The most senior member of Estonia’s ministry of defence has resigned over a procurement controversy involving buying ammunition for Ukraine.
Hanno Pevkur (pictured right) said on Wednesday evening, 2 September, that he would be stepping away from the role after an investigation revealed that the ministry, under his watch, had spent around €70 million on product that was initially late and ultimately not suitable for use. Estonia’s Ministry of Defence confirmed his departure shortly after Pevkur’s public announcement.
Estonia’s parliament is still in summer recess. A replacement is likely to be appointed when it resumes, on 14 September.
Pevkur had been in the role since July 2022. Getting appointed shortly after Russia kicked off its full-scale invasion of Ukraine, his time in the role was effectively defined by that conflict.
As a prominent neighbour of Russia along the Eastern Flank, Estonia became significantly more focused on its own defence in response to Russia’s aggression. Under Pevkur, the country boosted its defence spend to 5% of the country’s GDP in line with NATO guidance.
It also leveraged its growing technology industry to dive deep into defence and resilience tech, with a number of companies hatching and operating out of the country. (In fact, the permanent secretary of defence at the time of the purchases, Kusti Salm, is now the CEO of one of those companies, the interceptor startup Frankenburg Technologies.)
And, like a number of other Western countries, Estonia became heavily involved in the fast and furious scramble to provide urgent assistance to Ukraine with funding and military supplies. That included acting as a broker in deals for equipment to send to the country.
Estonia acted decisively, sending around €500 million in equipment to the country by November 2024. Pevkur was very public about what Estonia was buying and donating. The controversial contract in question stems from those activities.
Some of the details of what exactly went wrong are still in dispute, and there are investigations going on both at the national and European level, but the bigger picture seems to be this: The government, via the Estonia Centre for Defence Investments (ECDI), made a series of purchases from Datasel — an Indian-owned, Italian-based supplier — for artillery shells totalling around €70 million using funds related to frozen Russian assets.
But according to reports from the country’s National Audit Office and Estonian media, the vendor was not properly vetted in advance, the supplies took a long time to arrive, and the supplies that have arrived up to now are not what was ordered and are unusable.
Datasel appears to be contesting the allegations. In the meantime, it’s unclear how much of the frozen-asset funds were allocated, and if Estonian taxpayers may nevertheless still be on the hook for the lost purchase. It’s also not fully clear who masterminded this bad deal on the buyers’ side, and separately who may ultimately be responsible for it.
While procurement black holes and other financial mis-dealings may well get traced to corruption or other nefarious activities — the picture painted here so far is that the Estonian government mismanaged this deal and acted too quickly to thoroughly vet the seller. Pevkur said that as the senior-most person in the ministry, he had to step down as a result of it.
“Although the minister does not count socks and ammunition or conduct contract negotiations, the National Audit Office’s criticisms, primarily concerning the activities of the Defense Forces and the Center for Defense Investments, raise the question of political responsibility,” he said. “I therefore believe it is right to take political responsibility today for the entire defense sector and hand over the defense minister’s baton at a time suitable for the prime minister.”
We’ll update this post as we learn more.
