Estonia to sue two more defense firms over contract disputes

Estonia's state Center for Defense Investments (RKIK) is preparing legal action against two more defense suppliers over payment and delivery disputes involving contracts worth a combined total of just over €10 million. The companies have not been named publicly.

The move follows revelations earlier this week that the state had already paid the bulk of €70 million to Indian defense firm Datasel for artillery shells intended for Ukraine that were never delivered. Of that sum, €59 million has been paid out, leaving questions over the missing €11 million and the shells themselves. The Datasel case is being handled in domestic court as well as the European Court of Arbitration in Strasbourg.

The scandal led to the resignation of Defense Minister Hanno Pevkur (Reform) on Wednesday evening. Speaking to Estonian public broadcaster ERR on Thursday, Pevkur said RKIK had indicated the two newer disputes might still be resolved, but RKIK Director General Elmar Vaher said attempts to settle with the two firms had failed, prompting preparations for court action similar to the Datasel case.

Vaher, who has led RKIK since January, said the agency had not been prepared for the scale of the recent rise in the defense budget. Over the past seven months he has worked to build a team capable of managing the volume of procurements and to streamline decision-making so not every choice requires his personal sign-off.

Prime Minister Kristen Michal (Reform) said the incoming defense minister will need to introduce changes, including monthly reporting to the government together with RKIK's chief. The defense ministry's plans now include a full inventory of the defense sector's stocks and assets, while Vaher will review all of RKIK's existing contracts and the obligations they create for the state.

The Riigikogu's Anti-Corruption Select Committee also discussed the matter on Thursday. Committee chair Anastassia Kovalenko-Kõlvart (Center) said risk assessment and reporting procedures at the ministry and RKIK have not been properly thought through, adding that frequent leadership changes at RKIK have diluted accountability. The Center Party has said it will initiate a motion of no confidence against Prime Minister Michal over the controversy.