New Delhi, 4 September

Estonia’s Defence Minister Hanno Pevkur has resigned following a procurement scandal involving a €70 million deal to buy artillery ammunition for Ukraine from an Italian company owned by an Indian entity.

Pevkur, who had served since 2022 and was Estonia’s longest-serving minister since independence in 1991, announced his resignation on Wednesday. He has denied personal responsibility for the failed deal.

At the centre of the controversy is Datasel, an Italian company acquired in March 2024 by Neco Defence Munitions which is also just a three-year-old firm, part of Nagpur-based Neco Group of Industries, controlled by the Jayaswal family.

Datasel had previously worked in defence electronics but had no experience supplying artillery ammunition. Before the takeover, it reportedly had only a handful of employees and annual turnover of just over €1,20,000. Yet within months of the acquisition, it secured major Estonian ammunition contracts worth around €70 million.

Estonia says Datasel failed to deliver much of the ammunition on time and that some supplies did not meet required standards. Datasel acknowledges delays but rejects claims that its products were substandard, saying it had already supplied goods worth €59 million and could have completed the remaining deliveries had Estonia not cancelled the contracts. 

The ammunition was intended for Ukraine, with part of the funding coming through the EU’s European Peace Facility.

The deal has raised questions over how Datasel secured the contracts despite its lack of relevant experience. 

From plastic to defence manufacturing 

The controversy has also drawn attention to Neco’s corporate structure in India. Its defence subsidiaries use the “Manufacture of plastic products” National Industrial Classification code, a domestic corporate and tax designation. The company did not bid in Europe as a plastic manufacturer; instead, Neco acquired an existing Italian defence company, giving it a European corporate presence through which it pursued the contracts.

It remains unclear whether Neco planned to manufacture the shells in India or source them from another producer. Estonia’s National Audit Office has also questioned the procurement process, saying it was not given the €70 million contract despite repeated requests.