Price cap hits China oil refiner

Profits at top Asian oil refiner Sinopec nearly halved in 2008 because of caps on how much it could sell fuel for, even as oil prices soared.

Annual net profit fell 47% to 13.3bn yuan ($1.94bn; £1.35bn) from 56.5bn yuan in the same period a year earlier.

It marked the first profit decline at the state-run firm in seven years.

The loss came as the company was obliged to supply fuel at low prices set by the government, even when prices reached a record $147 a barrel.

But analysts expect margins to improve in 2009 as price caps ease and oil prices remain far below the record reached in 2008.

The firm predicts its net profit for the first three months of this year will rise by half compared to the same quarter a year earlier.

But it also warned that demand would slow further.

"The demand growth for refined oil products in the domestic market is expected to slow down," the company said.

"Due to the combined pressure of slower economic growth and a downward cyclical trend, the chemicals business will be facing more challenging situations."

While the firm saw its profits fall sharply in 2008, the government provided annual subsidies worth 50.3bn yuan.

Other firms in the sector have also been hit, with PetroChina recently saying its net profit in 2008 fell 22%.

Deutsche Bahn boss set to resign

The head of Germany's railway company, Deutsche Bahn, has offered to resign after the company admitted spying on thousands of its employees.

Chief executive Hartmut Mehdorn said: "I have offered the chairman of the supervisory board my resignation".

The firm admitted that it conducted a surveillance operation on staff, intended to tackle corruption.

Mr Mehdorn said he had not been aware of the spying but expressed regret over what had happened.

There have been calls in the media for him to resign but in a recent newspaper interview he vowed to stay on.

Deutsche Bahn, the country's biggest public company, has previously confirmed it employed investigators from a detective agency in Berlin to carry out covert surveillance operations on its employees.

It has also admitted monitoring staff emails to check whether they were being critical of the company's policies.

Privatisation

Mr Mehdorn has previously won plaudits for turning Deutsche Bahn into a profitable company.

Earlier on Monday the firm posted a 4.8% increase in pre-tax profits to 2.5bn euros (£2.3bn; $3.3bn).

As well as the controversy over spying, Mr Mehdorn has become embroiled in scandals regarding train safety and bonus payments relating to a planned privatisation of the firm.

Until now he's been able to count on the support of Chancellor Angela Merkel, who has backed him over previous confrontations.

But as she faces a federal election in six months, analysts have suggested her support could diminish.

Russia's poor 'need crisis help'

Russia's economy will shrink by 4.5% this year because of the global downturn, the World Bank has predicted.

The Bank said Russia, a major oil producer, would be particularly hard hit by the low price of oil.

It said the Kremlin should shift the focus of its anti-crisis programme to the poor because of "the threat of significant social pressure".

The Bank added that aid to Russia's poor might have the added benefit of stimulating domestic demand.

Unrest feared

The World Bank says that the social situation in Russia has worsened so rapidly and so unexpectedly that it is important to shift the focus of the anti-crisis policy to the population.

It says that the Russian government should increase payments to the unemployed and to pensioners.

Since the global economic downturn began to affect Russia, the authorities here have been worried by the prospect of social unrest - especially in towns where single enterprises are the engine of the entire local economy.

The government insists that it has the funds to meet social spending requirements, but the World Bank's prediction is likely to cause further concern.

While the Bank expects the Russian economy to shrink by 4.5% this year, the Russian government predicts a 2.2% contraction.

GM chief Wagoner ousted by Obama

The chief executive of struggling US car company General Motors has been ordered to step down by US President Barack Obama.

Rick Wagoner will leave immediately, a government official confirmed.

Mr Obama is preparing to outline terms for offering more help to GM and fellow car giant Chrysler.

The two firms have already received $17.4bn (£14.4bn) in bail-outs. Chrysler has requested a further $5bn while GM says it needs $16.7bn more.

Plans rejected

Reports have suggested that a frustrated Mr Obama will reject GM and Chrysler's turnaround plans as unrealistic, raising the risk of the carmakers' bankruptcy.

The auto task force appointed by Mr Obama released two reports on Monday on the financial health of both carmakers, saying that Chrysler was "not viable" in its current form.

It demanded a merger with Italy's Fiat or another carmaker if Chrysler was to survive and said the Obama administration would only provide the company working capital for the next 30 days.

It also said that it would pledge to fund GM's operations for the next 60 days only, requiring the carmaker to come up with another plan detailing further restructuring.

"While Chrysler and GM are different companies with different paths forward, both have unsustainable liabilities and both need a fresh start," the task force said.

"Their best chance at success may well require utilising the bankruptcy code in a quick and surgical way."