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Canadian Doug Steele at his bar, Papa's Place, in Moscow, Jan. 19, 2014. He says he decided not to open a club in Sochi for fear that it would be caught up in scandal and investigation after the Games. (John Lehmann/The Globe and Mail)
Canadian Doug Steele at his bar, Papa's Place, in Moscow, Jan. 19, 2014. He says he decided not to open a club in Sochi for fear that it would be caught up in scandal and investigation after the Games. (John Lehmann/The Globe and Mail)

Moscow nightclub mogul steers clear of Sochi Add to ...

Doug Steele has seen and done some crazy things during his two decades as one of the kingpins of Russia’s wild nightclub scene. For years, he ran the most notorious bar in Eastern Europe. He was vilified by name in the Russian parliament and nearly abducted by armed gangsters.

But Mr. Steele says even he is not adventurous enough to get involved with the Sochi Olympics.

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The 62-year-old native of Timmins, Ont., famous in Russia as the man behind Moscow’s legendary Hungry Duck nightclub during the 1990s, says he and a partner were offered a chance to open a bar in the Rosa Khutor mountain resort that will host the skiing and sliding events during the Winter Games that begin Feb. 7.

It sounded like a lucrative opportunity, but Mr. Steele said he decided to walk away after being advised that anything built in Sochi could be targeted for investigation once the Olympics are over. While Russian President Vladimir Putin is anxious to have the Games seen as a success, he is also believed to be furious at massive overspending and corruption, and is expected to order police to find out why the cost of the Olympics soared from a planned $12-billion (U.S.) to the current price tag of $51-billion and counting.

“We had a great site, great rent, [scenery] right out of a movie. We had the money lined up,” Mr. Steele explains. And then, he says he received a warning from a Russian who lives in Sochi and has contacts in the security services. “He said ‘Tell Doug not to invest one kopek down here, because it’s all going to go right to hell in a handbasket in six months. They’re going to start taking properties back.’ There’s been so much money squandered there. Right now, everything’s nice and pretty, but everybody’s expecting major, major fallout.”

Economists say it will be difficult for Mr. Putin to crack down too hard in Sochi, since the root problem is the political system he created. The Kremlin has tightened its control over the media and courts, while systematically pushing legitimate political opposition out of parliament over the past 15 years. That’s left the country with few checks on the behaviour of corrupt officials.

“Russia has an extremely serious problem with corruption and the government has no mechanisms to control it,” said Dmitry Travin, a professor of economics at the European University in St. Petersburg. “Corruption enters almost any project that’s built.”

The swirling scandal in Sochi is at odds with what Mr. Steele says is otherwise a stabilizing business environment in Russia – something for which he largely credits Mr. Putin.

While palm-greasing in the bureaucracy cripples government projects – especially when it’s one as big as Rosa Khutor, an all-new resort built specially for the Olympics – Mr. Steele says it is far easier to run a small enterprise in today’s Russia than it was when he first arrived in the country in 1993, shortly after the fall of the Soviet Union.

“Russia, to me, is 22 years old. That’s all it is. Everybody gets on about Putin and stuff like that. I don’t get into politics, but I know that these people are infinitely better off today than they were 15 years ago. … At least there’s a structure, there’s order. It’s a better place now.”

That sense of progress has helped maintain Mr. Putin’s popularity even as he has been accused of taking the country down an authoritarian road. Economic growth during the 15 years Mr. Putin has been president or prime minister can be partially attributed to high oil prices, but there’s also a sense that Russia has become more stable and predictable under his rule.

Mr. Steele says the Hungry Duck nightclub could only have existed in the Russia of the 1990s, when Boris Yeltsin was president and lawlessness reigned. The club became famous because of a simple gimmick: Women drank for free and were encouraged to do whatever they wanted – especially if it involved dancing on top of the bar and removing articles of clothing. The club became an over-the-top symbol of how Russians were embracing their new freedom after the collapse of the USSR.

“It was wild. It was absolutely the wildest place I’ve seen in my life,” Mr. Steele says, still shaking his head at the memory. “Communism was dead and we were the only bar that let people dance on furniture. It became this symbol of the times. We could never have sustained that.”

The club’s fame eventually started working against Mr. Steele. A group of Duma deputies visited the Hungry Duck – they were particularly shocked by a male strip show to the tune of the Soviet national anthem – and afterward Mr. Steele was criticized by name in the Russian parliament.

Police raided the club, followed by fire inspectors and tax inspectors. According to Mr. Steele, all of them were looking for bribes, rather than investigating violations. It got worse. “A couple of Chechens tried to … drag me into the car where there were two guys in the back seat,” Mr. Steele recalled. With the help of Hungry Duck staff, he escaped, but the pressure continued to escalate. “There were death threats, my translator quit. It was a different time.”

Mr. Steele believes the encounters with gangsters and police were all part of a co-ordinated effort to force him to close the Hungry Duck. Eventually, he did, in 1999, only to see it reopen six months later under Russian owners he says had links to the Federal Security Bureau, or FSB.

Mr. Steele says none of that could happen in today’s Russia. “Now we do everything legally. There’s a process to getting licences, to getting permits. Back [in the 1990s], we were paying people to do things – we didn’t know if we had to pay them, they just said we did.”

Mr. Steele’s latest projects – a Cheers-themed bar called The Standard and a dance club called Papa’s, hidden down an alley a short walk from Red Square – are tame by Hungry Duck standards. A busy Saturday night at Papa’s still involves plenty of alcohol and dancing, but no one jumps on the bar to disrobe while a live band plays covers of Bob Marley and The Police.

Both clubs are successful, but Mr. Steele nonetheless bemoans the lost chance to open a Papa’s-style bar in Sochi. “We would have done business,” he said, sighing. “But once Putin went down there and saw the sheer level of the corruption, that was it.”

Follow me on Twitter: @markmackinnon

Follow on Twitter: @markmackinnon