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Krysha (Крыша)
Last updated: 21-Jun-2015

Per Gloster J in Berezovsky v Abramovich [2012] EWHC 2463 (Comm)  at paras 51-54:

51. The concept of krysha (literally Russian for "roof") played an important role in this case. The meaning of the concept was effectively common ground as between the respective historical experts and the parties. In a society which is not governed by the rule of law, people devise alternative structures to govern their relations, based not on law but on power. Krysha is an alternative system of obligation; the classic product of a society where businessmen cannot count on the protection of the law, either because the law is itself defective or because the administrative and judicial agencies charged with its enforcement cannot be relied upon to do so. Where there is no effective law, or no effective legal process of enforcement, relationships are governed instead by power. It was common ground among the experts that the situation in Russia in the 1990s and early 2000s was that, although there were laws, the legal processes were defective.

52. The concept of krysha was described by Mr. Berezovsky’s historical expert, Professor Fortescue, in paragraphs 188 to 190 of his first report. He emphasised that the concept was not limited to physical protection. He explained as follows:

188. The term first came into use in everyday usage in Russia in the early to mid-1990s when the world was taken over by racketeers and took on criminal overtones. In that context, it meant ‘protection’. Protection racketeering was a very large part of the activities of criminal gangs in the 1990s although with all the violent and involuntary connotations of the word protection, a criminal krysha was likely to also provide services beyond the immediate one of keeping other criminal groups away from your business. These included debt collection, i.e. contract enforcement, and conflict resolution. In the absence of an effective state, the krysha fulfilled some of the functions of the state, and collected tax for doing so.

189. As I noted above, in the late 1990s the Russian state began to assert itself and to operate more effectively. This not only reduced the role of criminal groups but also led to a new application of the word krysha (which was not in general usage in the early and mid-1990s). It was now bureaucrats and politicians who provided a krysha. Like the criminal gangs, they also provided protection from a business person’s enemies and competitors. They also advanced the interests of their business client within the bureaucracy and political arena and were well remunerated for doing so. Volkov says of this more recent usage of the word krysha that:‘In current Russian business parlance [it] is used to refer to agencies that provide institutional services to economic agents irrespective of the legal status of providers and clients. Such agencies are not necessarily criminal groups but are composed of a variety of criminal, semi legal (informal), legal, and state organisations.’

190. Used in this way, the term krysha does not carry the necessary implication that the services in question will be criminal or illegal."

53. In November 2003, an article in The Economist observed that:

" … most [Russian businessmen] already know that their best protection is still not the law but their krysha, or "roof" – a well-connected power broker".

54. The evidence at trial demonstrated that the essential features of krysha were as follows:

i) It was not possible in Russia in the 1990s to build up a substantial business without both political and physical krysha. "Anyone with the ambition to flourish in Russian big business …" opined Professor Service, "… had to hire an apparatus of political and physical protection". If one did not have political power oneself, then one needed access to a "Godfather" who did. Mr. Berezovsky himself explained that he had turned to politics in 1994 after finding that the showrooms of his motor dealership were being attacked by gangs employed by business rivals and he was the target of an attempted assassination.

ii) Krysha was a form of clientage, which came at a price: see Professor Fortescue’s account of krysha in the mid-1990s quoted above. Professor Bean stated that (in his experience) "… krysha was never provided without a cost".

iii) Political krysha (the kind with which the article in The Economist was concerned) involved the patron’s use of his connections in government or administration: a) to procure favourable treatment of the client’s interests in the formulation of legislation or policy, or the provision of discretionary favours; b) to protect the client against arbitrary action by State authorities; and to provide the client with a visible connection to a powerful man which can be expected to deter others from attacking his interests.

iv) Physical krysha involved protection against violence or other interference, commonly through the services of criminal gangs. Professor Bean (agreeing with Professor Fortescue’s analysis) states that: "…if an organisation or individual was known to be associated with a powerful provider of physical 'protection', there were great advantages in terms of protection from harassment by criminal elements".

v) Krysha was a long-term relationship, based on a code of personal obligation. It was not terminable at will. The client owed the survival, and possibly the creation, of his business to the patron, who may well regard himself as "owning" the client or as having an interest in the client’s business fortunes.

vi) Krysha was not a legally enforceable relationship. By definition it normally involved either the provision of political influence or protection for money or money’s worth, or criminal violence, or both.

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