Defense institutions acknowledge audit problems but reject calls to resign

An audit by Estonia’s National Audit Office has identified serious problems in the Defence Ministry’s area of responsibility for the second consecutive year, ERR reports. The ministry, the State Defence Investment Centre and the Defence Forces acknowledged the shortcomings, but none of the officials involved said they saw grounds for resignation.

The audit of the state’s consolidated annual report, published on Friday, follows findings from previous years. In July 2024, the National Audit Office warned the then Defence Ministry Secretary General Kusti Salm that the work processes of the State Defence Investment Centre and the Defence Forces needed to be reorganised, while the volume of un inventoried assets remained high.

The latest inspection found errors in the documentation of purchases, advance payments and the recording of inventories.

The previous year’s audit also highlighted shortcomings in the organisation of work at the State Defence Investment Centre and the Defence Forces. The National Audit Office said these deficiencies affected the accounting of assets, expenses and receivables, as well as budget implementation. Problems dating back to earlier years remained unresolved, while the sharp increase in funds available to the defence sector had increased the risks, some of which had materialised.

According to the audit, an advance payment balance of 9.6 million euros had accumulated in one supplier’s account since 2018. In practice, this had functioned like a long-term interest-free loan at the expense of Estonian taxpayers.

The State Defence Investment Centre had continued ordering goods from the supplier, but had not used the opportunity over several years to offset the orders against the advance payment.

The latest audit also found that the Defence Ministry had undertaken obligations not covered by the state budget. The National Audit Office said the state might have to cover 70 million euros outside the budget.

Defence Ministry Secretary General Kaimo Kuusk said the potential expense arose after a supplier defaulted and the ministry took the matter to court. It is not yet clear whether the risk will materialise.

Former Defence Minister Urmas Reinsalu, who chairs the parliamentary special committee on state budget control, said the ministry had explicitly promised not to allow such expenses again and had therefore lied.

Kuusk responded that the ministry would put the matter right, adding that the explanatory memorandum should have described the hypothetical risk.

The audit has raised the question for the second consecutive year of whether anyone will be held responsible. Defence Minister Hanno Pevkur did not respond to ERR’s calls, but Kuusk said the secretary general was responsible for the ministry’s financial affairs. He said, however, that he saw no reason to resign.

Kuusk said the entire area of government had been reviewed since July. He acknowledged that he was dissatisfied with the pace of work under an action plan established the previous year, but said the plan had now become more specific and detailed, with named people and deadlines.

The audit also criticised the State Defence Investment Centre, including for documents that had not been signed and cases in which signatories lacked the necessary authorisation. Centre director Elmar Vaher said the institution had also failed to record all the risks associated with using external funds.

Vaher said this was particularly important because the activities involved a significant risk of corruption.

All the institutions named in the audit have acknowledged that problems exist, while rejecting the view that they provide sufficient grounds for officials to step down.