The Virginia highway commissioner whom Gov. John N. Dalton ousted earlier this week for what Dalton said were "technical violations" of state conflict of interest laws also voted to award paving contracts to a business associate who was later convicted of bid-rigging.

T. Ray Hassell III, a Chesapeake land surveyor, conceded today that he had failed to disclose his three-percent share of a development firm headed by R. Curtis Saunders Jr., who was also president of Portsmouth Paving Corp., a Tidewater Virginia firm that won hundreds of thousands of dollars in state road contracts during Hassell's 7 1/2 years on the commission.

Hassell said in a telephone interview today he never abstained from voting to award thgose contracts to Saunders and never disclosed to state officials his interest in Cedar Road Ltd. of Great Bridge, Va., the development firm which Saunders also headed.

Information disclosing Hassell's interest in the Saunders firm was contained in a secret investigative report conducted by state Attorney General J. Marshall Coleman's office and presented to Dalton a week ago Friday. Dalton and Coleman, the Republican candidate for governor, have refused to release the report.

Dalton and a spokesman for the attorney general have maintained that Hassell was ousted for the technical violation of failing to disclose contracts that his firm held with other state agencies in the Tidewater area. They repeatedly insisted that was Hassell's only violation and the governor said he was convinced Hassell had not willfully broken any law or profited from his position on the commission.

"We're not in the habit of releasing investigative reports," said Dalton press secretary Charles J. Davis. "You'll just have to take my word."

The Ledger-Star, a Norfolk newspaper, said today that the report contained potentially far more damaging information, disclosing the relationship between Hassell and Saunders, who is one of a half dozen road contractors in Virginia who have been convicted of federal antitrust violations. Saunders was sentenced to 4 months in prison and his firm fined $400,000 earlier this year for conspiring with other Tidewater paving companies to rig bids on state and local road contracts over a period of 15 years.

Hassell said today that although he voted for the Portsmouth Paving contracts, he denied there was a conflict because he and the other commissioners merely accepted recommendations by the highway department staff following competitive bidding.

"It never occurred to me there was any conflict because I didn't have anything to do with the bids," said Hassell. "I couldn't tell you whether there were one or 5 or 500" awards to Saunders' firm.

Hassell said he himself has yet to see the investigative report and that he did not know his relationship with Saunders was part of it. He said he assumed the attorney general had determined that the three percent interest was too small to consitute a conflict.

Hassell said that he obtained the interest in the development firm by investing a small sum of money and agreeing to do the land surveying and engineering work for free at its 175-unit subdivision. He said his firm has done about $30,000 worth of work so far with the profits coming from sales of the lots. Saunders had agreed to do the paving on a similar basis, Hassel said. Saunders could not be reached for comment.

The former commissioner did not mention his interest in the Saunders firm on the financial disclosure form he was required to submit annually to the state. "There was no occasion for me to disclose that that I know of," said Hassell.

Coleman again today refused to discuss Hassell's case. Earlier in the week, Coleman press aide Ben Ragsdale had insisted there were "no other major problems" in the Hassell case.

Hassell is the second member of the state highway commission to be forced out of office in recent weeks over conflict of interest allegations. Earlier Dalton demanded the resignation of William B. Wrench of Northern Virginia after disclosure that he voted to place the proposed Springfield Bypass highway near some of his Fairfax County properties.