The money came from classified donor countries, not only the European Peace Facility (EPF), though the authorities have declined to disclose which ones.

From August 2024, the state Center for Defense Investments (RKIK) signed four contracts with Datasel, an Italian firm acquired by Indian-owned Neco Defense Munitions, paying roughly €70 million up front for artillery shells for Ukraine. None of the ammunition arrived, the agency terminated the contracts, and the state is now pursuing the money through Estonian courts and Swiss arbitration.

Parties familiar with the contracts told Postimees the donor nations are Denmark and the Netherlands — €9.5 million of the Datasel advance payments came from Denmark, and €5 million of the payment to an unknown company came from the Netherlands.

The Netherlands and Denmark very likely gave Estonia much more than €14.5 million in total, according to Postimees, most of which was spent or remains in an Estonian account and poses no risk.

That €14.5 million is a component of the advance payments to companies from which Ukraine received no suitable ammunition, and under the bilateral agreements Estonia is obliged to return all unused funds.

RKIK deputy director Asko Kivinuk confirmed Estonia must do so immediately if the donors request it, and said negotiations are underway on whether they will wait for the court proceedings to finish.

The interstate agreements expire within this year, meaning the repayment could hit Estonia's current state budget rather than a future one.

The Ministry of Defense denies Dutch involvement in the Datasel case, while the Dutch Ministry of Defense confirmed it allocated funds to Estonia and said the agreements provide for their return, Postimees reported.

The National Audit Office (Riigikontroll) warned the risks could create significant obligations on Estonia's state budget; the Ministry of Defense's earlier statement to the Riigikogu that there was no budget risk had been in error.

Intermediary donor activity has not ended — the 2027 budget plans up to €62.97 million in mediated grants, including €25 million in Norwegian support for ammunition for Ukraine.

The original Postimees piece is here.

Background

Fallout from the Datasel scandal contributed to Hanno Pevkur's resignation as defense minister on September 2, 2026.

Auditor General Janar Holm said last month the scandals pose no security threat and that open discussion makes Estonia stronger, but warned several problems are systemic.

The scandal has raised broader questions about the state's oversight of defense procurement and about wider accounting and oversight problems at the Estonian Defense Forces (EDF). Pevkur's replacement as defense minister, Martin Herem, a former EDF commander, has pledged to analyze these issues further.

The Riigikogu's Anti-Corruption Select Committee last week said it was demanding all correspondence documenting from the outset the Estonian authorities' contact with Datasel and also with Turkish ammunition manufacturer ARCA Defence, the committee's chair Anastassia Kovalenko-Kõlvart (Center) told ERR (link in Estonian).

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