Berlin  - Germany's transport ministry on Thursday endorsed Ruediger Grube, 57, a top executive at carmaker Daimler, as the new head of the state-owned railways company Deutsche Bahn.

The ministry said Chancellor Angela Merkel and key ministers had agreed on Grube for the hot-seat job, replacing Hartmut Mehdorn, 66, who tendered his resignation this week after Bahn had admitted to illicit surveillance of its employees.

Bahn is owner of the worldwide freight-forwarding company Schenker and operates Germany's bullet-train expresses as well as suburban rail services all over the country. Mehdorn restored the company to profit as a prelude to its privatization, now delayed.

Transport Minister Wolfgang Tiefensee informed Deutsche Bahn's supervisory board of the government's recommendation on Wednesday evening. The board's personnel committee was due to discuss the appointment later Thursday.

Grube heads Daimler's development division and chairs the supervisory board of European plane and defence group EADS.

The Bahn post is politically sensitive in Germany, with parties courting the votes of both the 220,000 Bahn employees and the millions of passengers who use rail services, many state subsidized.

Mehdorn denied any personal wrongdoing over the breaches of privacy, but said as chief of Deutsche Bahn he was responsible for what happened in such a large company whether he was aware of it or not.

He defended the efforts of the rail operator's compliance unit which as part of an anti-corruption drive had hunted through employee data for signs that Bahn staff might have received kickbacks from suppliers.

It was not immediately clear when Mehdorn will leave the post he has held since 1999.

Grube helped plan Daimler's expansion in China and was involved in the company's 2007 decision to end its merger with US carmaker Chrysler. (dpa)