A Deadly Fire in a Russian Mall Reveals a System's Lax Controls

(Bloomberg View) -- In 2015, protests following a nightclub fire that killed more than 30 people brought down the government in Romania. But nothing of the kind is going to happen in Russia after at least 64 people, 9 of them children, died in a mall fire in the Siberian city of Kemerovo on Sunday -- even though the tragedy is ultimately the government's fault.

The Zimnyaya Vishnya (Winter Cherry) mall in the center of Kemerovo, which opened in 2013, was part of a powerful business trend. After the Moscow market for large malls became competitive at the beginning of this decade, expansion to the Russian hinterlands became the big play for developers. The international real estate firm Cushman & Wakefield reported late last year that Russia had "the strongest pipeline" in Europe for shopping center openings in 2017 and 2018, amounting to a quarter of the total European pipeline. Only 13 percent of the planned retail space was slated to open in Moscow. Though the Russian e-commerce market has more than doubled since 2013, people, especially in the provinces, where there's little else to do on weekends, flock to malls for entertainment. Winter Cherry laid on all kinds of opportunities to entertain kids; Sunday's fire reportedly started in a top-floor play zone.

The mall was full on the day. As the fire spread at an astonishing speed -- materials used in interior construction were as flammable as those responsible for the Grenfell Tower fire in London last year -- it quickly transpired that the shopping center's fire alarms didn't work, nor did the smoke extraction system. The building filled with noxious smoke, and people began jumping out of fourth-floor windows. Firefighters only managed to get to the fourth floor by Sunday evening, hours after the fire started. There, people, including children had been stuck in a multiplex cinema where doors had been locked to prevent visitors from getting in without a ticket.

Following the tragedy, police arrested some of the mall's management. But the man named by the media and by Anton Gorelkin, member of the Russian parliament from Kemerovo, as Winter Cherry's end beneficiary -- Siberian confectionery and snack magnate Denis Shtengelov -- was out of the country. His family permanently lives in Australia, and he shares his time between the family home and Russia, where his business is. Reached by Russian journalists after the fire, he wouldn't answer whether he really owns the mall: The ownership is obscured through a chain of shell companies. 

Somehow, despite being a major development with a retail area of 23,000 square meters (248,000 sqf), Winter Cherry was officially classified as a small business, which gave it access to a so-called inspection holiday: For three years, fire safety, sanitary and other inspectors had no right to check it, a measure propagated by President Vladimir Putin as a popular way to stop the harassment of private business by government agencies. The 2016 inspection, held after the "holiday" ran out, showed everything was fine at Winter Cherry. 

That's a particularly Russian situation, an example of how the Russian brand of corruption isn't just a nuisance but a potential killer. In Germany, the unfinished new Berlin airport, meant to cope with the city's growing inflow of visitors, is something of a national disgrace: Initially meant to open in 2011, it won't start accepting flights until at least 2020, the budget has grown far beyond the original estimate and members of its management team have been caught extorting bribes. The main reason the airport isn't opening is a faulty smoke extraction system which needs to be rebuilt from scratch to comply with German regulations. In Russia, the airport simply would have opened, and the public would have been none the wiser. Winter Cherry is an example of how that works.

That things like this happen in Russia is ultimately the fault of the central government and the unfair, dysfunctional business environment it has allowed to develop. But a well-known precedent -- the Perm nightclub fire of 2009, in which 156 people died -- didn't lead to any consequences in Moscow. The club's managers and two fire inspectors were jailed and the regional government stepped down.

Whether the Kemerovo regional government will follow suit is not a foregone conclusion, although it's highly likely.

Governor Aman Tuleyev has run the coal mining region since 1997, suppressing any attempt to oppose him and turning Kemerovo into an electoral stronghold for the Kremlin. Leonid Volkov, the campaign manager of Putin's strongest opponent, Alexei Navalny, has accused the regional authorities of adding up to a million votes to Putin and his party at every election. On March 18, when Russia re-elected Putin once again, Kemerovo gave him one of his highest results -- 85.4 percent on a turnout of 83 percent, compared with 76.7 percent and 67.5 percent nationally. It's impossible to say how much of the Kemerovo vote was falsified, but to the Kremlin, it's the official result that matters. As it sought to replace old-school, czar-like regional governors with younger technocrats in recent years, the Kremlin has spared Tuleyev as one of the last of his breed. The fire, however, provides a convenient reason to remove him, too.

The heart-rending stories of parents whose children died in the fire call out for more radical change than any firings. But Putin isn't even planning to travel to Kemerovo, according to his spokesman. In today's Russia, the tragedy won't be politicized any more than the other signs that human lives aren't worth much to the Putin system. Almost two-thirds of Russians rely only on themselves and avoid any contact with authority. As the fake presidential election suggested, they are unwilling to do anything about the reasons they feel that way.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net.

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