After he left the Virginia governor's mansion in 1998 and before he entered the U.S. Senate in 2001, George F. Allen of Virginia did what out-of-office politicians often do: He tried to make some money. As it happens, a number of companies that he had assisted as a pro-business Republican governor returned the favor once he was a private citizen by inviting him to join their boards and furnishing him with potentially valuable stock options. One of them was a high-tech government contractor called Com-Net Ericsson, whose stock options translated into a one-time windfall for Mr. Allen worth $279,000 in 2001. As governor, Mr. Allen had helped Com-Net with its expansion plans.

It is not illegal for a governor to help out companies while in office and then join with them once he leaves -- though one can certainly question the ethics of doing so. However, it becomes a potentially graver problem when a U.S. senator owns options to buy a substantial quantity of a government contractor's stock -- and then goes to bat for that company with an arm of the federal government.

That's apparently what Mr. Allen did, in his first year in the Senate, when he intervened with the U.S. Army on behalf of a government contractor called Xybernaut Corp. According to the Associated Press, Mr. Allen joined Xybernaut's board shortly after leaving the governor's office; at the time he was urging the Army to help the firm, he still owned options to buy 110,000 shares of the company's stock. Had the Army heeded Mr. Allen's request and come down in Xybernaut's favor, the firm's stock price might well have gone up.

The Army did not give Xybernaut what it wanted and, according to Mr. Allen's aides, the senator offered no further help. Eventually, Mr. Allen sold his Xybernaut stock at a loss, he told the Associated Press. Still, his aides didn't dispute that Mr. Allen, in his official capacity, intervened on behalf of a firm in which he had a financial interest.

The AP also reported that for the past five years -- years in which he filed annual disclosure reports -- Mr. Allen did not report his stock options in a firm called Commonwealth Biotechnologies Inc., on whose board Mr. Allen also served. The senator's explanation is that he believed the options were worthless, since the option purchase price exceeded the stock's market value. That is beside the point. What is relevant is that Mr. Allen has a financial stake in Commonwealth, which as a government contractor may have business before Congress.

Mr. Allen says his financial dealings have been aboveboard. But in these cases they appear to reflect at best an ethical sloppiness.

The Roanoke Times also takes Allen to task, questioning whether Virginians should trust Allen:

Give the good senator the benefit of the doubt, though. Maybe he really was ignorant of the ethical rules.

Even if he truly believed he was not required to report his financial stake in the companies' fortunes, nothing prevented him from choosing disclosure. Allen preferred to keep his constituents in the dark about his potential conflicts of interest.

Now the whole mess is off to the Senate ethics committee for clarification.

That opinion probably will not come out until after the election, so voters will have only one clear truth to remember when they go to voting machines in November: Allen did not want them to know about his financial ties. If he does not trust Virginians, should they trust him?

Today's Virginian-Pilot reports on the Allen campaign's response yesterday to the allegations, "Allen camp defends senator's honesty on stock options":

Political advisers to U.S. Sen. George Allen on Monday downplayed a report that the Republican failed to properly disclose stock options he received as a director of a high-tech company.

Dan Allen, a senior adviser, said that George Allen reported the options when he arrived in the Senate in 2001 but did not think he had to do so in subsequent years because the holdings were worthless.

"Sen. Allen has always been open and honest and was open and honest about the options when he got to the Senate," Dan Allen said.

That may not lay the issue to rest though, as this morning, Bloomberg is reporting the "worthless" stock options at one point were worth up to $1.1 million:

Oct. 10 (Bloomberg) -- Stock options that Senator George Allen described as worthless were worth as much as $1.1 million at one point, according to a review of Senate disclosure forms and U.S. Securities and Exchange Commission filings.

The records appear to contradict remarks he made to the Associated Press. ``I got paid in stock options which were worthless,'' AP quoted him as saying.

Allen served as a board member of Chantilly, Virginia-based Xybernaut Corp. from 1998 until December 2000 and was awarded options on 110,000 shares during that period. His Senate financial disclosure form for 1999, required for candidates as well as officeholders, doesn't report that he owned the options.

The stock options issue didn't arise during a televised debate last night between Allen, a 54-year-old Republican, and Democratic nominee Jim Webb, 60. Nevertheless, Mark Rozell, a professor of public policy at George Mason University in Arlington, Virginia, said the issue poses a problem for Allen, who polls show is in a close race with Webb.

``In an election season in which congressional ethics and morality are at the top of public discussion, Allen may now be seen by much of the public as part of a larger problem afflicting his party,'' Rozell said.

Allen left Xybernaut at the end of 2000 after he was elected to the Senate. The company makes portable computers that can be strapped to the body for military or civilian uses.

SEC records showed that Allen owned 60,000 options at the end of 1999, worth $38,200. For 2000 and 2001, he filed amendments to his annual disclosures stating that he owned Xybernaut options.

60,000 Options

In March 2000, Allen held 60,000 options when Xybernaut shares closed at an all-time high of $23.75. That would have made the options worth $1.1 million, less commissions and fees, had Allen exercised them.

At that time, Allen could have paid $5.47 and $1.56 respectively for two groups of options, sold them and pocketed the difference. He was awarded another 50,000 options in October 2000.

Greg Walden, an attorney at Patton Boggs LLP in Washington who represents Allen, said the options with Xybernaut expired 90 days after Allen left the board in December 2000.

Walden said Allen never exercised the options. They became worthless as the share price fell. The company went bankrupt in 2005.

A filing by Allen, which Xybernaut forwarded to the SEC in February 2001, shows that he had the right to exercise all the options at the end of 2000. The options were to begin to expire in 2008. Allen also reported owning the options on his 2002 and 2003 Senate financial disclosures, long after Walden said they had expired.

Chief Executive

Xybernaut Chief Executive Perry Nolen referred reporters to Allen's Senate office. ``I've helped them by providing information to them. So it should be accurate,'' Nolen said.

The company, which now has a market capitalization of less than $1 million, raised $173 million from investors since first going public 10 years ago. It never had a profitable quarter.

By the end of 2000, Xybernaut's share price had plummeted to $1.69, and Allen's options were worth just $1,300.

In 2001, Allen's first year in the U.S. Senate, the company's share price recovered to $5.46 on May 25, which would have valued 110,000 options at $71,500 before commissions and other brokerage fees. Some of the options exceeded their strike price as recently as July 2004.

Allen wrote a letter to the U.S. Army on Xybernaut's behalf in December 2001, AP reported, citing John Reid, Allen's spokesman, who told AP he wouldn't disclose the contents of the letter. In September 2003 the U.S. Defense Department announced $2.13 million in contracts to buy the company's wearable computers.

Accounting Rule Change

In the Senate, Allen opposed an accounting rule change that requires companies to list options as an expense on their financial reports. Allen co-sponsored a measure to block the rule change and in a hearing that year linked the awarding of stock options to increasing the security of U.S. troops in Iraq.

He said stock options make investments in technology companies more attractive, leading to innovations that helped make ``it safer for our men and women in uniform.''

Allen's double-digit lead in the race was eroded following a comment he made about one of Webb's Indian-American campaign workers and media reports alleging he made racial slurs against blacks while a student at the University of Virginia in the 1970s. He has denied making racial slurs.

Any thoughts on why this topic was not raised by the moderator or panelists in the debate?