hanno Pevkur announced his resignation.
On September 4, the Estonian State Defence Investment Centre (RKIK) disclosed new data: out of 27 contracts for the purchase of weapons and ammunition for Ukraine, seven have already been terminated. Their total value amounts to approximately €71.6 million.
Under five contracts, the state is already trying to recover money through court or international arbitration. Materials for legal proceedings are currently being prepared for two more.
In total, Estonia concluded contracts worth approximately €350 million
RKIK head Elmar Vaher reported that the centre concluded a total of 27 contracts intended for the supply of weapons and ammunition to Ukraine.
Their total value is approximately €350 million.
Thus, the majority of agreements are being fulfilled, but seven had to be terminated due to problems with deliveries or product quality.
Four problematic contracts with one supplier have already been referred to international arbitration. Another joint contract with two companies is being considered in Harju County Court.
The total value of these five agreements is €59.8 million.
In addition, RKIK terminated two more contracts with a total value of €11.8 million. The centre is also preparing to take legal action regarding them.
Why Estonia terminated the contracts
According to Vaher, one of the reasons was missed deadlines.
The purchases were financed in part by European funds, and the use of such funding is tied to clear deadlines. If goods did not arrive on time, Estonia could not continue the contract indefinitely.
But the main issue was quality.
Specialists inspected the products that suppliers intended to deliver to Ukraine, and in a number of cases concluded that they did not meet what is needed by the Ukrainian army.
In the case of artillery ammunition, the problem is particularly sensitive: a low-quality shell may not only fail to accomplish the task, but also pose a danger when used.
How the €70 million scandal began
This week, Estonian media revealed one of the most problematic procurement episodes.
In 2024, RKIK concluded several agreements for artillery ammunition for Ukraine with the Italian-registered company Datasel S.R.L., which is connected to the Indian company Neco Defence Munitions.
Before the deals were made, according to Estonian media, the companies had no confirmed history of supplying artillery shells.
The first contract was signed in August 2024. Estonia transferred €15 million as an advance payment. Further agreements and additional advance payments followed.
The total amount of funds transferred under the problematic purchases approached €70 million.
At the same time, it is important to note a clarification that appeared after the first publications: it is not that the supplier produced nothing at all.
Some ammunition exists, but was not delivered to Ukraine
Outgoing Defense Minister Hanno Pevkur stated that part of the ordered products had indeed been manufactured and delivered to a warehouse in one of the European countries.
However, inspection showed that the delivery was incomplete and of insufficient quality.
According to Pevkur, there was an agreement between Estonia and Ukraine: the ammunition would not be sent to the Ukrainian army until Estonian specialists inspected it and were convinced of its functionality.
Therefore, the wording about “completely vanished €70 million” would be inaccurate. A contractual dispute is now ongoing: Estonia considers the supplier's obligations unfulfilled and is trying to recover the funds.
The European Union is finding out whether Estonia will have to return the money
An additional financial risk is connected to the origin of the funds.
Some purchases were paid for through the European Peace Facility — an EU mechanism used, among other things, to finance military assistance to Ukraine.
The European Commission has already stated that it is in contact with the Estonian authorities and is studying the situation.
It has not yet been determined whether Tallinn will have to return the European funds due to the failed purchases.
EU mechanisms for recovering funds exist for cases where financing was not used in accordance with established requirements.
Therefore, in the worst-case scenario for Estonia, a commercial dispute with suppliers could turn into a state budget expenditure.
Audit showed the problem is broader than one supplier
The ammunition story became particularly serious after an inspection by the Estonian National Audit Office.
Auditors found systemic shortcomings in the management of defense procurement: problems with contract control, inspection of delivered products, inventory accounting, and monitoring the fulfillment of obligations.
The National Audit Office warned that such shortcomings increase the risk of improper or ineffective use of state funds.
This conclusion becomes especially sensitive now, as Estonia's defense spending is growing rapidly.
For the procurement of ammunition alone in 2025–2029, the country plans to allocate about €3.4 billion.
Why the defense minister resigned
After the publication of the audit results and information about problematic purchases, Defense Minister Hanno Pevkur announced on September 2 that he would leave his post.
At the same time, he did not accept personal responsibility for the choice of specific companies or contract terms.
Pevkur explained his decision as political responsibility for the entire defense sector.
According to him, the minister does not negotiate individual contracts and does not control every ammunition delivery, but the head of the ministry must answer for the work of structures in his area.
Pevkur had headed the Ministry of Defense since 2022.
The prosecutor's office launched an investigation
In light of the National Audit Office's findings, the Estonian prosecutor's office also commenced criminal proceedings regarding circumstances related to financial management in structures of the Ministry of Defense.
At this stage, no charges have been brought against specific persons.
The investigation must determine whether the identified violations were the result of poor management and insufficient oversight, or whether there are grounds to speak of criminal offenses.
Now Estonia is trying to get the money back
RKIK expects that the first major court proceedings on the terminated contracts could begin in late 2026 or early 2027.
According to the current head of the centre, after the delivery deadlines expired and negotiations failed, the state practically had no other option but to demand the money back through court.
The new scale of the problem makes the current scandal no longer just the story of one failed €70 million order. Estonia terminated seven contracts worth €71.6 million, is starting legal battles over most of them, and the audit raised the question of how reliably the country controls its rapidly growing defense spending at all.
