BAE: Can't pay, would like to pay

If, as expected, the Serious Fraud Office announces today that it intends to request permission from the attorney general to prosecute BAE, that will be an important milestone in perhaps the most sensational criminal case ever against a big British company.

It comes after years of investigations into allegations that BAE paid hundreds of millions of pounds in bribes to secure contracts from Africa, to the Middle East to Eastern Europe. It also follows BAE's admission last year that it hadn't in the past employed the highest ethical standards in the way it won business and promised to clean up its act.

But here's what may surprise many.

BAE, Britain's biggest manufacturer, would dearly like to make a limited admission of guilt, pay a fine and move on.

It would love to settle the case by plea bargain and turn over a new leaf, to use the cliché.

That's wholly rational, in that most of the senior executives of the company weren't with the business in the period when, by its own admission, it wasn't as scrupulous in its business practices as it would now like to be.

But its directors have a legal duty not to hand over cash or damage the reputation of the company - through what would be seen as a confession of wrongdoing - unless they are advised by their own lawyers that the SFO has an overwhelming case.

And they feel that the sum of money being demanded by the SFO for a settlement - between £1/2bn and £1bn (as disclosed by the Today programme) - is not warranted by the strength of the case.

It will continue to negotiate with the SFO to reach an agreement to cease hostilities.

The balance it has to strike is between the attractions of removing the heavy millstone of the case from around its neck, and the potential damage to its ability to win business in the future from sensitive international customers (typically governments) if it were to make a frank admission of guilt.

The stakes are high, not only for the company and its shareholders. Whether you love or hate that BAE is a world leader in defence, it is the biggest manufacturer in the UK and is a significant part of the British economy.