Estonia’s emergency effort to source artillery ammunition for Ukraine has led to contract disputes, a criminal investigation and scrutiny of procurement records. The country’s prosecutors found grounds to examine whether a criminal offence occurred, and the European Public Prosecutor’s Office will take over because European Union-managed funds were involved. Two former officials linked to the disputed purchases now lead a proposed ammunition and explosives factory project in Latvia.
An urgent search widened the supplier field
During the first years of the war, European factories could not produce enough artillery ammunition for Ukraine. Estonia therefore searched widely, using European funding that included income generated by frozen Russian Central Bank assets. Madis Hindre, an investigative journalist at Eesti Ekspress, said officials travelled to Kenya and East Asian countries in search of any available stock or supplier. One contractor was Datasel, a small Italian company previously active in electronics and software. It was bought in March 2024 by India’s Neco Defence Munitions, which also lacked experience producing large-calibre artillery shells. Later reporting raised questions about images used in Datasel’s offer and about whether the factory shown to Estonian officials in India belonged to the supplier.
Advance payment became a contract and quality dispute
Estonia paid Datasel almost €60 million in advance. When the supplied ammunition was inspected and shells were cut open last year, Estonian officials concluded that the explosive was of inadequate quality and that the ammunition could not be sent to Ukraine in that condition. Some shells were incomplete and others defective; Estonian officials have described them as semi-finished products. Datasel rejects the allegations. The company says disputes over product quality and termination of the contracts have not been decided by a court or arbitration. In total, seven contracts were terminated and five reached court or arbitration. The stock is now held in a warehouse in a European country, costing Estonia about €20,000 a month.
Investigators say procurement records are missing
Estonia’s General Prosecutor’s Office reviewed a National Audit Office report and information published by the media before finding grounds to open criminal proceedings into whether an offence occurred. The European Public Prosecutor’s Office will investigate possible breaches because the funds were managed by the European Union, while a European Commission investigation team is due to travel to Estonia at the end of September. The current leadership of Estonia’s Defence Investment Centre says it has not found documents explaining how the supplier was selected or its capabilities assessed. Decisions were effectively taken by a very small group. Magnuss-Valdemar Saar led the centre at the time, with Katri Raudsepa involved in discussions; either Raudsepa or Saar signed the contracts. Nothing in the source establishes criminal wrongdoing.
The Latvian project is private and not yet approved for support
Saar and Raudsepa left their former roles and became leaders of Wolfram Europa in March this year. They are now involved in a proposed explosives and ammunition plant in Jēkabpils municipality, publicly presented at the end of August. The plan envisages investment of up to €200 million and about 200 jobs, with production starting next year, although construction has not begun. The project has reached a building right on Latvian State Forest land; it still needs national-interest-object status, design work and approvals. Production would initially assemble and fill ammunition from imported components, with explosives production planned later. The project is private, has no guaranteed buyer and is seeking a capital rebate of up to €4.9 million. Altum is still assessing the application, and any support would depend on production and export conditions being met.
| Fact | Detail |
|---|---|
| Advance payment to Datasel | Almost €60 million |
| Contracts terminated | Seven |
| Contracts in court or arbitration | Five |
| Monthly warehouse cost | About €20,000 |
| Planned Wolfram Europa investment | Up to €200 million |
| Planned employment | About 200 jobs |
| Potential capital rebate | Up to €4.9 million |
The current leadership of Estonia’s Defence Investment Centre says it has not found documents explaining how the supplier was selected or its capabilities assessed.
WHY IT MATTERS
Emergency procurement can widen the supplier search when demand exceeds established production, but it does not remove the need to document capability checks, contract terms and delivery acceptance. Here, advance payment, disputed quality and missing supplier-selection records have produced litigation and a criminal investigation. For the Latvian project, officials say there is no state buyer or guarantee: any future purchase decision would have to take account of the company’s performance and the outcome of the Estonian proceedings.
Reported from pmo.ee, 2026-09-13. The Tender Wire is published by Otnox.
