BP chief executive faces US Congress, Shares move higher: Economy Roundup

BP chief executive Tony Hayward has appeared before a Congressional committee designed to investigate the circumstances leading up to the giant oil spill in the Gulf of Mexico.

Hayward presented prepared remarks that some representatives criticised, while he was twice told to speak louder after being told his voice was too quiet.

“How could this happen? How damaging is the spill to the environment? Why is it taking so long to stop the flow of oil and gas in the Gulf?” Mr Hayward said in an opening statement.

“We don’t yet have all the answers to these important questions.”

“Under your leadership BP has taken the most extreme risks,” Democratic representative Henry Waxman said. “BP cut corner after corner to save a million dollars here and a few hours or days there.”

Hayward defended the company, stuck to prepared statements and said he did not wish to go into detail regarding the investigation of the oil spill.

However, Waxman become frustrated with Hayward, saying “You are not taking responsibility. You are kicking the can down the road”.

Meanwhile, Macquarie Group has reached an agreement with Rismark International take a 53% stake in the real estate funds management and research company.

Macquarie Funds Group will provide funds for management infrastructure and operational support services.

“The investment in Rismark gives our clients access to Rismark’s well-diversified residential real estate investment funds,” MFG head Shemara Wikramanayake said in a statement.

“In addition to acquiring a shareholding in Rismark, Macquarie’s commitment to co-invest in these funds demonstrates our support for Rismark’s investment strategies.”

In the mining sector, as reported by the Australian Financial Review, resources companies gained $91 billion in profits during 2009, more than twice the amount made in 2008.

The publication claims these figures are part of a recent Treasury analysis, which has been used for the basis of the proposed resources super profits tax.

Shares higher despite modest Wall Street gain

The Australian sharemarket has opened higher today, following modest gains on Wall Street, where investors were boosted by the S&P200 breaking through a 200-day average, despite news of more jobless claims.

The benchmark S&P/ASX200 index was up 15 points or 0.35% to 4543.1 at 12.00 AEST, while the Australian dollar also some ground to US86c.

ANZ shares gained 0.2% to $22.99, while Commonwealth Bank shares lost 0.1% to $52.46. NAB gained 0.7% to $24.98 while Westpac rose 0.3% to $23.34.

David Jones shares continued to fall, after the resignation of chief executive Mark McInnes due to “inappropriate behaviour” towards a female staff member. Its shares have fallen 2.4% to $4.40.

Also reported by the AFR, senior Healthscope executives have threatened to leave if a takeover bid by Kohlberg Kravis Roberts and CBC Asia Pacific would lead to Health Group managing director Benn Thynne appointed to the management team.

The publication has reported that under Thynne’s management, Health reported a $12.4 million loss. It is understood Healthscope will ask for a higher purchase price than those offered by other bidders.

In the mining sector, Alesco Corporation has said it will post a $126 million net loss in the 2010 financial year, and will suspend its dividend until March 2011 due to impairments and other expenses.

“This outcome reflects tough market conditions, poor operating results and recognises the challenge of integrating 14 separate businesses was far greater than anticipated on a number of levels,” Alesco chairman Mark Luby said in a statement.

He also described the situation as “disappointing”.

Barrick wary of super profits tax

Meanwhile, the world’s largest gold miner, Barrick Gold Corporation, has said the proposed resources super profits tax will affect its investment decisions in Australia.

“I can’t go into details, but it is impacting investment decisions we’re making right now,” Sean Jermy, Barrick’s senior manager of taxation for Western Australia, told reporters. “We’re a big owner of mining real estate in this state. You can say without a shadow of a doubt, it will impact the value of existing operations.”

“Barrick does a lot of business in Africa and we have a mine in Papua New Guinea … where they tried to bring in something similar a couple of years ago and they stepped back from it. History is littered with examples of where this hasn’t worked.”

In the United States, investors were disappointed by new data from the Labor Department which revealed initial claims for state unemployment benefits rose by 12,000 to a seasonally adjusted 472,000.

The manufacturing, construction and education sectors have continued to make layoffs.

But the news didn’t have a huge affect on Wall Street, where the Dow Jones Industrial Average gained 24.71 points or 0.24% to 10,434.17.