Estonian Defence Minister Hanno Pevkur has resigned amid a procurement controversy over €70 million (around Rs 770 crore) in ammunition contracts involving Italy-registered defence company DATASEL SRL, owned by Nagpur-based Neco Group.
While announcing his resignation on Wednesday, Pevkur said he was taking political responsibility for issues within his ministry, as Estonia faced scrutiny over allegations of delivery delays and quality concerns linked to the contracts.
However, days after Pevkur's resignation, in an exclusive statement to the Free Press Journal, DATASEL has rejected the allegations, saying it received approximately €59 million in advance payments and had already supplied and invoiced materials worth around €58 million.
Sidharth Jaiswal, Director of DATASEL SRL, said the company had fulfilled its contractual obligations and disputed the circumstances surrounding the termination of its contracts with Estonia’s Centre for Defence Investments (ECDI).
Jaiswal said the company was subsequently informed that funding available through the European funding mechanism had lapsed, which, according to DATASEL, affected ECDI’s ability to make further payments and accept the remaining deliveries.
“Against the advance of €70 million as highlighted in the international media, we have received approximately €59 million only in advance payments, against which we have already supplied and invoiced materials amounting to approximately €58 million,” Jaiswal said.
DATASEL disputes contract termination
According to DATASEL, the execution of its contracts with ECDI in 2024 and 2025 involved a complex international supply chain requiring multiple governmental approvals, authorisations, regulatory clearances and procurement activities across different jurisdictions.
The company said that when the contracts were terminated, materials were already ready for delivery, while further quantities were at various stages of production. It also claimed that substantial volumes had already been specifically procured and made available for the contracts.
ECDI, according to DATASEL, terminated the contracts citing delivery delays and quality issues. The company, however, strongly disputed that basis and maintained that the termination was linked to the lack of funds.
“We strongly disagree with the basis on which our contracts were subsequently unilaterally terminated,” Jaiswal said, adding that DATASEL remained committed to supplying the remaining quantities under the agreements.
Company rejects quality concerns
DATASEL also disputed allegations concerning the quality of the materials supplied. Jaiswal said multiple lots had undergone the inspection process stipulated under the contracts, with ECDI representatives inspecting the materials before the goods were lifted by ECDI.
“Certain quality or defect-related concerns were raised only after the termination of the contracts,” he said.
DATASEL has argued that the quality concerns raised after the termination were an “afterthought” aimed at avoiding contractual obligations. These remain the company’s claims in an ongoing contractual dispute and have not been independently established.
DATASEL details defence track record
The company also sought to address questions surrounding its defence-industry track record following its acquisition by India’s Neco Defence Munitions Pvt. Ltd. in 2024.
According to DATASEL, the acquisition marked a major transformation for the Italian company, which specialises in medium- and large-calibre ammunition, fuzes, missile interface systems and other defence products.
The company said it subsequently expanded its international partnerships and undertook complex, multi-country defence projects.
DATASEL claims that since its acquisition by Neco Defence Munitions, it has executed contracts worth more than €110 million, while contracts worth around €190 million are currently at various stages of execution.
The company also highlighted its founder and Executive Director, Ing. Sandro Pazzini, who it said has more than four decades of experience in the Italian defence industry, including senior positions with OTO Melara, MBDA and WASS/Alenia Sistemi Subacquei.
Legal dispute continues
The dispute between DATASEL and ECDI is currently before a competent court and arbitration tribunal, according to the company.
Jaiswal said DATASEL had submitted detailed responses and had also lodged counterclaims against ECDI worth “double digit million Euros”.
As the proceedings are ongoing and confidential, the company said it would not comment on specific legal arguments or evidence before the authorities.
DATASEL said it remains confident of a positive outcome and maintained that it had complied with its contractual obligations.
Company disputes Ukraine reports
The company has also disputed reports suggesting that the ammunition covered by its contracts with Estonia was purchased specifically to supply Ukraine.
According to Jaiswal, the contracts were entered into with ECDI and Estonia was the end user of the goods under those agreements.
“We would also like to clarify that in some media news it has been stated that the weapons were purchased to support Ukraine, which again is different from the fact that according to our contracts Estonia is the end user of the goods,” Jaiswal said.
Pevkur resigns amid controversy
The DATASEL-ECDI dispute comes amid scrutiny of Estonia’s defence procurement practices and the resignation of Defence Minister Hanno Pevkur.
Pevkur announced his resignation on Wednesday, saying he was taking political responsibility for issues within his ministry. He had served as Estonia’s defence minister since 2022.
The controversy involves ammunition procurement contracts reportedly worth €70 million, with reports alleging delays and quality concerns. Estonia subsequently sought to recover funds and referred the dispute to international arbitration.
Pevkur said: “Estonian security is not a one-man project. It is our joint responsibility.”
The Estonian National Audit Office had also criticised aspects of the country’s defence spending and procurement practices.
While reports surrounding the deal have raised questions over DATASEL’s role and the performance of the contracts, the company has strongly rejected the allegations and maintains that it fulfilled its contractual obligations. The matter remains under legal and arbitration proceedings.
