Tuesday, October 10, 2006

George Allen Stock Option Skullduggery?

Another problem for Senator Allen?

Sen. George Allen did not disclose to Congress that he owned stock options in a Virginia high-tech company and has now requested an opinion from the Senate Ethics Committee about whether that failure violated Senate rules.

Allen (R-Va.) received options on 15,000 shares of stock in Commonwealth Biotechnologies Inc. after serving on its board of directors between the end of his term as governor and his election to the Senate. He disclosed the options before his first Senate term in 2001 but has not reported his continued ownership of them since, campaign officials said Monday. ...

Under terms of Allen's stock options, he can buy the Commonwealth shares at $7.50 each.

The company's stock closed at $2.58 per share Monday, making the options worthless today, but potentially valuable if the stock rises above $7.50. The Senate's disclosure instructions say that options that are not vested or are "contingent upon the occurrence of some future event" need not be disclosed. ...

Sheila Krumholz, acting executive director of the nonpartisan Center for Responsive Politics, said Allen's defense -- that the options were worthless -- should not excuse him from having to disclose that he owned them.

"It doesn't matter whether the exercise price is above or below the current stock price," she said. "What matters is you own it, you have it and at some point it may be worth money."

Krumholz said that public disclosure about ownership of such stock options helps voters decide whether lawmakers are making policy decisions that also enrich themselves. There is no evidence that Allen did anything to boost the stock price of Commonwealth.

"If it is worthless today, and then worth millions next year, then it's of enormous interest whether the representative or senator made decisions based on their potential financial gain," Krumholz said.

Allen's staff also acknowledged Monday that the senator had written a letter on behalf of another Virginia company in which he owned stock.

In the December 2001 letter, furnished by Allen campaign officials, the senator urged the Army to expedite a decision regarding a contract with Xybernaut, another Virginia high-tech company. Allen also has served on Xybernaut's board.

"Your immediate attention and expeditious assistance with the requests and concerns expressed in this case would be greatly appreciated," Allen wrote in the five-sentence letter to Army officials as Xybernaut vied for a Army with the service.

Campaign officials said that the request by Xybernaut was turned down and that Allen's only intervention was in a form letter. The office provided copies of similar letters written on behalf of other Virginia companies that contained the exact language. The AP also first reported about the Xybernaut letter.

This is not the first time Allen has faced inquiries about his corporate dealings.

In 2001, news reports surfaced that Allen had reported a $279,000, one-time payment from stock options he received as an advisory board member at Com-Net Ericsson, a high-tech company in Lynchburg, Va.

Allen joined the Com-Net board in 2000 after helping the company expand while governor.

The payment was made after Allen received a ruling from the Senate Ethics Committee that the compensation did not violate Senate rules.

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